Question

The accounting entries passed to transfer balance from the closed account to another account are called transfer entries, e.g. transfer of net profit to Capital A/c.

• A. True
• B. False

Answer 1

The correct option is A True

Transfer entries, are entries intended to transfer an item from one head of account to another.

Transfer entries are passed in the journal for transferring an account from one account to another account. E.g. Drawing account is transferred to Capital account at the end of the accounting year. Accounts relating to operation of business like sales, income, expenses are closed at the end of the year and their total or balances are transferred to Trading and Profit and Loss Account after recording journal entries.