Question

Trading Account is closed by transferring its balance to the _______________.

• A. Capital A/c
• B. Profit & Loss A/c
• C. Manufacturing A/c
• D. None of these

Answer 1

The correct option is B Profit & Loss A/c

Trading account is closed by arriving at a figure called gross profit. Gross profit is calculated deducting cost of goods sold from sales. Gross profit is then transferred to the profit and loss account from which all the non operating expenses are deducted and non operating incomes are added to arrive at net profit.