PRC-1 · Chapter 3 · Question 26 of 100
What is the correct double-entry sequence to formally transfer a net profit of Rs. 250,000 to the owner's equity at year-end?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Statement of Profit or Loss Rs. 250,000, Credit Owner's Capital Rs. 250,000
Explanation
Net profit inherently belongs to the owner. To close the profit or loss account and transfer this balance, the Statement of Comprehensive Income (Profit or loss) is debited, and the Owner's Capital account is credited, thereby increasing equity.
More Ledgers and Trial Balance MCQs
- Q28When posting data from the Cash Book, how are individual payments made to credit suppliers processed in a manual ledger system?
- Q29The 'Payables Ledger' is also commonly referred to by which alternative name in accounting terminology?
- Q30When 'Velocity Logistics' receives a credit note from a supplier for returned defective goods, into which specific ledger is this…
- Q31The 'Trade Payables' account in the General Ledger of 'Apex Logistics' shows total entries on the debit side amounting to Rs. 45,000 and…
- Q32In manual ledger accounting, when an account is balanced at the end of the month, the abbreviation 'Balance c/d' is often used. What does…