PRC-1 · Chapter 3 · Question 64 of 100
At the end of the financial year, the business generated a net profit of Rs. 150,000. Which closing journal entry correctly transfers this profit to the ledger accounts?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Debit Statement of Profit or Loss Rs. 150,000; Credit Capital Rs. 150,000
Explanation
Net profit belongs to the owner and increases their equity. The profit or loss account is debited to close its credit balance, and the Capital account is credited to reflect the increase.
More Ledgers and Trial Balance MCQs
- Q66What is the primary difference between the General Ledger and a subsidiary ledger (such as the Receivables Ledger)?
- Q67At the end of the month, the total of the Purchases Day Book is Rs. 120,000. How is this periodic total posted to the General Ledger?
- Q68The Sales Day Book shows a monthly total of Rs. 350,000. What is the correct double-entry for posting this total to the General Ledger?
- Q69The total of the 'Discount Allowed' column in the cash book is Rs. 4,500 for the period. Where is this total posted in the General Ledger?
- Q70The total of the 'Discount Received' column in the cash book is Rs. 3,200. What is the correct posting for this total in the General Ledger?