PRC-1 · Chapter 3 · Question 34 of 100
At the end of the financial year, the 'Sales Revenue' account of 'Glow Enterprises' has a credit balance of Rs. 4.5 million. What is the correct journal entry to formally close this account?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Debit Sales Revenue Rs. 4.5m, Credit Statement of Profit or Loss Rs. 4.5m
Explanation
Revenue accounts have credit balances. To close them to zero at year-end, they must be debited. The corresponding credit is made to the Statement of Profit or Loss (or Trading Account) to calculate the gross profit.
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