PRC-1 · Chapter 3 · Question 49 of 100
At the end of the reporting period, 'Radiant Builders' has a credit balance of Rs. 75,000 in its 'Commission Received' account. How is this account dealt with to prepare for the new financial year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The account is closed by debiting it with Rs. 75,000 and crediting the Statement of Profit or Loss.
Explanation
Income accounts (like Commission Received) are nominal accounts that must be closed at year-end. Because it has a credit balance, it is closed by debiting the account and transferring the amount to the Statement of Profit or Loss.
More Ledgers and Trial Balance MCQs
- Q51What is the primary purpose of extracting a trial balance at the end of an accounting period?
- Q52Which of the following accounts will normally present a debit balance in a trial balance?
- Q53If the bank account in the general ledger shows a credit balance brought down (Balance b/d), what does this signify?
- Q54The Trade Payables account has an opening credit balance of Rs. 66,450. During the period, purchases were Rs. 205,600, payments made were…
- Q55The Trade Receivables account has an opening debit balance of Rs. 46,652. During the period, sales were Rs. 245,000, cash received was Rs…