PRC-1 · Chapter 3 · Question 41 of 100
'Silverline Traders' unfortunately incurred a net loss of Rs. 150,000 for the financial year. How is this net loss formally transferred in the ledger accounts at year-end?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Owner's Capital Rs. 150,000, Credit Statement of Profit or Loss Rs. 150,000
Explanation
A net loss represents a decrease in the owner's equity. To transfer this, the Owner's Capital account is debited (reducing equity), and the Statement of Profit or Loss is credited to close it out.
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