Credit balance of profit and loss account shows net profit of the business.

Question

State whether the following statement is True or False.

Credit balance of profit and loss account shows net profit of the business.

Options

• True
• False

Answer 1

True

Explanation: The balance of the Profit & Loss Account is the net profit when the credit side of this account exceeds its debit side. This net profit is added to the capital of the proprietor appearing in the Balance Sheet.