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Question
Profit and Loss Suspense Account is shown in the new Balance Sheet on ______ side.
Options
Debit
Credit
Asset
Liabilities
MCQ
Fill in the Blanks
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Solution
Profit and Loss Suspense Account is shown in the new Balance Sheet on asset side.
Explanation:
It is shown on the Assets side because it represents a debit balance that hasn't been adjusted yet. Since the final profit for the entire year is only calculated at the year-end, this interim payment to the partner is treated as a temporary asset (fictitious asset) until the final accounts are closed.
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Chapter 5: Reconstitution of Partnership (Death of Partner) - Exercise 5.1 (Objective Questions) [Page 200]
