Question

Where is gross profit or gross loss from the Trading Account recorded in the Profit and Loss Account?

Options

• Debit side as gross profit

• Credit side as gross loss

• Credit side as gross profit or debit side as gross loss

• Debit side as net profit

Answer 1

Credit side as gross profit or debit side as gross loss

Explanation:

Gross profit is credited (shown on the credit side), and gross loss is debited (shown on the debit side) when transferred from the Trading Account to the Profit and Loss Account