Question

If the total of the credit side of the profit and loss account is more than the total of the debit side, the difference is the net profit.

• A. True
• B. False

Answer 1

Answer: (A)

Excess of credit over debit in profit and loss account is net profit generated by the business. This can be shown as follows:

Profit & Loss Account

Particulars Amount Particulars Amount

To Rent 5000 By Gross Profit 75000

To Rent 15000

To Insurance 12000

To Stationery 4000

To Other Expense 4000

To Net Profit 35000

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75000 75000

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