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1 mark

Which of the following is the correct journal entry to transfer a net profit (credit balance of the Profit and Loss Account) to the Profit and Loss Appropriation Account?

  1. A
    Profit and Loss Appropriation A/c Dr. To Profit and Loss A/c
  2. B
    Profit and Loss A/c Dr. To Profit and Loss Appropriation A/c
  3. C
    Profit and Loss Appropriation A/c Dr. To Partner's Capital/Current A/c's
  4. D
    Partner's Capital/Current A/c Dr. To Profit and Loss Appropriation A/c

Solution & Step-by-step Explanation

To close the Profit and Loss Account and transfer the net net profit to the Profit and Loss Appropriation Account, the Profit and Loss Account is debited (to clear its credit balance) and the Profit and Loss Appropriation Account is credited.The correct accounting entry is:

Practice this question

Try it yourself before checking the explanation above.

Which of the following is the correct journal entry to transfer a net profit (credit balance of the Profit and Loss Account) to the Profit and Loss Appropriation Account?
A
Profit and Loss Appropriation A/c Dr. To Profit and Loss A/c
B
Profit and Loss A/c Dr. To Profit and Loss Appropriation A/c
C
Profit and Loss Appropriation A/c Dr. To Partner's Capital/Current A/c's
D
Partner's Capital/Current A/c Dr. To Profit and Loss Appropriation A/c

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