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GCE Financial Accounting 1990 Question 42

Question 42

Final Accounts of a Sole Trader

The balance of the Sales Account is transferred to the Trading Account by

  1. A.debiting the Profit and Loss Account
  2. B.debiting the Trading Account
  3. C.debiting the Sales Account
  4. D.crediting the Profit and Loss Account
  5. E.crediting the Sales Account.
Show the answer and explanation

Answer: C (debiting the Sales Account)

Explanation

The sales account (credit balance) is closed by debiting it and crediting the trading account.