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JAMB Principles of Accounts 2000 Question 13

Question 13

Final Accounts of a Sole Trader

An expense account is closed by a debit to

  1. A.an asset account and a credit to the expense account
  2. B.the expense account and a credit to an asset account
  3. C.profit and loss account and a credit to the expense account
  4. D.the expense account and a credit to profit and loss account.
Show the answer and explanation

Answer: C (profit and loss account and a credit to the expense account)

Explanation

Expenses are transferred to profit and loss: debit profit and loss, credit the expense account.