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JAMB Principles of Accounts 2010 Question 27

Question 27

Manufacturing Accounts

The gross loss on manufacturing is always transferred to the

  1. A.credit side of balance sheet
  2. B.debit side of profit and loss account
  3. C.credit side of profit and loss account
  4. D.debit side of balance sheet.
Show the answer and explanation

Answer: B (debit side of profit and loss account)

Explanation

A loss reduces profit, so it is debited to the profit and loss account.