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WAEC Financial Accounting 2021 Question 10

Question 10

Final Accounts of a Sole Trader

Net profit of a sole proprietor is transferred to the

  1. A.profit and loss account.
  2. B.profit and loss appropriation account.
  3. C.capital account.
  4. D.drawings account.
Show the answer and explanation

Answer: C (capital account.)

Explanation

A sole trader's profit belongs to him, so it is added to his capital.