Net profit is the debit balance of Profit and Loss Account.

Question

State whether the following statements are True or False with reasons:

Net profit is the debit balance of Profit and Loss Account.

Answer 1

This statement is Raise.

In a Profit and Loss Account, when the credit side total i.e. a total of incomes is more than the debit side total, i.e. expenses it is known as a credit balance. When incomes exceed expenses there is profit. Therefore credit balance of the Profit and Loss Account indicates net profit.