. Select the most appropriate alternative from those given below
Debit balance of Trading Account means.
A: Gross Loss
B: Net Loss
C: Net Profit
D: Gross Profit
Best Answer
Explanation:
Option A - Correct. When the debit side of the trading account is greater than the credit side, it results in a gross loss.
Option B- Incorrect. When the debit side of profit & loss a/c is more than the credit side, it results in a net loss. It indicates that the expenses are more than the incomes.
Option C - Incorrect. When the indirect incomes are more than indirect expenses, it would result in net profit. The credit side of profit & loss a/c is greater than the debit side.
Option D - Incorrect. The excess of direct incomes over direct expenses would result in gross profit. The credit side is greater than the debit side of the trading account.
Final answer:
Hence, option A is the correct answer. Select the most appropriate alternative from those given below: Debit balance of Trading Account means Gross Loss.
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