. 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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