Profit on sale of old plant is:___________?
Correct answer: B. Profit and Loss A/c
- A. In Trading A/c
- B. Profit and Loss A/c
- C. In Profit and Loss Appropriation A/c
- D. Being a non operating item ignored
Explanation
The profit is a capital profit arising from disposal of a fixed asset, but it is transferred to the Profit and Loss Account for reporting. It is not included in Trading Account or ignored as a non-operating item.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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