Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

In the financial statements of a sole trader, how are closing inventory and loss for the year dealt with?

  • Aclosing inventory: asset in statement of financial position; loss for the year: debit in capital account
  • Bclosing inventory: asset in statement of financial position; loss for the year: debit in income statement
  • Cclosing inventory: debit in income statement; loss for the year: debit in capital account
  • Dclosing inventory: debit in income statement; loss for the year: debit in income statement

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