When preparing the financial statements using a manual accounting system, the worksheet will show profit:
A) in the DR column of the income statement and in the CR column of the balance sheet.
B) as zero.
C) as a CR to the capital account and a DR to the bank account.
D) in the DR column of the adjustments and in the CR column of the balance sheet.

Question

Quizplus · Accepted Answer

Profit is shown in the DR (debit) column of the income statement because it represents revenue exceeding expenses. It is also shown in the CR (credit) column of the balance sheet because profit increases the equity of the business, which is reflected on the credit side.

When Preparing the Financial Statements Using a Manual Accounting System