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CMA Foundation · Fundamentals of Financial and Cost Accounting · Journal and Ledger

Which of the following balances would be carried down in the ledger at the year end and appear as an opening balance in the next year's books, rather than being closed by transfer to the Profit and Loss Account?

The Capital Account balance is carried forward. Real and personal accounts are balanced and brought down as opening balances, whereas nominal accounts such as rent paid, salaries and sales are closed by transfer to the Trading or Profit and Loss Account at year end.

  1. ACapital Account balanceCorrect
  2. BRent Paid Account balance
  3. CSalaries Account balance
  4. DSales Account balance

Explanation

Real and personal accounts such as Capital are balanced and carried forward. Nominal accounts like Rent, Salaries and Sales are closed by transfer to the Trading or Profit and Loss Account at the year end, so they start the new year with nil balance.

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