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CSEET · Fundamentals of Accounting · Preparation of Final Accounts for Sole Proprietorship

Which of the following items is debited to the Profit and Loss Account of a sole proprietor while preparing final accounts?

Salaries paid to office staff are debited to the Profit and Loss Account because they are indirect operating expenses. Carriage inwards goes to the Trading Account, installation wages are capitalised with the machine, and drawings are adjusted against the proprietor's capital, not charged as an expense.

  1. ACarriage inwards
  2. BSalaries paid to office staffCorrect
  3. CWages paid for installing machinery
  4. DDrawings made by the proprietor

Explanation

Salaries to office staff are an indirect operating expense and are charged to the Profit and Loss Account. Carriage inwards belongs to the Trading Account, wages for installing machinery are capitalised, and drawings reduce capital without touching profit.

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