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

Which of the following items is shown on the debit side of the Trading Account of a sole proprietor?

Carriage inwards is debited in the Trading Account because it is a direct expense incurred to bring purchased goods to the business premises. Discount allowed and office salaries are indirect expenses for the Profit and Loss Account, while sales returns are deducted from sales.

  1. ASales returns
  2. BCarriage inwardsCorrect
  3. CDiscount allowed
  4. DSalaries to office staff

Explanation

Carriage inwards is a direct expense incurred in bringing goods to the place of business, so it is debited to the Trading Account. Sales returns are deducted from sales on the credit side. Discount allowed and office salaries are indirect expenses charged in the Profit and Loss Account.

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