Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 17 - No. 3)
How is a surplus treated in the Income and Expenditure account?
It is transferred to the balance sheet as a liability.
It is the same as a profit in a normal trading business.
It represents a loss and is deducted from all future incomes.
It reduces future expenses.
Explanation
Surplus is equivalent to profit in a commercial setting. It increases equity.
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