Question

12) Pre incorporation profit is to be credited to
a) Profit and loss account above the line.
b) Profit and loss account below the line.
c) Capital reserve.​

Answer 1

Answer:

On the other hand, if a profit has been earned by business prior to the same being taken over and the same is not fully absorbed by any interest payable for the period, it is credited to Capital Reserve Account or to the Goodwill Account, if any goodwill has been adjusted as an asset