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    Question

    At the end of the accounting year, all the nominal accounts of the ledger book are:

    A Balanced but not transferred to profit and loss account Correct Answer Incorrect Answer
    B Not balanced and also the balance is not transferred to the profit and loss account Correct Answer Incorrect Answer
    C Balanced and the balance is transferred to the balance sheet Correct Answer Incorrect Answer
    D Not balanced and their balance is transferred to the profit and loss account. Correct Answer Incorrect Answer

    Solution

    At the end of the accounting year, nominal accounts, which include income, expenses, gains, and losses, are closed by transferring their balances to the profit and loss account. This process is essential to determine the net profit or loss for the accounting period. Once these balances are transferred, the nominal accounts are reset to zero and are not carried forward to the next accounting period.

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