Which of the following statements are true?

(A) Revenue expenditure is treated as an expense for the current year and is shown in balance sheet.

(B) Closing stock is credited to Trading account.

(C) Trading and Profit and Loss account is also known as Income statement.

(D) If the total of the credit side of the profit and loss account is more than the total of the debit side, the difference is the net profit.

(E) Capital expenditure is incurred to acquire fixed assets for operation of business.

Choose the correct answer from the options given below.

(B), (C), (D), (E)

The correct answer is option 4- (B), (C), (D), (E).

(A) Revenue expenditure is treated as an expense for the current year and is shown in balance sheet. IT IS FALSE. The part of the expenditure, which is perceived to have been used or consumed in the current year, is termed as expense of the current year. Revenue expenditure is treated as an expense for the current year and is shown in trading and profit and loss account.

(B) Closing stock is credited to Trading account. IT IS TRUE. The Trading Account is a part of the financial statements used to determine the Gross Profit or Gross Loss of a business for a particular accounting period. It includes all the revenues and direct costs associated with the sale of goods. Sales and closing stock is credited to trading account and opening stock and direct expenses are debited to  trading account to calculate the gross profit.

(C) Trading and Profit and Loss account is also known as Income statement. IT IS TRUE. Trading and Profit and Loss account, also known as Income statement, shows the financial performance in the form of profit earned or loss sustained by the business. 

(D) If the total of the credit side of the profit and loss account is more than the total of the debit side, the difference is the net profit. IT IS TRUE. The indirect expenses are transferred to the debit side of the profit and loss account. All revenue/gains other than sales are transferred to the credit side of the profit and loss account. If the total of the credit side of the profit and loss account is more than the total of the debit side, the difference is the net profit for the period of which it is being prepared. On the other hand, if the total of the debit side is more than the total of the credit side, the difference is the net loss incurred by the business firm.

(E) Capital expenditure is incurred to acquire fixed assets for operation of business. IT IS TRUE.  If the benefit of expenditure extends more than one accounting period, it is termed as capital expenditure. An example can be payment to acquire furniture for use in the business. Furniture acquired in the current accounting period will give benefits for many accounting periods to come. The usual examples of capital expenditure can be payment to acquire fixed assets and/or to make additions/ extensions in the fixed assets.