The unfavourable balance of Profit and Loss Account should be:

The correct answer is: D. None of the above

The unfavourable balance of Profit and Loss Account is called a loss. A loss is a decrease in equity that results from business activities during a period of time. It is recorded as a negative number in the Profit and Loss Account.

The equity of a company is the difference between its assets and its liabilities. The equity of a company is owned by its shareholders.

A loss is not added to liabilities or subtracted from assets. It is recorded as a negative number in the Profit and Loss Account. The loss will reduce the equity of the company.

Here are some additional details about each option:

• Option A: Added in liabilities. This is incorrect because liabilities are the company’s debts. A loss is not a debt.
• Option B: Substracted from assets. This is incorrect because assets are the company’s resources. A loss is not a resource.
• Option C: Substracted from capital. This is incorrect because capital is the company’s equity. A loss is not equity.