[amp_mcq option1=”profit and loss a/c” option2=”by-product a/c” option3=”process a/c” option4=”abnormal gain a/c” correct=”option2″]
The correct answer is: B. by-product a/c
A by-product is a secondary product of a manufacturing process that has a relatively low sales value compared to the main product. By-products are usually sold at a reduced price, and the revenue from their sale is credited to the by-product account. The by-product account is then closed to the profit and loss account at the end of the accounting period.
The other options are incorrect for the following reasons:
- Option A: The profit and loss account is a financial statement that reports the revenues and expenses of a business for a specific period of time. It is not used to account for by-products.
- Option C: The process account is a temporary account used to accumulate the costs of a manufacturing process. It is not used to account for by-products.
- Option D: The abnormal gain account is a temporary account used to record gains or losses that are not expected to recur. It is not used to account for by-products.