Profit and loss account
Capital reserve account
Goodwill account
Profit and loss adjustment account
Answer is Right!
Answer is Wrong!
The correct answer is: A. Profit and loss account.
A loss arising from the acquisition of a business to its incorporation should be debited to the profit and loss account. This is because the loss is a part of the cost of acquiring the business, and it should be recognized in the period in which it is incurred.
The other options are incorrect because:
- Option B, capital reserve account, is used to record capital gains or losses that are not realized through the sale of assets.
- Option C, goodwill account, is used to record the excess of the purchase price of a business over the fair value of its net assets.
- Option D, profit and loss adjustment account, is used to record adjustments to the profit and loss account that are not related to the normal course of business.