To account profit on sale of investment should be debited to?

Profit and Loss A/c
Capital Reserve A/c
Investment A/c
Sinking Fund A/c

The correct answer is A. Profit and Loss A/c.

Profit on sale of investment is a gain that arises from the sale of an investment at a price that is higher than its book value. This gain is recorded in the Profit and Loss Account as an increase in income.

The other options are incorrect because:

  • Capital Reserve A/c is a reserve that is created to account for gains that are not realized, such as gains on revaluation of assets.
  • Investment A/c is an account that is used to record the cost of investments.
  • Sinking Fund A/c is an account that is used to accumulate funds for the repayment of a loan or the redemption of a bond.