Closing Entries Of  Profit and loss account  :

Profit and loss account should be closed by transferring the net profit or net loss to capital account.

i. If net profit
Profit and Loss A/c………….                Dr         x x x
To Capital A/c                                    x x x
(Net profit transferred to capital A/c)

ii. If net loss
Capital A/c………………..                      Dr.         x x x
To Profit and loss A/c                                 x x x
(Net loss transferred to capital A/c)