Q.Net Profit shown by the Profit and Loss Account is finally transferred to:
(A) Trading Account
(B) Purchases Account
(C) Capital Account
(D) Sales Account

The year's Net Profit belongs to the owner and increases the owner's stake, so it is added to the Capital Account.

Net Profit represents an increase in the owner's wealth from running the business, so it is credited to the Capital Account, increasing the balance shown for Capital in the Balance Sheet.

Option-by-option analysis:

• (A) Incorrect — the Trading Account has already closed with Gross Profit transferred out of it.
• (B) Incorrect — Purchases has no connection with the final Net Profit figure. …