Multiple choice

Income tax paid by the sole proprietor from business bank account is debited to

  1. income tax account

  2. bank account

  3. capital account

  4. not to be shown in the business books
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Income tax is the owner's personal obligation, not a business expense. When paid from business account, it's treated as drawings/debit to capital account. It doesn't appear in business profit/loss calculation.

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