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11th Grade > Accountancy

FINANCIAL STATEMENTS - OVERVIEW MCQs

Total Questions : 30 | Page 1 of 3 pages
Question 1. Which of the following is to be recorded in a profit and loss account?
  1.    Purchase of fixed asset
  2.    Capital Expenditure incurred on fixed asset
  3.    Profit on sale of fixed asset
  4.    Sale of fixed asset
 Discuss Question
Answer: Option C. -> Profit on sale of fixed asset
:
C
Profit on sale of fixed asset is to be recorded in a profit and loss account.
Question 2. Which of the following represents the entity`s financial position ?
  1.    Balance sheet
  2.    Cash Flow Statement
  3.    Profit & Loss account
  4.    None of the above
 Discuss Question
Answer: Option A. -> Balance sheet
:
A
Balance sheet reveals the entity’s financial position.
Question 3. Depreciation on fixed assets is _________.
  1.    non-operating income.
  2.    operating expense.
  3.    operating income.
  4.    non-operating expense
 Discuss Question
Answer: Option D. -> non-operating expense
:
D
Depreciation on fixed assets is a non-operating expense.
Question 4. Excess of sales over cost of goods sold in an accounting period is termed as:
  1.    Net Profit
  2.    Gross Profit
  3.    Retained Earnings
  4.    None of the above
 Discuss Question
Answer: Option B. -> Gross Profit
:
B
Excess of sales over cost of goods sold in an accounting period is termed as Gross Profit.
Question 5. If closing stock does not appears in the trial balance and given as additional information, it should be
  1.    Credited to the trading account
  2.    Credited to the profit and loss account
  3.    Deducted from the purchases in the trading account
  4.    Shown on the liability side of the Balance sheet
 Discuss Question
Answer: Option A. -> Credited to the trading account
:
A
If closing stock does appears in the trial balance, it should be credited to the trading account.
Question 6. The costs of putting goods into a saleable condition should be charged to:
  1.    Trading account
  2.    Profit & Loss account
  3.    Balance sheet
  4.    None of the above
 Discuss Question
Answer: Option A. -> Trading account
:
A
The costs of putting goods into a saleable condition should be charged to Trading account.
Question 7. Trading & Profit & loss account and balance sheet is prepared from:
  1.    Ledger balance
  2.    Ledger balances, cash and bank balances
  3.    Cash book and bank book
  4.    Trial Balance
 Discuss Question
Answer: Option D. -> Trial Balance
:
D
Trading & Profit & loss account and balance sheet is prepared from Trial Balance.
Question 8. Which of the following would not appear on the balance sheet?
  1.    Carriage Inwards
  2.    Drawings
  3.    Money owed by the firm to suppliers
  4.    Machinery
 Discuss Question
Answer: Option A. -> Carriage Inwards
:
A
Carriage inwards appear in the tradingaccount but not in balance sheet.
Question 9. Carriage inwards is charged to the trading account because:
  1.    Carriage outwards goes in the profit and loss account
  2.    It is an expense connected with buying goods
  3.    It is not part of motor expenses
  4.    It should not go in the balance sheet
 Discuss Question
Answer: Option B. -> It is an expense connected with buying goods
:
B
Carriage inwards is charged to the trading account because it is an expense connected with buying goods.
Question 10. Calculate the gross profit /loss if:
Sales Rs. 90,000; Closing stock Rs. 40,000; Opening stock Rs. 40,000; Purchases Rs.40,000; Wages Rs. 20,000.
  1.    Loss of Rs. 10,000
  2.    Profit of Rs. 30,000
  3.    Loss of Rs. 20,000
  4.    Profit of Rs. 40,000
 Discuss Question
Answer: Option B. -> Profit of Rs. 30,000
:
B
Gross Profit
=Sales + Closing stock - Opening stock - Purchases - Wages
= Rs. 90,000 + Rs. 40,000 - Rs. 40,000 - Rs. 40,000 - Rs. 20,000
= Rs. 30,000

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