Preparation of Final Accounts & Sole Proprietor

1. Final accounts include which of the following?
A. Trial Balance
B. Ledger
C. Trading and Profit & Loss Account and Balance Sheet
D. Cash Book
Answer: C

2. The main objective of preparing final accounts is to find out:
A. Net Sales
B. Financial Position and Profit or Loss
C. Cash in hand
D. Number of employees
Answer: B

3. Gross Profit is calculated in which account?
A. Profit & Loss Account
B. Balance Sheet
C. Trial Balance
D. Trading Account
Answer: D

4. The excess of indirect expenses over indirect incomes is called:
A. Gross Profit
B. Net Loss
C. Net Profit
D. Operating Profit
Answer: B

5. In final accounts, drawings are shown on the:
A. Credit side of P&L Account
B. Debit side of Trading Account
C. Asset side of Balance Sheet
D. Deducted from Capital in Balance Sheet
Answer: D

6. Outstanding expenses are shown in the final accounts as:
A. Debit side of Trading Account only
B. Liability in the Balance Sheet and added to concerned expenses
C. Deducted from Capital
D. Asset side of Balance Sheet
Answer: B

7. Which statement shows the financial position of the sole proprietor?
A. Profit & Loss Account
B. Cash Flow Statement
C. Balance Sheet
D. Trading Account
Answer: C

8. Net Profit is transferred to which account in the books of a sole proprietorship?
A. Drawings
B. Capital Account
C. Suspense Account
D. Cash Book
Answer: B

9. Which of the following is not part of Final Accounts?
A. Trial Balance
B. Trading Account
C. Profit & Loss Account
D. Balance Sheet
Answer: A

10. Closing Stock is shown in:
A. Only in Trading Account
B. Only in Balance Sheet
C. In both Trading Account (credit) and Balance Sheet (asset)
D. Only in P&L Account
Answer: C

11. Wages paid for installation of machinery is treated as:
A. Revenue Expense
B. Indirect Expense
C. Capital Expense
D. Deferred Revenue Expense
Answer: C

12. Which account is prepared to determine the operating results of a business?
A. Balance Sheet
B. Trading Account
C. Profit & Loss Account
D. Journal
Answer: C

13. Salaries and Wages appearing in Trial Balance are shown in:
A. Trading Account
B. Profit & Loss Account
C. Balance Sheet
D. None of the above
Answer: B

14. Depreciation is recorded in:
A. Trading Account
B. Profit & Loss Account
C. Balance Sheet only
D. Cash Book
Answer: B

15. Accrued Income is shown in final accounts as:
A. Liability
B. Asset
C. Expense
D. Deduction from Capital
Answer: B

16. Which of the following is shown on the credit side of the Trading Account?
A. Purchases
B. Opening Stock
C. Sales
D. Wages
Answer: C

17. The financial year in India generally starts from:
A. 1st January
B. 1st July
C. 1st April
D. 1st March
Answer: C

18. Capital introduced during the year is shown in:
A. Trading Account
B. Profit & Loss Account
C. Added to Opening Capital in Balance Sheet
D. Drawings
Answer: C

19. Which item is deducted from gross profit to arrive at net profit?
A. Purchase Return
B. Direct Expense
C. Indirect Expense
D. Capital
Answer: C

20. Prepaid Expenses are shown as:
A. Liability in Balance Sheet
B. Asset in Balance Sheet
C. Income in P&L Account
D. Expense in Trading Account
Answer: 

ecpgurgaon.com