Tag: meaning and preparation of statement of profit

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Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

The difference between capital at the end of year and capital at the beginning of year is called ____________.

  1. Profit

  2. Income

  3. Drawings

  4. Expenses
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An increment of closing capital is a result of excess revenue earned during the year against the opening capital at the beginning thus representing Profit.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

In order to find out the correct profit, drawings are ___________ to the closing capital.

  1. Deducted

  2. Added

  3. Divided

  4. Multiplied
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As Drawing refers to withdrawal of capital, Due to drawings, closing capital is decreased resulting a reduced Profit.
Hence, to ascertain correct profit Drawings are added back to closing capital.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Find the total at assets at the end of the year if the net profit, drawing during the year and assets at the beginning of the year were 12,000, 7,000 and 15,000 respectively.

  1. 20,000

  2. 10,000

  3. 9,000

  4. 8,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Calculation of total assets at the end of the year :- 

 Assets in the beginning of the year =Rs 15000
Less : Drawing made during the year (7000)
Add : Net profit for the year                  12000
                                                            = Rs 20000

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

                                             Rs.
Opening Capital                  50,000
Closing Capital                    52,000
Net profit during the year      5,000     
If the above figure are drawn from the books of a trader, then  his drawings, if any, are ____________.

  1. Rs. 5,000

  2. Rs. 3,000

  3. Rs. 1,000

  4. Rs. 6,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
 PARTICULARS  AMT RS.
 opening capital   50,000
add : net profit during the year    5,000
   
 less : closing capital  (52,000)
 TOTAL    3,000
Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Loss of stock is said to be normal loss when such loss is not due to inherent characteristics of the commodities.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Normal loss is inherent to the nature of the commodity (e.g., evaporation, breakage). Abnormal loss is not inherent.

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Capital on 1 January Rs.65,000, Interest on drawing Rs.5,000, Interest on Capital Rs.2,000, Drawings Rs.14,000, Profit for the year Rs.15,000. His capital as on 31 December will be _____________.

  1. Rs. 67,000

  2. Rs.63,000

  3. Rs.77,000

  4. Rs.89,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
 PARTICULARS  AMT RS.
 Capital at the beginning of the year  65,000
 less: drawings  14,000
 less: int. on drawings   5,000
 add: int.on capital   2,000
 add: profit for the year  15,000
   
 Capital at the end of the year  63,000
Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Profit = Capital at the end+______- Capital introduced - Capital in the beginning.

  1. Sales

  2. Drawings

  3. Loan

  4. Net Purchases
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Profit is calculated by the taking into account the fluctuations of the capital at the beginning and at the end of the year, by adding the drawings, and deducting the capital introduced to the capital at the end of the year.