Tag: company final accounts

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Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Cash Profit is?

  1. Net profit$-$Non-trading Profit$-$Depreciation and provision

  2. Gross-Profit$-$Non-trading Profit$+$Depreciation and provision

  3. Net Profit$+$Depreciation & provision

  4. Gross Profit$-$Operational expenses
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Cash profit is calculated by adding non-cash expenses, such as depreciation and provisions, back to the net profit, as these expenses reduce accounting profit but do not involve cash outflows.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

While preparing final account, to record loss in stock due to fire or accidents which of the following adjustment entry will passed?

Stock A/cTo Creditors A/c Dr.
Profit & Loss A/cTo Stock A/c Dr.
Stock A/cTo Capital A/c Dr.
Debtors A/cTo Stock A/c Dr.

  1. A

  2. B

  3. C

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

When stock is lost due to fire, the stock account is credited to reduce the inventory, and the Profit and Loss account is debited to record the loss.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

During the year goods destroyed by fire was Rs. $10,000$. This insurance company accepted the claim for Rs. $6,000$ and paid the money after the close of financial year. In relation to this which of the following statement is correct?

  1. Trading A/c will be credited by Rs. $10,000$, Profit & Loss A/c will be debited by Rs. $6,000$ and in balance sheet insurance claim will be shown at Rs. $4,000$

  2. Trading A/c will be credited by Rs. $10,000$, Profit & Loss A/c will be debited by Rs. $10,000$

  3. Trading A/c will be credited by Rs. $10,000$, Profit & Loss A/c will be debited by Rs. $4,000$ and in balance sheet insurance claim will be shown at Rs. $6,000$

  4. None of the statement is correct
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The total loss of 10,000 is credited to the Trading account. The insurance claim of 6,000 is an asset (receivable), and the remaining 4,000 is the net loss debited to the Profit and Loss account.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

State the reasons whether the following are true or false.
The gain from sale of capital assets need not be added to revenue to ascertain the net profit of a business.

  1. True

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

Gains from the sale of capital assets are non-operating gains and are typically included in the Profit and Loss account to determine the net profit for the period.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

From the following details calculate the net profit for the year ending $31-3-2015$

Particulars Rs.
Opening Stock $1,50,000$
Purchase $2,50,000$
Manufacturing Expenses $80,000$
Selling Expenses $20,000$
Administration Expenses $10,000$
Financial Charges $5,000$
Sales $5,55,000$

Sales include damaged goods sold for Rs. $5,000$ against the cost price of Rs. $12,000$. Gross profit margin on normal sales is $20\%$ on the sales.

  1. Rs. $65,000$

  2. Rs. $68,000$

  3. Rs. $70,000$

  4. Rs. $77,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Normal sales = 5,55,000 - 5,000 = 5,50,000. GP on normal = 20% of 5,50,000 = 1,10,000. Loss on damaged goods = 12,000 - 5,000 = 7,000. Total GP = 1,10,000 - 7,000 = 1,03,000. Net Profit = 1,03,000 - 20,000 - 10,000 - 5,000 = 68,000.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Which is the characteristic feature of profit & loss account?

  1. Accounts transferred to profit & loss account do not exist after being transferred to profit & loses account

  2. It is prepared at the last date of the accounting period.

  3. It is a statement

  4. All of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Once accounts are transferred to the Profit and Loss account, they are closed and their balances are zeroed out for the next period, which is a fundamental characteristic of the closing process.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

In a sole traders profit and loss account firm taxation accounts are not present because ______________.

  1. the proprietor of such a business pays income tax in his private capacity

  2. the Income tax department has not made laws regarding the taxation of firms

  3. as sole trader has a simple business so tax paying is not required

  4. the business is separate undertaking for the purposes of tax
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In a sole proprietorship, the business is not a separate legal entity for tax purposes. The proprietor is personally liable for income tax on the business profits.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Everyday office expenses are charged to _____________.

  1. Selling expenses

  2. Administrative expenses

  3. Marketing expenses

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

Office expenses, such as stationery, salaries of office staff, and utilities, are classified as administrative expenses because they support the general management of the business.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Which of the following would not appear in the profit and loss account?

  1. Rent received

  2. Cash expenses

  3. Carriage outwards

  4. Drawings
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Drawings represent personal withdrawals by the owner and are recorded in the capital account or balance sheet, not the profit and loss account. Rent received, cash expenses, and carriage outwards are all operational income or expense items that appear in the profit and loss account.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

__________ profit is profit before interest and tax (EBIT).

  1. Net

  2. Operating

  3. Gross

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

Operating profit is defined as profit before interest and tax (EBIT). It measures the profit generated from core business operations before accounting for financial costs or tax obligations.