Tag: introduction to final accounts

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Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Manufacturing a/c is prepared by the enterprise engaged in________.

  1. trading activities

  2. manufacturing activities

  3. mining activities

  4. overseas export-import
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Manufacturing a/c is prepared by the enterprises engaged in manufacturing activities. This financial statement does not show profit and loss figures but rather the cost of direct materials and labour. A manufacturing account also includes production overhead. 

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

To ascertain profit and loss on consignment, ___________ is prepared.

  1. trading account

  2. consignment a/c

  3. profit and loss a/c

  4. consignment stock a/c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A consignment account is a special ledger account prepared by the consignor to determine the profit or loss specifically arising from consignment transactions.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Which of the following statement is false with regard to final accounts of the company?

  1. Balance Sheet is prepared as per Schedule VI (Part - I).

  2. There is no prescribed format for the preparation of financial statements.

  3. Profit and Loss Account is prepared as per prescribed format.

  4. Figures of Previous year are also shown in Profit and Loss Account and Balance Sheet.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Companies are required by law (such as the Companies Act) to prepare financial statements in a prescribed format. Therefore, the statement that there is no prescribed format is false.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Manufacturing account is prepared to___________. 

  1. ascertain the profit or loss on the goods produced

  2. ascertain the cost of the goods manufactured

  3. show the sale proceeds from the goods manufactured during the year

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A manufacturing account is specifically designed to calculate the total cost of producing goods, including raw materials, direct labor, and factory overheads, before they are transferred to the trading account.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Match List I with List II and select the correct answer using the codes given below:

List I List II
(Name of the Account/ Statement) (Items to be shown)
A. Trading A/c I. Assets and liabilities
B. Profit and Loss A/c II. Indirect expenses like salaries, rent rates and taxes, interest etc.
C. Balance Sheet III. Direct expenses like wages, dock dues, duties, freight etc.

  1. $A = III, B = II, C = I$

  2. $A = III, B = I, C = II$

  3. $A = I, B = II, C = III$

  4. $A = II, B = I, C = III$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Trading account records direct expenses (III), Profit and Loss account records indirect expenses (II), and the Balance Sheet records assets and liabilities (I).

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

'Final Accounts' of a manufacturing company generally include the following types of documents:
1. Balance Sheet
2. Manufacturing Account
3. Profit and Loss Account
4. Trading Account
5. Profit and Loss Appropriation Account
The correct sequence in which these documents are prepared is________. 

  1. $1, 4, 3, 2, 5$

  2. $2, 4, 3, 5, 1$

  3. $1, 2, 4, 3, 5$

  4. $2, 4, 5, 3, 1$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The logical flow for a manufacturing company is: Manufacturing Account (to find production cost), Trading Account (to find gross profit), Profit and Loss Account (to find net profit), Profit and Loss Appropriation Account (to distribute profit), and finally the Balance Sheet (to show financial position).

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Match List I (Items) with List II (Recorded in) and select the correct answer using the codes given below the lists:

List I List II
A. Wrapping material 1. Trading account
B. Wages and salaries 2. Profit and loss acount
C. Prepaid expenses 3. Balance sheet
D. Opening stock

  1. $A = 2, B = 1, C = 1, D = 3$

  2. $A = 2, B = 1, C = 3, D = 1$

  3. $A = 3, B = 2, C = 2, D = 1$

  4. $A = 3, B = 2, C = 1, D = 3$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Wrapping material is an indirect expense (P&L), wages and salaries are direct (Trading), prepaid expenses are assets (Balance Sheet), and opening stock is part of the Trading account.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

The correct sequence in preparation of periodical financial statement would be.
$1$. Preparation of balance sheet
$2$. Preparation of cash flow statement
$3$. Preparation of trial balance
$4$. Preparation of Profit & Loss A/c
Select the correct answer from the options given.

  1. $4, 2, 1, 3$

  2. $3, 4, 1, 2$

  3. $2, 4, 3, 1$

  4. $1, 3, 2, 4$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The standard sequence is: Trial Balance (3), Profit & Loss Account (4), Balance Sheet (1), and Cash Flow Statement (2).

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Which of these items will appear in a Manufacturing A/c?

  1. Power and Steam A/c

  2. Salary and Wages A/c

  3. Carriage Outward

  4. Goodwill written off
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Power and steam are direct factory expenses related to production, making them appropriate for the Manufacturing account. Carriage outward and goodwill are selling/administrative or non-operating items, and salary/wages (if general) usually go to the P&L.