Financial Statements 1 Test 42

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Financial Statements 1 Test 42

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Weekly Quiz Competition

Question 1
1 / -0

Donation received by 'Shekhawati Sports Club' for conducting a tournament should be shown in _____________.

A
Income and Expenditure Account

B
Trading and Profit and Loss Account

C
Balance Sheet

D
None of the above

Solution

Donation received for a specific activity need not to be accounted as income. It has to be shown in the balance sheet against which the expenses of the specific activity accounted for.

Donation received for conducting a tournament should be shown in the Balance Sheet.
Question 2
1 / -0

______ is/are example(s) of non-operating income.

A
Profit from sale of assets

B
Dividend

C
Refund of income-tax

D
All the three

Solution

Non-operating income, in accounting and finance, is gain or losses from sources not related to the typical activities of the business or organisation. Non-operating income can include gains or losses from investments, property or assets sales, dividend, currency exchange, refund of income-tax, and other a typical gains or losses.
Question 3
1 / -0

Loss on sale of asset is ____________ while calculating operating profit from net profit.

A
added

B
ignored

C
deducted

D
none

Solution

Operating profit is calculated by deducting the operating expenses from the operating income. Operating expenses are those which are directly related to the core business activity.
Loss on sale of asset is to be added while calculating operating profit from net profit.
Question 4
1 / -0

The financial position of the business is ascertained on the basis of _________ .

A
Records prepared under Book-keeping process

B
Ledgers

C
Trial balance

D
Financial statement

Solution

Financial statements records and outline the financial activities of a business, an individual or any other entity. Financial statements are meant to present the financial information of the entity in question as clearly and concisely as possible for both the entity and for readers. The financial position of the business is ascertained on the basis of financial statements.
Question 5
1 / -0

Select the most appropriate alternative from those given below:
Trading A/c is prepared on the basis of ________ expenses and incomes.

A
indirect

B
direct

C
outstanding

D
prepaid

Solution

Trading account is prepared to know the profit earned by the firm through the trading activity. Trading account is prepared by considering only direct expenses. Gross Profit depicts the direct profit earned by the firm through trading of goods.

Trading Account
Particulars Amount Particulars Amount
To Opening Stock By Sales
To Purchases By Closing Stock
To Wages
To Direct Expenses
To Gross Profit
--------------- ---------------
---------------- ----------------
Question 6
1 / -0

While calculating Operating profit the incomes and expenses of purely ____________ nature are not taken into account.

A
operating

B
trading

C
financial

D
non financial

Solution

Operating profit is defined as the profit earned by the firm during the course of normal trading operations. To calculate the operating profit, operational expenses are deducted from operational income.

Expense of purely of financial nature need not to be taken into account while calculating the operational profit like interest on loan, dividends etc.
Question 7
1 / -0

Income derived from, normal operation of the business is called ________.

A
normal income

B
manufacturing income

C
operating income

D
financial income

Solution

Operating income resulting from a firm's primary business operations (normal operations), excluding extraordinary income and expenses. Also called earning before interest and taxes. the measure revels an entity's ability to generate earnings from its operational activities.
Question 8
1 / -0

Current liabilities do not include _______________.

A
Unclaimed Dividends

B
Sundry Creditors

C
Prepaid Insurance

D
Bank Overdraft

Solution

Current liabilities arises during the business operations and to be repayable in the coming business cycle. These are short term liabilities. Examples are sundry creditors, bills payable, bank overdraft etc.

Prepaid Insurance means the insurance premium paid in advance and to be shown an item of other current assets.
Question 9
1 / -0

A trade discount is calculated by ___________.

A
adding the discount rate to the amount of the sale

B
multiply the amount of the sales by the discount rate

C
dividing the amount of the sales rate of discount

D
adding the discount rate to the amount of sale

Solution

Trade discount is allowed to every customer for promotion of sales. This is allowed on a certain percentage on sales.

For example, if the selling price is Rs.500 per units and a trade discount of @5%. Discount is calculated as = Sales Price* Discount rate
= Rs.500*5%
= Rs.25/- per unit
Question 10
1 / -0

Cost of goods sold is calculated from the following equation______.

A
beginning inventory-cost of goods purchased + ending inventory

B
sales- cost of goods purchased + beginning inventory - ending inventory

C
sales + gross profit - ending inventory + beginning inventory

D
beginning inventory + cost of goods purchased - ending inventory

Solution

Below are the accounting equations:

Gross Profit = Sales - Cost of goods sold

Cost of Goods Sold = Opening Stock + Purchases - Closing Stock

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Re-Attempt Weekly Quiz Competition

Financial Statements 1 Test 42

Result

Financial Statements 1 Test 42

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Rank

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SHARING IS CARING

Question 1

Income and Expenditure Account

Trading and Profit and Loss Account

Balance Sheet

None of the above

Solution

Question 2

Profit from sale of assets

Dividend

Refund of income-tax

All the three

Solution

Question 3

added

ignored

deducted

none

Solution

Question 4

Records prepared under Book-keeping process

Ledgers

Trial balance

Financial statement

Solution

Question 5

indirect

direct

outstanding

prepaid

Solution

Question 6

operating

trading

financial

non financial

Solution

Question 7

normal income

manufacturing income

operating income

financial income

Solution

Question 8

Unclaimed Dividends

Sundry Creditors

Prepaid Insurance

Bank Overdraft

Solution

Question 9

adding the discount rate to the amount of the sale

multiply the amount of the sales by the discount rate

dividing the amount of the sales rate of discount

adding the discount rate to the amount of sale

Solution

Question 10

beginning inventory-cost of goods purchased + ending inventory

sales- cost of goods purchased + beginning inventory - ending inventory

sales + gross profit - ending inventory + beginning inventory

beginning inventory + cost of goods purchased - ending inventory

Solution

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