Financial Statements 1 Test 7

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Financial Statements 1 Test 7

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Weekly Quiz Competition

Question 1
1 / -0

Interest and taxes are ___________ from operating profit to find out the net profit.

A
added

B
deducted

C
no effect

D
none
Question 2
1 / -0

______________ is a good indicator of how well the business activities are being managed.

A
Operating Profit

B
Net Profit

C
Both

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.
Operating profit indicates the earning from the core business operations. Its an indicator of how well a business operations are being managed.
Question 3
1 / -0

Operating Profit is also known as ____________.

A
EBIT

B
EAIT

C
NPAT

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.
Operating Profit is also known as EBIT (Earning before Interest & Tax)
Question 4
1 / -0

__________ is non operating expense.

A
Loss on sale of Asset

B
Bad debts

C
Carriage

D
Royalty

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 a non operating expenses. Hence it should not be considered while calculating the operating net profit.
Question 5
1 / -0

Net Profit = 50000
interest on bank loan = 500
bad debts = 1000
ascertain operating profit.

A
48000

B
48500

C
49500

D
49000

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. Interest on bank loan is non operating activity.

Net Profit Rs.50000
Less: Bad Debts Rs. 1000
-------------------
Operating Profit Rs.49000
-------------------
Question 6
1 / -0

Which of the following is correct?

A
Operating profit = Operating profit - Non-operating expenses - Non-operating incomes

B
Operating profit = Net profit + Non-operating expenses + Non-operating incomes

C
Operating profit = Net profit + Non-operating expenses - Non-operating incomes

D
Operating profit = Net profit - Non-operating expenses + Non-operating incomes

Solution

Operating profit is the profit earned through the operating activities of the firm. This has been calculated as:

Gross Profit - Operating expenses = Operating Profit

Net Profit = Operating Profit - Non Operating Expenses + Non Operating Income.

Else,

Operating Profit = Net Profit + Non Operating Expense - Non Operating income
Question 7
1 / -0

If the rent of one month is still to be paid, the adjustment entry will be_________________________.

A
debit outstanding rent account and credit rent account

B
debit profit and loss account and credit rent account

C
debit rent account and credit profit and loss account

D
debit rent account and credit outstanding rent account

Solution

There are various adjustment entries need to be passed at the end of financial year as there are certain expenses which are either paid in advance or not paid.
Outstanding expenses are those expenses which are due but not paid but services are already provided for. This is actually a liability of the business against the services taken.
In such cases, respective expenses account to be debited and outstanding expenses liability account to be credited.

Accounting entry will be as under:
Rent A/c Dr.
To Outstanding Rent A/c.
Question 8
1 / -0

Amount which is not recoverable from customer is known as ___________.

A
debts

B
debtor

C
bad debts

D
doubtful debts

Solution

Bad debts are those items of charge on the profits of the company, that indicate the sums of money that could not be recovered from a debtor, during the year.
These are the trade receivables that will not be collected.
Question 9
1 / -0

While calculating operating profit, the following are not taken into account:

A
Normal transactions

B
Direct expenses

C
Expenses of purely financial nature

D
Both (ii) and (iii)

E
Both (i) and (iii)

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.
Expense of purely financial nature are not taken in to account while calculating the operating profit.
Question 10
1 / -0

Financial statements are part of ______.

A
Accounting

B
Book-keeping

C
Cost accounting

D
H.R accounting

Solution

When transaction is recorded in books of the business, it is called book keeping. As we understand, book keeping does not give any final output for understanding the business. Once financial statements are prepared, that gives the a real picture of any business. Preparation of financial statement is part of accounting process.

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Re-Attempt Weekly Quiz Competition

Financial Statements 1 Test 7

Result

Financial Statements 1 Test 7

Score

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Rank

-

SHARING IS CARING

Question 1

added

deducted

no effect

none

Question 2

Operating Profit

Net Profit

Both

None

Solution

Question 3

EBIT

EAIT

NPAT

None

Solution

Question 4

Loss on sale of Asset

Bad debts

Carriage

Royalty

Solution

Question 5

48000

48500

49500

49000

Solution

Question 6

Operating profit = Operating profit - Non-operating expenses - Non-operating incomes

Operating profit = Net profit + Non-operating expenses + Non-operating incomes

Operating profit = Net profit + Non-operating expenses - Non-operating incomes

Operating profit = Net profit - Non-operating expenses + Non-operating incomes

Solution

Question 7

debit outstanding rent account and credit rent account

debit profit and loss account and credit rent account

debit rent account and credit profit and loss account

debit rent account and credit outstanding rent account

Solution

Question 8

debts

debtor

bad debts

doubtful debts

Solution

Question 9

Normal transactions

Direct expenses

Expenses of purely financial nature

Both (ii) and (iii)

Both (i) and (iii)

Solution

Question 10

Accounting

Book-keeping

Cost accounting

H.R accounting

Solution

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