Financial Statements Test

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Financial Statements Test - 4

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Weekly Quiz Competition

Question 1
1 / -0

These are expenses which have been paid in current year and benefit of it will be available in next accounting year

A
Prepaid expenses

B
Outstanding Expenses

C
Both

D
None

Solution

these are the expenses which are paid in advance in the current year for the next year.
Question 2
1 / -0

_____ is prepared to ascertain gross profit and net profit / loss during an accounting period.

A
Balance sheet

B
Financial statement

C
Cash flow statement

D
Income statement

Solution

income statement is also known as trading and profit and loss account. Trading account is used to calculate gross profit or loss and profit and loss account is used to calculate net profit or loss.
Question 3
1 / -0

Types of account shown in the balance sheet are

A
Nominal and real

B
Nominal and personal

C
Real and Personal

D
None of these

Solution

since nominal account is of incomes gains losses and expenses they are shown in trading and profit and loss account so real and personal accounts are shown in balance sheet as it includes assets and liabilities.
Question 4
1 / -0

The item discount received will appear on the

A
Credit side of Balance sheet

B
Credit side of Profit and loss account

C
Debit side of Balance sheet

D
Debit side of Profit and loss account

Solution

since discount received is profit for the business so it is credited in profit and loss account.
Question 5
1 / -0

To Know the profitability and financial position of a business at the end of the year _____________ are prepared.

A
Balance sheet

B
Audit report

C
Financial statements

D
Profit and loss account

Solution

financial statements include both profit and loss and balance sheet.For profit we will check profit and loss account and for financial position we will see the balance sheet.
Question 6
1 / -0

Which of the following is another name used to describe EBIT (earning before interest and taxes)?

A
Net Profit

B
Gross Profit

C
Operating profit

D
None

Solution

It includes gross profit- operating expenses = operating profit or EBIT.
Question 7
1 / -0

All direct expenses are ___ to Trading account and all indirect expenses are __________ to Profit and Loss account.

A
Debited, Debited

B
Credited , Debited

C
Debited, Credited

D
Credited , Credited

Solution

trading and profit and loss account is nominal in nature so all the expenses are debited. the direct expenses are debited in trading account and the indirect expenses are debited to profit and loss account.
Question 8
1 / -0

Calculation of Cost of goods sold

A
Cost of Goods Sold = Net Sales - Gross Profit

B
Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses - Closing Stock

C
Both

D
None

Solution

cost of goods sold can be calculated by both the methods.
Question 9
1 / -0

Revenue Expenditure means

A
The expenditure which is incurred for the day to day running of the business

B
The amount which is incurred in acquiring or improving the value of fixed assets

C
Both

D
None

Solution

revenue expenditure are the expenses incurred to match the revenue. these are the expenses which are done to run the day to day business.
Question 10
1 / -0

Following are the Financial statement except

A
Cash Flow statement

B
Audit report

C
Statements of retained earnings

D
Income statement

Solution

Audit report is not a part of financial statements. it is a disclaimer issued by the auditor that all the information given in financial statement is correct.
Question 11
1 / -0

Capital receipt includes following receipts :

A
Fresh capital introduced or additional capital introduced

B
Loan raised

C
Amount received which is not is the normal and ordinary course of business like sale of fixed assets.

D
All of these

Solution

capital receipts are those which reduces the fixed assets and increases the long term liability. increasing capial and raising loan increase the liablity so they are capital receipt. similarly sale of nassets leads to decrease in assets so it is also capital receipts so all the option are correct.
Question 12
1 / -0

The expenditure whose amount is heavy and benefit of the likely to be derived over a number of years called ____________.

A
Deferred capital expenditure

B
Deferred revenue expenditure

C
Both

D
None

Solution

deferred revenue expenditure is the expenditure which is done once and benefits of it can be derived for a number of years example - advertisement expenditure.
Question 13
1 / -0

Which of the following will not be included in Trading account

A
Factory expenses

B
Manufacturing Wages

C
Postage and telegram expense

D
Carriage on purchase

Solution

postage and telegram are indirect expenses. They are not shown in trading account they are shown in debit side of profit and loss account
Question 14
1 / -0

Accrued income is

A
Revenue

B
Liability

C
Asset

D
Expense

Solution

accrued income is considered as current asset as it is the income due but not received.
Question 15
1 / -0

_____ is the arrangement of various assets and liabilities in a particular order

A
Balancing

B
Marshalling

C
Grouping

D
All of these

Solution

marshalling refers to the arrangement of assets and liabilities in particular order. it can be done in two ways- on the basis of permanence and on the basis of liquidity.
Question 16
1 / -0

Computer of a firm should be classified as

A
Liquid assets

B
Fictitious

C
Fixed assets

D
Current assets

Solution

fixed assets are those which take a period of more than one year to convert it in to cash so computer will be classified as fixed asset.
Question 17
1 / -0

The amount which is incurred to aquire or improve the fixed assets is known as _______________.

A
Revenue Expenditure

B
Capital receipt

C
Revenue receipt

D
Capital expenditure

Solution

the expenditure done to increase the assets is known as capital expenditure.
Question 18
1 / -0

Capital receipts are shown in _____

A
Balance Sheet

B
Trading account

C
Profit and Loss account

D
None of these

Solution

capital receipts are generally generated by sale of fixed assets so it is directly shown in balance sheet.
Question 19
1 / -0

Which is not an example of Capital expenditure

A
Expenses for obtaining a license.

B
Initial expenditure for acquiring patent right.

C
Preliminary expenses for floating a company.

D
Depreciation on fixed assets

Solution

Depreciation is revenue expenditure. these are charged directly to depreciation account
Question 20
1 / -0

Calculation of Operating profit

A
Operating Profit = Gross Profit – (Office Admn. Expenses+selling and distribution exp.)

B
Operating Profit = Gross Profit – (Office Admn. Expenses+direct exp.)

C
Operating Profit = Gross Profit – (Office Admn. Expenses+wages exp.)

D
Operating Profit = Gross Profit – (Factory Admn. Expenses+selling and distribution exp.)

Solution

deduct all the operating expenses from gross profit.

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Re-Attempt Weekly Quiz Competition

Financial Statements Test - 4

Result

Financial Statements Test - 4

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SHARING IS CARING

Question 1

Prepaid expenses

Outstanding Expenses

Both

None

Solution

Question 2

Balance sheet

Financial statement

Cash flow statement

Income statement

Solution

Question 3

Nominal and real

Nominal and personal

Real and Personal

None of these

Solution

Question 4

Credit side of Balance sheet

Credit side of Profit and loss account

Debit side of Balance sheet

Debit side of Profit and loss account

Solution

Question 5

Balance sheet

Audit report

Financial statements

Profit and loss account

Solution

Question 6

Net Profit

Gross Profit

Operating profit

None

Solution

Question 7

Debited, Debited

Credited , Debited

Debited, Credited

Credited , Credited

Solution

Question 8

Cost of Goods Sold = Net Sales - Gross Profit

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

Both

None

Solution

Question 9

The expenditure which is incurred for the day to day running of the business

The amount which is incurred in acquiring or improving the value of fixed assets

Both

None

Solution

Question 10

Cash Flow statement

Audit report

Statements of retained earnings

Income statement

Solution

Question 11

Fresh capital introduced or additional capital introduced

Loan raised

Amount received which is not is the normal and ordinary course of business like sale of fixed assets.

All of these

Solution

Question 12

Deferred capital expenditure

Deferred revenue expenditure

Both

None

Solution