Trading & Profit or Loss Account

Q.

Explain the basic factors affecting the amount of depreciation.

Q.

Opening capital Rs 60, 000, Drawings Rs 5, 000, capital introduced during the year Rs 10, 000, closing capital Rs 90, 000. Calculate profit or loss.

Q.

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

1. Rent received

2. Cash Expenses

3. Capital

4. Carriage Inwards

Q.

Calculate the gross profit /loss if:

Sales Rs. 60, 000; Closing stock Rs. 50, 000; Opening stock Rs. 10, 000; Purchases Rs. 40, 000; Wages Rs. 20, 000.

1. Profit of Rs. 40, 000

2. Loss of Rs. 20, 000

3. Profit of Rs. 20, 000

4. Loss of Rs. 10, 000

Q.

What Are Examples of Withdrawal From the Circular Flow of Income?

Q.

What type of account is outstanding wages?

Q. Depreciation of machinery will be shown as expense.

1. direct
2. indirect
3. selling
4. financial

Q. ___ is prepared to calculate the net profit earned and net loss incurred during the accounting period.

1. Trading Account

2. Balance Sheet

3. Profit and Loss Account

4. Financial Statement

Q.

Which of the following are shown on the debit side of profit or loss account?

1. Core expenses

2. Non-core expenses

3. Both A & B

4. None of the above

Q.

Is Depreciation a Revenue Expenditure?

Q.

The following balances have been extracted from the trial of M/s Haryana Chemical Ltd. You are required to prepare a trading and profit and loss account and balance sheet as on December 31, 2010 from the given information

$\begin{array}{cccc}\text{Account Title}& \text{Amt. (Rs.)}& \text{Account Title}& \text{Amt.(Rs)}\\ \text{Opening Stock}& 50,000& \text{Sales}& 3,50,000\\ \text{Purchase}& 1,25,500& \text{Purchase Return}& 2,500\\ \text{Sales Return}& 2,000& \text{Creditors}& 25,000\\ \text{Cash in Hand}& 21,200& \text{Rent}& 5,000\\ \text{Cash at Bank}& 12,000& \text{Interest}& 2,000\\ \text{Carriage}& 100& \text{Bills Payable}& 1,71,700\\ \text{Freehold Land}& 3,20,000& \text{Capital}& 3,00,000\\ \text{Patents}& 1,20,000& & \\ \text{General Expenses}& 2,000& & \\ \text{Sundry Debtors}& 32,500& & \\ \text{Building}& 86,000& & \\ \text{Machinery}& 34,500& & \\ \text{Insurance}& 12,400& & \\ \text{Drawings}& 10,000& & \\ \text{Motor Vehicle}& 10,500& & \\ \text{Bad Debts}& 2,000& & \\ \text{Light and Water}& 1,200& & \\ \text{Trade Expenses}& 2,000& & \\ \text{Power}& 3,900& & \\ \text{Salary and Wages}& 5,400& & \\ \text{Loan 15}\%\left(\mathrm{1.9.2010}\right)& 3,000& & \\ & \overline{\underset{–}{\underset{–}{8,56,200}}}& & \overline{\underset{–}{\underset{–}{8,56,200}}}\end{array}$

Adjustments

1. Closing stock was valued at the end of the year Rs. 40, 000.

2. Salary amounting Rs. 500 and trade expenses Rs. 300 are due.

3. Depreciation charged on building and machinery are @ 4% and @ 5% respectively.

4. Make a provision of @ 5% on sundry debtors.

Q. Closing stock is credited in the .

1. trading account
2. profit or loss A/c
3. balance sheet

Q.

What are the 10 accounting terms?

Q.

The trading account does not:

1. Calculate gross profit

2. Include the cost of goods sold

3. Show the assets of the company

4. Compare the sales with the cost of those sales

Q.

Operating profit earned by M/s Arora & Sachdeva in 2015-16 was Rs. 17, 00, 000. Its non-operating incomes were Rs. 1, 50, 000 and non-operating expenses were Rs. 3, 75, 000. Calculate the amount of net profit earned by the firm

Q.

What is meant by abnormal profit?

Q.

All direct expenses related to business are charged to:

1. Profit and loss account

2. Trading account

3. Directly to balance sheet

4. None of the above

Q.

Rectify the following errors by passing entries:

(i) Rs.2, 000 received from Ramesh wrongly entered as from Suresh.

(ii) The purchase Book was under cast by Rs.300.

(iii) Total of Sales return was under cast by Rs.500

Q.

A firm has not recorded the bad debts by mistake. Which of the following is the effect of bad debts omission?

1. Gross profit would be overstated

2. gross profit will be understated

3. Net profit would be understated

4. Net profit would be overstated

Q.

Creditors and governments are _____ users of financial statement.

1. External

2. Internal

3. Both Internal & External
4. None of these

Q.

True and fair profit or loss of a company can be known by _________.

1. Preparing trial balance

2. Preparing respective ledger of account

3. Preparing trading a/c

4. Preparing trading & profit or loss a/c

Q.

Explain determinants of the amount of depreciation.

Q.

Which of the following is to be recorded in a profit and loss account?

1. Capital Expenditure incurred on fixed asset

2. Sale of fixed asset

3. Purchase of fixed asset

4. Profit on sale of fixed asset

Q. Trading account records value of _____ and cost of goods sold.

1. Gross Sales
2. Net Sales
3. Indirect Income
4. None of these

Q.

Name Any Two Items Included in the Balance of Trade Account.

Q.

Mr. Kapil does not keep proper records of his business and he provided the following information.

You are required to prepare a statement showing the profit or loss for the year 2011-12.
Opening Capital (01-04-2011) , 50, 000

Closing Capital (31-03-2012) , 1, 00, 000

Additional capital introduced (2011-12) , 20, 000

Drawings made during the year (2011-12) , 40, 000

Q.

A business has compiled the following information for the year ended 31st March, 2018:

Particulars	Rs.
Opening Stock	4, 00, 000
Purchases	10, 00, 000
Closing Stock	3, 00, 000

The gross profit during the year is 1, 00, 000. Based on these figures, what is the sales revenue for the year?

1. 10, 00, 000

2. None of these

3. 11, 00, 000

4. 12, 00, 000

Q.

What is meant by capital receipts?

Q. When the opening and closing stocks are adjusted through purchases, the trial balance does not show any __________.

1. Closing stock
2. Purchases
3. Stock
4. Opening stock

Q. Closing stock is always valued at market price.

1. True
2. False