Preparation of Statement of Profit and Loss

Q.

Salaries, wages and staff welfare expenses etc are shown under ___

1. Employee benefit expenses

2. Changes in inventories

3. Cost of materials consumed

4. All of these

Q.

Which of the following accounts normally have a credit balance?

1. Unearned revenue; prepaid rent; sales revenue.

2. Sales revenue; expenses; retained earnings.

3. Sales revenue; cash; unearned revenue.

4. Accounts payable; retained earnings; sales revenue.

Q.

Is signage a fixed asset?

Q. Under which head following revenue items of a non-financial company will be classified or shown:
(i) Sales; (ii) Revenue from Services Rendered; (iii) Sale of Scrap; (iv) Interest Earned on Loans; and (v) Gain (profit) on Sale of Investments?

Q. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reasons (R).

Assertion (A) - The income statement and the balance sheet are financial statements that show the cash flows in and out of the business unit.

Reason (R) - The general purpose of financial statements is to show the financial position and performance of a business unit.

In the context of the above two statements, which of the following is correct?

[0.88 marks]

1. Both A and R are true, and R is the correct explanation of A
2. Both A and R are true, but R is not the correct explanation of A
3. A is true, but R is false.
4. A is false, but R is true

Q.

Is amortisation an operating expense?

Q.

Is a retailer's Interest Expense an operating expense or a non-operating expense?

1. Operating Expenses

2. Non-operating Expenses

3. None of these

4. Either Operating Expenses or Non-operating Expenses

Q.

What are fixed-income assets?

Q. Match the following as per the classification to be made in Statement of Profit and Loss and Balance Sheet :

1. Finance Cost
2. Current Liability
3. Fixed Asset
4. Other Income

Q. Commission received in advance A/c appearing in the trial balance is ___________.

1. shown on the assets side of the balance sheet
2. shown on the liability side of balance sheet
3. credited to profit and loss A/c
4. shown on debit side of profit and loss A/c

Q.

Important disclosures and description about any particular item of Financial Statement is shown in ______.

1. Income Statement

2. General Ledger Accounts

3. Notes To The Financial Statements

4. None of these

Q.

How to value fixed assets?

Q.

Commitment charges, loan processing charges, guarantee charges, loan facilitation charges, discounts/premium on borrowings, other ancillary costs are shown under ...........

1. Interest expenses

2. Other borrowing costs

3. Amortization expenses

4. None of these

Q.

A company has to disclose depreciation provided on fixed assets and amortization of intangible assets under ___

1. Employee benefit expenses

2. Changes in inventories

3. Depreciation & Amortization

4. Finance costs

Q. _____ are the costs which have been created by a decision that was made in the past and cannot be changed by any decision that will be made in the future.

1. Sunk costs
2. Fixed costs
3. Variable costs
4. Shutdown costs

Q. List any three objectives of analysing financial statement?

Q.

What are Comparative Financial Statements?

Q. What is amortisation?

Q. Compensation paid to employees who were retrenched is ______________.

1. Revenue Expenditure
2. Capital Expenditure
3. Deferred Revenue Expenditure
4. Prepaid Expenses

Q. In response to market expectations, the credit period has been increased from 45 days to 60 days. This would result in a _____________.

1. Decrease in sales
2. Decrease in debtors
3. Increase in bad debts
4. Increase in average collection period

Q. Objective type questions :-
Answer in one sentence only.

What do you mean by indirect expenses?

Q. Which statement are prepared by the Not-for-profit Organisations?

1. Receipt and Payment Account
2. Income and Expenditure Account
3. Balance Sheet
4. All of the above

Q. The expense side of the statement of profit and loss is majorly further classified into parts.

1. five
2. six
3. seven
4. eight

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

1. Records prepared under Book-keeping process
2. Ledgers
3. Trial balance
4. Financial statement

Q. Balance of cash book is posted to the ledger ______________.

1. Nowhere
2. In the cash account
3. Either (a) or (b).
4. In bank account

Q.

Interest expenses & borrowing costs etc are shown under ___

1. Changes in inventories

2. Cost of materials consumed

3. Finance costs

4. Employee benefit expenses

Q. ___________ method is normally recommended for amortization of intangible assets.

1. WDV
2. SLM
3. SYD
4. DDB

Q. Objective type questions :-
Answer in one sentence only.

A statement showing financial position of the business on a particular date.

Q.

Interest Expense will be classified under :

1. General Expenses

2. Total Expenses

3. Operating Expenses

4. None of these

Q. When unsold stock is taken away by a Co-venturer, the _______ is debited.

1. Stock With Joint Venture A/c
2. Co-venturer's Capital A/c
3. None
4. Joint Bank A/c