Select the most appropriate alternative from those given below and rewrite the statement.

To find out net profit or net loss of the business _________________ account is prepared.
a) trading
b) capital
c) current
d) profit and loss

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Solution

To find out net profit or net loss of the business, Profit & Loss Account is prepared.

Explanation: Trading account only discloses the gross profit earned/loss incurred. But a businessman is more interested in knowing the overall profit or loss of the business. So, a Profit & Loss Account is prepared to ascertain the net profit earned or net loss incurred at the end of the accounting period.

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Similar questions

Q. Select the most appropriate alternative from those given below and rewrite the statement.

Final accounts are prepared on the basis of _________________ and adjustments.
a) trial balance
b) capital A/c
c) trading A/c
d) profit and loss A/c

Q. Select the most appropriate alternative from those given below and rewrite the statement.

_________________ is the list of all ledger balances.
a) balance sheet
b) trial balance
c) trading A/c
d) profit and loss A/c

Q. Select the most appropriate alternatives from those given below and rewrite the sentence :

Wages A/c is transferred to ________ A/c.
a) Trading A/c
b) Profit And Loss A/c
c) Trial Balance
d) Any

State whether the following statement are true or false.

1. Final Accounts are prepared on the basis of Trial Balance.
2. Trading Account is a part of Profit & Loss Account.
3. Profit Loss Account is prepared to find out Gross Profit or Gross Loss.
4. Gross Profit or Gross Loss is transferred to Balance Sheet.
5. An amount of net profit is added to the capital.
6. All indirect expenses are debited to trading account.
7. Balance Sheet is a statement and not an account.
8. Capital account is a personal account.
9. Amount of prepaid expenses appears on assets side.
10. Bank Overdraft is a liability of business concern.

Q. Select the most appropriate alternative from those given below:
Gross Profit or Gross Loss is transferred to _______ Account.

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Select the most appropriate alternative from those given below and rewrite the statement. To find out net profit or net loss of the business _________________ account is prepared. a) trading b) capital c) current d) profit and loss

Select the most appropriate alternative from those given below and rewrite the statement.

To find out net profit or net loss of the business _________________ account is prepared.
a) trading
b) capital
c) current
d) profit and loss