Question

The purpose of preparing final accounts is to ascertain ________.

• A. Profit or loss
• B. Capital
• C. The value of assets
• D. Profit or loss and financial position

Answer 1

The correct option is D Profit or loss and financial position

The accounts which are prepared at the final stage of the accounting cycle to know the profit or loss and financial position of a business concern are called Final Accounts.Every businessman enters into business activities to earn profit. It is the accounting that shows profit or loss of a business concern. The role of accounting is to compile the financial record of a business in such a manner that yields the profit or loss of the business.