1-50 MULTIPLE CHOICE QUESTIONS WITH ANSWERS- TRADING ACCOUNT PROFIT AND LOSS ACCOUNT INCOME AND EXPENDITURE ACCOUNT

Which of the following is shown on the debit side of a trading account?

a) Sales
b) Purchases
c) Discount received
d) Commission received
Answer: b) Purchases

The main purpose of preparing a trading account is to ascertain the:

a) Gross Profit or Loss
b) Net Profit or Loss
c) Financial Position
d) Capital Employed
Answer: a) Gross Profit or Loss

Which of the following is not considered a direct expense?

a) Carriage inwards
b) Wages
c) Factory rent
d) Office salaries
Answer: d) Office salaries

Profit and Loss Account is prepared to determine:

a) Gross Profit
b) Net Profit
c) Total Capital
d) Financial Position
Answer: b) Net Profit

Which of the following is shown on the credit side of a Profit and Loss Account?

a) Rent paid
b) Interest received
c) Salaries
d) Depreciation
Answer: b) Interest received

In the Profit and Loss Account, which of the following expenses are included?

a) Direct expenses only
b) Indirect expenses only
c) Both direct and indirect expenses
d) Capital expenses only
Answer: b) Indirect expenses only

Income and Expenditure Account is generally prepared by:

a) Trading Organizations
b) Non-Trading Organizations
c) Manufacturing Organizations
d) Service Sector Organizations
Answer: b) Non-Trading Organizations

The surplus or deficit in an Income and Expenditure Account is transferred to:

a) Capital Account
b) Profit and Loss Account
c) Balance Sheet
d) Accumulated Fund
Answer: d) Accumulated Fund

Income and Expenditure Account is prepared on which basis?

a) Cash basis
b) Accrual basis
c) Hybrid basis
d) Modified cash basis
Answer: b) Accrual basis

Which of the following items will not appear in the Income and Expenditure Account?

a) Subscription received
b) Capital expenditure
c) Donation received
d) Entrance fees
Answer: b) Capital expenditure

Which of the following is considered a direct income?

a) Rent received
b) Sales
c) Interest received
d) Commission received
Answer: b) Sales

Carriage outward is shown in:

a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Income and Expenditure Account
Answer: b) Profit and Loss Account

The closing stock is shown on the:

a) Debit side of Trading Account
b) Credit side of Trading Account
c) Debit side of Profit and Loss Account
d) Credit side of Profit and Loss Account
Answer: b) Credit side of Trading Account

Which of the following is an example of a direct expense?

a) Advertising expense
b) Depreciation
c) Wages
d) Office rent
Answer: c) Wages

The balance of the Trading Account is transferred to:

a) Profit and Loss Account
b) Balance Sheet
c) Cash Book
d) Capital Account
Answer: a) Profit and Loss Account

Freight and cartage are examples of:

a) Direct expenses
b) Indirect expenses
c) Capital expenditures
d) Revenue expenditures
Answer: a) Direct expenses

Which of the following will be credited to the Trading Account?

a) Purchases
b) Wages
c) Sales
d) Carriage inwards
Answer: c) Sales

Returns inward are deducted from:

a) Purchases
b) Sales
c) Carriage inwards
d) Carriage outwards
Answer: b) Sales

Which of the following items is not included in the Trading Account?

a) Opening stock
b) Purchases
c) Sales
d) Office salaries
Answer: d) Office salaries

Which of the following is shown on the debit side of the Profit and Loss Account?

a) Rent received
b) Discount allowed
c) Interest on investments
d) Commission received
Answer: b) Discount allowed

Which item is transferred from the Trading Account to the Profit and Loss Account?

a) Gross Profit
b) Net Profit
c) Operating Expenses
d) Sundry Debtors
Answer: a) Gross Profit

In Profit and Loss Account, which of the following is considered an indirect income?

a) Sales
b) Commission received
c) Rent received
d) Dividend received
Answer: c) Rent received

Depreciation is shown in:

a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Income and Expenditure Account
Answer: b) Profit and Loss Account

Which of the following is an indirect expense?

a) Wages
b) Purchases
c) Rent and taxes
d) Carriage inwards
Answer: c) Rent and taxes

Interest paid on loans is shown in:

a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Income and Expenditure Account
Answer: b) Profit and Loss Account

Bad debts written off are shown in the:

a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Income and Expenditure Account
Answer: b) Profit and Loss Account

The balance of the Profit and Loss Account is transferred to:

a) Capital Account
b) Cash Account
c) Trading Account
d) Balance Sheet
Answer: a) Capital Account

Which of the following is not shown in the Profit and Loss Account?

a) Depreciation
b) Discount allowed
c) Sales
d) Wages
Answer: c) Sales

Which of the following will be shown on the debit side of the Profit and Loss Account?

a) Gross Profit
b) Commission received
c) Rent received
d) Salaries
Answer: d) Salaries

Prepaid expenses are shown in the:

a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Cash Book
Answer: c) Balance Sheet

Accrued income is shown in the:

a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Cash Book
Answer: c) Balance Sheet

Which of the following is considered as revenue expenditure?

a) Purchase of machinery
b) Construction of building
c) Payment of salaries
d) Purchase of land
Answer: c) Payment of salaries

Provision for doubtful debts is shown in:

a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Income and Expenditure Account
Answer: b) Profit and Loss Account

Which of the following items appears in the Profit and Loss Appropriation Account?

a) Office rent
b) Interest on capital
c) Bad debts
d) Discount received
Answer: b) Interest on capital

Preliminary expenses written off are shown in:

a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Income and Expenditure Account
Answer: b) Profit and Loss Account

Which of the following is shown on the credit side of the Profit and Loss Account?

a) Wages
b) Rent paid
c) Commission received
d) Depreciation
Answer: c) Commission received

The main objective of the Profit and Loss Account is to ascertain:

a) Financial position
b) Gross profit or loss
c) Net profit or loss
d) Working capital
Answer: c) Net profit or loss

Which of the following will not appear in the Profit and Loss Account?

a) Interest received
b) Sales
c) Rent paid
d) Gross Profit
Answer: b) Sales

Which of the following is considered a financial expense?

a) Rent paid
b) Interest on loan
c) Salaries
d) Depreciation
Answer: b) Interest on loan

Which of the following is shown on the income side of an Income and Expenditure Account?

a) Salaries paid
b) Subscription received
c) Rent paid
d) Office expenses
Answer: b) Subscription received

Income and Expenditure Account is similar to:

a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Cash Book
Answer: b) Profit and Loss Account

Which of the following is treated as income in an Income and Expenditure Account?

a) Donations received for building
b) Entrance fees
c) Loan taken
d) Sale of fixed assets
Answer: b) Entrance fees

Which of the following will be shown on the expenditure side of the Income and Expenditure Account?

a) Life membership fees
b) Legacies received
c) Salaries
d) Donations received
Answer: c) Salaries

Capital receipts are not shown in the Income and Expenditure Account because:

a) They are not related to the current period
b) They are not revenue in nature
c) They are not actual receipts
d) They are not cash receipts
Answer: b) They are not revenue in nature

Which of the following is considered a revenue receipt in an Income and Expenditure Account?

a) Donations for specific purposes
b) Sale of old newspapers
c) Life membership fees
d) Legacies
Answer: b) Sale of old newspapers

Which of the following will not be shown in the Income and Expenditure Account?

a) Subscription received
b) Entrance fees
c) Sale of fixed assets
d) Interest received
Answer: c) Sale of fixed assets

Surplus or deficit in the Income and Expenditure Account is transferred to:

a) Cash Account
b) Capital Account
c) Balance Sheet
d) Income and Expenditure Account
Answer: c) Balance Sheet

Which of the following is considered an expenditure in an Income and Expenditure Account?

a) Subscription received
b) Donation received
c) Payment of honorarium
d) Sale of investments
Answer: c) Payment of honorarium

Accrued expenses are shown in the:

a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Income and Expenditure Account
Answer: c) Balance Sheet

Which of the following items is not included in the Income and Expenditure Account?

a) General donations
b) Specific donations
c) Entrance fees
d) Subscription received
Answer: b) Specific donations