50 MCQ-TRADING ACCOUNT PROFIT AND LOSS ACCOUNT AND INCOME AND EXPENDITURE ACCOUNT IN INDIA

Which of the following is credited in the Trading Account?
a) Purchases
b) Sales
c) Wages
d) Carriage inward
Answer: b) Sales

The balance of the Trading Account shows:
a) Gross Profit or Loss
b) Net Profit or Loss
c) Capital
d) Assets
Answer: a) Gross Profit or Loss

Which of the following items is debited to the Trading Account?
a) Discount allowed
b) Interest received
c) Carriage inward
d) Rent received
Answer: c) Carriage inward

Which account is prepared to determine the gross profit?
a) Profit and Loss Account
b) Trading Account
c) Balance Sheet
d) Cash Account
Answer: b) Trading Account

Opening stock is:
a) Credited to the Trading Account
b) Debited to the Trading Account
c) Credited to the Profit and Loss Account
d) Debited to the Profit and Loss Account
Answer: b) Debited to the Trading Account

Which of the following is shown on the debit side of the Trading Account?
a) Closing stock
b) Sales
c) Purchases
d) Gross profit
Answer: c) Purchases

The value of closing stock is shown on the:
a) Debit side of the Trading Account
b) Credit side of the Trading Account
c) Debit side of the Profit and Loss Account
d) Credit side of the Profit and Loss Account
Answer: b) Credit side of the Trading Account

Which expense is not included in the Trading Account?
a) Factory rent
b) Carriage inward
c) Commission on sales
d) Wages
Answer: c) Commission on sales

Gross Profit is transferred to:
a) Profit and Loss Account
b) Capital Account
c) Balance Sheet
d) Income and Expenditure Account
Answer: a) Profit and Loss Account

Which of the following is a direct expense?
a) Office salaries
b) Carriage outward
c) Wages
d) Discount allowed
Answer: c) Wages

The main purpose of preparing a Profit and Loss Account is to find out:
a) Capital
b) Gross Profit
c) Net Profit
d) Closing Stock
Answer: c) Net Profit

Which of the following is shown on the credit side of the Profit and Loss Account?
a) Rent received
b) Wages
c) Purchases
d) Carriage inward
Answer: a) Rent received

Depreciation is charged to:
a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Cash Account
Answer: b) Profit and Loss Account

Interest on drawings is:
a) Debited to the Profit and Loss Account
b) Credited to the Profit and Loss Account
c) Debited to the Capital Account
d) Credited to the Capital Account
Answer: b) Credited to the Profit and Loss Account

Net Profit is transferred to:
a) Trading Account
b) Capital Account
c) Balance Sheet
d) Income and Expenditure Account
Answer: b) Capital Account

Which of the following is not shown in the Profit and Loss Account?
a) Bad debts
b) Interest on loan
c) Carriage outward
d) Closing stock
Answer: d) Closing stock

Which of the following items appears on the debit side of the Profit and Loss Account?
a) Discount received
b) Commission received
c) Office salaries
d) Rent received
Answer: c) Office salaries

Provision for doubtful debts is:
a) Debited to the Profit and Loss Account
b) Credited to the Profit and Loss Account
c) Debited to the Trading Account
d) Credited to the Trading Account
Answer: a) Debited to the Profit and Loss Account

Which account is credited with the amount of interest on investments?
a) Trading Account
b) Profit and Loss Account
c) Income and Expenditure Account
d) Balance Sheet
Answer: b) Profit and Loss Account

Profit and Loss Account is also known as:
a) Income Statement
b) Revenue Account
c) Appropriation Account
d) Cash Account
Answer: a) Income Statement

Income and Expenditure Account is prepared by:
a) Sole proprietorship
b) Partnership firm
c) Not-for-profit organizations
d) Joint stock company
Answer: c) Not-for-profit organizations

The balance of the Income and Expenditure Account shows:
a) Net profit or loss
b) Surplus or deficit
c) Capital
d) Assets
Answer: b) Surplus or deficit

Which of the following is treated as revenue income in an Income and Expenditure Account?
a) Sale of furniture
b) Subscription from members
c) Sale of land
d) Receipt of loan
Answer: b) Subscription from members

Which of the following is not included in the Income and Expenditure Account?
a) Donation for a specific purpose
b) Subscription
c) Sale of old newspapers
d) Interest on bank deposits
Answer: a) Donation for a specific purpose

Income and Expenditure Account is prepared on:
a) Accrual basis
b) Cash basis
c) Hybrid basis
d) None of the above
Answer: a) Accrual basis

The term ‘Expenditure’ in Income and Expenditure Account refers to:
a) Capital expenditure
b) Revenue expenditure
c) Both capital and revenue expenditure
d) None of the above
Answer: b) Revenue expenditure

Which item is shown on the expenditure side of an Income and Expenditure Account?
a) Entrance fees
b) Donations
c) Depreciation
d) Legacy
Answer: c) Depreciation

Which account is debited with an honorarium paid to a member?
a) Trading Account
b) Profit and Loss Account
c) Income and Expenditure Account
d) Balance Sheet
Answer: c) Income and Expenditure Account

Which of the following is an example of revenue income?
a) Sale of fixed assets
b) Interest received on investments
c) Donation for building construction
d) Sale of machinery
Answer: b) Interest received on investments

Surplus in an Income and Expenditure Account is:
a) Added to capital fund
b) Subtracted from capital fund
c) Added to assets
d) Subtracted from liabilities
Answer: a) Added to capital fund

Which of the following is considered revenue expenditure?
a) Purchase of machinery
b) Payment of rent
c) Construction of a new building
d) Purchase of land
Answer: b) Payment of rent

Which item would be included in the Income and Expenditure Account of a not-for-profit organization?
a) Life membership fees
b) Subscription received
c) Sale of land
d) Loan received
Answer: b) Subscription received

Income and Expenditure Account records:
a) Only cash transactions
b) Only credit transactions
c) All revenue transactions irrespective of cash or credit
d) Only capital transactions
Answer: c) All revenue transactions irrespective of cash or credit

Which of the following is not shown in the Income and Expenditure Account?
a) Honorarium
b) Interest on loan
c) Capital receipt
d) Subscription received
Answer: c) Capital receipt

Outstanding expenses are shown in the:
a) Income and Expenditure Account
b) Balance Sheet
c) Trading Account
d) Cash Account
Answer: a) Income and Expenditure Account

Which of the following is credited in the Income and Expenditure Account?
a) Wages
b) Interest paid
c) Subscription received
d) Depreciation
Answer: c) Subscription received

Loss on the sale of assets is recorded in the:
a) Trading Account
b) Profit and Loss Account
c) Income and Expenditure Account
d) Balance Sheet
Answer: c) Income and Expenditure Account

Which of the following is shown on the debit side of the Income and Expenditure Account?
a) Subscription received
b) Interest on bank deposits
c) Loss on sale of assets
d) Entrance fees
Answer: c) Loss on sale of assets

Entrance fees are generally treated as:
a) Revenue income
b) Capital income
c) Revenue expenditure
d) Capital expenditure
Answer: a) Revenue income

Which of the following expenses is not included in the Income and Expenditure Account?
a) Repairs and maintenance
b) Wages and salaries
c) Purchase of furniture
d) Printing and stationery
Answer: c) Purchase of furniture

Income and Expenditure Account is similar to:
a) Trading Account
b) Profit and Loss Account
c) Balance Sheet
d) Cash Flow Statement
Answer: b) Profit and Loss Account

Which of the following is a capital receipt?
a) Subscription received
b) Donation for building construction
c) Interest on investments
d) Sale of old newspapers
Answer: b) Donation for building construction

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

Which item is credited in the Income and Expenditure Account?
a) Expenses on charity
b) Depreciation
c) Donations
d) Rent paid
Answer: c) Donations

Accrued income is shown in the:
a) Income and Expenditure Account
b) Trading Account
c) Balance Sheet
d) Profit and Loss Account
Answer: a) Income and Expenditure Account

Outstanding subscription is shown in the:
a) Income and Expenditure Account
b) Trading Account
c) Balance Sheet
d) Cash Account
Answer: a) Income and Expenditure Account

Capital expenditure is:
a) Debited to the Income and Expenditure Account
b) Credited to the Income and Expenditure Account
c) Shown in the Balance Sheet
d) Shown in the Trading Account
Answer: c) Shown in the Balance Sheet

Income received in advance is shown as:
a) Asset in the Balance Sheet
b) Liability in the Balance Sheet
c) Income in the Income and Expenditure Account
d) Expense in the Income and Expenditure Account
Answer: b) Liability in the Balance Sheet

Subscriptions received in advance are:
a) Shown as a liability
b) Added to subscriptions in the Income and Expenditure Account
c) Shown as an asset
d) Ignored
Answer: a) Shown as a liability

Surplus or deficit in the Income and Expenditure Account is transferred to:
a) Capital Fund
b) General Reserve
c) Profit and Loss Account
d) Trading Account
Answer: a) Capital Fund