Chapter 9 – Final Accounts of a Proprietary Concern.

08 Nov 2020 11:28 am

Chapter 9: Final Accounts of a Proprietary Concern

Answer in One Sentence:

1.What is a Trading A/c?

SOLUTION

An account which gives the overall preview of all trading activities of a business firm, known as Trading Account.

2.What do you mean by Profit & Loss A/c?

SOLUTION

A part of the final account prepared by the business concern on the basis of indirect expenses and indirect incomes to ascertain net profit or net loss of the business is called Profit and Loss Account.

3.Why Balance Sheet is prepared?

SOLUTION

Balance Sheet is prepared to know the financial position of a business unit.

4.State the meaning of Final Accounts?

SOLUTION

Final Accounts are financial statements which confirm and explain working results (profit or loss) and the financial position of a business for a specific period of time and on a particular date.

5.What is Net Profit?

solution

When the total of credit side of Profit and Loss Account (indirect incomes side) is greater than the debit side of Profit and Loss Account (indirect expenses side), it is known as Net Profit [Credit balance of Profit and Loss A/c].

6.What do you mean by Gross Profit?

SOLUTION

In the Trading A/c, when total of credit side is greater than the total of debit side, it is known as Gross Profit. [Credit balance of Trading A/c]

7.State the meaning of Accrued Income?

SOLUTION

The income which is due and supposed to be received in the accounting year, but actually not received during the accounting year, is known as Accrued Income.

8.State the meaning of Outstanding Expenses?

SOLUTION

The expenses which are incurred during the current accounting year, but not paid partly or fully during the current accounting year are known as Outstanding Expenses.

9.What is Depreciation?

SOLUTION

Continuous, gradual and permanent decrease in the value of a fixed assets due to factors like wear and tear, passage of time, etc. is known as Depreciation.

10.What do you mean by Prepaid Expenses?

SOLUTION

The expenses which are paid before they are not partly or fully due for payment during the current accounting year are known as Prepaid Expenses

Select the most appropriate alternatives given below and rewrite the sentence :

1.____________ is excess of assets over liabilities

  • Goodwill
  • Capital
  • Investments
  • Drawings

2.Discount earned is transferred to credit side of ______ account.

  • Current A/c
  • Profit & Loss
  • Trading
  • Capital

3.______________ is a statement which shows the financial position of business on a specific date.

  • Trading account
  • Trial Balance
  • Profit & Loss A/c
  • Balance Sheet

4.Outstanding expenses are shown on the ____________ side of Balance Sheet.

  • Assets
  • Liability
  • Both Assets and Liability
  • None of these

5.Interest on Drawing is credited to __________ Account.

  • Trading
  • Profit & Loss
  • Profit & Loss A/c
  • Balance Sheet

6.Debit balance of Trading Account means ______,.

  • Gross Loss
  • Net Loss
  • Net Profit
  • Gross Profit

7.Carriage Inward is debited to __________ Account

  • Trading
  • Profit & Loss
  • Capital
  • Bank

8.Excess of credit over to debit in Profit and Loss Account indicates ________

  • Net Profit
  • Gross Profit
  • Gross Loss
  • Net Loss

9.Closing stock is always valued at cost or market price which is __________

  • more
  • less
  • zero
  • equal

10.When Specific date is not given, in that case interest on drawing is charged for __________ month.

  • Four
  • Six
  • Eight
  • Nine

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