Tag: commercial studies

Questions Related to commercial studies

Which statement is true?

commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

  1. Gross profit - gross loss = Net profit

  2. Gross profit - net loss = Net profit

  3. Net profit - Net loss = Net profit

  4. Total revenue - total expenses = net profit

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Correct Option: D

________ is not the integral part of profit & loss account.

commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

  1. Bank interest received

  2. Discount received

  3. Sales

  4. Rent of property received

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Correct Option: C

What is transferred to capital account?

commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

  1. Gross profit

  2. Net profit

  3. Gross sales revenue

  4. Net sales revenue

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Correct Option: B

Adjusted profit and loss are used in____________.

commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

  1. budgetary control technique

  2. information technique

  3. financial accounts preparation technique

  4. for bounced cheques

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Correct Option: A

Which is the characteristic feature of profit & loss account?

commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

  1. Account transferred to profit & loss account do not exist after being transferred to profit & loses account

  2. It is prepared at the last date of the accounting period.

  3. It is a statement

  4. All of the above

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Correct Option: A

The trading account does not __________.

commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

  1. calculate gross profit

  2. compare the sales with the cost of those sales

  3. include the cost of goods sold

  4. show the effect of profit on capital

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Correct Option: D
Explanation:

A trading account helps in determining the gross profit or gross loss of a business made strictly out of trading activities. Only direct revenue and direct expenses are considered in it. 

It is prepared mainly to know the profitability of goods. In this indirect expenses and indirect revenue are not included. So, it can not show the effect of profit on capital. In Capital net profit is added. 

Valuing closing stock at a cost is an application of which concept?

commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

  1. Consistency

  2. Dual aspect

  3. Prudence

  4. Money measurement

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Correct Option: C

Assuming no returns outwards or carriage inwards, the cost of goods sold will be equal to _______.

commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

  1. opening stock plus purchases plus closing stock

  2. closing stock less purchases plus opening stock

  3. sales less gross profit

  4. purchases plus closing stock less opening stock

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Correct Option: C
Explanation:

Assuming no returns outwards or carriage inwards, the cost of goods sold will be equal to Sales less gross profit. Goods are sold at cost plus profit. So. sales less gross profit represents the cost of goods sold.

_______ is the part of income statement, which is prepared to ascertain the profit/ loss for a given accounting period.

commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

  1. Manufacturing A/c

  2. Profit and Loss A/c

  3. Balance Sheet

  4. All of the above

Show answer
Correct Option: B
Explanation:

Final Account is the final process of accounting. Final accounts include the preparation of Trading account, Profit and Loss account and Balance Sheet. The main purpose of this account is to show the profit or loss earned by the firm during the accounting period. It shows the profitability of the business. 

Gross profit less expense is known as __________.

commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

  1. cost of goods sold

  2. net turnover

  3. total drawings

  4. net profit

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Correct Option: D
Explanation:

Net Profit is the measure of the true profitability of a venture after accounting for all costs and taxes. It is the actual profit and includes the operating expenses that are excluded from gross profit. So,
Gross Profit - Operating Expenses = Net Profit.