Tag: ascertainment of profit and loss

Questions Related to ascertainment of profit and loss

Find the total at assets at the beginning of the year if the net profit, drawing during the year and Assets at the end of the year were 12,000, 7000 and 25,000 respectively.

elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

  1. 15,000

  2. 10,000

  3. 20,000

  4. 8,000

Show answer
Correct Option: C

Credit purchase, during the year is ascertained by preparing ________.

elements of accounts accounts from incomplete records - single entry system stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs

  1. Total creditor's account

  2. Total debtor's account

  3. Cash account

  4. Opening statement of affairs

Show answer
Correct Option: A
Explanation:


Creditor's account is prepared to record the transaction of payment made to the supplier against the credit purchases and discount allowed by them. Credit purchases are recorded by debiting the purchases account and crediting the creditors account. Creditors account can be presented as:


 Particulars  Amount  Particulars   Amount
 To Cash/Bank    By Opening Balance B/f  
 To Discount    By Credit Purchases  
 To Closing Balance c/d      
   xxxx    xxxx

Credit sales be ascertained as the balancing figure in the __________.

elements of accounts accounts from incomplete records - single entry system stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs

  1. Creditors Account

  2. Statement of Affairs

  3. Debtors Account

  4. Income and Expenditure Account

Show answer
Correct Option: C
Explanation:

Credit Sales can be ascertained by preparing Sundry Debtors Account which is given as below:

 Particulars  Amount  Particulars  Amount
 To Opening Balance B/f    By Cash/Bank  
 To Credit Sales    By Discount  
     By Closing balance C/f  
   xxxxx    xxxxx

Drawings of the proprietor is ________ to the capital at the end for the purpose of ascertaining profit under single entry system.

elements of accounts accounts from incomplete records - single entry system stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs

  1. subtracted

  2. added

  3. multiplied

  4. divided

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Correct Option: B

If capital as on 31st March, 2018 (closing capital) is given, what will be the treatment of additional capital for the purpose of ascertaining profit for the year?

elements of accounts accounts from incomplete records - single entry system stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs

  1. It will be added to closing capital.

  2. It will be subtracted from closing capital.

  3. No treatment is required.

  4. None of these.

Show answer
Correct Option: B

State whether the following statements are True or False.
Drawings made during the year decrease the profit under single entry system.

elements of accounts accounts from incomplete records - single entry system stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

False.

The drawings made during the year in single entry system are added to the closing capital. Hence, drawings will increase the profit.

If a predetermined overhead rate is not employed and the volume of production is increased over the level planned, the cost per unit would be expected to?

elements of accounts accounts from incomplete records - single entry system stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs

  1. Decrease for fixed costs and remain unchanged for variable costs.

  2. Remain unchanged for fixed costs and increase for variable costs.

  3. Decrease for fixed costs and increase for variable costs.

  4. Increase for fixed costs increase for variable costs.

Show answer
Correct Option: A
Explanation:

Fixed cost and variables cost are just opposite to each other. Variable cost is fixed per unit and increases with the level of production in value while the fixed cost remains constant in value irrespective of the volume of production but decreases per unit with the increase in volume.

The net profit or loss for a particular period of time is reported on the____________ .

elements of accounts accounts from incomplete records - single entry system stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs

  1. Income Statement

  2. Balance Sheet

  3. Trial Balance

  4. Statement of Changes in Owner's Equity

Show answer
Correct Option: A
Explanation:

The net profit or loss for a particular period of time is reported on the Income statement or profit and loss account.

A profit and loss account shows a company’s revenue and expenses over a particular period of time, typically either one month or consolidated months over a year. These figures show whether your business has made a profit or a loss over that time period.

Profit and loss accounts show your total income and expenses, and also shows whether your business has earned more income than it has spent on its running costs. If that is the case, then your business has made a profit.

Particulars Rs.
Opening capital $16,000$
Investment by proprietor Nil
Drawings $3,000$
Capital at the end $13,500$
Net Profit/(Loss) ?

If in the given information, Net Loss is Rs. $1,000$, then the investment made by the proprietor during the year will be _______________.

elements of accounts accounts from incomplete records - single entry system stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs

  1. Rs. $1,500$

  2. Rs. $2,000$

  3. Rs. $1,200$

  4. Rs. $1,700$

Show answer
Correct Option: A
Explanation:

Solution to the given problem can be presented as:


Opening Capital+Profit+Invested by proprietor-Drawings $=$ Closing Capital
Rs.16000+(-1000) +Invested by proprietor -Rs.3000=Rs.13500 
$Rs.12000+Investment =Rs.13500$
Investment $= Rs.13500-12000$
Investment made by proprietor  $ = Rs.1500$