Financial Statements Part 1

An Accounting period is

• 1 month

• 1 year

• 1 week

• 1/2 year

The business determine its Financial Performance by preparing

• Ledger Accounts

• Trial Balance

• Income Statement

• Balance Sheet

The Income Statement has 2 sections

• True

• False

Net sales is equal to

• Sales + Return Inwards

• Sales - Return Outwards

• Sales + Return Outwards

• Sales - Return Inwards

Answer explanation

Return Inwards (Sales Returns)decreases the Total Sales

Carriage Outwards increases purchases

• True

• False

A business has a gross profit when

• Sales is more the cost of good available for sales

• Sales is less the the cost of goods sold

• Net Sales is less than cost of goods available for sales

• Net Sales is more than cost of goods sold

Which of the following is not added to gross profit

• Service revenue received

• Discounts received

• rent received

• Commissions Received

• Donations Received

Answer explanation

Service revenue it treated like sales revenue

Which of the following would be an administrative expense

• Rent Expense

• Electricity

• Wages and Salaries

• Donations Given

The Income statement is used to calculate

• Gross profit/Loss

• Total Profit/Loss

• Net profit/Loss

• All of the Above

Trick Question: What is used to prepare the Financial Statements

• Assets, Liabilities and Revenue Accounts

• Revenue and Expense Accounts

• Balances from the Trial Balance

• Balances in the Journals

Answer explanation

After creating the Trial Balance with the account balances, The Financial statements are prepared