Principles of Accounts

Gross profit is calculated in the:

• profit and loss account

• balance sheet

• trading account

• trial balance

Net profit is:

• sales less purchases add opening stock less closing stock

• gross profit add expenses of the period

• capital plus all expenses

• gross profit less expenses of the period

The debit entry for net loss is on the debit side of:

• the capital account

• the trading account

• the balance sheet

• the profit and loss account

We calculate the value of closing stock at the end of a period by:

• looking at the balance in the stock account

• deducting opening stock from purchases

• deducting purchases and opening stock from sales

• conducting a stocktaking

What is the correct order for current assets in order of permanency in the balance sheet?

• cash, bank, receivables, stock

• Inventory, receivables, bank, cash

• inventory, bank, cash, receivables

• receivables, inventory, bank, cash

Select the correct definition of a balance sheet?

• A double entry account

• A list of balances after the profit and loss account has been drawn up

• A statement of all the assets

• An account proving the books balance

Which of the following are not part of the double entry system?

• i. Trading account

• ii. Balance sheet

• iii. Trial balance

• iv. Profit and loss account

Carriage inwards is charged to the trading account because:

• it is not a balance sheet item

• it is not part of our motor expenses

• returns inwards also goes in the trading account

• it is basically part of the cost of buying goods

Given figures showing: sales of $28,500, opening stock of $4,690, closing stock of $7, 240, carriage inwards of $570 and purchases of $21, 350, the cost of goods sold figure is:

• $19,830

• $19,380

• $18,810

• another figure

In the trading account the returns inwards should be:

• added to cost of goods sold

• deducted from purchases

• deducted from sales

• added to sales