Trading Account Questions

What is calculated in a Trading Account?

• closing Inventory (stock)

• gross profit

• profit for the year /net profit

• sales

Which would appear in a Statement of Financial Position?

• closing inventory

• cost of sales

• opening inventory

• sales

A business provides the following information.

What is the cost of sales?

• $2000

• $2100

• $7200

• $8200

What are assets?

• items that are expected to be turned into cash in the near future

• items that are owned by or owed to a business

• items that are owned by or owed by a business

• items that are purchased for long-term use by a business

A trader wishes to know the cost of goods sold during the year.

Which financial statement will provide the answer?

• Statement of Financial Position (Balance Sheet)

• Profit and Loss Account

• Trading Account

• Trial Balance

What information is shown by a business’s Trading Account?

• if the business assets equal the liabilities

• if the business has made a gross profit

• if the business has made a profit for the year

• if the business income exceeds expenditure

Which is a liability of a business?

• amount owing by debtors (Trade Receivables)

• amount owing to creditors (Trade Payables)

• long term loan to employee

• property tax paid in advance

Why does the owner of a business calculate profit?

• to find out how much debtors (trade receivables) owe him

• to find out how much he owes to creditors (trade payables)

• to know how much money may be taken as drawings without reducing capital

• to reconcile the cash book balance with the balance on the bank statement

What is a statement of financial position/ balance sheet?

• a statement of all assets and liabilities on a certain date

• a statement of all the balances in the ledger accounts on a certain date

• a statement showing all the receipts and payments for a financial year

• a statement showing the income and expenditure for a financial year

At the end of her first year of trading, Mona provides the following information.

What is Mona’s gross profit?

• $6400

• $7100

• $8700

• $11 000