QUIZ 2 - ACCOUNTING FOR TRADING ENTITIES

With respect to final accounts, which of the following statements is incorrect?

• if the balance of an account is on the debit side of the trial balance where profit has already been liquidated, it is treated as an expense.

• when an asset is acquired, it gives rise to expenditure and when it is consumed, it gives rise to cost.

• if the debit side of the trading account exceeds its credit side, the balance is said to be gross profit.

• unsold cost of goods sold = gross profit

With respect to accounting for business entities, the term 'Final Account' includes:

i) Trading Account

ii) Statement of Financial Position

iii) Statement of Comprehensive Income

• only (i)

• (i) and (iii)

• (i), (ii) and (iii)

• (ii) and (iii)

If there is a positive balance in debit side of Profit & Loss account, then what does it indicate?

• gross profit

• net profit

• gross loss

• net loss

Loss due to fire in factory is recorded in the______.

• Statement of Financial Position

• Insurance account

• Statement of Comprehensive Income

• Factory account

If the rate of Gross Profit on sales is 30% and the cost of goods sold is RM70,000. What is the amount of sales?

• RM100,000

• RM21,000

• RM49,000

• RM233,333

When you prepare final account, where will you transfer bad debts recovered account?

• Statement of Comprehensive Income

• Provision for bad debt account

• Debtor account

• Account Receivable

In the trial balance if the wages are categorized with salaries and is shown as 'salaries and wages', then it is recorded in______.

• Trading account

• Statement of Comprehensive Income

• Statement of Financial Position

• Proprietor account

A returns inwards book is kept to record_____.

• Return of anything sold

• Return of anything purchased

• Return of goods sold

• Return of goods purchased

The following data is available in respect of XYZ Sdn Bhd:

i) opening debtors RM12,000

ii) closing debtors RM15,000

iii) Credit sales RM28,000

What is the amount of cash received from Customers?

• RM25,000

• RM3,000

• RM28,000

• RM31,000

Gross profit is calculated by using_____ formula.

• sales - cost of goods sold

• sales - all expenses

• assets - liabilities

• sales - liabilities