Chapter 5 Trial Balance & Financial Statements

Which of the following is/are possible formula to obtain Gross Profit?

• Sales revenue - Sales returns

• Sales revenue - Cost of sales

• Profit for the year - Income + Expense

• Profit for the year + Income - Expense

Which of the following is/are NOT an expense?

• Interest on loan

• Interest on fixed deposit

• Discount allowed

• Discount received

• Prepaid rent expense

Which of the following is/are NOT a Current Liability?

• Interest expense payable

• Long term borrowing

• Bank overdraft

• Current portion of long term borrowing

• Income received in advance

Which of the following is/are NOT a Current Asset?

• Motor vehicle

• Cash at bank

• Income receivable

• Inventory

• Prepaid expense

Which of the following is/are the purpose of a trial balance?

• To tally debit and credit balance

• To facilitate the preparation of financial statements

• To detect fraud

• To ensure arithmetic accuracy in recording

Which of the following is/are NOT an item that appears in the Statement of Financial Performance of a Service business?

• Sales revenue

• Service Fee Revenue

• Sales returns

• Inventory

• Cost of sales

Which of the following account(s) has/have DEBIT balances?

• Sales revenue

• Sales returns

• Cost of sales

• Drawings

• Capital

Which of the following account(s) has/have CREDIT balances?

• Sales revenue

• Sales returns

• Trade receivables

• Trade payables

• Discount Allowed