Financial Statements : Understanding accountancy

This set of MCQs helps students to learn about various important things such as, state the nature of the financial statements, identify the various stakeholders and their information requirements, distinguish between the capital and revenue expenditure and receipts, explain the concept of trading and profit and loss account and its preparation, State the nature of gross profit, net profit and operating profit; • describe the concept of balance sheet and its preparation, explain grouping and marshalling of assets and liabilities, prepare profit and loss account and balance sheet of a sole proprietory firm, make an opening entry

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Choose the correct chronological order of ascertainment of the following profits from the profit and loss account:

Operating Profit, Net Profit, Gross Profit Operating Profit, Gross Profit, Net Profit Gross Profit, Operating Profit, Net Profit Gross Profit, Net Profit, Operating Profit

Direct Expenses are entered in:

Trading Account profit & Loss Account Balance sheet None of these

Goodwill is a-

Fixed Asset Current Asset Fictitious Asset None of these