Financial Accounting ICOM Part 01 Top 500 + MCQS Download Pdf Chapter No 13

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Chapter – 13

Financial Statements

Encircle the most appropriate answer from the following :


1.A statement, which is prepared to ascertain the net income or net loss for period is called:

  1. Statement of condition
  2. Position Statement
  3. Bank Reconciliation Statement
  4. Financial Statement

2.A statement, which is prepared to know the financial position of a business is called.

  1. Statement of condition
  2. Balance sheet
  3. Position statement
  4. All of above

(c) The inflow of assets in return for services performed or products delivered during a period is:

  1. Revenue
  2. Asset
  3. None of these
  4. Non current asset

4. Cost incurred to generate revenue is called:

  1. Cost
  2. Revenue
  3. Liability
  4. Expense

5.The amount by which the revenue for a particular period of time exceed from expenses incurred to generate them is called

  1. Net income
  2. Gross income
  3. Expenses.
  4. Revenue

6. Sales are equal to:

  1. Cost of goods sold + profit
  2. Gross profit cost of goods sold
  3. Cost of goods sold gross profit
  4. None of these

7. Cost of goods sold is equal to:

  1. Sales-purchases
  2. Purchases +Closing Stock- Returns outwards
  3. Opening stock- closing stock + Purchases + Returns inwards
  4. Opening stock + purchases-Returns outwards closing stock

8.The gross amount of goods sold or services performed during an accounting period ls as

  1. Purchase
  2. Net profit
  3. Sale
  4. Gross profit

9. Net purchases are equal to:

  1. Sales-Returns outwards
  2. Purchases+Returns inwards
  3. Purchases – Returns outwards
  4. Purchases – Returns outwards

10.Net sales are equal to:

  1. Sales-Returns outwards
  2. Sales – Returns inwards
  3. Sales + Returns inwards
  4. Purchases-Returns inwards

11.Which one of the following is a direct expense

  1. Custom duty
  2. Wages
  3. Carriage able
  4. All of above

12. The margin that is available to cover the other expenses for a period and to yield net income is known as:

  1. Net profit
  2. Net sales
  3. Gross profit
  4. Cost of goods sold

13.The expenses which are incurred for the generation of revenues from the sales of goods are called:

  1. Non-operating expenses
  2. Operating expenses
  3. Selling expenses
  4. Administrative expenses

14.All expenses connected with the office and its conduct are called:

  1. Selling expenses
  2. Service expenses
  3. Marketing expenses
  4. Administrative expenses

15.Net sales-cost of goods sold – operating expenses

  1. Gross profit
  2. Cost of goods sold available for sale Gross profit
  3. Net purchases
  4. Net operating income

16.Income statement is prepared to ascertain the net result of the business concern under

  1. American accounting system
  2. British accounting system
  3. Cash system of accounting
  4. None of these

17.Which one of the following is a direct expense?

  1. None of these
  2. Advertisement expense
  3. Traveling expense
  4. Packing expense
  5. Manufacturing expense

18.Allowance for discount on account receivable is calculated on the amount of account receivable.

  1. Before deducting the allowance for doubtful debts
  2. Left after deducting the allowance for doubtful debts.
  3. Before deducting the actual bad debts
  4. None of these

19.Allowance for doubtful debts normally has a:

  1. Debit balance
  2. Credit balance
  3. None of these
  4. Both debit & credit balance

20.From Business point of view, interest on drawings is:

  1. An expense
  2. An asset
  3. A Liability
  4. A revenue