In the financial statements of a sole trader, drawings are deducted from: MCQ with Answer and Explanation

Question

Share Report Error

In the financial statements of a sole trader, drawings are deducted from:

A. Sales

B. Capital

C. Gross profit

D. Net profit

Answer: Option B

Solution (By JKSSB Mock Tests)

Drawings are not an expense; they reduce the owner's capital directly in the balance sheet.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Request complete Subject PDF

Discuss this Question (0)

No comments yet. Be the first to start the discussion!

Practice More Accountancy and Book Keeping Questions

Question #1

Which of the following decisions relates to determining the optimal capital structure?

A. Investment Decision

B. Financing Decision

C. Liquidity Decision

D. Dividend Decision

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option B

Explanation:
The financing decision involves choosing the right mix of debt and equity (capital structure) to minimize the overall cost of capital.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

A Cash Voucher is prepared for:

A. Credit transactions

B. Only cash payments

C. Only cash receipts

D. Both cash receipts and cash payments

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
Cash vouchers are used to record all transactions involving the physical inflow or outflow of cash.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3

The 'Net Profit' is transferred to:

A. Drawings Account

B. Trading Account

C. Capital Account (or Retained Earnings)

D. Balance Sheet liability side

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option C

Explanation:
Net profit is added to owner's capital or retained earnings.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Explore All Accountancy and Book Keeping MCQs