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

Question
In the financial statements of a sole trader, drawings are deducted from:
A. Sales
B. Capital
C. Net profit
D. Gross 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
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Practice More Accountancy and Book Keeping Questions

Question #1
The 'Revenue from Contracts with Customers' (Ind AS 115) requires identification of performance obligations. A performance obligation is:
A. Only services
B. Only goods
C. Each promise to transfer a distinct good or service (or series)
D. The contract as a whole
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Correct Answer: Option C

Explanation:
Distinct goods/services are separate performance obligations.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
Gross profit is transferred to:
A. Profit & Loss A/c (credit side)
B. Capital A/c
C. Balance Sheet
D. Trading A/c
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Correct Answer: Option A

Explanation:
Gross profit from Trading A/c is transferred to the credit side of Profit & Loss A/c.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
Which audit is conducted by an organization's own employees to evaluate the effectiveness of its internal controls?
A. Internal Audit
B. Tax Audit
C. Statutory Audit
D. Cost Audit
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Correct Answer: Option A

Explanation:
Internal audit is an independent, objective assurance function within an organization, distinct from external statutory audits.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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