The primary purpose of preparing a Profit and Loss Account is to find out: MCQ with Answer and Explanation

Question

Share Report Error

The primary purpose of preparing a Profit and Loss Account is to find out:

A. Net Profit or Net Loss

B. Gross Profit

C. Financial Position

D. Total Assets

Answer: Option A

Solution (By JKSSB Mock Tests)

The P&L account deduces all indirect expenses from the gross profit to ascertain the final Net Profit or Loss for the period.

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 is a capital profit?

A. Profit on sale of investment (capital nature)

B. Profit on sale of goods

C. Discount received

D. Rent received

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option A

Explanation:
Profit on sale of a capital asset (like long-term investment) is capital profit. Profit on sale of goods is revenue.

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

Question #2

Debentures are shown in Balance Sheet under:

A. Long-term borrowings

B. Reserves and surplus

C. Current liabilities

D. Share capital

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option A

Explanation:
Debentures are long-term borrowings unless they are due within 12 months, then current liabilities.

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

Question #3

A 'Debit Note' is sent by the buyer when returning goods to the supplier. It is used to:

A. Inform the supplier that his account has been debited

B. Record sales return

C. Record cash receipt

D. Inform the supplier that his account has been credited

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option A

Explanation:
The debit note informs the supplier that the buyer has debited the supplier's account.

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

Explore All Accountancy and Book Keeping MCQs