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. Financial Position

B. Gross Profit

C. Total Assets

D. Net Profit or Net Loss

Answer: Option D

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

Share Report

The 'National Pension System' (NPS) for government employees was made mandatory for those joining after:

A. 1 Jan 2015

B. 1 Jan 1991

C. 1 Jan 2010

D. 1 Jan 2004

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
NPS replaced the old defined benefit pension for central government employees joining on or after 1/1/2004.

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

Question #2

Share Report

Which of the following is NOT an Intangible Asset?

A. Goodwill

B. Prepaid Rent

C. Franchise rights

D. Patents

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option B

Explanation:
Prepaid rent is a current asset representing a right to services, but it is not classified as an intangible fixed asset under AS-26.

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

Question #3

Share Report

If a business purchases goods worth ₹60,000 paying ₹20,000 cash and the balance on credit, the accounting equation will show:

A. Increase in assets ₹60,000, increase in liabilities ₹40,000, decrease in capital ₹20,000

B. Increase in assets ₹60,000, increase in liabilities ₹60,000

C. Increase in assets ₹40,000, increase in liabilities ₹40,000

D. Increase in assets ₹60,000, increase in liabilities ₹40,000, decrease in capital ₹0

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
Assets increase by ₹60,000 (stock), cash decreases by ₹20,000, net assets increase ₹40,000; liabilities increase by ₹40,000 (creditors). Capital is unchanged. Equation: Assets = Liabilities + Capital, here +40,000 = +40,000 + 0.

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

Explore All Accountancy and Book Keeping MCQs