The Trading Account is prepared to ascertain: MCQ with Answer and Explanation

Question
The Trading Account is prepared to ascertain:
A. Financial Position
B. Net Profit or Net Loss
C. Gross Profit or Gross Loss
D. Cash Flow
Answer: Option C
Solution (By JKSSB Mock Tests)
Trading account compares direct revenues (sales) with direct costs (purchases, direct expenses) to find the Gross Profit or Loss.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
S1: Cost audit is mandatory for all companies in India. S2: Cost audit is conducted to verify the accuracy of cost records. Which statement(s) is/are correct?
A. S2 only
B. Neither S1 nor S2
C. S1 only
D. Both S1 and S2
Discuss
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Correct Answer: Option A

Explanation:
Cost audit is not mandatory for all companies; it is only required for specific classes of companies (like those in regulated sectors or manufacturing) as prescribed by the Central Government. S2 is correct as it verifies cost records. S1 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
The 'Subsequent Events' review period extends to:
A. One month after
B. Balance sheet date
C. Date of approval of financial statements (if auditor's report is dated later) or date of auditor's report
D. No fixed date
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Correct Answer: Option C

Explanation:
The auditor's responsibility for subsequent events covers the period up to the date of auditor's report.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
The term 'Liquidity Ratio' includes:
A. Current Ratio and Quick Ratio
B. Debt-Equity Ratio and Proprietary Ratio
C. Stock Turnover Ratio and Debtors Turnover Ratio
D. Gross Profit Ratio and Net Profit Ratio
Discuss
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Correct Answer: Option A

Explanation:
Liquidity ratios measure the short-term solvency of a firm and include the Current Ratio and the Quick (or Acid-Test) Ratio.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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