To ascertain profit under the Single Entry System (Statement of Affairs method), closing capital is compared with: MCQ with Answer and Explanation

To ascertain profit under the Single Entry System (Statement of Affairs method), closing capital is compared with:
A. Opening Capital
B. Total Assets
C. Cash Balance
D. Total Liabilities
Answer: Option A
Solution (By JKSSB Mock Tests)
Profit or loss is determined by comparing the capital at the end of the year with the capital at the beginning, adjusted for drawings and fresh capital.

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Practice More Accountancy and Book Keeping Questions

Question #1
A trial balance shows equal totals but still contains an error of ₹2,000 where purchase of stationery was debited to furniture account. This is:
A. Error of principle
B. Compensating error
C. Error of omission
D. Error of commission

Correct Answer: Option A


Explanation:
Stationery is revenue expenditure, furniture is asset. Treating revenue as capital is error of principle.

Question #2
The process of transferring entries from journal to ledger is called:
A. Journalizing
B. Posting
C. Recording
D. Balancing

Correct Answer: Option B


Explanation:
Posting is the process of transferring debit and credit amounts from journal to respective ledger accounts.

Question #3
A 'High Debtors Turnover Ratio' indicates:
A. Slow collection from debtors
B. Efficient collection from debtors
C. Large bad debts
D. Excess inventory

Correct Answer: Option B


Explanation:
Higher ratio means faster collection of receivables.