Which financial statement shows the net profit or loss for an accounting period? MCQ with Answer and Explanation

Which financial statement shows the net profit or loss for an accounting period?
A. Cash Flow Statement
B. Trial Balance
C. Statement of Profit & Loss
D. Balance Sheet
Answer: Option C
Solution (By JKSSB Mock Tests)
The Statement of Profit & Loss (Profit & Loss Account) calculates the net result of operations.

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Practice More Accountancy and Book Keeping Questions

Question #1
Which entity is most likely to use the Cash Basis of accounting?
A. A commercial bank
B. An insurance company
C. A small medical practitioner
D. A listed manufacturing company

Correct Answer: Option C


Explanation:
Professionals (like doctors, lawyers) often use cash basis because of its simplicity, whereas companies must use accrual basis under the Companies Act.

Question #2
In the absence of a partnership deed, what is the rule regarding salaries to partners?
A. No partner is entitled to a salary
B. Salary based on hours worked
C. Salary proportional to capital
D. Equal salary to all partners

Correct Answer: Option A


Explanation:
Section 13(a) of the Indian Partnership Act, 1932 states that partners are not entitled to receive any remuneration for participating in the business.

Question #3
Which concept dictates that personal expenses of the owner paid from the business account should be treated as drawings?
A. Business Entity Concept
B. Materiality
C. Periodicity
D. Conservatism

Correct Answer: Option A


Explanation:
The Business Entity Concept treats the owner and the business as two distinct legal entities, separating personal and business transactions.