Chapter 13: Final Accounts of Sole Proprietors - II — Online MCQ Test
ACCOUNTANCY · CLASS 11th · Tamil Nadu State Board
Practice Chapter 13: Final Accounts of Sole Proprietors - II with a free chapter-wise online MCQ test.
This chapter covers: This chapter covers final account preparation with accounting adjustments. Students master adjustment entries for closing stock outstanding expenses prepaid expenses accrued income....
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Chapter 13: Final Accounts of Sole Proprietors - II — Important Questions & Answers
What is the treatment of outstanding salary while preparing Final Accounts?
- A. Add to salary in Trading Account
- B. Add to salary in Profit and Loss Account as an expense
- C. Deduct from salary in Trading Account
- D. Show it as an asset in the Balance Sheet only
Answer: B. Add to salary in Profit and Loss Account as an expense
Outstanding salary is an expense relating to the current year but not yet paid. Hence, it is added to salary expenditure in the Profit and Loss Account and shown as a liability in the Balance Sheet.
Outstanding salary is an expense relating to the current year but not yet paid. Hence, it is added to salary expenditure in the Profit and Loss Account and shown as a liability in the Balance Sheet.
Closing stock is usually shown in the final accounts at the end of the year as a(n):
- A. Liability in the Balance Sheet
- B. Expense in the Trading Account
- C. Asset in the Balance Sheet
- D. Income in the Profit and Loss Account
Answer: C. Asset in the Balance Sheet
Closing stock represents unsold goods at the end of the accounting period. It is shown as an asset in the Balance Sheet.
Closing stock represents unsold goods at the end of the accounting period. It is shown as an asset in the Balance Sheet.
Outstanding expenses are added to the respective expense because they are:
- A. Expenses relating to the current year but unpaid
- B. Expenses relating to the next year but prepaid
- C. Receipts received in advance
- D. Capital expenses
Answer: A. Expenses relating to the current year but unpaid
Outstanding expenses have been incurred during the current accounting year but not yet paid. Therefore, they are added to the related expense item.
Outstanding expenses have been incurred during the current accounting year but not yet paid. Therefore, they are added to the related expense item.
If rent received in advance is not adjusted, the profit will be:
- A. Understated
- B. Overstated
- C. Correctly stated
- D. Equal to zero
Answer: B. Overstated
Rent received in advance should not be treated as current year income. If ignored, income will be shown higher than actual, causing profit to be overstated.
Rent received in advance should not be treated as current year income. If ignored, income will be shown higher than actual, causing profit to be overstated.
A business pays rent of ₹12,000 for the year ending 31st March 2025 on 1st January 2025. If ₹4,000 relates to April to June 2025, the amount to be debited to the Profit and Loss Account for 2024-25 is:
- A. ₹12,000
- B. ₹8,000
- C. ₹4,000
- D. ₹16,000
Answer: B. ₹8,000
Only the portion relating to the current accounting year is treated as expense. Since ₹4,000 is prepaid for the next year, the current year expense is ₹12,000 - ₹4,000 = ₹8,000.
Only the portion relating to the current accounting year is treated as expense. Since ₹4,000 is prepaid for the next year, the current year expense is ₹12,000 - ₹4,000 = ₹8,000.