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Components of Income Statement in Accounting

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Components of Income Statement in Accounting

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Questions and Answers

Which of the following is NOT a component of Net Sales?

Gross Profit (correct)

Sales Less: Sales Returns

Carriage Inwards

Sales Returns

What does the term 'Closing Inventory' represent?

The inventory purchased during the accounting period

The inventory sold during the accounting period

The inventory at the start of the accounting period

The inventory remaining at the end of the accounting period (correct)

Which of the following is NOT a step in the closing entries process?

Transferring the Net Profit/Net Loss to the Capital account

Transferring Income to the Capital account

Transferring Expenses to the Trading/Profit and Loss account

Transferring the Closing Inventory to the Balance Sheet (correct)

What is the purpose of the 'Carriage Inwards' account?

To record the cost of transporting goods from the supplier to the business Signup and view all the answers

Which of the following accounts is NOT closed at the end of the accounting period?

Accounts Receivable account Signup and view all the answers

What is the purpose of the 'Purchases Returns' account?

To record the value of goods returned to suppliers Signup and view all the answers

Which of the following accounts is used to record the Net Profit or Net Loss for the accounting period?

Both Trading and Profit and Loss accounts Signup and view all the answers

What is the purpose of the 'Drawings' account?

To record the amount of money the owner withdraws from the business for personal use Signup and view all the answers

Which of the following accounts is used to record the cost of goods sold during the accounting period?

Trading account Signup and view all the answers

What is the purpose of the 'Other Income' account?

To record the income generated from activities that are not the business's main operating activities Signup and view all the answers