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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?

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

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

    <p>Accounts Receivable account</p> Signup and view all the answers

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

    <p>To record the value of goods returned to suppliers</p> 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?

    <p>Both Trading and Profit and Loss accounts</p> Signup and view all the answers

    What is the purpose of the 'Drawings' account?

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

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

    <p>Trading account</p> Signup and view all the answers

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

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

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