Q. In the income statement of a sole trader, which of the following is considered an expense?
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A.
Sales Revenue
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B.
Drawings
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C.
Cost of Goods Sold
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D.
Capital Introduced
Solution
Cost of Goods Sold is an expense that is deducted from sales revenue to calculate gross profit.
Correct Answer:
C
— Cost of Goods Sold
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Q. What is the typical accounting period for preparing final accounts for a sole trader?
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A.
Monthly
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B.
Quarterly
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C.
Annually
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D.
Bi-annually
Solution
Final accounts for a sole trader are typically prepared annually to reflect the financial performance over the year.
Correct Answer:
C
— Annually
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Q. When valuing inventory for final accounts, which method is NOT commonly used?
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A.
FIFO
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B.
LIFO
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C.
Weighted Average Cost
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D.
Net Present Value
Solution
Net Present Value is not a method used for inventory valuation; it is used for investment appraisal.
Correct Answer:
D
— Net Present Value
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Q. Which of the following is a characteristic of sole trader accounts?
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A.
Separate legal entity
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B.
Unlimited liability
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C.
Complex reporting requirements
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D.
Limited access to capital
Solution
Sole traders have unlimited liability, meaning they are personally responsible for all debts of the business.
Correct Answer:
B
— Unlimited liability
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Q. Which of the following is NOT typically included in the final accounts of a sole trader?
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A.
Income Statement
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B.
Balance Sheet
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C.
Cash Flow Statement
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D.
Trial Balance
Solution
A Cash Flow Statement is not typically included in the final accounts of a sole trader.
Correct Answer:
C
— Cash Flow Statement
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