Q. How is depreciation typically recorded in the final accounts of a sole trader?
-
A.
As an asset
-
B.
As a liability
-
C.
As an expense
-
D.
As revenue
Solution
Depreciation is recorded as an expense in the final accounts, reducing the profit for the period.
Correct Answer:
C
— As an expense
Learn More →
Q. In the trial balance of a sole trader, which of the following accounts would typically have a credit balance?
-
A.
Cash
-
B.
Accounts Receivable
-
C.
Capital
-
D.
Inventory
Solution
The Capital account typically has a credit balance in the trial balance of a sole trader.
Correct Answer:
C
— Capital
Learn More →
Q. In the trial balance, which of the following accounts would typically have a credit balance?
-
A.
Cash
-
B.
Accounts Receivable
-
C.
Capital
-
D.
Inventory
Solution
The Capital account typically has a credit balance in the trial balance.
Correct Answer:
C
— Capital
Learn More →
Q. What is the effect of an error in the trial balance on the final accounts?
-
A.
No effect
-
B.
It will cause the final accounts to be inaccurate
-
C.
It will always lead to a profit
-
D.
It will always lead to a loss
Solution
An error in the trial balance will cause the final accounts to be inaccurate, as the totals will not match.
Correct Answer:
B
— It will cause the final accounts to be inaccurate
Learn More →
Q. What is the effect of an overstatement of expenses on the final accounts of a sole trader?
-
A.
Increased profit
-
B.
Decreased profit
-
C.
No effect on profit
-
D.
Increased assets
Solution
An overstatement of expenses will lead to a decreased profit in the final accounts.
Correct Answer:
B
— Decreased profit
Learn More →
Q. What is the primary financial statement that shows the profitability of a sole trader?
-
A.
Balance Sheet
-
B.
Income Statement
-
C.
Cash Flow Statement
-
D.
Trial Balance
Solution
The primary financial statement that shows the profitability of a sole trader is the Income Statement.
Correct Answer:
B
— Income Statement
Learn More →
Q. What is the purpose of the balance sheet in the final accounts?
-
A.
To show cash inflows and outflows
-
B.
To summarize income and expenses
-
C.
To present the financial position at a specific date
-
D.
To calculate net profit
Solution
The balance sheet presents the financial position of the sole trader at a specific date, showing assets, liabilities, and equity.
Correct Answer:
C
— To present the financial position at a specific date
Learn More →
Q. What method can a sole trader use to value inventory at the end of the accounting period?
-
A.
FIFO
-
B.
LIFO
-
C.
Weighted Average
-
D.
All of the above
Solution
A sole trader can use FIFO, LIFO, or Weighted Average methods to value inventory at the end of the accounting period.
Correct Answer:
D
— All of the above
Learn More →
Q. What method is commonly used for inventory valuation in the final accounts of a sole trader?
-
A.
FIFO
-
B.
LIFO
-
C.
Weighted Average
-
D.
All of the above
Solution
All of the above methods (FIFO, LIFO, and Weighted Average) can be used for inventory valuation.
Correct Answer:
D
— All of the above
Learn More →
Q. Which accounting principle requires that expenses be matched with revenues in the final accounts?
-
A.
Going Concern
-
B.
Accruals
-
C.
Consistency
-
D.
Prudence
Solution
The Accruals principle requires that expenses be matched with revenues in the final accounts.
Correct Answer:
B
— Accruals
Learn More →
Q. Which accounting standard governs the recognition of revenue for sole traders?
-
A.
IFRS 15
-
B.
IAS 2
-
C.
IAS 18
-
D.
IFRS 9
Solution
IAS 18 governs the recognition of revenue for sole traders, outlining when revenue should be recognized.
Correct Answer:
C
— IAS 18
Learn More →
Q. Which accounting standard governs the treatment of inventory valuation?
-
A.
IFRS 15
-
B.
IAS 2
-
C.
IFRS 9
-
D.
IAS 10
Solution
IAS 2 governs the treatment of inventory valuation, outlining how to measure and report inventory.
Correct Answer:
B
— IAS 2
Learn More →
Q. Which of the following is a key component of the income statement for a sole trader?
-
A.
Assets
-
B.
Liabilities
-
C.
Revenue
-
D.
Equity
Solution
Revenue is a key component of the income statement, reflecting the income generated from business activities.
Correct Answer:
C
— Revenue
Learn More →
Q. Which of the following is an example of a current liability for a sole trader?
-
A.
Bank Loan
-
B.
Accounts Payable
-
C.
Capital Account
-
D.
Fixed Assets
Solution
Accounts Payable is an example of a current liability for a sole trader.
Correct Answer:
B
— Accounts Payable
Learn More →
Showing 1 to 14 of 14 (1 Pages)
