Final Accounts of Sole Proprietors MCQ

1. The income statement shows either net profit or net loss for a particular period.

2. Gains from the sale or exchange of assets are not considered as the revenue of the business.

3. The salary paid in advance is not an expense because it neither reduces assets or nor increase liabilities.

4. A loss is an expenditure which does not bring any benefit to the concern.

5. All liabilities which become due for payment within one year are classified as long-term liabilities.

6. The term current asset is used to designate cash and other assets or resources which are reasonably expected to be realized or sold or consumed within one year.

7. An asset gives rise to expenditure when it is acquired and to an expense when it is consumed.

8. If the balance of an account on the debit side of the trial balance where the benefit has already expired then it is treated as an expense.