Final Accounts Of A Sole Trader! Trivia Quiz

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  • 1/13 Questions

    Which of the following is a liability?

    • Machinery
    • Creditors
    • Motor vehicle
    • Bank
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About This Quiz

Explore the fundamentals of sole trader accounts with this engaging trivia quiz. Test your understanding of assets, liabilities, and profit calculations, and learn how purchases and net profit fit into financial statements. Ideal for students and professionals in accounting.

Final Accounts Of A Sole Trader! Trivia Quiz - Quiz

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  • 2. 

    Which of the following is not an asset?

    • Buildings

    • Cash

    • Debtors

    • Loan from K Harris

    Correct Answer
    A. Loan from K Harris
    Explanation
    Loan from K Harris is not an asset because it represents a liability or a debt owed by the individual or entity to K Harris. Assets are resources or items of value that are owned or controlled by an individual or entity, such as buildings, cash, and debtors (people who owe money to the individual or entity). However, a loan from K Harris represents an obligation to repay the borrowed funds, making it a liability rather than an asset.

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  • 3. 

    Net profit is calculated in the 

    • Trading account

    • Profit and loss account

    • Trial balance

    • Balance sheet

    Correct Answer
    A. Profit and loss account
    Explanation
    Net profit is calculated in the Profit and loss account. The Profit and loss account is a financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time. It shows the net profit or loss generated by the business by deducting all expenses from the revenues. The Profit and loss account helps in determining the profitability of the business and is an essential component of the financial statements. It is usually prepared at the end of the accounting period and provides valuable insights into the financial performance of the company.

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  • 4. 

    Depreciation is 

    • The amount spent on buying fixed assets

    • How much a fixed asset can be sold for

    • The part of the cost of the fixed assets that is used up over its period of use

    • The money spent replacing assets

    Correct Answer
    A. The part of the cost of the fixed assets that is used up over its period of use
    Explanation
    Depreciation is the allocation of the cost of a fixed asset over its useful life. It represents the decrease in value of the asset due to wear and tear, obsolescence, or other factors. By recognizing depreciation expense, a company can accurately reflect the reduction in value of its assets over time. This helps in determining the true profitability and financial position of the company. Therefore, the correct answer is "The part of the cost of the fixed assets that is used up over its period of use."

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  • 5. 

    Which of the following is correct?

    • Profit does not affect capital

    • Profit reduces capital

    • Capital can only come from profit

    • Profit increases capital

    Correct Answer
    A. Profit increases capital
    Explanation
    Profit increases capital because profit is the amount of money left over after deducting expenses from revenue. This surplus can be reinvested into the business, which in turn increases the capital of the company. By generating profit, a company can allocate more resources towards expanding operations, investing in new projects, or paying off debts. This ultimately leads to an increase in the overall capital of the business.

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  • 6. 

    Work out capital from the following: Premises £20,000, Closing stock £8,500, Cash £100, Creditors £3,000 Loan £4,000

    • £21,100

    • £21,600

    • £32,400

    • £21,400

    Correct Answer
    A. £21,600
    Explanation
    The correct answer is £21,600. This is calculated by adding up the premises (£20,000), closing stock (£8,500), cash (£100), and loan (£4,000). Then, subtracting the creditors (£3,000) from the total, we get £29,600.

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  • 7. 

    Which of these best describes fixed assets?

    • Are bought to be used in the business

    • Are items which will not wear out quickly

    • Are expensive items bought for the business

    • Are of long life and are not bought specifically for resale

    Correct Answer
    A. Are of long life and are not bought specifically for resale
    Explanation
    Fixed assets are long-term tangible assets that are not intended for resale. They are purchased by a business to be used in its operations and are expected to have a useful life of more than one year. Examples of fixed assets include land, buildings, machinery, vehicles, and equipment. These assets are not easily converted into cash and are essential for the business to generate revenue and operate effectively.

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  • 8. 

    Rent and rates are £6,000 and Insurance £1,500. If a further £500 rent needs to be accrued £250 of insurance is prepaid what balances need to be shown in the profit and loss account.

    • Rent £6,500, Insurance £1,750

    • Rent £5,500, Insurance £1,750

    • Rent £6,500, Insurance £1,250

    • Rent £5,500, Insurance £1,250

    Correct Answer
    A. Rent £6,500, Insurance £1,250
  • 9. 

    Which of the following is the best meaning of purchases?

    • Items bought

    • Good bought for resale

    • Goods bought on credit

    • Goods paid for

    Correct Answer
    A. Good bought for resale
    Explanation
    The best meaning of "purchases" is goods bought for resale. This implies that the items are being acquired with the intention of selling them to customers. This definition distinguishes purchases from goods bought for personal use or consumption.

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  • 10. 

    If sales are £8,200, opening stock £1,300, closing stock £900, purchases £6,400, carriage inwards £200, the cost of goods sold figure is

    • £6,800

    • £6,200

    • £7,000

    • Another figure

    Correct Answer
    A. £7,000
    Explanation
    The cost of goods sold can be calculated by adding the opening stock, purchases, and carriage inwards, and then subtracting the closing stock. In this case, the calculation would be: £1,300 + £6,400 + £200 - £900 = £7,000. Therefore, the cost of goods sold figure is £7,000.

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  • 11. 

    The order in which current asset should be shown in the balance sheet is

    • Cash, bank. debtors, stock

    • Debtors, stock, bank, cash

    • Stock, debtors, bank, cash

    • Stock, debtors, cash, bank

    Correct Answer
    A. Stock, debtors, bank, cash
    Explanation
    The correct order in which current assets should be shown in the balance sheet is stock, debtors, bank, cash. This order is based on the liquidity of the assets, with stock being the least liquid and cash being the most liquid. By following this order, it provides a clear representation of the availability and value of the assets to the company.

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  • 12. 

    A business bought a car for £25,000. It had already depreciated by £5,000. The business depreciates motor vehicles by 20% using the reducing balance method. (a) Calculate the depreciation expense (b) State the provision for depreciation in the balance sheet.  

  • 13. 

    If depreciation was not calculated, what effect would it have on the financial accounts?

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Oct 28, 2012
    Quiz Created by
    MiffBiz
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