Question

21.      The total of the Purchases Journal is transferred to the:

           

1. Credit side of the Purchases Book

2. Credit side of the Purchases Account

3. Debit side of the Purchases Account

4. Debit side of the Purchases Day Book

22.       Bank overdraft is:

1. A current asset

2. A current liability

3. A non-current asset

4. A non-current liability

23.      Net profit is calculated in the:

1. Trial balance

2. Trading account

3. Profit and loss account

4. Statement of financial position

24.       Gross profit is:

1. Sales less purchases

            b.   Net profit less expenses of the period

            c.   Cost of goods sold + opening inventory

            d.   Excess of sales over cost of goods sold

                                               

Answer 1

21.  The total of the Purchases Journal is transferred to the:

C ) Debit side of the Purchases Account

The purchase is stock is expense for the firm hence it is of debit nature. All the purchase journal balance is transferred to debit side of purchase account ledger to find the net balance to be shown on Trial balance.

Purchase day book is created when the journal book is not created (when the accounting entries are high) . These are the books of original entry like Journal and its balance is also transferred to debit side of purchase account ledger.

22.       Bank overdraft is:

B ) A current liability

The liabilities which are paid within one year are known as current liabilities. Bank overdraft is a current liability. The bank overdraft is a service given to some customers that they can withdraw the balance more than what is in there account. Bank charges interest over overdraft.

23.      Net profit is calculated in the:

C ) Profit and loss account

Net profit is calculated after deducting all the indirect expenses and adding the indirect incomes from gross profit which is calculated in Profit and loss account.

24.       Gross profit is:

d.   Excess of sales over cost of goods sold

Gross profit is calculated in trading account which is calculated as -

Gross profit = Sales - COGS

where as , COGS = Opening inventory + purchases + direct expenses - closing stock.

Hope it helps!