Class 11 Accountancy - Chapter Financial Statements - 1 NCERT Solutions | What are closing entries? Give four exam
What are closing entries? Give four examples of closing entries.
The preparation of Trading and Profit and Loss account requires that the balances of accounts of all concerned items are transferred to it for its compilation.
For transferring the balance of all the ledger accounts to the concerned head is done through closing entries. Here are some examples of closing entries.
(i) Opening stock account, Purchase account, Wages account, Carriage inwards account and direct expenses account are closed by transferring to the debit side of the Trading and Profit and Loss account. This is done by recording the following entry:
Trading A/c Dr.
To Opening Stock A/c
To Purchase A/c
To Wages A/c
To Carriage Inwards A/c
To All Other Direct Expenses A/c
(ii) The Purchase return or Return outwards account are closed by transferring its balance to the Purchase account. The following entry is recorded for this purpose:
Purchase Return A/c Dr.
To Purchase A/c
(iii) Similarly, the sales return or Return inwards account is closed by transferring its balance to the Sales account is
Sales A/c Dr.
To Sales Return A/c
(iv) The Sales account is closed by transferring its balance to the credit side of the Trading and Profit and Loss account by recording the following entry.
Sales A/c Dr.
To Trading A/c
More Questions From Class 11 Accountancy - Chapter Financial Statements - 1
- Q:-
Distinguish between capital and revenue expenditure and state whether the following statements are items of capital or revenue expenditure :
(a) Expenditure incurred on repairs and whitewashing at the time of purchase of an old building in order to make it usable.
(b) Expenditure incurred to provide one more exit in a cinema hall in compliance with a government order.
(c) Registration fees paid at the time of purchase of a building.
(d) Expenditure incurred in the maintenance of a tea garden which will produce tea after four years.
(e) Depreciation charged on a plant.
(f) The expenditure incurred in erecting a platform on which a machine will be fixed.
(g) Advertising expenditure, the benefits of which will last for four years. - Q:-
Choose the correct chronological order of ascertainment of the following profits from the profit and loss account :
(i) Operating Profit, Net Profit, Gross Profit
(ii) Operating Profit, Gross Profit, Net Profit
(iii) Gross Profit, Operating Profit, Net Profit
(iv) Gross Profit, Net Profit, Operating Profit - Q:-
What is meant by Grouping and Marshalling of assets and liabilities. Explain the ways in which a balance sheet may be marshalled.
- Q:-
Match the items given under ‘A’ with the correct items under ‘B’
(i) Closing stock is credited to (a) Trial balance
(ii) Accuracy of book of account is tested by (b) Trading account
(iii) On returning the goods to seller, the buyer sends (c) Credit note
(iv) The financial position is determined by (d) Balance sheet
(v) On receiving the returned goods from the (e) Debit note
buyer, the seller sends - Q:-
While calculating operating profit, the following are not taken into account.
(i) Normal transactions
(ii) Abnormal items
(iii) Expenses of a purely financial nature
(iv) (ii) & (iii)
(v) (i) & (iii) - Q:-
Choose the correct option in the following questions :
The financial statements consist of:
(i) Trial balance
(ii) Profit and loss account
(iii) Balance sheet
(iv) (i) & (iii)
(v) (ii) & (iii) - Q:-
State True or False :
(i) Gross profit is total revenue.
(ii) In trading and profit and loss account, opening stock appears on the debit side because it forms the part of the cost of sales for the current accounting year.
(iii) Rent, rates and taxes is an example of direct expenses.
(iv) If the total of the credit side of the profit and loss account is more than the total of the debit side, the difference is the net profit. - Q:-
Which of the following is correct :
(i) Operating Profit = Operating profit – Non-operating expenses – Non-operating incomes
(ii) Operating profit = Net profit + Non-operating Expenses + Non-operating incomes
(iii) Operating profit = Net profit + Non-operating Expenses – Non-operating incomes
(iv) Operating profit = Net profit – Non-operating Expenses + Non-operating incomes - Q:-
Explain the concept of cost of goods sold?
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What is a balance sheet. What are its characteristics?
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