PROFIT AND LOSS ACCOUNTBack to HOME

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'; //Write it to the frame TopFrame.document.clear(); TopFrame.document.open(); TopFrame.document.write(OutString); TopFrame.document.close(); } function StartUp(){ //Reduce array if required if (QsToShow < I.length){ ReduceItems(); } //Shuffle stuff if required if (ShuffleQs == true){ I = Shuffle(I); } if (ShuffleAs == true){ for (var i=0; iIn the Profit and Loss Account, all revenues and expenses are accounted for, thus giving the net profit of the business.'; I[0][1][2][2] = 1; I[0][1][3] = new Array(); I[0][1][3][0]='gross profit less expenses.'; I[0][1][3][1]='Try again.
Well, what happens if the business earned other revenues?
Do you then think this gives the net profit?'; I[0][1][3][2] = 0; I[0][2] = 0; I[1] = new Array(); I[1][0]='The following should be debited to the Profit and Loss account, except'; I[1][1] = new Array(); I[1][1][0] = new Array(); I[1][1][0][0]='carriage outwards.'; I[1][1][0][1]='Are you sure? This is an operating expense.'; I[1][1][0][2] = 0; I[1][1][1] = new Array(); I[1][1][1][0]='commission revenue.'; I[1][1][1][1]='That\'s right!
A revenue should be credited to the Profit and Loss Account.'; I[1][1][1][2] = 1; I[1][1][2] = new Array(); I[1][1][2][0]='interest expense.'; I[1][1][2][1]='Are you sure? This is an operating expense.'; I[1][1][2][2] = 0; I[1][1][3] = new Array(); I[1][1][3][0]='rent expense.'; I[1][1][3][1]='Try again. This is an operating expense.'; I[1][1][3][2] = 0; I[1][2] = 0; I[2] = new Array(); I[2][0]='The discount allowed of $50 was wrongly recorded as discount received. What is the effect on net profit?'; I[2][1] = new Array(); I[2][1][0] = new Array(); I[2][1][0][0]='Net profit is understated by $50.'; I[2][1][0][1]='Opps, you\'ve got to calculate more carefully.
Try drawing up a simple Profit and Loss Account to find the figure.'; I[2][1][0][2] = 0; I[2][1][1] = new Array(); I[2][1][1][0]='Net profit is understated by $100.'; I[2][1][1][1]='Opps, you\'ve got to calculate more carefully.
Try drawing up a simple Profit and Loss Account to find the figure.'; I[2][1][1][2] = 0; I[2][1][2] = new Array(); I[2][1][2][0]='Net profit is overstated by $50.'; I[2][1][2][1]='Opps, you\'ve got to calculate more carefully.
Try drawing up a simple Profit and Loss Account to find the figure.'; I[2][1][2][2] = 0; I[2][1][3] = new Array(); I[2][1][3][0]='Net profit is overstated by $100.'; I[2][1][3][1]='Very good!
The effect of recording an expense as a revenue will double the effect on net profit,
since not only is the expense not recorded, it has been recorded as a revenue.'; I[2][1][3][2] = 1; I[2][2] = 0; I[3] = new Array(); I[3][0]='Which of the following statements is/are correct?

I. The increase in cash represents profit.

II. Profit increases capital.

III. Drawings reduce profit.

IV. Personal vehicle introduced by owner into the business increases the capital of the business.'; I[3][1] = new Array(); I[3][1][0] = new Array(); I[3][1][0][0]='I and II'; I[3][1][0][1]='Opps...
Increase in cash may not mean an increase in expense which reduces profit.
The cash may have been used to acquire an asset.'; I[3][1][0][2] = 0; I[3][1][1] = new Array(); I[3][1][1][0]='I and IV'; I[3][1][1][1]='Please try again.
Increase in cash may not mean an increase in expense which reduces profit.
The cash may have been used to acquire an asset.
'; I[3][1][1][2] = 0; I[3][1][2] = new Array(); I[3][1][2][0]='II and III'; I[3][1][2][1]='Think again...
Does drawings really reduce profit? It is not a nominal expense or revenue account.
'; I[3][1][2][2] = 0; I[3][1][3] = new Array(); I[3][1][3][0]='II and IV'; I[3][1][3][1]='You are right!
Net Profit is transferred to credit side of the Capital Account, thus increasing capital which has a credit nature.
The personal vehicle for the business from the owner, is the business\' capital, according to the concept of business entity.'; I[3][1][3][2] = 1; I[3][2] = 0; I[4] = new Array(); I[4][0]='Net profit is determined in the '; I[4][1] = new Array(); I[4][1][0] = new Array(); I[4][1][0][0]='Trial Balance.'; I[4][1][0][1]='Are you sure?
Trial balance is only a list of balances from the ledger. '; I[4][1][0][2] = 0; I[4][1][1] = new Array(); I[4][1][1][0]='Balance Sheet.'; I[4][1][1][1]='Opps...please try again.
Balance sheet records only the balances of assets, liabilities and owner\'s equity at a point in time.
'; I[4][1][1][2] = 0; I[4][1][2] = new Array(); I[4][1][2][0]='Profit and Loss Account.'; I[4][1][2][1]='You are right!
In the profit and loss account, revenues and expenses are matched,
giving rise to a net figure, called the net profit.'; I[4][1][2][2] = 1; I[4][1][3] = new Array(); I[4][1][3][0]='Trading Account.'; I[4][1][3][1]='Opps...
Remember that this account does not take into account
all the revenues earned and expenses incurred for the period?'; I[4][1][3][2] = 0; I[4][2] = 0; I[5] = new Array(); I[5][0]='Carriage inwards $25 is wrongly recorded in the General Expenses Account.
This error results in the following effect(s):

I. Net profit is overstated by $25.

II. Gross profit is overstated by $25.

III. Gross profit remains unchanged.

IV. Net profit remains unchanged.'; I[5][1] = new Array(); I[5][1][0] = new Array(); I[5][1][0][0]='I only'; I[5][1][0][1]='Will this really happen? Please check your answer again.'; I[5][1][0][2] = 0; I[5][1][1] = new Array(); I[5][1][1][0]='IV only'; I[5][1][1][1]='Well, that\'s not completely right.'; I[5][1][1][2] = 0; I[5][1][2] = new Array(); I[5][1][2][0]='I and II only'; I[5][1][2][1]='Think again...Check your answer with a simple T-account.'; I[5][1][2][2] = 0; I[5][1][3] = new Array(); I[5][1][3][0]='II and IV only'; I[5][1][3][1]='That\'s wonderful! You got it right.'; I[5][1][3][2] = 1; I[5][2] = 0; I[6] = new Array(); I[6][0]='Which of the following transactions will result in a decrease in net profit?'; I[6][1] = new Array(); I[6][1][0] = new Array(); I[6][1][0][0]='Paid $100,000 to acquire land.'; I[6][1][0][1]='Try again!
The land acquired is an asset.
Think of the double entry to record this transaction to find out
if any expense or revenue amounts affect the net profit.'; I[6][1][0][2] = 0; I[6][1][1] = new Array(); I[6][1][1][0]='Paid $55,000 to creditors.'; I[6][1][1][1]='Think carefully...
The creditors paid are a reduction in liability.
Think of the double entry to record this transaction to find out
if any expense or revenue amounts affect the net profit.'; I[6][1][1][2] = 0; I[6][1][2] = new Array(); I[6][1][2][0]='Paid commission of $2,000 to sales personnel.'; I[6][1][2][1]='You are right!
The commission paid to sales personnel is an operating expense which will reduce net profit.
The double entry is: Dr Commission expense, $2,000; Cr Cash $2,000.'; I[6][1][2][2] = 1; I[6][1][3] = new Array(); I[6][1][3][0]='Repaid loan $8,000.'; I[6][1][3][1]='Think again...
Does this affect the business\' expenses or revenue? '; I[6][1][3][2] = 0; I[6][2] = 0; I[7] = new Array(); I[7][0]='Net profit is transferred to the credit side of '; I[7][1] = new Array(); I[7][1][0] = new Array(); I[7][1][0][0]='Capital Account'; I[7][1][0][1]='Great!
Net profit is found on the debit side of the Profit and Loss Account.
Hence, when bringing down the net profit amount to the Capital Account, the amount will be on the credit side of the Capital Account.
Thus net profit increases capital.'; I[7][1][0][2] = 1; I[7][1][1] = new Array(); I[7][1][1][0]='Trading Account'; I[7][1][1][1]='Think again.
Trading Account gives the gross profit.
Why do we transfer net profit to the Trading Account? '; I[7][1][1][2] = 0; I[7][1][2] = new Array(); I[7][1][2][0]='Profit and Loss Account'; I[7][1][2][1]='Opps...Which side of the Profit and Loss Account is net profit found?
Make use of the scale balance analogy we learnt in class.'; I[7][1][2][2] = 0; I[7][1][3] = new Array(); I[7][1][3][0]='Cash Account'; I[7][1][3][1]='Are you sure? Did we learn this?'; I[7][1][3][2] = 0; I[7][2] = 0; I[8] = new Array(); I[8][0]='Given opening capital of $9,000, closing capital as $10,000 and drawings of $800, then'; I[8][1] = new Array(); I[8][1][0] = new Array(); I[8][1][0][0]='net profit for the year was $3,600.'; I[8][1][0][1]='Opps, did you make a mistake in your calculation?
Try again by balancing the Capital Account carefully.'; I[8][1][0][2] = 0; I[8][1][1] = new Array(); I[8][1][1][0]='net loss for the year was $3,600.'; I[8][1][1][1]='Opps, did you make a mistake in your calculation?
Try again by balancing the Capital Account carefully.'; I[8][1][1][2] = 0; I[8][1][2] = new Array(); I[8][1][2][0]='net profit for the year was $1,800.'; I[8][1][2][1]='Wonderful! You\'ve got it right! '; I[8][1][2][2] = 1; I[8][1][3] = new Array(); I[8][1][3][0]='net loss for the year was $1,800.'; I[8][1][3][1]='Are you sure? Try again by balancing the Capital Account carefully.'; I[8][1][3][2] = 0; I[8][2] = 0; I[9] = new Array(); I[9][0]='Tan buys and sells furniture for a profit. If $700 worth of goods purchased for resale are incorrectly debited to the Furniture Account, '; I[9][1] = new Array(); I[9][1][0] = new Array(); I[9][1][0][0]='net profit will be understated by $700.'; I[9][1][0][1]='Opps...
Think about how purchases will affect the net profit.
With less purchases recorded, will it increase or decrease the net profit?'; I[9][1][0][2] = 0; I[9][1][1] = new Array(); I[9][1][1][0]='net profit will be overstated by $700.'; I[9][1][1][1]='That\'s right!
Purchases is understated by $700.
Therefore, gross profit will be overstated by $700 and so will the net profit.'; I[9][1][1][2] = 1; I[9][1][2] = new Array(); I[9][1][2][0]='asset value will be understated by $700.'; I[9][1][2][1]='Are you sure?
$700 has been debited to the Furniture Account.
Does this overstate or understate the asset value?'; I[9][1][2][2] = 0; I[9][1][3] = new Array(); I[9][1][3][0]='net profit will be unaffected.'; I[9][1][3][1]='Please check your answer again.
Purchases are being recorded in the Trading Account.
So, do you think profit will be affected as a result of less purchases?'; I[9][1][3][2] = 0; I[9][2] = 0; I[10] = new Array(); I[10][0]='A debit balance in the Profit and Loss Account means a'; I[10][1] = new Array(); I[10][1][0] = new Array(); I[10][1][0][0]='net loss.'; I[10][1][0][1]='Great! You\'ve got it!'; I[10][1][0][2] = 1; I[10][1][1] = new Array(); I[10][1][1][0]='net profit.'; I[10][1][1][1]='Are you sure?
Try to recall the scale balance analogy and draw up a simple Profit and Loss Account to check your answer.'; I[10][1][1][2] = 0; I[10][1][2] = new Array(); I[10][1][2][0]='gross loss.'; I[10][1][2][1]='Not really...
Either a gross loss or a gross profit may result in a debit balance in the Profit and Loss Account.
A debit balance can occur if expenses exceed the gross profit.'; I[10][1][2][2] = 0; I[10][1][3] = new Array(); I[10][1][3][0]='gross profit.'; I[10][1][3][1]='Not exactly...
A gross profit increases the credit side of the Profit and Loss Account. Think again.'; I[10][1][3][2] = 0; I[10][2] = 0; I[11] = new Array(); I[11][0]='If wages are expenses incurred in making goods into a saleable condition, they should be charged to the '; I[11][1] = new Array(); I[11][1][0] = new Array(); I[11][1][0][0]='Trading Account.'; I[11][1][0][1]='That\'s absolutely right!
These wages are to be considered as part of the purchasing expenses.
'; I[11][1][0][2] = 1; I[11][1][1] = new Array(); I[11][1][1][0]='Profit and Loss Account.'; I[11][1][1][1]='Opps..please try again.'; I[11][1][1][2] = 0; I[11][1][2] = new Array(); I[11][1][2][0]='Trial Balance.'; I[11][1][2][1]='Not exactly...
You may want to check out the purpose of a Trial Balance?'; I[11][1][2][2] = 0; I[11][1][3] = new Array(); I[11][1][3][0]='Balance Sheet.'; I[11][1][3][1]='Please try again...
Balance sheet records only the balances of assets, liabilities and owner\'s equity at a point in time.'; I[11][1][3][2] = 0; I[11][2] = 0; I[12] = new Array(); I[12][0]='Which of the following is not shown in the Profit and Loss Account?'; I[12][1] = new Array(); I[12][1][0] = new Array(); I[12][1][0][0]='Stationery'; I[12][1][0][1]='Why not?
This is an operating expense.'; I[12][1][0][2] = 0; I[12][1][1] = new Array(); I[12][1][1][0]='Carriage inwards'; I[12][1][1][1]='That\'s right.
This is a purchasing expense.
Purchasing expenses are debited in the Trading Account.'; I[12][1][1][2] = 1; I[12][1][2] = new Array(); I[12][1][2][0]='Annual business registration fee'; I[12][1][2][1]='Why not?
This is an operating expense.'; I[12][1][2][2] = 0; I[12][1][3] = new Array(); I[12][1][3][0]='Registration fee for delivery van'; I[12][1][3][1]='Why not?
This is an operating expense.'; I[12][1][3][2] = 0; I[12][2] = 0; I[13] = new Array(); I[13][0]='Gross loss is shown on the '; I[13][1] = new Array(); I[13][1][0] = new Array(); I[13][1][0][0]='credit side of the Profit and Loss Account.'; I[13][1][0][1]='Are you sure?
Net profit/ loss is found in the Profit and Loss Account.'; I[13][1][0][2] = 0; I[13][1][1] = new Array(); I[13][1][1][0]='debit side of the Profit and Loss Account.'; I[13][1][1][1]='Are you sure?
Net profit/ loss is found in the Profit and Loss Account.'; I[13][1][1][2] = 0; I[13][1][2] = new Array(); I[13][1][2][0]='credit side of the Trading Account.'; I[13][1][2][1]='Wonderful!
Gross loss results when COGS (debit side) exceeds net sales (credit side).
Thus, gross loss being a balancing figure, is shown on the credit side of the Trading Account.'; I[13][1][2][2] = 1; I[13][1][3] = new Array(); I[13][1][3][0]='debit side of the Trading Account.'; I[13][1][3][1]='Hmm...please try again...
Try to draw up a simple Trading Account and find out if this statement is indeed true.'; I[13][1][3][2] = 0; I[13][2] = 0; I[14] = new Array(); I[14][0]='If the capital at the end of the accounting period is $50,000, the net profit for the year is $15,000 and drawing is $3,000, what is the capital at the beginning of the period?'; I[14][1] = new Array(); I[14][1][0] = new Array(); I[14][1][0][0]='$47,000'; I[14][1][0][1]='Are you sure?
Try again by balancing the Capital Account carefully.'; I[14][1][0][2] = 0; I[14][1][1] = new Array(); I[14][1][1][0]='$32,000'; I[14][1][1][1]='Opps...
Perhaps there is some calculation error?
Try again by balancing the Capital Account carefully.'; I[14][1][1][2] = 0; I[14][1][2] = new Array(); I[14][1][2][0]='$38,000'; I[14][1][2][1]='Great! You\'ve got it right!'; I[14][1][2][2] = 1; I[14][1][3] = new Array(); I[14][1][3][0]='$62,000'; I[14][1][3][1]='Please try again.
You may like to draw up the Capital Account and find out the capital at the beginning of the period.'; I[14][1][3][2] = 0; I[14][2] = 0; I[15] = new Array(); I[15][0]='If other revenues received for the year are $15,000, operating expenses are $50,000 and the net profit is $35,000, the gross profit is'; I[15][1] = new Array(); I[15][1][0] = new Array(); I[15][1][0][0]='$85,000'; I[15][1][0][1]='Please try again.
You may like to draw up the Profit and Loss Account, given the figures in the question, to check your answer.
'; I[15][1][0][2] = 0; I[15][1][1] = new Array(); I[15][1][1][0]='$70,000'; I[15][1][1][1]='Great job!'; I[15][1][1][2] = 1; I[15][1][2] = new Array(); I[15][1][2][0]='$50,000'; I[15][1][2][1]='Opps...
You may like to draw up the Profit and Loss Account, given the figures in the question, to check your answer.'; I[15][1][2][2] = 0; I[15][1][3] = new Array(); I[15][1][3][0]='$100,000'; I[15][1][3][1]='Uh oh...
You may like to draw up the Profit and Loss Account, given the figures in the question, to check your answer.'; I[15][1][3][2] = 0; I[15][2] = 0; Status = new Array(); function CreateStatusArrays(){ for (var x=0; x-1){ FirstBit = InString.substring(0, i); LastBit = InString.substring(i + Token.length, InString.length); InString = FirstBit + Replacement + LastBit; i = InString.indexOf(Token); } return InString; } function ChangeQ(ChangeBy){ var NewNum = CurrQNum + ChangeBy; if ((NewNum >= 0)&&(NewNum '; OutString += ''; OutString += TitleCode; OutString += ''; OutString += NavBar; OutString += '

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'; } Output = Output + BuildQuestion(I.length-1); Output = TableOpener + Output + TableCloser; DisplayExercise(Output); } function ShowQuestion(QNum){ //First, create the Q number readout at the top var Readout = (QNum+1) + '/' + I.length; while (Readout.length < 7){ Readout = ' ' + Readout + ' '; } Readout = QButtonsOpener + Readout + QButtonsCloser; var Output = BuildQuestion(QNum); Output = TableOpener + Output + TableCloser; DisplayExercise(Readout + Output); //Mark the answers already done for (i=0; i=0; i--){ //Find any incorrect choices var b = eval('BottomFrame.document.QForm.A_' + QNum + '_' + i); if (b != null){ //if it's wrong, count it if (b.checked == true){ Status[QNum][1][i] = 'C'; } else{ Status[QNum][1][i] = 'U'; } if (((b.checked == true) && (b.value == "0"))||((b.checked == false)&&(b.value == "1"))){ TotWrong++; } } } if (TotWrong == 0){ Output = DefaultRight; } else{ Output = DefaultWrong + '
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