Preparation of Final Accounts of Sole ProprietorsQ-4 | Final Accounts of Sole ProprietorsQuestion 5113 of 40

The gain from sale of capital assets is added to revenue to ascertain the net profit of the business. [Dec. 2023, 2 Marks]

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Detailed Solution & Explanation

True: The gain from sale of capital assets is added to revenue to ascertain the net profit but it should not be added to revenue to ascertain net operating profit of business.

About This Chapter: Final Accounts

Paper

Paper 1: Accounting

Weightage

25-30%

Key Topics

Sole Proprietor, NPO, Manufacturing

This chapter covers Sole Proprietor, NPO, Manufacturing and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 25-30% weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

Net Profit

The final profit of a business after deducting all indirect operating expenses, non-operating expenses, and taxes from Gross Profit. It represents the actual earnings available to the owners.

Related Comparison Tables

Revenue Expenditure vs Capital Expenditure: Accounts Trading Account vs P&L Account: Final Accounts Explained SLM vs WDV Depreciation: CA Foundation Accounts

More Questions from Preparation of Final Accounts of Sole Proprietors

Mr. A accepts two bills of exchange on June 1, 2024 for ₹ 1,50,000 and 60,000 drawn on him by Mr. B. The bill of exchange for ₹ 1,50,000 is for two months while the bill of exchange for 60,000 is for three months. Mr. B got the first bill discounted with the bank for ₹ 1,49,000 on June 3, 2024. On August 2, 2024 Mr. A requested Mr. B. to cancel both the bills and drew a new bill on him with the combined amount of both the bills along with interest @ 12% per annum for a period of two months. Before the due date of the renewed bill on September 3, 2024, Mr. A becomes insolvent and only 40 paise in a rupee could be recovered from his estate. You are required to give the journal entries in the books of Mr. B. [Jan. 2025, 5 Marks]

Discuss the limitations which must be kept in mind while evaluating the Financial Statements. [Nov. 2018, 4 Marks]

Trading account

Profit and loss account

Balance sheet

Manufacturing A/c

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