Question

7. Where provident fund interest of trial balance is shown ?
(A) Added in provident fund on liabilities side of balance sheet
(B) Added in provident fund investment on asset side of balance sheet
(C) Debit side of Profit & Loss Account
(D) Credit side of Profit & Loss Account​

Answer 1

Answer:

Provident fund interest of trial balance is shown in credit side of Profit & Loss Account .

Explanation:

Choice (d) is correct:

Provident fund interest is a liability and is added to the liability side of the balance sheet. A balance sheet is explained as a financial statement that is used to provide information about a company's assets, liabilities, and equity over a period of time, which helps assess the company's capital structure.

Choice (b) is incorrect:

The balance sheet is very transparent as it provides true financial information about the country to all categories such as management, lenders stakeholders who directly or indirectly deal with the company. It is prepared at the end of the financial year.

Choice (a) is incorrect:

The income statement reflects the company's actual profit or loss during the reporting period. It is compiled based on the company's net profit for the period.

The income statement is used to record income and expenses related to the main and secondary activities. The financial status of the company is not discussed here.

Choice (c) is incorrect:

A balance sheet is explained as a financial statement that is used to provide information about a company's assets, liabilities, and equity over a period of time, which helps assess the company's capital structure.

The balance sheet is very transparent as it provides true financial information about the country to all categories such as management, lenders stakeholders who directly or indirectly deal with the company. It is prepared at the end of the financial year.

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