MCQs Answers | The Heading Of Every Financial Statement Should Contain The | In Every Financial Statement, There Exists Single And Double Underlines

The correct answer is b), as every Financial Statement whether it is an Income Statement, Statement of Owners’ Equity, Balance Sheet or a Cash Flows Statement, is required to start with the heading which contains the name of the company, the title which shows the name of the statement such as Income Statement, etc. and the specific date such as in case of Income Statement, Statement of Owners’ Equity and Cash Flows Statement “for 31^st December, 2024” and “As On 31^st December, 2024 for Balance Sheet.

The place of business, where business operations are conducted, is not required in the heading of each financial statement. However, the name of place of the business is required in legal documents such as Memorandum of Association (MoM), Articles of Association (AoA) and Prospectus. The place of business is a registered and official address where the business is physically located.

Unit of measurement is not usually required in the heading section. Type of ownership is not required in the heading of financial statements.

In Every Financial Statement, There Exists Single And Double Underlines

The correct answer of this mcq is (a), as a single line is used to show either addition of values or subtraction of values. From Example 1, in Income Statement a single line after Sales - Cost of Sales shows subtraction while after the sum of total selling & operating expenses and general and administrative expenses shows addition and as a result, we get total operating expenses. From Example 2, in statement of financial position or balance sheet, single lines are used to show the sum of total current assets, total non current assets, total liabilities and total shareholders’ equity.

Double underlines are used to show the final totals of all the values. For example, in T-Account double underlines are used to show final totals on debit side and credit side. In case of balance sheet, these double underlines are used at the end of the balance sheet format to show the balances of total assets on asset side or left side and on liabilities and equity side or right side to indicate the total of liabilities & equity on the specified date e.g., as on 31^st December, 2024.

Example 1

ABC Company

Income Statement

For The Year Ended On 31^st December, 2024

                              

                                                                                 $000                        

Sales                                                                        XXX

Cost Of Sales                                                          (XXX                                                                                                                                                            _______

Gross Profit                                                              XXX                                                                       

Selling & Operating Expenses               XXX

General And Administrative Expenses  XXX

                                                               _____

Total Operating Expenses                                       (XXX)

                                                                                _______

Net Income                                                               XXX

                                                                                ________

                                                                                ________                                                                 

Example 2

ABC Company

Balance Sheet

As on 31^st December, 2024

 

Assets                                   $000                       Liabilities                   $000

Current Assets                                               Current Liabilities           

Cash                                      XXX                Accounts Payable            XXX

Accounts Receivable            XXX                 Salaries Payable              XXX

Inventory                               XXX                 Wages Payables              XXX

                                             ______                                                      ______

Total Current Assets              XXX         Total Current Liabilities          XXX

                                             ______                                                      _______

Non-Current Assets                                Non-Current Liabilities

Plant & Machinery                XXX         Bank Loan                                XXX

Furniture & Fixture               XXX          Other Loans                             XXX

                                             ______                                                        ______ 

Total Non Current Assets       XXX       Total Non-Current Liabilities     XXX

                                              ______                                                        _____

                                                                Shareholders’ Equity

                                                                       Common Stock                    XXX

                                                                       Retained Earnings                XXX

                                                                                                                    _____

 

                                                                     Total Shareholders’ Equity     XXX

                                               ______                                                          _____

Total Assets                             XXX           Total Liabilities & Equity        XXX                  

                                              _______                                                          _____

                                              _______                                                          _____