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Which of the following is not a part of the Income Statement for a non-manufacturing concern?
- a)Trading account
- b)Profit and Loss account
- c)Balance Sheet
- d)None of the above
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
Which of the following is not a part of the Income Statement for a non...
Understanding the Income Statement Components
The Income Statement reflects a company's financial performance over a specific period. For non-manufacturing concerns, this statement primarily includes the Profit and Loss account, but not the Trading account or Balance Sheet.
Key Components of the Income Statement
- Trading Account:
- Typically used by manufacturing companies to calculate the gross profit by showing sales and cost of goods sold.
- Non-manufacturing concerns do not have a trading account since they do not deal with inventory or manufacturing goods.
- Profit and Loss Account:
- This part of the Income Statement summarizes revenues and expenses to determine net profit or loss for the period.
- All non-manufacturing entities prepare this account to assess their profitability.
Balance Sheet Exclusion
- Balance Sheet:
- The Balance Sheet is not a part of the Income Statement.
- It represents the financial position of a business at a specific point in time, showing assets, liabilities, and equity.
- While integral to financial reporting, it is separate from the Income Statement.
Conclusion
In summary, the correct answer is option 'C' because the Balance Sheet does not belong to the Income Statement for a non-manufacturing concern. The Income Statement mainly comprises the Profit and Loss account, while the Trading account is irrelevant for non-manufacturers, who focus solely on their revenues and expenses.
The Income Statement reflects a company's financial performance over a specific period. For non-manufacturing concerns, this statement primarily includes the Profit and Loss account, but not the Trading account or Balance Sheet.
Key Components of the Income Statement
- Trading Account:
- Typically used by manufacturing companies to calculate the gross profit by showing sales and cost of goods sold.
- Non-manufacturing concerns do not have a trading account since they do not deal with inventory or manufacturing goods.
- Profit and Loss Account:
- This part of the Income Statement summarizes revenues and expenses to determine net profit or loss for the period.
- All non-manufacturing entities prepare this account to assess their profitability.
Balance Sheet Exclusion
- Balance Sheet:
- The Balance Sheet is not a part of the Income Statement.
- It represents the financial position of a business at a specific point in time, showing assets, liabilities, and equity.
- While integral to financial reporting, it is separate from the Income Statement.
Conclusion
In summary, the correct answer is option 'C' because the Balance Sheet does not belong to the Income Statement for a non-manufacturing concern. The Income Statement mainly comprises the Profit and Loss account, while the Trading account is irrelevant for non-manufacturers, who focus solely on their revenues and expenses.
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Community Answer
Which of the following is not a part of the Income Statement for a non...
The Balance Sheet is not a part of the Income Statement. The Income Statement consists of the Trading account and the Profit and Loss account, which show the performance of the business, whereas the Balance Sheet shows the financial position.
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Which of the following is not a part of the Income Statement for a non-manufacturing concern?a)Trading accountb)Profit and Loss accountc)Balance Sheetd)None of the aboveCorrect answer is option 'C'. Can you explain this answer?
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