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SSC Financial and Cost Accounting P-1 QUESTION #6142
Question 1

Which item, when entered in the statement of profit or loss of a sole trader, will increase profits?

  • Carriage inwards
  • Discounts allowed
  • Goods taken for own use✔️
  • Sales returns
Correct Answer Explanation

Option C (Goods taken for own use) is correct.

Entry: Debit Drawings; Credit Purchases — reducing purchases expense increases gross profit.

  • A: Carriage inwards increases cost of purchases — reduces profit.
  • B: Discounts allowed is an expense — reduces profit.
  • D: Sales returns reduces revenue — reduces profit.