A tax levied on a commodity at each stage of production and distribution, based only on the value added at that stage, is characteristic of: MCQ with Answer and Explanation

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A tax levied on a commodity at each stage of production and distribution, based only on the value added at that stage, is characteristic of:
A. Wealth Tax
B. Income Tax
C. Corporate Tax
D. Value Added Tax (VAT) / GST
Answer: Option D
Solution (By JKExamLibrary)
VAT/GST eliminates the cascading effect by taxing only the value added, utilizing the Input Tax Credit mechanism.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1 Report Error
Money kept in Provident Funds and small savings schemes forms part of the:
A. Public Account of India
B. RBI Reserves
C. Consolidated Fund of India
D. Contingency Fund of India
Discuss

Correct Answer: Option A

Explanation:
The Public Account holds money acting as a banker (e.g., provident funds) and does not require parliamentary vote for disbursements.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2 Report Error
A: The Quick Ratio is more stringent than the Current Ratio. R: The Quick Ratio excludes inventory and prepaid expenses from current assets. Choose the correct option.
A. A is true but R is false
B. Both A and R are true and R is the correct explanation of A
C. Both A and R are true but R is NOT the correct explanation of A
D. A is false but R is true
Discuss

Correct Answer: Option B

Explanation:
The Quick (Acid-Test) Ratio is a more stringent measure of short-term liquidity than the Current Ratio. It excludes inventory and prepaid expenses because they are not immediately convertible to cash. R correctly explains why it is more stringent.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3 Report Error
Which of the following is an example of an 'Error of Commission'?
A. Two errors cancelling each other out
B. Failing to record a transaction entirely
C. Recording a machinery purchase in the Purchases Account
D. Entering Rs 4,500 instead of Rs 5,400 in an account
Discuss

Correct Answer: Option D

Explanation:
An error of commission involves incorrect casting, posting, or carry-forward, such as writing the wrong numerical amount.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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