As per AS 3, interest paid on loan is classified as: MCQ with Answer and Explanation
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Question #1
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In a partnership, interest on capital is allowed only when:
Correct Answer: Option C
Explanation:
Interest on capital is payable only if the partnership deed so provides, and only out of profits.
Interest on capital is payable only if the partnership deed so provides, and only out of profits.
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Accountancy and Statistics
Accountancy and Book Keeping
Question #2
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S1: In a cash flow statement, the purchase of an investment in the shares of another company is classified under investing activities. S2: The receipt of dividends on those shares is always classified under operating activities. Which statement(s) is/are correct?
Correct Answer: Option D
Explanation:
S1 is correct; purchasing investments is an investing activity. S2 is incorrect because under Ind AS 7, dividends received can be classified as either operating (as a return on investments) or investing (as a return on investments) activities, providing flexibility.
S1 is correct; purchasing investments is an investing activity. S2 is incorrect because under Ind AS 7, dividends received can be classified as either operating (as a return on investments) or investing (as a return on investments) activities, providing flexibility.
This question belongs to:
Accountancy and Statistics
Accountancy and Book Keeping
Question #3
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The cost of a machine is ₹1,00,000, scrap value ₹10,000, useful life 10 years. Annual depreciation under straight-line method:
Correct Answer: Option D
Explanation:
Depreciation = (Cost - Scrap) / Life = (1,00,000 - 10,000) / 10 = ₹9,000.
Depreciation = (Cost - Scrap) / Life = (1,00,000 - 10,000) / 10 = ₹9,000.
This question belongs to:
Accountancy and Statistics
Accountancy and Book Keeping
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