Payment of a liability out of cash will result in: MCQ with Answer and Explanation

Question Report Error
Payment of a liability out of cash will result in:
A. Decrease in an asset and decrease in a liability
B. Increase in an asset and increase in a liability
C. Increase in a liability and decrease in capital
D. Decrease in an asset and decrease in capital
Answer: Option A
Solution (By JKExamLibrary)
Cash (Asset) decreases and the corresponding Liability also decreases, keeping the accounting equation balanced.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Practice More Accountancy and Book Keeping Questions

Question #1 Report Error
The 'Sufficient Appropriate Audit Evidence' means:
A. Only quality
B. Quantity (sufficiency) and quality (appropriateness - relevance and reliability) of evidence
C. Only quantity
D. Any evidence
Discuss

Correct Answer: Option B

Explanation:
Sufficient relates to quantity, appropriate to quality.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2 Report Error
A 'Partner by Holding Out' is:
A. A retired partner
B. A minor admitted to benefits
C. A person who represents himself as a partner but is not
D. A deceased partner's legal heir
Discuss

Correct Answer: Option C

Explanation:
A person who by his conduct or words allows others to believe he is a partner may be held liable as partner by estoppel or holding out.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3 Report Error
Public Financial Management System (PFMS) in India is primarily used for:
A. Government financial transactions and fund tracking
B. Tax collection only
C. Corporate financial reporting
D. Stock market regulation
Discuss

Correct Answer: Option A

Explanation:
PFMS is a government portal for tracking fund disbursement, ensuring transparency and efficiency in public financial management.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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