Provision for doubtful debts is created based on: MCQ with Answer and Explanation

Question Report Error

Provision for doubtful debts is created based on:

A. Convention of conservatism

B. Convention of materiality

C. Convention of disclosure

D. Convention of consistency

Answer: Option A

Solution (By JKExamLibrary)

Creating provision for doubtful debts is an application of conservatism, anticipating possible losses.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Discuss this Question (0)

No comments yet. Be the first to start the discussion!

Practice More Accountancy and Book Keeping Questions

Question #1 Report Error

Nominal accounts are closed at the end of the accounting year by transferring them to:

A. Balance Sheet

B. Capital Account

C. Trading and Profit & Loss Account

D. Suspense Account

View Answer & Solution Discuss

Correct Answer: Option C

Explanation:
Nominal accounts represent expenses and incomes, which are summarized into the Trading and P&L accounts to determine net profit/loss.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2 Report Error

Assertion (A): Under Ind AS 107, an entity must disclose information that enables users to evaluate the significance of financial instruments for its financial position. Reason (R): This includes disclosing the nature and extent of risks arising from financial instruments. Choose the correct option.

A. Both A and R are true but R is NOT the correct explanation of A

B. A is true but R is false

C. Both A and R are true and R is the correct explanation of A

D. A is false but R is true

View Answer & Solution Discuss

Correct Answer: Option C

Explanation:
Ind AS 107 requires extensive disclosures about financial instruments. The primary goal is to help users evaluate their significance, which inherently requires disclosing the nature and extent of risks (credit, liquidity, market) associated with them. R correctly explains A.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3 Report Error

The 'Outstanding Salary' is recorded by:

A. Debit Outstanding Salary A/c, Credit Salary A/c

B. No entry

C. Debit Salary A/c, Credit Outstanding Salary A/c

D. Debit Cash A/c, Credit Salary A/c

View Answer & Solution Discuss

Correct Answer: Option C

Explanation:
To record accrued expense: Salary A/c Dr. To Outstanding Salary A/c.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Explore All Accountancy and Book Keeping MCQs