S1: Under Ind AS 115, a 'Contract Asset' is an entity's right to consideration in exchange for goods or services that the entity has transferred to a customer, when that right is conditioned on something other than the passage of time. S2: A 'Contract Liability' is an entity's obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. Which statement(s) is/are correct? MCQ with Answer and Explanation

Question Report Error

S1: Under Ind AS 115, a 'Contract Asset' is an entity's right to consideration in exchange for goods or services that the entity has transferred to a customer, when that right is conditioned on something other than the passage of time. S2: A 'Contract Liability' is an entity's obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. Which statement(s) is/are correct?

A. Neither S1 nor S2

B. S2 only

C. S1 only

D. Both S1 and S2

Answer: Option D

Solution (By JKExamLibrary)

Both statements correctly define Contract Asset and Contract Liability as per Ind AS 115. A contract asset is conditional on future performance, while a receivable is unconditional. A contract liability is the obligation to perform after receiving payment.

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

Which of the following is not a type of error?

A. Error of interpretation

B. Error of principle

C. Error of omission

D. Error of commission

View Answer & Solution Discuss

Correct Answer: Option A

Explanation:
Common errors in accounting are error of principle, omission, commission, and compensating error. Error of interpretation is not a standard classification.

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

Question #2 Report Error

Interest on drawings is shown in the Profit & Loss Account on the:

A. Credit side

B. It is not shown in P&L A/c

C. Both sides

D. Debit side

View Answer & Solution Discuss

Correct Answer: Option A

Explanation:
Interest on drawings is an income for the business, hence it is credited to the Profit and Loss Account.

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

Question #3 Report Error

Assertion (A): Indirect Taxes are regressive in their impact. Reason (R): They are levied at a uniform rate irrespective of the income level of the consumer.

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:
Because indirect taxes (like GST) are charged flatly on goods, lower-income people pay a higher proportion of their income, causing a regressive effect.

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

Explore All Accountancy and Book Keeping MCQs