'Substance over Form' is a concept that means: MCQ with Answer and Explanation
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Question #1
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Provision for doubtful debts created at the year-end is debited to:
Correct Answer: Option D
Explanation:
Creating a provision is an expected indirect loss based on conservatism, so it is charged to the Profit and Loss Account.
Creating a provision is an expected indirect loss based on conservatism, so it is charged to the Profit and Loss Account.
This question belongs to:
Accountancy and Statistics
Accountancy and Book Keeping
Question #2
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The formula 'Fixed Cost / Contribution Margin per Unit' is used to find:
Correct Answer: Option B
Explanation:
This formula yields the exact number of units a company needs to sell to cover all its fixed and variable costs.
This formula yields the exact number of units a company needs to sell to cover all its fixed and variable costs.
This question belongs to:
Accountancy and Statistics
Accountancy and Book Keeping
Question #3
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A company has an operating cycle of 90 days. Its average daily cash outflow is ₹2,00,000. It maintains a minimum cash balance of 10% of its cash outflow during the operating cycle. What is the minimum cash balance it should maintain?
Correct Answer: Option D
Explanation:
Total cash outflow during the operating cycle = 90 days * ₹2,00,000 = ₹1,80,00,000. Minimum cash balance = 10% of ₹1,80,00,000 = ₹18,00,000.
Total cash outflow during the operating cycle = 90 days * ₹2,00,000 = ₹1,80,00,000. Minimum cash balance = 10% of ₹1,80,00,000 = ₹18,00,000.
This question belongs to:
Accountancy and Statistics
Accountancy and Book Keeping
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