Which transaction will increase an asset and decrease another asset, keeping the accounting equation unchanged? MCQ with Answer and Explanation

Which transaction will increase an asset and decrease another asset, keeping the accounting equation unchanged?

A. Payment to a creditor

B. Goods purchased on credit

C. Introduction of capital

D. Purchase of machinery for cash

Answer: Option D

Purchasing machinery for cash increases the Machinery asset and decreases the Cash asset by the same amount.

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

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Question #1 Report Error

The 'Ind AS 24' on Related Party Disclosures requires disclosure of:

A. Only transactions with key management personnel

B. Only parent-subsidiary relationships

C. Relationships, transactions, and outstanding balances with related parties

D. Only compensation of key management personnel

Correct Answer: Option C

Explanation:
Ind AS 24 requires disclosure of related party relationships, transactions, and balances.

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

Question #2 Report Error

Provision for doubtful debts is created based on:

A. Convention of materiality

B. Convention of consistency

C. Convention of disclosure

D. Convention of conservatism

Correct Answer: Option D

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

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

Question #3 Report Error

Under GST, the 'Taxable Event' is:

A. Manufacture

B. Supply of goods or services

C. Sale

D. Production

Correct Answer: Option B

Explanation:
GST is levied on 'supply' rather than manufacture or sale alone.

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