A change in depreciation method is treated as: MCQ with Answer and Explanation

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A change in depreciation method is treated as:

A. Prior period item

B. Extraordinary item

C. Change in accounting policy

D. Error

Answer: Option C

Solution (By JKSSB Mock Tests)

Change in depreciation method is a change in accounting policy, requiring retrospective application as per AS 5.

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

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Question #1

If a partner takes over an unrecorded liability during dissolution, the accounting entry is:

A. Debit Liability A/c, Credit Cash

B. Debit Realisation A/c, Credit Partner's Capital A/c

C. Debit Partner's Capital A/c, Credit Realisation A/c

D. No entry is required

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Correct Answer: Option B

Explanation:
The firm is assuming a cost (Debit Realisation) and compensating the partner who took the liability (Credit Partner's Capital).

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

Question #2

In a partnership, if a partner is guaranteed a minimum profit share, deficiency is borne by:

A. From reserves

B. All partners equally

C. The partner giving guarantee

D. The firm

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Correct Answer: Option C

Explanation:
If a partner guarantees a minimum profit to another, any shortfall is made good by the guaranteeing partner.

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Question #3

Which of the following is NOT an advantage of Zero Based Budgeting?

A. Eliminates redundant expenses

B. Fosters efficient resource allocation

C. It is less time-consuming than traditional budgeting

D. Prevents arbitrary budget inflation

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Correct Answer: Option C

Explanation:
ZBB is actually heavily time-consuming because it requires managers to justify every single expenditure from scratch annually.

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