A credit purchase of machinery worth ₹50,000 will: MCQ with Answer and Explanation

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A credit purchase of machinery worth ₹50,000 will:

A. Increase assets and decrease liabilities

B. Decrease assets and increase liabilities

C. Decrease assets and decrease capital

D. Increase assets and increase liabilities

Answer: Option D

Solution (By JKSSB Mock Tests)

Machinery (asset) increases, and a creditor liability increases. So assets and liabilities both increase.

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

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Question #1

Goodwill brought in cash by a new partner is distributed among old partners in their:

A. Old profit sharing ratio

B. Capital ratio

C. New profit sharing ratio

D. Sacrificing ratio

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Correct Answer: Option D

Explanation:
Premium for goodwill compensates the old partners for the share of profit they sacrifice in favor of the new partner.

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Question #2

A Cash Book serves the purpose of:

A. A Ledger only

B. Both Journal and Ledger

C. A Trial Balance

D. A Journal only

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Correct Answer: Option B

Explanation:
The cash book acts as a journal because transactions are recorded chronologically, and as a ledger because it contains the cash account balance.

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Question #3

The 'Emphasis of Matter' vs 'Other Matter' paragraph: Emphasis of Matter refers to:

A. Matters that require a modified opinion

B. Scope limitation

C. Matters appropriately presented or disclosed in the financial statements that are fundamental to users' understanding

D. Matters not presented or disclosed in the financial statements

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Correct Answer: Option C

Explanation:
Emphasis of Matter highlights a note/disclosure already in financial statements.

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