A liability arising from a past event, whose existence depends on a future uncertain event, is known as: MCQ with Answer and Explanation

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A liability arising from a past event, whose existence depends on a future uncertain event, is known as:

A. Deferred Liability

B. Fixed Liability

C. Current Liability

D. Contingent Liability

Answer: Option D

Solution (By JKSSB Mock Tests)

Contingent liabilities depend on the outcome of a future event (like a pending lawsuit) and are disclosed in footnotes.

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

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The 'Peer Review' of audit firms is conducted by:

A. SEBI

B. MCA

C. NFRA

D. ICAI's Peer Review Board

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Correct Answer: Option D

Explanation:
ICAI has a Peer Review Board to ensure quality of audit services.

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Question #2

The 'Recoverable Amount' of a cash-generating unit (CGU) is:

A. Current market price

B. Replacement cost

C. Higher of fair value less costs of disposal and value in use

D. Lower of cost and net realisable value

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Correct Answer: Option C

Explanation:
As per Ind AS 36, recoverable amount is the higher of FVLCD and VIU.

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Question #3

A 'Funds Flow Statement' shows:

A. Cash inflows and outflows

B. Profit for the year

C. Changes in financial position between two periods

D. Changes in working capital

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Correct Answer: Option C

Explanation:
Funds flow statement explains the change in financial position (working capital) between two balance sheets.

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

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