A partner who does not actively participate in the business but is liable to third parties is called: MCQ with Answer and Explanation

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A partner who does not actively participate in the business but is liable to third parties is called:

A. Partner by estoppel

B. Nominal partner

C. Sleeping partner

D. Secret partner

Answer: Option C

Solution (By JKSSB Mock Tests)

Sleeping or dormant partner contributes capital but does not take part in management; still has unlimited liability.

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

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Question #1

The final step in the accounting cycle is:

A. Journalizing

B. Preparation of trial balance

C. Posting to ledger

D. Preparation of financial statements

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Correct Answer: Option D

Explanation:
The accounting cycle ends with the preparation of financial statements from the trial balance and adjustments.

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

Question #2

The term 'Marshalling' in the context of a Balance Sheet means:

A. Transferring net profit to capital

B. Writing off bad debts

C. Totaling the assets and liabilities

D. Arranging assets and liabilities in a specific order of liquidity or permanence

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Correct Answer: Option D

Explanation:
Marshalling refers to the logical sequencing of assets and liabilities to make the balance sheet easily readable and analytical.

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Question #3

Which system of accounting recognizes income when it is earned irrespective of receipt?

A. Hybrid system

B. Cash system

C. Accrual system

D. Single entry system

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Correct Answer: Option C

Explanation:
Accrual basis records revenues when earned and expenses when incurred, not when cash is received or paid.

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

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