A 'Provision' is recognized when: MCQ with Answer and Explanation

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A 'Provision' is recognized when:

A. Management decides

B. For all future losses

C. It is certain

D. There is a present obligation, probable outflow, reliable estimate

Answer: Option D

Solution (By JKSSB Mock Tests)

As per AS 29, provision is recognized when these three conditions are met.

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

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Question #1

Under GST, the 'Taxable Event' is:

A. Sale

B. Manufacture

C. Production

D. Supply of goods or services

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Correct Answer: Option D

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

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

Question #2

The main objective of maintaining a Cash Book is:

A. To record credit transactions

B. To compute profit

C. To audit cash

D. To record all cash receipts and payments

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Correct Answer: Option D

Explanation:
Cash book records all cash and bank transactions, serving both as journal and ledger.

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

Question #3

The term 'Prepaid Expense' is treated as:

A. An expense

B. A loss

C. An asset

D. A liability

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Correct Answer: Option C

Explanation:
Prepaid expenses are treated as current assets because they represent future economic benefits for which payment has already been made.

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

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