A: The Going Concern concept justifies the charging of depreciation. R: Depreciation allocates the cost of an asset over its useful life. Choose the correct option. MCQ with Answer and Explanation
A: The Going Concern concept justifies the charging of depreciation. R: Depreciation allocates the cost of an asset over its useful life. Choose the correct option.
A. Both A and R are true but R is NOT the correct explanation of A
B. A is false but R is true
C. A is true but R is false
D. Both A and R are true and R is the correct explanation of A
Answer: Option D
Solution (By JKSSB Mock Tests)
The Going Concern concept assumes the business will continue indefinitely, which justifies capitalizing asset costs and depreciating them over their useful lives. R correctly explains the mechanism of depreciation.
A: A current ratio of 2:1 is generally considered ideal. R: It indicates that current assets are twice the current liabilities, ensuring good short-term liquidity. Choose the correct option.
A.A is true but R is false
B.A is false but R is true
C.Both A and R are true and R is the correct explanation of A
D.Both A and R are true but R is NOT the correct explanation of A
Explanation:
A current ratio of 2:1 is a standard benchmark for short-term solvency. It means the firm has double the current assets to cover its current liabilities, providing a safety margin. R correctly explains A.
Explanation:
Section 148 empowers the Central Government to mandate cost audits for companies engaged in specific production or manufacturing activities.
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