A trade discount is: MCQ with Answer and Explanation

A trade discount is:
A. Given for prompt payment
B. Treated as a non-operating expense
C. Recorded separately in the books of accounts
D. Deducted from the list price and not recorded in the books
Answer: Option D
Solution (By JKSSB Mock Tests)
Trade discount is a reduction from the catalogue price given for bulk purchases and is not recorded in the accounting books.

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Practice More Accountancy and Book Keeping Questions

Question #1
S1: Carriage Inwards is added to the Trading Account. S2: Carriage Outwards is added to the Trading Account. Which statement(s) is/are correct?
A. S2 only
B. S1 only
C. Neither S1 nor S2
D. Both S1 and S2

Correct Answer: Option B


Explanation:
Carriage Inwards is a direct expense related to purchases and is added to the Trading Account. Carriage Outwards is a selling and distribution expense, shown in the Profit and Loss Account.

Question #2
Under GST, if a registered person makes both taxable and exempt supplies, the input tax credit (ITC) on common inputs must be reversed. Which rule prescribes the methodology for this reversal?
A. Rule 54 and 55
B. Rule 89 and 90
C. Rule 42 and 43
D. Rule 36 and 37

Correct Answer: Option C


Explanation:
Rule 42 and 43 of the CGST Rules prescribe the methodology for determining and reversing ITC attributable to exempt and non-business supplies.

Question #3
The time value of money concept is a core element in which financial management decision?
A. Ratio Analysis
B. Working Capital Management
C. Capital Budgeting
D. Inventory Valuation

Correct Answer: Option C


Explanation:
Capital budgeting techniques like Net Present Value (NPV) discount future cash flows, fundamentally relying on the time value of money.