Abnormal loss of stock by fire (fully uninsured) is treated by: MCQ with Answer and Explanation

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Abnormal loss of stock by fire (fully uninsured) is treated by:

A. Crediting P&L A/c and Debiting Trading A/c

B. Only crediting Trading A/c

C. Only debiting P&L A/c

D. Crediting Trading A/c and Debiting P&L A/c

Answer: Option D

Solution (By JKSSB Mock Tests)

The loss reduces the stock (Credit Trading A/c). Being an uninsured abnormal loss, it is transferred entirely to the debit side of P&L A/c.

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

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Question #1

Social Accounting primarily benefits:

A. Society at large by disclosing social costs and benefits

B. Shareholders only

C. Competitors

D. Government only

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Correct Answer: Option A

Explanation:
It provides information to stakeholders about the social impact of an entity.

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

Question #2

When credit sales of Rs 5,000 to Ram are wrongly posted as Rs 500 in his account, it is an error of:

A. Compensating

B. Principle

C. Commission

D. Omission

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Correct Answer: Option C

Explanation:
An error of commission includes posting wrong amounts. It will cause a mismatch in the Trial Balance.

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Question #3

The 'Physical Verification' of inventory is a part of:

A. Compliance procedure

B. Internal control evaluation

C. None

D. Substantive procedure

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Correct Answer: Option D

Explanation:
Physical verification is a substantive audit procedure to verify existence of inventory.

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

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