'Angel Tax' is a term used for tax on: MCQ with Answer and Explanation

Question

Share Report Error

'Angel Tax' is a term used for tax on:

A. Investments in startups by angel investors above fair market value

B. Income of angels

C. Charitable trusts

D. Religious institutions

Answer: Option A

Solution (By JKSSB Mock Tests)

Angel tax refers to Section 56(2)(viib) tax on excess share premium received by closely held companies.

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

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Question #1

Income tax paid by a sole proprietor is treated as:

A. Statutory liability in Balance Sheet

B. Business expense in P&L Account

C. Drawings and deducted from Capital

D. Direct expense in Trading Account

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Correct Answer: Option C

Explanation:
For a sole proprietor, income tax is a personal expense on the owner's income, hence treated as drawings and reduced from capital.

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Question #2

S1: In a partnership, if a partner's loan to the firm is interest-free, and the deed is silent, no interest is allowed. S2: If the partner's loan is interest-bearing as per the deed, it is treated as a liability and interest is charged to the Profit and Loss Account. Which statement(s) is/are correct?

A. S2 only

B. S1 only

C. Neither S1 nor S2

D. Both S1 and S2

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Correct Answer: Option D

Explanation:
Both statements are correct. If the deed is silent, no interest on a partner's loan is allowed. If the deed specifies an interest rate, it is treated as an expense and charged to the P&L Account, not the P&L Appropriation Account.

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Question #3

The 'Events after the Reporting Period' (Ind AS 10) are classified as:

A. Adjusting and non-adjusting events

B. Only adjusting events

C. Contingent events

D. Only non-adjusting

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Correct Answer: Option A

Explanation:
Adjusting events provide evidence of conditions that existed at the reporting date; non-adjusting indicate conditions that arose after.

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