Contingent liabilities are shown as a footnote to the balance sheet to comply with which accounting convention? MCQ with Answer and Explanation

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Contingent liabilities are shown as a footnote to the balance sheet to comply with which accounting convention?

A. Conservatism

B. Full Disclosure

C. Materiality

D. Consistency

Answer: Option B

Solution (By JKSSB Mock Tests)

Full disclosure requires all significant information to be completely and fairly disclosed, including contingent liabilities via footnotes.

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

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Question #1

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The 'Pension Fund Regulatory and Development Authority' (PFRDA) oversees:

A. Mutual funds

B. Bank deposits

C. Stock markets

D. National Pension System (NPS) and other pension funds

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Correct Answer: Option D

Explanation:
PFRDA is the pension sector regulator.

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

Question #2

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On retirement of a partner, if the retiring partner is paid his dues in instalments, the method used is:

A. Proportionate capital method

B. Piecemeal distribution

C. Surplus capital method

D. Maximum loss method

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Correct Answer: Option B

Explanation:
When dues are paid in instalments, piecemeal distribution (as per Garner vs Murray rule) is applied.

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Question #3

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Opportunity Cost can be best described as:

A. The direct cost of making a product

B. The benefit sacrificed when choosing one alternative over the next best alternative

C. A cost that cannot be changed

D. The cost of idle time

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Correct Answer: Option B

Explanation:
Opportunity cost is a crucial economic and management concept reflecting the value of the foregone alternative in decision making.

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

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