Creating a provision for doubtful debts is an application of which accounting convention? MCQ with Answer and Explanation

Question
Creating a provision for doubtful debts is an application of which accounting convention?
A. Consistency
B. Full Disclosure
C. Materiality
D. Conservatism
Answer: Option D
Solution (By JKSSB Mock Tests)
Conservatism (Prudence) requires anticipating potential future losses (like bad debts) and providing for them immediately.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
If Sales are Rs 1,00,000, Variable Cost is Rs 60,000, what is the Contribution Margin Ratio (P/V Ratio)?
A. 20%
B. 60%
C. 40%
D. 100%
Discuss
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Correct Answer: Option C

Explanation:
Contribution = Sales - Variable Cost = 40,000. P/V Ratio = (Contribution / Sales) * 100 = 40%.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
Tax Deducted at Source (TDS) on rent of land/building under section 194I (exceeding Rs 2.4 lakhs p.a.) is at the rate of:
A. 2%
B. 1%
C. 5%
D. 10%
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Correct Answer: Option D

Explanation:
Under Section 194I of the Income Tax Act, TDS on rent for land and buildings is deducted at 10%.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
Which of the following is a feature of financial management?
A. It ignores the time value of money
B. It is only concerned with raising funds
C. It is a specialized branch of general management
D. It is only for non-profit organizations
Discuss
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Correct Answer: Option C

Explanation:
Financial management is a specialized branch of general management that deals with the planning, organizing, and controlling of financial activities.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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