Discount Allowed is considered a: MCQ with Answer and Explanation

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Discount Allowed is considered a:

A. Selling & Distribution Expense

B. Factory Expense

C. Financial Expense

D. Direct Expense

Answer: Option A

Solution (By JKSSB Mock Tests)

Discount allowed is given to encourage prompt payment by customers, treated as a selling/administrative expense in the P&L Account.

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

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Question #1

A company's current ratio is 2:1. If it purchases goods on credit for ₹1,00,000, what will be the effect on the current ratio?

A. It will decrease

B. It will become 1:1

C. It will remain unchanged

D. It will increase

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Correct Answer: Option A

Explanation:
When the current ratio is greater than 1 (e.g., 2:1), an equal increase in current assets and current liabilities (like credit purchase) will result in a decrease in the ratio.

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

Question #2

Ind AS (Indian Accounting Standards) are converged with:

A. IFRS (International Financial Reporting Standards)

B. Chinese Accounting Standards

C. US GAAP

D. UK GAAP

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Correct Answer: Option A

Explanation:
To align with global practices, India developed Ind AS which are substantially converged with IFRS.

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Question #3

Under the General Financial Rules (GFR) 2017, the 'Contingent Expenditure' includes:

A. Expenditure on capital assets

B. Salary and wages of regular staff

C. Expenditure on unforeseen events like natural calamities or legal claims

D. Expenditure on routine maintenance

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Correct Answer: Option C

Explanation:
Contingent expenditure under GFR refers to expenditure that is not certain and depends on the occurrence of unforeseen events, such as natural disasters, accidents, or legal claims against the government.

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

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