If a machinery costing ₹80,000 is sold for ₹70,000 with accumulated depreciation ₹20,000, the profit/loss on sale is: MCQ with Answer and Explanation

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If a machinery costing ₹80,000 is sold for ₹70,000 with accumulated depreciation ₹20,000, the profit/loss on sale is:

A. No profit no loss

B. Profit ₹30,000

C. Loss ₹10,000

D. Profit ₹10,000

Answer: Option D

Solution (By JKSSB Mock Tests)

Book value = 80,000 - 20,000 = 60,000. Sale price 70,000. Profit = 70,000 - 60,000 = ₹10,000.

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

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Question #1

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In the context of single entry system, 'Net Worth' means:

A. Excess of assets over liabilities

B. Total assets

C. Cash in hand

D. Total liabilities

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Correct Answer: Option A

Explanation:
Net worth = Total assets - Total liabilities, representing owner's equity.

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Question #2

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The 'Component Auditor' in a group audit is:

A. Internal auditor

B. An auditor who performs audit work on a component for the group auditor

C. The auditor who audits the parent

D. Tax auditor

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Correct Answer: Option B

Explanation:
Group auditor may use the work of component auditors.

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Question #3

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A: Closing stock is valued at cost or net realizable value, whichever is lower. R: This is based on the Conservatism (Prudence) Concept. Choose the correct option.

A. A is true but R is false

B. Both A and R are true and R is the correct explanation of A

C. Both A and R are true but R is NOT the correct explanation of A

D. A is false but R is true

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Correct Answer: Option B

Explanation:
AS 2 mandates inventory valuation at cost or NRV, whichever is lower. This prevents overstating assets and profits, directly applying the Prudence (Conservatism) Concept. R correctly explains A.

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