In a journal entry, if an asset is destroyed by fire and fully insured, which account is debited? MCQ with Answer and Explanation

Question

Share Report Error

In a journal entry, if an asset is destroyed by fire and fully insured, which account is debited?

A. Profit & Loss Account

B. Sales Account

C. Insurance Company (Claim) Account

D. Asset Account

Answer: Option C

Solution (By JKSSB Mock Tests)

Because the loss is fully insured, the insurance company becomes a debtor for the claim amount, hence debited.

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

Request complete Subject PDF

Discuss this Question (0)

No comments yet. Be the first to start the discussion!

Practice More Accountancy and Book Keeping Questions

Question #1

The 'Interim Financial Report' should include:

A. Only a condensed balance sheet

B. Only profit and loss

C. Full annual report

D. Condensed set of financial statements and selected explanatory notes

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
As per Ind AS 34, interim report includes condensed statements and notes.

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

Question #2

The 'Statement of Changes in Equity' shows:

A. Changes in liabilities

B. Changes in owners' equity during the period

C. Changes in assets

D. Cash flows

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option B

Explanation:
It reconciles opening and closing equity, showing profit/loss, other comprehensive income, transactions with owners.

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

Question #3

In partnership, the guarantee of profit to a partner is given by:

A. The government

B. The other partners

C. The auditor

D. The firm

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option B

Explanation:
A guarantee of minimum profit to a partner is given by the other partners or the firm as a whole, and any deficiency is borne by the guarantor(s).

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

Explore All Accountancy and Book Keeping MCQs