Legacy donation is generally treated as: MCQ with Answer and Explanation

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Legacy donation is generally treated as:

A. Deferred revenue

B. Revenue receipt

C. Capital receipt

D. Liability

Answer: Option C

Solution (By JKSSB Mock Tests)

Legacy is a voluntary contribution of a significant nature, usually treated as capital receipt.

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

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Question #1

Which principle states that an asset must be recorded at the price paid to acquire it?

A. Realization Principle

B. Historical Cost Principle

C. Conservatism Principle

D. Matching Principle

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Correct Answer: Option B

Explanation:
The historical cost principle requires that assets be recorded at their original purchase price, irrespective of changes in market value over time.

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Question #2

If the purchase of a printer for ₹12,000 is recorded in the purchases book, the error is:

A. Error of principle

B. Error of omission

C. Error of commission

D. Compensating error

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Correct Answer: Option A

Explanation:
Printer is an asset, should be capitalised. Recording in purchases book treats it as expense, violating accounting principles.

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Question #3

Which of the following is a feature of standard costing?

A. It uses predetermined costs for control purposes

B. It ignores variances

C. It is a historical cost system

D. It is used for external reporting

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Correct Answer: Option A

Explanation:
Standard costing uses predetermined (standard) costs to compare with actual costs, allowing for variance analysis and cost control.

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