'Prepaid Expenses' are shown as: MCQ with Answer and Explanation

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'Prepaid Expenses' are shown as:

A. Expense in P&L

B. Income

C. Asset

D. Liability

Answer: Option C

Solution (By JKSSB Mock Tests)

Prepaid expenses represent future benefit, classified as current assets.

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

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Question #1

The term 'Current Cost Accounting' deals with:

A. Sunk cost

B. Historical cost

C. Replacement cost

D. Opportunity cost

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Correct Answer: Option C

Explanation:
Current cost accounting values assets at their current replacement cost, not historical cost.

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

Question #2

Which of the following is not an external user of accounting information?

A. Government

B. Management

C. Investors

D. Suppliers

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Correct Answer: Option B

Explanation:
Management is an internal user. External users include investors, government, suppliers, creditors, etc.

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Question #3

In Trading Account, closing stock is valued at:

A. Cost or net realizable value, whichever is lower

B. Cost only

C. Market price only

D. Market price or cost, whichever is higher

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Correct Answer: Option A

Explanation:
As per the prudence concept and AS 2, closing stock is valued at cost or net realizable value, whichever is lower.

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

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