Provision for doubtful debts created at the year-end is debited to: MCQ with Answer and Explanation

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Provision for doubtful debts created at the year-end is debited to:

A. Profit & Loss Account

B. Sundry Debtors Account

C. Suspense Account

D. Trading Account

Answer: Option A

Solution (By JKSSB Mock Tests)

Creating a provision is an expected indirect loss based on conservatism, so it is charged to the Profit and Loss Account.

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

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Question #1

The financial ratio that measures short-term solvency is:

A. Current ratio

B. Return on investment

C. Gross profit ratio

D. Debt-equity ratio

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Correct Answer: Option A

Explanation:
Current ratio assesses the ability to meet short-term obligations.

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

Question #2

Which of the following is considered a Direct Expense?

A. Salary to office clerk

B. Advertising

C. Carriage outwards

D. Wages paid to factory workers

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Correct Answer: Option D

Explanation:
Direct expenses are directly linked to the purchase or manufacturing of goods. Factory wages are a prime example.

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Question #3

'Calls-in-Arrears' is shown in Balance Sheet by:

A. Deducting from called-up capital

B. Separate liability

C. Contingent liability

D. Adding to share capital

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Correct Answer: Option A

Explanation:
Calls-in-arrears is shown as deduction from called-up capital.

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

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