Revenue from sale of goods is recognized when: MCQ with Answer and Explanation

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Revenue from sale of goods is recognized when:

A. Cash is received

B. Risks and rewards are transferred to the buyer

C. Production is completed

D. Order is received

Answer: Option B

Solution (By JKSSB Mock Tests)

As per AS 9 (Revenue Recognition), revenue from sale of goods is recognized when significant risks and rewards of ownership are transferred.

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

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Question #1

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A company issues 10% debentures of ₹100 each at a discount of 5%, redeemable at a premium of 10%. What is the total loss on issue per debenture to be written off over the life of the debenture?

A. ₹15

B. ₹10

C. ₹0

D. ₹5

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Correct Answer: Option A

Explanation:
Loss on issue = Discount on issue + Premium on redemption = ₹5 + ₹10 = ₹15 per debenture. This total loss is written off over the tenure of the debentures.

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

Question #2

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A 'Shell Company' is a term used for:

A. A company with no active business or significant assets

B. A company with substantial assets

C. A listed company

D. A government company

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Correct Answer: Option A

Explanation:
Shell companies exist mainly on paper with no significant operations or assets, often used for illicit activities.

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

Question #3

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A credit balance in the Income and Expenditure Account of an NPO indicates:

A. Deficit (Excess of Expenditure over Income)

B. Capital Fund

C. Surplus (Excess of Income over Expenditure)

D. Cash in hand

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Correct Answer: Option C

Explanation:
An Income & Expenditure Account is a nominal account. A credit balance means incomes exceed expenses, resulting in a Surplus.

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

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