S1: Carriage Inwards is added to the Trading Account. S2: Carriage Outwards is added to the Trading Account. Which statement(s) is/are correct? MCQ with Answer and Explanation

Question

S1: Carriage Inwards is added to the Trading Account. S2: Carriage Outwards is added to the Trading Account. Which statement(s) is/are correct?

A. S2 only

B. Both S1 and S2

C. S1 only

D. Neither S1 nor S2

Answer: Option C

Solution (By JKSSB Mock Tests)

Carriage Inwards is a direct expense related to purchases and is added to the Trading Account. Carriage Outwards is a selling and distribution expense, shown in the Profit and Loss Account.

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

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Question #1

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Payment of a liability out of cash will result in:

A. Decrease in an asset and decrease in capital

B. Increase in an asset and increase in a liability

C. Increase in a liability and decrease in capital

D. Decrease in an asset and decrease in a liability

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Correct Answer: Option D

Explanation:
Cash (Asset) decreases and the corresponding Liability also decreases, keeping the accounting equation balanced.

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Question #2

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A credit balance in the bank column of a cash book signifies:

A. Fixed deposit

B. Bank overdraft

C. Error in accounting

D. Cash at bank

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Correct Answer: Option B

Explanation:
Since bank is an asset (usually debit balance), a credit balance means the business has withdrawn more than deposited, creating an overdraft liability.

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Question #3

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In 'Piecemeal Distribution' during dissolution, the first priority for payment of outside liabilities is:

A. Unsecured trade creditors

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Correct Answer: Option B

Explanation:
Secured creditors have the first right over the assets they hold as security. Any remaining dues become unsecured.

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