S1: Goods distributed as free samples are debited to the Advertising Account. S2: Goods distributed as charity are debited to the Charities Account. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Goods distributed as free samples are debited to the Advertising Account. S2: Goods distributed as charity are debited to the Charities Account. Which statement(s) is/are correct?
A. S2 only
B. Both S1 and S2
C. Neither S1 nor S2
D. S1 only
Answer: Option B
Solution (By JKSSB Mock Tests)
Free samples are treated as a promotional expense (Advertising). Free charity goods are treated as a charitable donation. Both require debiting their respective nominal accounts.
S1: The Profit and Loss Account shows the financial position of the business. S2: The Balance Sheet shows the financial position of the business. Which statement(s) is/are correct?
Explanation:
The Profit and Loss Account shows the financial performance (profit or loss) over a period. The Balance Sheet shows the financial position (assets and liabilities) at a specific point in time.
S1: Revaluation Account is prepared to record changes in the values of assets and liabilities. S2: The profit or loss on revaluation is transferred to the old partners' capital accounts in their sacrificing ratio. Which statement(s) is/are correct?
Explanation:
Revaluation Account records the changes in asset and liability values at the time of admission/retirement. The net profit or loss is distributed among the old partners in their old profit-sharing ratio (which is the sacrificing ratio for the retiring partner). Both are correct.
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