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

Question

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. Both S1 and S2

B. S1 only

C. Neither S1 nor S2

D. S2 only

Answer: Option A

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.

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

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Question #1

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Under the Income Tax Act, if a business loss of ₹5,00,000 (non-speculative) and a speculation loss of ₹2,00,000 are incurred in the same year, and the total profit from other heads is ₹3,00,000, what is the maximum loss that can be carried forward?

A. ₹7,00,000

B. ₹5,00,000

C. ₹4,00,000

D. ₹2,00,000

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Correct Answer: Option C

Explanation:
Non-speculative business loss can be set off against any other head (up to ₹3,00,000), leaving ₹2,00,000 to carry forward. Speculation loss can only be set off against speculation profit (₹0 here), so the full ₹2,00,000 carries forward. Total carry forward = ₹2,00,000 + ₹2,00,000 = ₹4,00,000.

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Question #2

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Under the concept of 'Triple Bottom Line' (TBL) reporting, a company focuses on:

A. People, Planet, and Profit

B. Revenues, Expenses, and Taxes

C. Assets, Liabilities, and Equity

D. Profits, Dividends, and Retained Earnings

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Correct Answer: Option A

Explanation:
TBL is a framework advocating that companies commit to social (People) and environmental (Planet) concerns just as they do on financial (Profit) goals.

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