S1: Margin of Safety is the excess of break-even sales over actual sales. S2: Margin of Safety is calculated as (Actual Sales - Break-Even Sales). Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Margin of Safety is the excess of break-even sales over actual sales. S2: Margin of Safety is calculated as (Actual Sales - Break-Even Sales). Which statement(s) is/are correct?
A. Neither S1 nor S2
B. S1 only
C. S2 only
D. Both S1 and S2
Answer: Option C
Solution (By JKSSB Mock Tests)
Margin of Safety is the excess of *actual* or *budgeted* sales over the break-even sales, not the other way around. S1 is incorrect. S2 correctly states the formula: Actual Sales - Break-Even Sales.
Explanation:
Internal check is a routine system where the work of one employee is automatically checked by another to prevent errors and frauds. It is an internal management function, not conducted by external auditors. S1 is correct, S2 is incorrect.
Explanation:
The cash book acts as a journal because transactions are recorded chronologically, and as a ledger because it contains the cash account balance.
No comments yet. Be the first to start the discussion!