Tax Audit under Income Tax Act is mandatory for businesses with turnover exceeding:
A. ₹2 crore
B. ₹10 crore
C. ₹1 crore
D. ₹50 lakh
Answer: Option C
Solution (By JKSSB Mock Tests)
Tax audit is required if turnover exceeds ₹1 crore in case of business (subject to digital transaction threshold of ₹10 crore in certain cases). Standard limit ₹1 crore.
Explanation:
The Trading Account is prepared to calculate Gross Profit by matching direct expenses with net sales. Indirect expenses (like office rent, salaries) are recorded in the Profit and Loss Account, not the Trading Account. S1 is correct, S2 is incorrect.
S1: In marginal costing, the Margin of Safety can be calculated as (Profit / P/V Ratio). S2: If the P/V ratio is 40% and the Margin of Safety is ₹50,000, the profit is ₹20,000. Which statement(s) is/are correct?
Explanation:
Margin of Safety = Profit / P/V Ratio. If MOS is 50,000 and P/V is 40%, Profit = 50,000 * 0.40 = ₹20,000. Both statements are mathematically and conceptually correct.
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