The 'Cash Basis' of accounting is primarily used by: MCQ with Answer and Explanation

The 'Cash Basis' of accounting is primarily used by:
A. Only non-profits
B. Government and small professionals
C. Large companies
D. All entities
Answer: Option B
Solution (By JKSSB Mock Tests)
Government accounts are cash-based; some small professionals may use it.

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Practice More Accountancy and Book Keeping Questions

Question #1
S1: In a cash flow statement under Ind AS 7, taxes on income are generally classified as cash flows from operating activities. S2: However, if it is practicable to identify the tax cash flow with an investing or financing activity, it must be classified accordingly. Which statement(s) is/are correct?
A. Both S1 and S2
B. S1 only
C. Neither S1 nor S2
D. S2 only

Correct Answer: Option A


Explanation:
Both statements are correct as per Ind AS 7. Taxes on income are generally operating, but if they can be specifically identified with a financing or investing transaction (like tax on sale of an asset), they should be classified with that activity.

Question #2
Under the Companies Act 2013, the 'Corporate Social Responsibility' (CSR) committee must consist of:
A. At least 2 directors, both of whom must be independent directors
B. At least 2 directors, out of which at least 1 must be an independent director
C. At least 3 directors, all of whom must be independent directors
D. At least 3 directors, out of which at least 1 must be an independent director

Correct Answer: Option D


Explanation:
Section 135 of the Companies Act 2013 mandates that the CSR Committee must consist of at least 3 directors, out of which at least 1 must be an independent director.

Question #3
The 'Statement of Changes in Equity' as per Ind AS 1 includes:
A. Only dividends
B. Only reserves
C. Total comprehensive income, transactions with owners, and reconciliation of equity components
D. Only share capital

Correct Answer: Option C


Explanation:
It shows all changes in equity, including profit/loss, OCI, capital transactions, dividends.