B. Expenses of a period must be matched with revenues of the same period
C. Assets should match liabilities
D. Debits must always equal credits
Answer: Option B
Solution (By JKSSB Mock Tests)
The matching concept ensures that all expenses incurred to earn a specific revenue are recognized in the same accounting period to find the true profit.
A company has an operating cycle of 90 days. Its average daily cash outflow is ₹2,00,000. It maintains a minimum cash balance of 10% of its cash outflow during the operating cycle. What is the minimum cash balance it should maintain?
Explanation:
Total cash outflow during the operating cycle = 90 days * ₹2,00,000 = ₹1,80,00,000. Minimum cash balance = 10% of ₹1,80,00,000 = ₹18,00,000.
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