The 'Deferred Tax Asset' arises when: MCQ with Answer and Explanation

Question
The 'Deferred Tax Asset' arises when:
A. Tax rate increases
B. Accounting income is less than taxable income
C. Accounting income is more than taxable income
D. Income tax is refunded
Answer: Option B
Solution (By JKSSB Mock Tests)
Deferred tax asset is recognized when accounting profit is lower than taxable profit due to timing differences, resulting in future tax savings.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
S1: Direct taxes are levied on income and wealth. S2: Direct taxes are regressive in nature. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. Both S1 and S2
C. S2 only
D. S1 only
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Correct Answer: Option D

Explanation:
Direct taxes (like Income Tax) are levied on income and wealth. They are progressive in nature, meaning the tax rate increases with higher income, not regressive. S1 is correct, S2 is incorrect.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
An amount of Rs 10,000 withdrawn by the proprietor for personal use will cause:
A. No change in total assets
B. Decrease in Cash and Decrease in Capital
C. Increase in Drawings and Increase in Liabilities
D. Decrease in Cash and Increase in Capital
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Correct Answer: Option B

Explanation:
Drawings reduce cash on the asset side and simultaneously reduce the proprietor's capital on the equity side.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
Which of the following is a feature of 'Process Costing'?
A. Used for construction contracts
B. Used for unique products
C. Costs are accumulated by processes
D. Each job is separate
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Correct Answer: Option C

Explanation:
Process costing applies to continuous production where output is homogeneous, costs tracked by process.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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