The 'Going Concern' assessment: If management concludes that the entity is not a going concern, the financial statements should be prepared on: MCQ with Answer and Explanation

Question
The 'Going Concern' assessment: If management concludes that the entity is not a going concern, the financial statements should be prepared on:
A. Cash basis
B. Accrual basis
C. Going concern basis
D. Break-up basis (liquidation basis)
Answer: Option D
Solution (By JKSSB Mock Tests)
If not going concern, financial statements are prepared on a break-up basis.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Practice More Accountancy and Book Keeping Questions

Question #1
The journal entry for income tax paid by a sole proprietor from the business bank account is:
A. Debit Drawings, Credit Bank
B. Debit Capital, Credit Income Tax
C. Debit P&L Account, Credit Bank
D. Debit Income Tax, Credit Bank
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Correct Answer: Option A

Explanation:
For a sole trader, income tax is a personal expense. Paying it from business funds is treated as Drawings.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
Which of the following is not a method of depreciation?
A. Machine hour rate
B. Sum of years' digits
C. Perpetual inventory method
D. Straight-line
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Correct Answer: Option C

Explanation:
Perpetual inventory method is a method of inventory valuation, not depreciation.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
A business paid ₹12,000 as insurance premium for the year ending 31st March 2025, out of which ₹3,000 relates to next year. Insurance expense for current year is:
A. ₹12,000
B. ₹3,000
C. ₹15,000
D. ₹9,000
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Correct Answer: Option D

Explanation:
Prepaid ₹3,000, so current year expense = 12,000 - 3,000 = ₹9,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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