The 'Gross Profit' is transferred to: MCQ with Answer and Explanation

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The 'Gross Profit' is transferred to:

A. Balance Sheet liability

B. Capital Account

C. Trading Account debit

D. Profit and Loss Account credit

Answer: Option D

Solution (By JKSSB Mock Tests)

Gross profit is credited to Profit & Loss Account.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

Life Membership Fees received by a club is treated as:

A. Current Liability

B. Revenue Receipt (credited to Income & Expenditure A/c)

C. Deferred Revenue Income

D. Capital Receipt (added to Capital Fund)

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Correct Answer: Option D

Explanation:
It is a one-time non-recurring receipt representing a lifetime obligation, hence capitalized and added to the Capital Fund.

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Question #2

The 'Audit Evidence' is more reliable if:

A. Internally generated

B. Obtained from independent external sources

C. Oral

D. Obtained from management

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Correct Answer: Option B

Explanation:
External evidence is generally more reliable than internal evidence.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3

The 'Goodwill' arising on acquisition is:

A. Written off immediately

B. Amortised over 10 years

C. Not amortised but tested for impairment annually

D. Capitalised and depreciated

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Correct Answer: Option C

Explanation:
Goodwill is not amortised but subject to annual impairment testing as per Ind AS 36.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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