The 'Margin of Safety' is calculated as: MCQ with Answer and Explanation

Question
The 'Margin of Safety' is calculated as:
A. Profit / Sales
B. Fixed cost / P/V ratio
C. Actual sales - Break-even sales
D. Variable cost - Fixed cost
Answer: Option C
Solution (By JKSSB Mock Tests)
Margin of safety = Actual sales - Break-even sales.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Practice More Accountancy and Book Keeping Questions

Question #1
When bad debts previously written off are recovered, which account is credited?
A. Bad Debts Account
B. Bad Debts Recovered Account
C. Suspense Account
D. Debtor's Personal Account
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Correct Answer: Option B

Explanation:
Bad debts recovered represent a gain for the business and are credited to a separate nominal account called 'Bad Debts Recovered Account'.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
The 'Journal Proper' is used to record:
A. All credit purchases
B. All credit sales
C. Transactions that cannot be entered in any subsidiary book
D. All cash transactions
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Correct Answer: Option C

Explanation:
Journal proper is for opening entries, closing entries, transfer entries, rectification entries, etc.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
A Value Added Statement is an important component of:
A. Cost Sheet
B. Cash Flow Statement
C. Bank Reconciliation
D. Social Accounting
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Correct Answer: Option D

Explanation:
A Value Added Statement shows how much wealth the company has created and how it is distributed among employees, government, providers of capital, and retained earnings.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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