The 'Prior Period Items' are shown in: MCQ with Answer and Explanation

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The 'Prior Period Items' are shown in:

A. Reserves

B. Separately in the current period's financial statements

C. Current period's profit and loss

D. Balance sheet

Answer: Option B

Solution (By JKSSB Mock Tests)

Prior period items are disclosed separately in the statement of profit and loss.

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

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Question #1

The 'Gross Profit' is transferred to:

A. Balance Sheet liability

B. Trading Account debit

C. Profit and Loss Account credit

D. Capital Account

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Correct Answer: Option C

Explanation:
Gross profit is credited to Profit & Loss Account.

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Question #2

The 'Accrual System' of accounting records transactions:

A. When cash is received or paid

B. On order placement

C. At the end of year

D. When they become due (earned/incurred)

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Correct Answer: Option D

Explanation:
Accrual basis recognises income when earned and expenses when incurred, regardless of cash flow.

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Question #3

The 'Right-of-Use Asset' under Ind AS 116 is depreciated over:

A. The lease term or the useful life of the asset, whichever is shorter

B. Only lease term

C. Only useful life

D. 5 years

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Correct Answer: Option A

Explanation:
If ownership transfers or there is a bargain purchase option, depreciate over useful life; otherwise over the shorter of lease term and useful life.

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

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