The 'Provision for Bad Debts' in banking companies is governed by: MCQ with Answer and Explanation

Question
The 'Provision for Bad Debts' in banking companies is governed by:
A. RBI guidelines and Income Tax Act
B. Income Tax Act alone
C. SEBI
D. Companies Act only
Answer: Option A
Solution (By JKSSB Mock Tests)
Banks must follow RBI's prudential norms for NPA provisioning, while tax deduction is under Section 36(1)(viia).
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
A company's current ratio is 2:1. If current liabilities are ₹1,00,000, current assets are:
A. ₹3,00,000
B. ₹1,00,000
C. ₹50,000
D. ₹2,00,000
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Correct Answer: Option D

Explanation:
Current ratio = Current assets / Current liabilities; 2 = CA / 1,00,000 => CA = ₹2,00,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
The 'Financial Reporting' under Ind AS is applicable to companies as per:
A. SEBI regulation
B. MCA notification
C. RBI directive
D. ICAI guideline
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Correct Answer: Option B

Explanation:
Ministry of Corporate Affairs notifies Ind AS rules.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
Which of the following is a fictitious asset?
A. Trade mark
B. Patent
C. Preliminary expenses
D. Goodwill
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Correct Answer: Option C

Explanation:
Preliminary expenses are a fictitious asset because they are not realizable and have to be written off. Goodwill, trademark, patent are intangible assets.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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