The 'Provision' for warranty is an example of: MCQ with Answer and Explanation

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The 'Provision' for warranty is an example of:

A. Contingent liability not recognised

B. Reserve

C. Liability

D. Asset

Answer: Option C

Solution (By JKSSB Mock Tests)

Warranty provision meets recognition criteria (present obligation, probable outflow, reliable estimate) and is recorded as a liability.

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 'Transfer Price' in cost accounting for internal transfers is:

A. Price at which goods/services are transferred between divisions of the same company

B. Market price only

C. Cost plus fixed profit

D. Government regulated price

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Correct Answer: Option A

Explanation:
Transfer price is the value placed on internal transfers between responsibility centres.

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

Question #2

The 'Return on Investment' (ROI) formula is:

A. Sales / Capital employed

B. Gross profit / Sales

C. Net profit / Capital employed

D. Net profit / Sales

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Correct Answer: Option C

Explanation:
ROI = Net profit before interest and tax / Capital employed, or sometimes PAT/CE. Typically, Net profit / Capital employed.

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

Question #3

The 'Loss from House Property' can be carried forward for how many years?

A. Indefinitely

B. 4 years

C. Not allowed

D. 8 years

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Correct Answer: Option D

Explanation:
House property loss can be carried forward for 8 assessment years.

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

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