The 'Related Party' as per AS 18 includes: MCQ with Answer and Explanation

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The 'Related Party' as per AS 18 includes:

A. Key management personnel and their relatives

B. All suppliers

C. Government

D. All customers

Answer: Option A

Solution (By JKSSB Mock Tests)

Related parties include key management, enterprises with control or significant influence, etc.

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

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Question #1

Which system of accounting recognizes income when it is earned irrespective of receipt?

A. Accrual system

B. Single entry system

C. Cash system

D. Hybrid system

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Correct Answer: Option A

Explanation:
Accrual basis records revenues when earned and expenses when incurred, not when cash is received or paid.

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

Question #2

S1: Depreciation is charged on all fixed assets except land. S2: Depreciation is charged on land if it is a freehold land. Which statement(s) is/are correct?

A. Both S1 and S2

B. S2 only

C. S1 only

D. Neither S1 nor S2

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Correct Answer: Option C

Explanation:
Depreciation is charged on all depreciable fixed assets. Land (specifically freehold land) has an unlimited useful life and is not depreciated. Leasehold land is depreciated over the lease term. S1 is correct, S2 is incorrect.

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Question #3

An amount received from a debtor whose account was previously written off as bad debt is:

A. Debited to Bad Debts A/c

B. Credited to Sales A/c

C. Credited to Bad Debts Recovered A/c

D. Credited to Debtor's A/c

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Correct Answer: Option C

Explanation:
It represents a new gain and is credited to Bad Debts Recovered, a nominal account, without reopening the debtor's account.

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