The 'Surrender Value' of a keyman insurance policy received by a company is: MCQ with Answer and Explanation

The 'Surrender Value' of a keyman insurance policy received by a company is:
A. Exempt
B. Capital receipt
C. Taxable as business income
D. Treated as loan
Answer: Option C
Solution (By JKSSB Mock Tests)
Keyman insurance policy proceeds/surrender value are taxable as business income.

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Practice More Accountancy and Book Keeping Questions

Question #1
In 'Piecemeal Distribution' during dissolution, the first priority for payment of outside liabilities is:
A. Unsecured trade creditors
B. Secured creditors up to the value of security
C. Partners' capital balances
D. Partners' loans

Correct Answer: Option B


Explanation:
Secured creditors have the first right over the assets they hold as security. Any remaining dues become unsecured.

Question #2
Goods distributed as free samples are debited to:
A. Sales Account
B. Purchases Account
C. Drawings Account
D. Advertisement Account

Correct Answer: Option D


Explanation:
Free samples are treated as advertising expense.

Question #3
S1: In a cash flow statement under Ind AS 7, dividends paid can be classified as either operating or financing activities. S2: Interest paid can be classified as either operating or financing activities. Which statement(s) is/are correct?
A. S2 only
B. Both S1 and S2
C. S1 only
D. Neither S1 nor S2

Correct Answer: Option B


Explanation:
Ind AS 7 allows flexibility. Dividends paid can be classified as financing (cash outflow for financing) or operating (to assist in determining cash from operations). Interest paid can be operating or financing. Both are correct.