The term 'Capitalisation' of reserves means: MCQ with Answer and Explanation

Question

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The term 'Capitalisation' of reserves means:

A. Distributing reserves as dividend

B. Writing off fictitious assets

C. Transfer of reserves to capital account

D. Utilising reserves for issue of bonus shares

Answer: Option D

Solution (By JKSSB Mock Tests)

Capitalisation of reserves refers to converting reserves into share capital, i.e., bonus issue.

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

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Question #1

The 'Angel Tax' exemption for startups was enhanced to include investments up to:

A. ₹5 crore

B. ₹25 crore

C. ₹10 crore

D. ₹50 crore

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Correct Answer: Option B

Explanation:
Eligible startups can receive angel investments up to ₹25 crore without angel tax.

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Question #2

A 'Flexible Budget' is also known as:

A. Sliding scale budget

B. Cash budget

C. Master budget

D. Fixed budget

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Correct Answer: Option A

Explanation:
Flexible budget changes with activity levels, hence also called variable or sliding scale budget.

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Question #3

If total assets are Rs 5,00,000 and outside liabilities are Rs 2,00,000, what is the owner's equity?

A. Rs 3,00,000

B. Rs 7,00,000

C. Rs 2,00,000

D. Rs 2,50,000

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Correct Answer: Option A

Explanation:
According to the accounting equation (Assets = Liabilities + Equity), Equity = 5,00,000 - 2,00,000 = Rs 3,00,000.

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