The term 'Prepaid Expense' is treated as: MCQ with Answer and Explanation

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The term 'Prepaid Expense' is treated as:

A. An expense

B. A loss

C. A liability

D. An asset

Answer: Option D

Solution (By JKSSB Mock Tests)

Prepaid expenses are treated as current assets because they represent future economic benefits for which payment has already been made.

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

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Question #1

The 'Excess Grant' is:

A. Expenditure in excess of voted grant

B. Supplementary grant

C. Grant not utilized

D. Token grant

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Correct Answer: Option A

Explanation:
Excess grant is the amount spent over the original grant, requiring regularization by Parliament.

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

Question #2

Carriage outward is shown in:

A. Balance Sheet

B. Trading A/c

C. Manufacturing A/c

D. Profit & Loss A/c

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Correct Answer: Option D

Explanation:
Carriage outward is a selling and distribution expense, so it appears in Profit & Loss Account.

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

Question #3

When a fixed asset is sold, any profit on sale is credited to:

A. Capital Account

B. Profit & Loss Account

C. Balance Sheet

D. Trading Account

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Correct Answer: Option B

Explanation:
Profit on sale of fixed asset is a revenue gain, shown in Profit & Loss Account.

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

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