Under AS 12, government grants related to depreciable assets are generally: MCQ with Answer and Explanation

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Under AS 12, government grants related to depreciable assets are generally:

A. Deducted from the cost of the asset or treated as deferred income

B. Ignored

C. Recognised as income immediately

D. Added to capital

Answer: Option A

Solution (By JKSSB Mock Tests)

AS 12 permits either reducing the cost of asset or treating grant as deferred income.

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

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Question #1

An item of 'Outstanding Income' is shown in Balance Sheet as:

A. Expense

B. Asset

C. Liability

D. Income

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Correct Answer: Option B

Explanation:
Outstanding income is receivable, hence a current asset.

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Question #2

The 'Minimum Wages Act, 1948' provides for:

A. Fixation of minimum rates of wages for certain employments

B. Overtime only

C. Maximum wages

D. Bonus

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Correct Answer: Option A

Explanation:
The Act aims to prevent exploitation by ensuring minimum wages.

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Question #3

A 'Drawings' account is a:

A. Valuation account

B. Personal account

C. Nominal account

D. Real account

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Correct Answer: Option B

Explanation:
Drawings account represents the proprietor, hence it is a personal account.

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