Under 'Ind AS 37', a provision is recognised for: MCQ with Answer and Explanation

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Under 'Ind AS 37', a provision is recognised for:

A. Self-insurance

B. A present obligation from a past event, where outflow of resources is probable and can be reliably estimated

C. Repairs and maintenance

D. All future operating losses

Answer: Option B

Solution (By JKSSB Mock Tests)

Provision recognition criteria: present obligation, probable outflow, reliable estimate.

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

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Question #1

A Trial Balance shows a difference of ₹5,000 debit side excess. This difference is transferred to:

A. Suspense A/c (Debit)

B. Profit & Loss A/c

C. Suspense A/c (Credit)

D. Capital A/c

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Correct Answer: Option C

Explanation:
If debit side is more, credit side is short. To balance, Suspense Account is credited. So, Suspense A/c (Credit) ₹5,000.

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Question #2

Which of the following is not a type of error?

A. Error of commission

B. Error of omission

C. Error of interpretation

D. Error of principle

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Correct Answer: Option C

Explanation:
Common errors in accounting are error of principle, omission, commission, and compensating error. Error of interpretation is not a standard classification.

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Question #3

The formula 'Fixed Cost / Contribution Margin per Unit' is used to find:

A. Break-Even Point in Units

B. Target Profit

C. Break-Even Point in Sales Value

D. Margin of Safety

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Correct Answer: Option A

Explanation:
This formula yields the exact number of units a company needs to sell to cover all its fixed and variable costs.

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