Under the Companies Act, 2013, a company must maintain its books of accounts on which basis?
A. Cash basis
B. Accrual basis
C. Tax basis
D. Hybrid basis
Answer: Option B
Solution (By JKSSB Mock Tests)
Section 128 of the Companies Act, 2013, mandates that companies must maintain books of accounts on an accrual basis and according to the double-entry system.
Explanation:
Corporations and companies are artificial persons created by law, distinguishing them from natural persons (Ramesh) or representative accounts.
A: Errors of complete omission do not affect the Trial Balance. R: In an error of complete omission, neither the debit nor the credit aspect is recorded. Choose the correct option.
A.A is true but R is false
B.Both A and R are true and R is the correct explanation of A
C.Both A and R are true but R is NOT the correct explanation of A
Explanation:
An error of complete omission means the transaction is not recorded at all. Since neither debit nor credit is entered, the total debits and credits remain equal, and the Trial Balance still agrees. R correctly explains A.
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