Under the Income Tax Act 1961, the year in which income is earned is called the: MCQ with Answer and Explanation

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Under the Income Tax Act 1961, the year in which income is earned is called the:

A. Previous Year

B. Financial Year

C. Assessment Year

D. Accounting Year

Answer: Option A

Solution (By JKSSB Mock Tests)

The Previous Year is the financial year in which the income is earned, which is assessed to tax in the immediately following Assessment Year.

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Question #1

The 'Life Cycle Costing' considers costs:

A. Only variable costs

B. From product design to disposal

C. Only fixed costs

D. Only during manufacturing

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Correct Answer: Option B

Explanation:
Life cycle costing tracks costs from research and development to after-sales service and disposal.

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Question #2

In cost accounting, if the 'Margin of Safety' is 20% of actual sales, and the actual sales are ₹5,00,000, what is the break-even sales?

A. ₹1,00,000

B. ₹5,00,000

C. ₹3,00,000

D. ₹4,00,000

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Correct Answer: Option D

Explanation:
Margin of Safety = Actual Sales - BEP Sales. 20% of 5,00,000 = 1,00,000. Therefore, BEP Sales = Actual Sales - MOS = 5,00,000 - 1,00,000 = ₹4,00,000.

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Question #3

A 'Bank Overdraft' is shown in Balance Sheet as:

A. Current liability

B. Contra asset

C. Long-term liability

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Correct Answer: Option A

Explanation:
Bank overdraft is repayable on demand, hence a current liability.

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

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