When preparing a BRS starting with an overdraft as per the Pass Book, checks deposited but not yet cleared should be:
A. Divided
B. Ignored
C. Deducted
D. Added
Answer: Option D
Solution (By JKSSB Mock Tests)
Deposited checks lower the Cash Book overdraft. To make the Pass Book overdraft match the lower Cash Book overdraft, the amount must be added (reducing the negative balance).
Explanation:
The cash brought in for goodwill is initially credited to a temporary 'Premium for Goodwill A/c', which is then distributed to sacrificing partners.
Explanation:
Prudence ensures conservatism by providing for all foreseeable losses but not anticipating profits. Materiality allows accountants to bypass strict accounting rules for insignificant items. Both are correct.
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