Which of the following is a 'Cash Equivalent'? MCQ with Answer and Explanation

Question
Which of the following is a 'Cash Equivalent'?
A. Short-term, highly liquid investments with maturity 3 months or less
B. Bank deposits with maturity more than 12 months
C. Inventory
D. Debtors
Answer: Option A
Solution (By JKSSB Mock Tests)
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
The term 'IFRS' stands for:
A. International Fiscal Reporting Standards
B. Indian Financial Reporting Standards
C. Indian Fiscal Reporting System
D. International Financial Reporting Standards
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Correct Answer: Option D

Explanation:
IFRS stands for International Financial Reporting Standards, issued by IASB.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
Which accounting principle justifies treating a calculator as an expense rather than a fixed asset?
A. Going Concern
B. Dual Aspect
C. Materiality
D. Consistency
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Correct Answer: Option C

Explanation:
The Materiality principle states that trivial costs (like a calculator) should be expensed immediately rather than capitalized and depreciated, due to their immaterial impact.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
In the absence of a partnership deed, profits are shared:
A. Equally
B. Based on age
C. Based on experience
D. In the ratio of capital
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Correct Answer: Option A

Explanation:
As per Indian Partnership Act, 1932, in absence of a deed, profits and losses are shared equally among partners.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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