While passing an opening entry, if the total of liabilities exceeds the total of assets, the difference is debited to: MCQ with Answer and Explanation

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While passing an opening entry, if the total of liabilities exceeds the total of assets, the difference is debited to:

A. General Reserve

B. Capital Account

C. Goodwill Account

D. Suspense Account

Answer: Option C

Solution (By JKSSB Mock Tests)

If a business is acquired and liabilities exceed assets paid for, the difference is treated as the value paid for the firm's Goodwill.

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

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Question #1

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The 'National Anti-Profiteering Authority' (NAA) has now been subsumed by:

A. NFRA

B. CAG

C. Competition Commission of India (CCI)

D. GST Council

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Correct Answer: Option C

Explanation:
From December 2022, anti-profiteering cases are handled by CCI.

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

Question #2

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In a partnership, interest on capital is allowed only when:

A. The firm has cash

B. It is mandatory under law

C. The firm makes profit

D. It is provided in the partnership deed

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Correct Answer: Option D

Explanation:
Interest on capital is payable only if the partnership deed so provides, and only out of profits.

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

Question #3

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The 'Prepaid Insurance' is adjusted by:

A. Debit Cash A/c, Credit Insurance A/c

B. Debit Insurance A/c, Credit Prepaid Insurance A/c

C. Ignore

D. Debit Prepaid Insurance A/c, Credit Insurance A/c

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Correct Answer: Option D

Explanation:
Prepaid insurance is an asset, so Prepaid Insurance A/c Dr. To Insurance A/c.

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

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