Working capital is calculated as: MCQ with Answer and Explanation

Working capital is calculated as:
A. Fixed assets - Long-term liabilities
B. Current assets - Current liabilities
C. Quick assets - Current liabilities
D. Total assets - Total liabilities
Answer: Option B
Solution (By JKSSB Mock Tests)
Working capital = Current assets - Current liabilities.

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Practice More Accountancy and Book Keeping Questions

Question #1
S1: Under GST, the 'Reverse Charge Mechanism' (RCM) is applicable on the import of services. S2: Under RCM, the supplier is liable to pay the GST. Which statement(s) is/are correct?
A. S2 only
B. Both S1 and S2
C. S1 only
D. Neither S1 nor S2

Correct Answer: Option C


Explanation:
S1 is correct; RCM applies to the import of services. S2 is incorrect because under RCM, the liability to pay GST shifts from the supplier to the recipient of the goods or services.

Question #2
Direct taxes are progressive in nature because:
A. Rate increases with income level
B. Rate is same for all
C. They are only on goods
D. They are collected indirectly

Correct Answer: Option A


Explanation:
Direct taxes like income tax have higher rates for higher income slabs, making them progressive.

Question #3
In a partnership, interest on capital is allowed only when:
A. It is mandatory under law
B. The firm has cash
C. It is provided in the partnership deed
D. The firm makes profit

Correct Answer: Option C


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