Questions in: Corporate/Business Roles

Right Answer:
Provision refers to an amount set aside to cover a future liability or expense that is uncertain in timing or amount, while a reverse is the act of canceling or reducing a previously recognized provision when the obligation no longer exists or is reduced.

Right Answer:
Controlling accounts are general ledger accounts that summarize the total balances of a group of related subsidiary accounts. They provide a way to maintain the overall financial picture while keeping detailed records in subsidiary ledgers.

A subsidiary ledger is a detailed record that supports a controlling account. It contains individual accounts for specific transactions, such as accounts receivable or accounts payable, allowing for more detailed tracking of transactions.

Mixed accounts are accounts that contain both personal and impersonal transactions. They can include both assets and liabilities or a combination of different types of accounts, making them less straightforward than typical accounts.

Right Answer:
The salaries of the previous month are Rs. 6,250.

Right Answer:
A prepaid expense is a payment made for goods or services that will be received in the future. It is recorded as an asset on the balance sheet until the benefit is realized, at which point it is expensed on the income statement. The effect is that it reduces current assets initially and increases expenses over time as the service or benefit is consumed.

Right Answer:
A bridge loan is a short-term loan used to cover immediate cash flow needs until a longer-term financing solution is secured or until an existing obligation is paid off.

Right Answer:
An Inter-Company Account is an account used to record transactions between two or more subsidiaries or divisions within the same parent company.

Right Answer:
Comprehensive income is the total change in equity of a company during a period, excluding transactions with owners, which includes net income plus other comprehensive income items like unrealized gains and losses on investments and foreign currency translation adjustments.

Right Answer:
The amount of profit will be Rs 12,500.

Right Answer:
Material Usage Variance = (Standard Quantity - Actual Quantity) × Standard Price

For Material X:
Standard Quantity = 40 kgs
Actual Quantity = 55 kgs
Standard Price = Rs 10

Material X Variance = (40 - 55) × 10 = -150 Rs (Unfavorable)

For Material Y:
Standard Quantity = 50 kgs
Actual Quantity = 35 kgs
Standard Price = Rs 5

Material Y Variance = (50 - 35) × 5 = 75 Rs (Favorable)

Total Material Usage Variance = -150 + 75 = -75 Rs (Unfavorable)

Right Answer:
The land should be treated as an investment property and measured at fair value through profit or loss in accordance with IAS 40 (Investment Property).

Right Answer:
A balance sheet is a financial statement that shows a company's assets, liabilities, and equity at a specific point in time, providing a snapshot of its financial position. Off-balance sheet refers to assets or liabilities that are not recorded on the balance sheet, often used to keep certain financial obligations or risks outside of the company's official financial statements.

Right Answer:
The Break-Even Point (B.E.P) is Rs 200,000.

Right Answer:
Assets are resources owned by a company that have economic value and can provide future benefits, while liabilities are obligations or debts that the company owes to others, which require future outflows of resources.

Right Answer:
The Gross Profit ratio is 20%.

Right Answer:
Overhead in accounting refers to the ongoing expenses of operating a business that are not directly tied to producing a product or service, such as rent, utilities, and salaries of non-production staff.

Right Answer:
Interest booking refers to the process of recording interest income or expense in the accounting records for a specific period, ensuring that it reflects the financial performance accurately in the financial statements.

Right Answer:
1. Financial Accounting
2. Managerial Accounting
3. Cost Accounting
4. Tax Accounting
5. Auditing
6. Forensic Accounting
7. Governmental Accounting
8. Nonprofit Accounting

Right Answer:
Bookkeeping involves the recording of financial transactions, while accounting encompasses the broader process of summarizing, analyzing, and reporting financial data.

Right Answer:
The rules of Debit and Credit are:

1. **Assets**: Debit increases, Credit decreases.
2. **Liabilities**: Debit decreases, Credit increases.
3. **Equity**: Debit decreases, Credit increases.
4. **Revenue**: Debit decreases, Credit increases.
5. **Expenses**: Debit increases, Credit decreases.

Right Answer:
False.