Accounting - Study Mode
[#1301] Which of the following is a long term liability?
Correct Answer
(C) Debentures
Explanation
Solution: Debentures is a long term liability. Long-term liabilities are financial obligations of a company that become due more than one year. In accounting, they form a section of the balance sheet that lists liabilities not due within the next 12 months including debentures, loans, deferred tax liabilities and pension obligations.
[#1302] Drawing is a type of
Correct Answer
(B) Withdrawal of capital
Explanation
Solution: Drawing is a type of Withdrawal of capital. An owner's drawing affects the capital account of a balance sheet, whereas a withdrawal has no such effect.
[#1303] Profit is a part of
Correct Answer
(B) Owner's capital
Explanation
Solution: Profit is a part of Owner's capital. When a company generates a profit and retains a portion of that profit after subtracting all of its costs, the owner's equity generally rises.
[#1304] Promissory note is prepared by
Correct Answer
(A) Drawer
Explanation
Solution: Promissory note is prepared by Drawer. Promissory note is prepared and signed by the a person / organisation ( borrower) while borrowing money from a lender.
[#1305] Which reserve is not shown in the Balance sheet?
Correct Answer
(A) Secret reserve
Explanation
Solution: Secret reserve is not shown in the Balance sheet. The term secret reserve refers to a reserve the existence of which is not disclosed in the Balance Sheet. It can be said that there is a surplus of assets over liabilities and that surplus is not disclosed or shown by the Balance Sheet.