Accounting - Study Mode

[#2246] The maximum number of partners in a firm has been specified by
Correct Answer

(B) The Companies Act, 1956

[#2247] If a firm considers advance received from its clients as its income, then it violates which of the following concepts?
Correct Answer

(C) Realisation concept

[#2248] Capital is considered as a business liability according to following concept of
Correct Answer

(A) separate business entity

[#2249] Which of the following would NOT be considered as a component of 'cost' of stock?
Correct Answer

(C) Salaries of selling staff

Explanation

Solution: Salaries of selling staff would NOT be considered as a component of 'cost' of stock. When investors purchase shares of stock, the price paid includes two components: the price of the stock and the fee charged by the brokerage firm, called commission.

[#2250] Which of the following is TRUE about the treatment of insurance premium paid in advance
Correct Answer

(A) Current asset

Explanation

Solution: Current asset is TRUE about the treatment of insurance premium paid in advance. Current assets represent all the assets of a company that are expected to be conveniently sold, consumed, utilized or exhausted through the standard business operations, which can lead to their conversion to a cash value over the next one year period.