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Account M.C.Q (1 Marks)

Provisions and Reserves · CBSE STD 11 Commerce (CBSE - English Medium). 5 questions.

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M.C.Q (1 Marks)

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5 questions · timed · auto-graded

MCQ 11 Mark
Which of the following statements is not appropriate in relation to “Provision”?
  • A
    Provision is a charge against profit.
  • B
    Provision is created for known liability.
  • ✓
    Provision is created for strengthening the financial position of the business.
  • D
    Creation of provision satisfies the principle of conservatism.
Answer
Correct option: C.
Provision is created for strengthening the financial position of the business.
Provision is created for strengthening the financial position of the business.
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MCQ 21 Mark
Which of the following is a correct distinction between a Revenue reserve and a Capital reserve?
  • A
    A revenue reserve is created out of capital profits whereas a capital reserve is created out of business profits.
  • B
    A revenue reserve can be used for distribution of dividend with certain preconditions whereas a capital reserve can be used for distribution of dividend without any preconditions.
  • ✓
    A revenue reserve is created for strengthening the financial position whereas capital reserve is created for meeting capital losses or to be used for purposes specified by the Companies Act.
  • D
    There is no distinction between revenue reserve and capital reserve.
Answer
Correct option: C.
A revenue reserve is created for strengthening the financial position whereas capital reserve is created for meeting capital losses or to be used for purposes specified by the Companies Act.
A revenue reserve is created for strengthening the financial position whereas capital reserve is created for meeting capital losses or to be used for purposes specified by the Companies Act.
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MCQ 31 Mark
Which of the following is a correct difference between a provision and reserve?
  • ✓
    A provision is created out of a legal necessity whereas a reserve is created as a matter of prudence.
  • B
    A provision is invested whereas reserve is not invested.
  • C
    A provision is an appropriation of profit whereas a reserve is a charge against profit.
  • D
    A provision can be used for distribution of dividend whereas a reserve cannot be allowed to be used for distribution of dividend.
Answer
Correct option: A.
A provision is created out of a legal necessity whereas a reserve is created as a matter of prudence.
A provision is created out of a legal necessity whereas a reserve is created as a matter of prudence.
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MCQ 41 Mark
If the amount of any known liability cannot be deterinined accurately.
  • ✓
    Provision should be created.
  • B
    Definite liability should be created.
  • C
    Reserve should be created.
  • D
    Should be shown as a contingent liability.
Answer
Correct option: A.
Provision should be created.
Provision should be created.
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MCQ 51 Mark
Which of the following statements are correct about a “Provision”?
  • Provisions are a charge against the profits of an enterprise.
  • Provisions are created out of divisible profits.
  • Creation of provisions are not necessary for a business.
  • Provisions are created to meet a known liability.
  • A
    $(ii)$ and $(iii)$
  • B
    $(ii)$ and $(iv)$ only
  • C
    $(i), (iii)$ and $(iv)$
  • ✓
    $(i)$ and $(iv)$ only
Answer
Correct option: D.
$(i)$ and $(iv)$ only
Provisions are created to meet a known liability.
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M.C.Q (1 Marks) - Account STD 11 Commerce Questions - Vidyadip