Objective Questions Short notes Objective questions (Answers are given below) If a 220 V heater is used on 110 V supply,heat produced by it will be —— as much.(a) one-half (b) twice(c) one-fourth (d) four times For a given line voltage, four heating coilswill produce maximum heat when connected(a) all in parallel (b) all in … Read more
General Reserves The purpose for such reserves are created is not specified. It is also termed as free reserve because the management can freely utilise it for any purpose. General reserve strengthens the financial position of the business. Specific reserve Specific reserve is the reserve, which is created for some specific purpose and can be … Read more
Difference between Provision and Reserves Provisions There are certain expenses/losses which are related to the current accounting period but amount of which is not known with certainty because they are not yet incurred. It is necessary to make provision for such items for ascertaining true net profit Depreciation bad and doubtful debts taxation discount … Read more
Secret reserve is a reserve which does not appear in the balance sheet. It may also help to reduce the disclosed profits and also the tax liability. The secret reserve can be merged with the profits during the lean periods to show improved profits. Management may resort to creation of secret reserve by charging higher … Read more
The Factors determining amount of depreciation are Cost, Useful Life, Net Realizable Value and Depreciable cost Cost Useful Life Net Realisable Value Depreciable Cost Cost of a fixed asset is “the total cost spent in connection with its acquisition, installation and commissioning as well as for add item or improvement of the depreciable asset”. Useful … Read more