Question : Assertion (A): A profit and loss adjustment account is required for the correction of errors or omissions. Reason (R): This account is prepared to correct any errors or omissions that were missed while preparing final accounts and discovered after profits were distributed to partners.
Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
Option 3: Assertion (A) is true but Reason (R) is False
Option 4: Both Assertion (A) and Reason (R) are not correct
Correct Answer: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Solution : Profit and loss adjustment accounts are created to record transactions, omissions, and errors that are discovered after the final accounts have been prepared and profits have been distributed among the partners.
Hence the correct answer is option 1.
Question : Assertion (A): A profit and loss appropriation account is prepared to show how profits are distributed among partners in accordance with the Partnership Deed.
Reason (R): Only the working partner(s) have access to the books of accounts.
Question : Assertion (A): Goodwill requires adjustment at the time of reconstitution of a firm. Reason (R): The nature and location of business do not affect the valuation of goodwill.
Question : Assertion: Unemployment and poverty go hand in hand. Reason: Poverty is a result of unemployment
Question : Assertion (A): A new business is likely to have lesser goodwill. Reason (R): Goodwill is an intangible asset.
Question : Assertion A:- The cash flow statement and income statement are the same. Reason R:- The cash flow statement does not show the profit and loss account.
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