Author name: Administrator

176. Expenditure incurred annually on renewal of patent is a

Revenue expenditure
Capital expenditure
Financial expenditure
Operating expenditure
✅ The correct answer is A.
Expenditure incurred annually on renewal of patent is a Revenue expenditure. A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place.

177. Which of the following can be distributed among the shareholders?

Capital reserve
General reserve
Revaluation reserve
All of the above
✅ The correct answer is B.
General reserve can be distributed among the shareholders. General reserve can be used for distribution of dividend among shareholders when profit is insufficient. Reserves and surpluses are shown in liabilities side of balance sheet.

178. Which of the following is a commonly used base to create the provision for doubtful debts?

Total purchases
Total credit sales
Total current assets
Total current liabilities
✅ The correct answer is B.
Total credit sales is a commonly used base to create the provision for doubtful debts. The provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet collected. It is identical to the allowance for doubtful accounts.

1875. ________ is a preventive function.

Costreduction
Costcontrol
Costunit
Costcentre
✅ The correct answer is B.
Cost control is a preventive function because it ascertains the cost before its occurrence.

1876. Falling interest rate leads change to bondholder income which is

reduction in income
increment in income
matured income
frequent income
✅ The correct answer is A.
Falling interest rate leads change to bondholder income which is reduction in income. An income bond is a type of debt security in which only the face value of the bond is promised to be paid to the investor, with any coupon payments paid only if the issuing company has enough earnings to pay for the coupon payment.

1881. Which of the following approaches advocates that the costs of equity capital and debt capital remain unaltered when the degree of leverage varies?

Net Income Approach
Traditional Approach
Modigliani-Miller Approach
Net operating Income
✅ The correct answer is A.
Net Income Approach advocates that the costs of equity capital and debt capital remain unaltered when the degree of leverage varies. Net Income Approach suggests that value of the firm can be increased by decreasing the overall cost of capital (WACC) through higher debt proportion.
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