State with reasons, whether the following statements are true or false: (i) Accounting Standards for non -corporate entities in India are issued by…
CA Foundation · Accounting · MTP · May 2026
State with reasons, whether the following statements are true or false: (i) Accounting Standards for non -corporate entities in India are issued by the Central Government. (ii) Subsidy received from the government for working capital by a manufacturing concern is a revenue receipt. (iii) If the effect of errors committed cancel out, the errors will be called compensating errors and the trial balance will disagree . (iv) Net income in case of persons practicing vocation is determined by preparing profit and loss account. (v) If a partner retires, then other partners have a gain in their profit sharing ratio. (vi) Re-issue of forfeited shares is allotment of shares but not a sale.
Suggested Answer and Working Notes:
(i) False: Accounting Standards for non-corporate entities in India are issued by the Institute of Chartered Accountants of India (ICAI). (ii) True: Subsidy received from the government for working capital by a manufacturing concern is a revenue receipt because it has no effect on improvement of future capability of business in revenue generation. (iii) False: If the effect of errors committed cancel out, the errors will be called compensating errors and the trial balance will agree because net effect of total debits and credits is zero. (iv) False: Net income is determined by preparing income and expenditure in case of persons practicing vocation. (v) True: If a partner retires, his share of profit or loss will be shared by the other partners in their profit sharing ratio. (vi) False: Reissue of forfeited shares is not allotment of shares but only a sale because such shares already has been allotted earlier.
Topics: Financial Statements of Not-for-Profit Organisations, Issue, Forfeiture and Re-issue of Shares
Related Questions in this Topic
- The following is the Receipts and payments account of Masters Club for the year ended on 31st March, 2026 Receipts and ...
- Fly high sports club had the following Income and Expenditure account for the year ended 31st Dec 2025. Income and Expe...
- From the following income and expenditure account of a Educational Club for the year ending 31stMarch, 2026, you are req...
- From the following data, prepare an Income and Expenditure Account for the year ended 31st December 2025, and Balance Sh...
- From the following Receipts and Payments Account of Civil Lines Club, prepare Income & Expenditure Account for the year ...