Correct Answer:
B. Not recognized in the statements but disclosed unless the possibility of outflow is remote
Contingent liabilities are disclosed in the notes unless the possibility of outflow is remote.
November 13, 2026 · Accounting and Finance MCQs, Financial Accounting MCQs
A contingent liability is:
Related MCQs
When shares are issued at a price above their par value, the excess is credited to:
A.
Retained earnings
B.
Share premium
C.
Revenue
D.
Loan account
Correct answer is:
B. Share premium
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Which of the following is an adjusting event after the reporting period?
A.
A fire destroying a warehouse after year end
B.
Announcement of a major acquisition after year end
C.
A fall in market value of investments caused by events after year end
D.
A court case settled after year end confirming an obligation that existed at the reporting date
Correct answer is:
D. A court case settled after year end confirming an obligation that existed at the reporting date
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The present value of Rs. 11,000 to be received after 1 year at a discount rate of 10% is:
A.
Rs. 10,000
B.
Rs. 9,900
C.
Rs. 12,100
D.
Rs. 11,000
Correct answer is:
A. Rs. 10,000
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An example of an indirect tax is:
A.
Income tax
B.
Wealth tax
C.
Sales tax
D.
Property tax on owner
Correct answer is:
C. Sales tax
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EBIT is Rs. 200,000 and interest is Rs. 50,000. The degree of financial leverage is approximately:
A.
4.0
B.
0.75
C.
1.33
D.
1.25
Correct answer is:
C. 1.33
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An auditor's report on the financial statements of a company is generally addressed to:
A.
The tax inspector
B.
The bank manager
C.
The company's employees
D.
The members or shareholders of the company
Correct answer is:
D. The members or shareholders of the company
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