Tax Book 2023

Method of Accounting & Records Chapter- 11

MULTIPLE CHOICE QUESTIONS

Q.1. Companies account for their business transactions on

(a) Cash basis

(b) Accrual basis

(c) Both a and b

(d) None of these

Q.2. Individual and AOP may account for their all heads of income transactions on

(a) Cash basis

(b) Accrual basis

(c) optional from (a) or (b)

(d) None of the above

Q.3. The value of closing stock is computed on

(a) Cost basis

(b) NRV

(c) Lower of cost and NRV

(d) Higher of cost and NRV

Q.4. A person may change the method of accounting with the approval of

(a) No approval required

(b) CIR or

(c) Taxation Officer

Q.5. ___method may be used by the persons using cash basis of accounting.

(a) Marginal cost

(b) Absorption cost

(c) optional from (a) or (b)

(d) None of these

Q.6. Where particular items of stock in trade are not identifiable, ___cost method should be used.

(a) Prime

(b) Absorption

(c) FIFO

(d) LIFO

(e) none of (a) to (d)

Q.7. Under the ITO, 2001 long-term contracts take ____tax year to get completed

(a) More than one

(b) More than three

(c) More than five

(d) More than ten

Q.8. The income arising out of long term contracts is computed on basis.

(a) Cash

(b) Accrual

(c) Percentage of completion computed on revenue basis

(d) None of these