Advanced AccountingQuestion 5331 of 305
All Questions

7. What is the treatment of insolvency of Sheetal Enterprises in the Books of Kay Ltd. as on 31st March, 2024 as per AS 4?

Options

AAn Adjusting Event, full provision of ` 75,000 should be made in the Final Accounts for the year ended 31 March, 2024.
BAn Adjusting Event, provision of ` 3,750 should be made in the Final Accounts for the year ended 31 March, 2024.
CA Non-adjusting event, no provision is required to be made as Sheetal Enterprises became bankrupt in April, 2024.
DA Non-adjusting event, only disclosure is required in the Final Accounts for the year ended 31st March, 2024.
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option A — An Adjusting Event, full provision of ` 75,000 should be made in the Final Accounts for the year ended 31 March, 2024.

All Options:

  • AAn Adjusting Event, full provision of ` 75,000 should be made in the Final Accounts for the year ended 31 March, 2024. ✓
  • BAn Adjusting Event, provision of ` 3,750 should be made in the Final Accounts for the year ended 31 March, 2024.
  • CA Non-adjusting event, no provision is required to be made as Sheetal Enterprises became bankrupt in April, 2024.
  • DA Non-adjusting event, only disclosure is required in the Final Accounts for the year ended 31st March, 2024.

Ad

Detailed Solution & Explanation

Under AS 4 (Contingencies and Events Occurring After the Balance Sheet Date):
1. The earthquake occurred on 30th March, 2024 (before reporting date).
2. Bankruptcy of Sheetal Enterprises in April 2024 (before approval of accounts) provides additional evidence of impairment of trade receivable as of the balance sheet date.
3. Therefore, this is an adjusting event, and a full provision of ‘ 75,000\displaystyle `\,75,000 should be made in the accounts.
Hence, **Option A** is the correct answer.

More Questions from Advanced Accounting

3x−2:5x+6\displaystyle 3x-2:5x+6 the duplicate ratio of 2:3\displaystyle 2:3 then find the value x\displaystyle x.

If the ratio of two numbers is 7:11\displaystyle 7:11. If 7\displaystyle 7 is added to each number then the new ratio will be 2:3\displaystyle 2:3 then the numbers are.

If x:y=z:7=4:11\displaystyle x:y=z:7=4:11 then x+y+zz\displaystyle \frac{x+y+z}{z} is

The ratio of two numbers are 3:4\displaystyle 3:4. The difference of their squares is 28\displaystyle 28 greater is:

The price of scooter and moped are in the ratio 7:9\displaystyle 7:9. The price of moped is ₹1,600\displaystyle ₹1,600 more than that of scooter. Then the price of moped is:

If A:B=3:7\displaystyle A:B=3:7, then 3a+2b:4a+5b=?\displaystyle 3a+2b:4a+5b=?

Ready to Master Advanced Accounting?

Practice all 305 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free