Advanced AccountingMCQQuestion 5940 of 302

15. During the process of Internal Reconstruction, JAY Ltd has come across the following adjustment: ADVANCED ACCOUNTING There is a contingent liability for which no provision had been made. This contingent liability was settled at ₹ 7,500 and also ₹ 6,000 was recovered from the insurance company in this regard. Which of the following is the correct treatment for the above adjustment?

Select Your Answer (Keyboard: A, B, C, D)

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Correct Answer

✅ Option A — Reconstruction A/c Dr ₹ 1,500 and Bank A/c Cr ₹ 1,500

AReconstruction A/c Dr ₹ 1,500 and Bank A/c Cr ₹ 1,500 ✓
BReconstruction A/c Dr ₹ 7,500 and Bank A/c Cr ₹ 7,500
CContingent Liability A/c Dr ₹ 1,500 and Bank A/c Cr ₹ 1,500
DProfit and Loss A/c Dr 1,500 and Bank A/c Cr ₹ 1,500 Answer Key MCQ. No. Correct Answer 1 B 2 A 3 C 4 D 5 C 6 C 7 C 8 A 9 D 10 B 11 B 12 A 13 C 14 D 15 A PART – II – Descriptive Questions

Correct Answer: Option **A** Explanation: As per the official suggested answer, option **A** is correct. Hence, **Option A** is the correct answer.

A potential liability that may occur depending on the outcome of an uncertain future event.

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