Wednesday, January 04, 2012
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Join Date: Feb 2010
Location: Karachi
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Quote:
Originally Posted by omerkhan
(8) Deferred Taxation amount be treated as:
(a) Foot note
(b) An item in the Balance Sheet on asset side
(c) None of these
None of these may be the answer because deferred taxation is what you have recognized in your financial statement but not paid to tax authorities, so it should be a liability. But I am not sure.
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I differ with reason you mentioned because as far as I studied it, Deferred Taxation arises due to difference of depreciation method used by the companies,as in Pakistan Tax authorities recommend companies to use Diminishing balance method and if company is using straight line method then there will be some difference incurred in amount of tax to be paid in starting the difference is Credit but as time passes the difference will start getting Debit or its become receivable..
AS in given question it is not evident that at what point of time they are asking this..but in my view in long run Deferred Tax will be given a Debit Balance means put on asset side...but in starting this shows Credit balance as well it can be liability or asset...so keeping in view these things I too go with part C
Quote:
(9) Return of Equity will be calculated as under:
(a) Operating Profit x 100/Equity
(b) Net profit x 100/Paid up Capital only
(c) None of these
Return on Equity is calculated as Net Profit/Shareholders' Equity x 100
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Yup you are right...!
Quote:
Originally Posted by xaara~hussain
(1) Rent of the premises constitutes variable expenses for cost allocation:
(a) True
(b) False
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This is False because whether you use premises or not, you will have to pay Rent..
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~ Riz ~
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