Accounting Principles and Practice

NPAs (Non-Performing Assets) are loans where principal or interest payment remains overdue for 90 days or more, not necessarily indicating that the entire amount is unrecoverable. Banks make provisions and continue recovery efforts. Some portion may still be recovered through restructuring, asset sales, or legal action. The statement is too absolute.

NAV is calculated as (Market Value of Assets - Liabilities) divided by Units Outstanding. This gives the per-unit value of the fund's portfolio after deducting expenses and liabilities. Option A incorrectly uses book value, option B is just the face value calculation, and option C uses initial units instead of current outstanding units.

The flats constructed by the real estate developers for sale are held as stock in trade. So, these are treated as inventories as per AS-2 “Valuation of Inventories”.

While preparing cash flow statements, the capital gain tax on sale of land shall be reduced from the cash flows from investing activities as per AS - 2 “Cash Flow Statements”.

In case of fixed capital method, all the adjustments are to be made in the partner's current account. So, interest on partner's capital is debited to partner's current account.

As per AS - 5 net profits, prior period Items and changes in accounting policies issued by the ICAI, the extraordinary items are those items, which are incomes or expenses that we do not expect to re-occur in future. The insurance claim received on loss of stock by fire, and the loss of land and building due to earthquake are extraordinary items.

The share of goodwill of retiring partner is debited to the remaining partner's capital a/c in gaining ratio among the remaining partners.

The company is following FIFO method of valuation of inventories from year to year basis on compliance with the fundamental accounting assumption of consistency. The correct option is (5).

Only art objects are being brought within the purview of the capital assets. Literary books do not fall in this category.

Going concern is one of the three fundamental accounting assumptions specified in AS-1, along with accrual and business entity. Materiality and prudence are important accounting concepts but are not classified as fundamental assumptions in the accounting framework.

Trademarks are intangible assets because they lack physical substance but have value and provide long-term benefits to the business. Unlike tangible fixed assets (like machinery or buildings), trademarks cannot be touched or seen but represent legal rights and brand recognition.

Assets are resources controlled by an entity primarily for generating future economic benefits through use in business operations. They're not held for immediate resale or conversion to cash - those would be inventory or investments.

If redemption is made by using divisible profits then an amount of profit so used for redeeming nominal value would be transferred to Capital Redemption Reserve A/c.

Those debentures which are secured by either a fixed charge or a floating charge on the assets of the company are called secured or mortgage debentures.

This is the correct answer.