Accounting Principles and Practice

NAV stands for Net Asset Value, which represents the value of a fund's assets minus its liabilities, divided by the number of outstanding units. Option A is incorrect because 'Assetment' is not a word. Option B has 'Nill' which is misspelled (should be 'Nil'). Option C is incorrect because funds do have assets.

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It includes Depreciation (B) and Amortization (C) in its name, and Taxes (A) are also included in the calculation. 'Expenditure' (D) is too broad and not a specific line item excluded from EBITDA.

ROE (Return on Equity) is a fundamental financial ratio measuring profitability relative to shareholder equity. Options A and B incorrectly suggest expenditure/expenses, while D is grammatically incorrect and misses the key 'return' concept.

EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization. It explicitly excludes interest, taxes, depreciation, and amortization from operating profit. However, capital expenditures (CAPEX) are also NOT included in EBITDA - they are separate cash outflows. Operating expenses (like salaries, rent, cost of goods sold) ARE included because they are subtracted to arrive at earnings. The question uses 'Expenditure' ambiguously but in financial context typically refers to capital expenditures, which EBITDA does not account for.

ROE stands for Return on Equity, a profitability ratio that measures a company's ability to generate profits from shareholders' equity. It's calculated as Net Income / Shareholders' Equity. 'Rate of expenditure' and 'Rate of expenses' are not standard financial metrics. Option D ('Rate of Equity') is grammatically incorrect and not a recognized financial term.

Tangible assets are physical assets that a company uses in its operations to produce goods or services, rather than holding them for resale to customers. Examples include machinery, buildings, and equipment. Option A and B incorrectly state these assets are for resale, while option D misses the key distinction about production vs. resale.

Term assets (also called fixed assets) include both tangible assets like machinery and buildings, and intangible assets like patents and copyrights. These assets are used in operations to generate revenue over multiple years, not held for immediate resale. Option B is too narrow (excludes intangible), option C is also too narrow (excludes tangible), and option D has the purpose backwards.

Depreciation is a non-cash expense because it represents the allocation of an asset's cost over its useful life, not an actual cash outflow. It's an accounting entry to spread the cost of tangible assets. Option C is correct. Depreciation is neither an asset nor a liability, and it's certainly not a cash item.

The proverb 'A penny saved is a penny gained' (often quoted as 'earned') emphasizes that saving money is as valuable as earning it. Both increase your net worth by the same amount - one through income, the other through frugality.

Contingent liabilities are not recognized on the balance sheet because they are uncertain obligations that may or may not occur. They are only disclosed in the notes to the financial statements when there is a possible obligation that cannot be reliably measured, or a present obligation where payment is not probable. Only certain liabilities are recognized on the balance sheet.

Current assets are assets expected to be converted to cash within one year. Inventory (stock), Debtors (accounts receivable), Cash and Bank balances, and Bills Receivable are all current assets. Bills Payable is a liability (not an asset), and Miscellaneous Expenditure (preliminary expenses, discount on issue) is a fictitious asset written off over time, not a current asset.

ADR stands for Average Daily Rate, a key hotel performance metric calculated by dividing room revenue by the number of occupied rooms.

Living Benefits guarantee to protect accumulated assets during the annuitant's lifetime and provide regular retirement income - which is exactly what the question describes. Death Benefits only apply after death, and Retirement Benefits is a general term, not a specific technical product feature. Living Benefits ensure the annuitant receives lifetime income while protecting their principal investment.

Liquid assets are assets that can be quickly converted to cash with minimal impact on their value. This includes cash itself, checking accounts, and marketable securities. Property and coins are physical assets that may take time or costs to convert.

Depreciation is the accounting concept that recognizes the gradual loss of value in fixed assets (equipment, machinery, buildings) due to wear and tear, obsolescence, or passage of time. It allocates the asset's cost over its useful life, rather than treating it as an immediate expense.