alleryIn a trading firm, octroi paid on purchases is debited to:
ATrading Account directly
BProfit & Loss Account
CBalance Sheet asset side
DCapital reserve account
Answer & Solution
Correct answer: A. Trading Account directly
1. Octroi is paid to bring goods to firm's location.
2. It is a direct expense forming part of cost of goods purchased.
3. Hence debited to Trading Account.
_Source: ICAI BoS Foundation Paper 1, Ch 7 U1 "Final Accounts", §1.3 direct expenses_
Keep practising Accounting Concepts
Browse all Accounting Concepts questions for CA Foundation, or explore more Accounting topics.
Related questions
Forensic accounting engagements arise fromFinancial statements published after the period ends are mainlyManagement accounting also covers future-oriented items such asWhich audit firm was dissolved after the Enron scandal?The Sarbanes-Oxley Act of 2002 followed the admissions of fraud atPreventing and detecting fraud is primarily the duty ofAn intentional misstatement in accounting records involving deception isWhich accounting field aims to give an independent opinion on financial statements?