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      Question

      Which of the following is not an exceptional item in

      Profit and loss account?
      A Write off of preliminary expenses Correct Answer Incorrect Answer
      B Abnormal loss on long term contract Correct Answer Incorrect Answer
      C Amount received in settlement of insurance claims Correct Answer Incorrect Answer
      D Sale of investment in subsidiary and associate Correct Answer Incorrect Answer
      E Profit and loss from disposal of fixed assets Correct Answer Incorrect Answer

      Solution

      Extraordinary items are income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore, are not expected to recur frequently or regularly. Examples of extraordinary expenses include: · Sale of an investment in subsidiary and associated companies; · Significant charge in Government fiscal policy; · Discontinuance of business segment. All other are exceptional items Conceptual clarity through class discussions and practice Questions like below:

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