Question

Match the items in Column A with the correct corresponding items in Column B:
Column A:
a) Valuation of goodwill
b) Debentures
c) Revenue from operations
d) Profitability Ratio
e) Cash flow statement
Column B:
i) Acknowledgement of debt
ii) Earnings per share
iii) Inflows and Outflows of cash
iv) Average profit method
v) Sales
vi) Financial position

Hint:

In 'Match the following' questions, start by matching the pairs you are 100% confident about. This often allows you to eliminate several incorrect options immediately.

Answer 1

Step 1: Understanding the Concept:
This question tests the understanding of fundamental accounting terms and their associated concepts or methods.

Step 2: Detailed Explanation:
Let's match each item logically:
a) Valuation of goodwill: Goodwill can be valued using various methods. The Average profit method is one of the most common techniques used. (\(a \rightarrow iv\))
b) Debentures: A debenture is a financial instrument issued by a company under its common seal, which serves as an Acknowledgement of debt. (\(b \rightarrow i\))
c) Revenue from operations: For a typical manufacturing or trading business, the primary source of revenue from its core operations is Sales. (\(c \rightarrow v\))
d) Profitability Ratio: These ratios measure a company's ability to generate earnings. Earnings per share (EPS) is a key profitability metric for investors. (\(d \rightarrow ii\))
e) Cash flow statement: This is a financial statement that provides an aggregate view of all Inflows and Outflows of cash and cash equivalents during a period. (\(e \rightarrow iii\))

Step 3: Final Answer:
The correct matching sequence is a-iv, b-i, c-v, d-ii, e-iii.