Question

Which of the following is a part of Asset group 'Current Assets' in account group of Assets?

• A. Duties and Taxes
• B. Miscellaneous Expenditures
• C. Reserves & Surplus
• D. Direct Expenses

Hint:

In accounting software group structures: Assets are split into Non-Current and Current. Current Assets include Inventories, Trade Receivables, Cash & Cash Equivalents, Short-term Loans & Advances, Other Current Assets. Liabilities have Equity, Non-Current, Current. Expenses and Incomes belong to P groups. Be mindful that group names like 'Duties and Taxes' can contain accounts falling under different major heads (Asset, Liability, Expense).

Answer 1

The Correct Option is A

Step 1: Understand Account Groups:
Accounting software often uses predefined groups. Assets are typically grouped into major categories like Fixed Assets (Non-Current) and Current Assets.
Step 2: Analyze Options in Asset Context:
(A) Duties and Taxes: This group can contain various accounts. If it includes items like Prepaid Taxes, Input Tax Credits Receivable (like GST receivable), or Tax Refunds Due, these would be classified under Current Assets (often under 'Other Current Assets' or 'Short-term Loans and Advances'). If it represents expenses, it belongs in P. If it's a liability (like Taxes Payable), it goes under Liabilities. Given the context of Asset groups, it most likely refers to receivable/prepaid amounts, making it part of Current Assets.
(B) Miscellaneous Expenditures: Often refers to deferred revenue expenditure or fictitious assets (like preliminary expenses not yet written off) shown on the asset side but representing losses/expenses. Some might be written off within 12 months (Current), others longer (Non-Current), but often classified under 'Other Non-Current Assets' or 'Other Current Assets' if short-term write-off applies. It's not a core Current Asset category like Inventory or Receivables.
(C) Reserves & Surplus: This is a major component of Shareholders' Funds under Equity and Liabilities, not Assets.
(D) Direct Expenses: These are expenses related to production or purchase (e.g., wages, carriage inwards) and are part of the Income Statement (Trading Account), not the Balance Sheet Asset groups.
Step 3: Identify the Best Fit under Current Assets:
Comparing the options, 'Duties and Taxes', when representing prepaid or receivable amounts, clearly fits under Current Assets. 'Miscellaneous Expenditures' is less certain and often non-current. 'Reserves & Surplus' and 'Direct Expenses' are definitively not asset groups.
Conclusion:
Assuming 'Duties and Taxes' refers to related current asset accounts (like prepaid taxes or tax credits receivable), it is part of the 'Current Assets' group.