Unit No 1: - Accounting Standards MCQ (Multiple Choice Question)

Corporate Accounting – I Course Code 232 (Semester – III)

 Unit No 1

Accounting Standards

MCQ (Multiple Choice Question)

 

1. Accounting Standards Board of India was established in the year________

    ·      1970

·      1972

·      1973

·      1977

 

2. How many mandatory accounting standards are there in India 2020?

·      29

·      32

·      41

·      112

 

 3. What is the aim of accounting standards in India?

·      To make financial statements more comparable.

·      To ensure uniformity in accounting policies.

·      To guide the judgment of professional accountants.

·      All of the above

 

 4. International Accounting Standard Board (IASB) was established in the year:

·      1977

·      2001

·      2013

·      2019

 

5. The accounting standards are mandatory for:

·      Sole trader

·      Firms

·      Companies

·      Societies

 

6. Accounting Standard board of India was set up by_______

·      ICAI

·      ICPI

·      ICAA

·      ICII

 

7. Which accounting standard is applicable for valuation of inventories?

·      AS -1 

·      AS-2 

·      AS-3 

·      As-4

 

 8. Which accounting standard is applicable for fixed assets?

·      AS- 1

·      AS-10

·      AS-19

·      AS-18

 

 9. Which accounting standard is applicable for intangible assets?

·      AS- 10

·      AS-6

·      AS-26

·      AS-3

 

10. Which accounting standard is applicable for depreciation accounting?

·      AS-6

·      AS-9

·      AS-10

·      AS-3

 

11. Which accounting standard is applicable for revenue recognition?

·      AS-9

·      AS-10

·      AS-3

·      AS-23

 

12. Which accounting standard is applicable for cash flow statement?

·      AS- 1

·      AS-10

·      AS-19

·      AS-3

 

13. Which accounting standard is applicable for contingencies and events occurring after the balance sheet date?

·      AS- 1

·      AS-10

·      AS-4

·      AS-18

 

14. Which accounting standard is applicable for impairment of assets?

·      AS- 1

·      AS-10

·      AS-19

·      AS-28

 

15.  Accounting Standard Board was set up by _____________

·      Institute of Chartered Accountants of India

·      Institute of Cost and Works Accountants of India

·      Institute of Company Secretaries of India

·      Government of India

 

16. In reference to the accounting standards, choose the correct statement:

·      Accounting standards codify the generally accepted accounting principles

·      They lay down the norms of accounting policies and practices by way of codes or guidelines

·      The main purpose of accounting standards is to provide information to the user as to the basis on which the accounts have been prepared

·      All of the above

 

17. In case the depreciable assets are revalued, the provision for depreciation is based on

·      The revalued amount on the estimate of the remaining useful life of such assets

·      Original cost of the assets

·      Depreciated value of the assets

·      AS - 6 is silent in this regard

 

18. Contingent liability is shown due to

·      Convention of full disclosure

·      Convention of conservatism

·      Convention of materiality

·      Dual aspect concept

 

19. Which of the following factors should be considered while estimating the useful life of a depreciable asset?

   ·      Expected physical wear and tear

·      Obsolescence

·      Legal or other limits on the use of asset

·      All of the above

20. The original cost at which an asset or liability is acquired is known as___________

·      Management accounting

·      Historical accounting

·      Incremental costing

·      Full cost accounting

 

21. Arrears of salaries and wages of ₹.10 lakhs for the previous year will be paid during the current year as per court judgment delivered in the current year. Whether the following items are

·      Prior period items

·      Change in accounting estimate

·      Extraordinary items

·      None of these

 

22. Expenses of ₹. 50,000 of the previous year, which were omitted from books of account of the previous year due to an oversight

·      Prior period items

·      Change in accounting estimate

·      Extraordinary items

·      None of these

 

23. The amount of provision for doubtful debts as at the end of the previous year was ₹. 5,00,000, of these debts of ₹. 3,00,000 were realized during the year.

·      Prior period items

·      Change in accounting estimate

·      Extraordinary items

·      None of these

 

24. Sale of a significant part of the plot of land on which the footing is situated

·      Extraordinary items

·      Ordinary items

·      Prior period items

·      Change in accounting estimate

 

25. Write off a huge debt of a major customer due for more than a year.

·      Prior period items

·      Change in accounting estimate

·      Extraordinary items

·      None of these

 

26. Which of the following items of ordinary activities require separate disclosures in the financial statement?

·      Profit or loss on sale of fixed assets

·      Reversal of wire down oil inventories

·      Litigation settlement

·      All of the above

 

27. Prior Period items may arise as a result of _______

·      Mathematical mistakes in preparation of financial statements of earlier tear

·      Consequent court decision in the case contested having earlier year effect.

·      Effect of legislative changes with retrospective application

·      All of the above

 

28. A change in the useful life of the depreciable assets is a ________

·      Change in an Accounting Estimate

·      Prior Period Items

·      Change in Accounting Policy

·      Extraordinary Item

 

29. Extraordinary Items relate to events or transaction affecting

·      Assets or Liabilities

·      Income or Expenses

·      Both (Assets or Liabilities and Income or Expenses)

·      None of the above

 

30. The Cost of a Fixed Asset acquired in an exchange for dissimilar asset is determined by reference to,

·      The fair market value of the asset acquired

·      The fair market value of the asset give up

·      Both (The fair market value of the asset acquired or The fair market value of the asset give up) whichever is more clearly evident

·      At the book value of the asset given up

 

31. Property, plant and equipment are

·      Current assets.

·      Used in operations.

·      Natural resources.

·      Long-term investments.

 

 32. Depreciation:

·      Measures the decline in market value of an asset.

·      Measures physical deterioration of an asset.

·      Is the process of allocating to expense the cost of an item of property, plant and equipment.

·      Is an outflow of cash from the use of an item of property, plant and equipment

 

33. Which of the following is not an appropriate basis for measuring the cost of property, plant, and equipment?

·      The purchase price, freight costs, and installation costs of a productive asset should be included in the assets cost.

·      Proceeds obtained in the process of readying land for its intended purpose, such as from the sale of cleared timber, should be recognized immediately as income.

·      The costs of improvements to equipment incurred after its acquisition should be added to the assets cost if they increase future service potential.

·      All costs incurred in the construction of a plant building, from excavation to completion, should be considered as part of the assets cost.

34. An entity installed an assembly line in Year 1. Four years later, ₹ 100,000 was invested to automate the line. The automation increased the market value and productive capacity of the assembly line but did not affect its useful life. Proper accounting for the cost of the automation should be to

·      Report it as an expense in Year 5

·      Establish a separate account for the ₹ 100,000.

·      Allocate the cost of automation between the asset and accumulated depreciation accounts.

·      Debit the cost to the property, plant, and equipment account.

35. Which of the following is not an appropriate basis for measuring the historical cost of property, plant, and equipment?

·      Delivery and handling costs and installation costs of a productive asset should be included in the assets cost.

·      The cost should include the purchase price without a deduction for trade discounts.

·      The costs of improvements to equipment incurred after its acquisition should be added to the assets cost if they provide future economic benefits exceeding the originally assessed standard of performance.

·    All costs incurred in the construction of a plant building, from excavation to completion, should be considered as part of the assets cost.

 

36. As per AS – 14 purchase consideration is what is payable to

·      Shareholders

·      Creditors

·      Debenture holders

·      Shareholders and Debenture holders

 

37. When amalgamation is in the nature of merger, the accounting method to be followed is:

·      Equity method

·      Purchase method

·      Pooling of interests method

·      Consolidated method

 

38. When amalgamation is in the nature of Purchase, the accounting method to be followed is:

·      Equity method

·      Purchase method

·      Pooling of interests method

·      Consolidated method

 

39. Amalgamation is said to be in the nature of merger if:

·      All assets and liabilities of Transferor Company are taken over by the transferee company.

·      Business of Transferor Company is intended to be carried on by the transferee company.

·      Purchase consideration must be paid in equity shares by the transferee company except for fraction shares.

·      All of the above

 

40. Amalgamate adjustment account is opened in the books of Transferee Company to incorporate:

·      The assets of the transferor company

·      The liabilities of the transferor company

·      The statutory reserves of the transferor company

·      The non – statutory reserves of the transferor company

 

41. For amalgamation in the nature of merger, the shareholders holding at least ______ or more of the equity shares of the transferor company becomes the equity shareholders of the transferee company.

·      51%

·      90%

·      99%

·      100%

 

42. AS – 14 is not applicable if when Transferee Company acquires Transferor Company and Transferor Company:

·      Ceases to exist

·      Separate entity is Continue to exist

·      Applied in all cases

·      None of the above

 

43. A Ltd. and B Ltd. go into liquidation and a new company X Ltd. is formed. It is a case of:

·      Absorption

·      External reconstruction

·      Amalgamation.

·      None of the above

 

44. X Ltd. goes into liquidation and a new company Z Ltd. is formed to take over the business of X Ltd. It is a case of:

·      Absorption

·      External reconstruction

·      Amalgamation.

·      None of the above

 

45. X Ltd. goes into liquidation and an existing company Z Ltd. purchases the business of X Ltd. It is a case of:

·      Absorption

·      External reconstruction

·      Amalgamation.

·      None of the above

 

46. Preparation of consolidated Balance Sheet of Holding Co. and its subsidiary company as per

·      As –11

·      AS – 22

·      AS – 21

·      AS – 23

 

47. The share of outsiders in the Net Assets in subsidiary company is known as under:

·      Outsiders liability

·      Assets

·      Subsidiary company's liability

·      Minority Interest

 

48. Pre-acquisition profit in subsidiary company is considered as_______

·      Revenue profit

·      Capital profit

·      Goodwill

·      None of the above

 

50. Post-acquisition profit in subsidiary company is considered as_______

·      Revenue profit

·      Capital profit

·      Goodwill

·      None of the above

 

51. Excess of paid up value of the shares over cost of investment is considered as_______

·      Goodwill

·      Capital Reserve

·      Minority Interest

·      None of above

 

52. Preparation of consolidated statement as per AS 21 is___________

·      Optional

·      Mandatory for listed Companies

·      Mandatory for Pvt. Ltd.

·      Companies Ltd. partnership

  

53. Holding Co. share in capital profit of subsidiary company is adjusted in _______

·      Cost of control

·      Shown on Assets side of Balance sheet

·      Revenue profit

·      None of above

 

54. Holding Co. share in revenue profit of subsidiary company is adjusted in _______

·      Cost of control

·      Shown on Assets side of Balance sheet

·      Profit and loss account

·      None of above

 

55. Unrealized profit on goods sold and included in stock is deducted from:

·      Capital Profit

·      Revenue Profit

·      Fixed Assets

·      Minority Interest