90+ Financial Reporting Solved MCQs

1.

What do you mean by ASB?

A. Accounting Security Board
B. Accounting Standard Board
C. Accounting Standardization Board
D. None of these
Answer» B. Accounting Standard Board
2.

IASB was established in the year….

A. 1999
B. 1977
C. 1972
D. 2001
Answer» D. 2001
3.

FASB is based in…………….

A. London
B. Chennai
C. New York
D. Norwalk
Answer» D. Norwalk
4.

………………..is the process of determining the monetary amounts at which the elements of financial statements are recognized and carried in the financial statements.

A. Recognition
B. Addition
C. Measurement
D. Carrying
Answer» C. Measurement
5.

…………….is the residual interest in the asset of an entity after deducting all liabilities

A. Capital
B. Net Asset
C. Depreciation
D. Equity
Answer» D. Equity
6.

ASB was set up in India on………………

A. 21 April 1977
B. 1 April 1977
C. 1 January 1976
D. 31 March 1978
Answer» A. 21 April 1977
7.

Indian Accounting Standard 3 (AS3) deals with….

A. Amalgamation
B. Lease
C. Cash flow Statement
D. Depreciation Accounting
Answer» C. Cash flow Statement
8.

What is the expansion of IASC?

A. Indian Accounting Standard Committee
B. International Accounting Standard Committee
C. International Accounting Standard Control
D. None of these
Answer» B. International Accounting Standard Committee
9.

How many members are there in IASB?

A. 10
B. 12
C. 20
D. 14
Answer» D. 14
10.

Accounting profession of India is governed by………………….

A. ICAI
B. Ministry of Corporate Affairs
C. Govt. Of India
D. ASB
Answer» A. ICAI
11.

Property, Plant and Equipment are defined as,

A. Tangible assets held for sale in the ordinary course of business
B. Tangible assets held to earn rental or for capital appreciation or both
C. Tangible assets used in the process of production or supply of goods or services or for rental to others
D. None of the above
Answer» C. Tangible assets used in the process of production or supply of goods or services or for rental to others
12.

An entity must measure its Property, Plant and Equipment after initial recognition at,

A. Cost
B. Cost less accumulated depreciation and impairment losses if any
C. Cost less accumulated depreciation and impairment losses if any including cost of day to day servicing
D. None of the above
Answer» B. Cost less accumulated depreciation and impairment losses if any
13.

Which method depreciation is most appropriate for the entity to compute depreciation for the significant parts of the aircraft?

A. Straight line method for all parts
B. Unit production method based on air miles flown for the jet engines and SLM method for all other parts.
C. Diminishing balance method for all parts
D. None of the above
Answer» B. Unit production method based on air miles flown for the jet engines and SLM method for all other parts.
14.

Which of the following asset is not coming under the scope of Ind AS 16?

A. Factory building
B. Sales Van
C. Right to extract fuel from Government owned field
D. All of the above
Answer» C. Right to extract fuel from Government owned field
15.

An intangible asset (other than goodwill) is,

A. An identifiable asset without physical substance
B. A non-monetary asset without physical substance
C. An identifiable non-monetary asset without physical substance
D. All of the above
Answer» C. An identifiable non-monetary asset without physical substance
16.

An intangible asset is identified when,

A. It is separable
B. It arises from contractual or other legal rights, regardless whether those rights are transferable or separable from the entity
C. Either (a) or (b)
D. None of these
Answer» C. Either (a) or (b)
17.

The cost of intangible asset at initial recognition is measured at its fair value when,

A. It is internally generated
B. It is acquired as a part of business combination
C. It is acquired by way of a Government grant
D. Both (b) and (c)
Answer» D. Both (b) and (c)
18.

The useful life of an intangible asset may be,

A. Finite
B. Infinite
C. Either (a) or (b)
D. None of these
Answer» C. Either (a) or (b)
19.

Impairment loss is recognised when,

A. Carrying amount of an asset is less than its recoverable amount
B. Carrying amount of an asset is less than its original acquisition cost
C. Carrying amount of an asset exceeds its recoverable amount
D. Fair value of an asset is less than the undiscounted expected future cash inflows
Answer» C. Carrying amount of an asset exceeds its recoverable amount
20.

An entity assesses inventories for impairment,

A. Only when there are external indicators that, an impairment has occurred
B. At each reporting date
C. Only when there are internal indicators that an impairment has occurred
D. None of these
Answer» B. At each reporting date
21.

Inventories must be measured at

A. Cost
B. Lower of cost and estimated selling price less cost to complete and sell
C. Lower of cost and fair value less cost to complete and sell
D. None of these
Answer» B. Lower of cost and estimated selling price less cost to complete and sell
22.

Cost of inventory is a sum of

A. Cost of purchase and cost of conversion
B. Direct cost, indirect cost and other cost
C. Cost of purchase, cost of conversion and other cost to bring the material to the present location
D. None of these
Answer» C. Cost of purchase, cost of conversion and other cost to bring the material to the present location
23.

Consumable stores are

A. Inventories
B. Property, Plant and Equipment
C. Investment Property
D. Intangible Asset
Answer» A. Inventories
24.

Cost of inventory does not include

A. Salary of factory staff
B. Storage cost necessary in the production process
C. Cost of abnormal wastage
D. None refundable taxes
Answer» C. Cost of abnormal wastage
25.

A property developer must classify properties that it hold for sale in the ordinary course of business as

A. Inventories
B. Property, Plant and Equipment
C. Financial Assets
D. Investment property
Answer» A. Inventories
26.

Borrowing cost are,

A. Interest and other cost that an entity incurs in connection with borrowing of funds
B. Dividend payments
C. Fine on delayed payments
D. None of the above
Answer» A. Interest and other cost that an entity incurs in connection with borrowing of funds
27.

Borrowing cost do not include,

A. Interest on debentures
B. Incremental administrative fees for raising loans
C. Dividend declared to equity shareholders
D. All of the above
Answer» C. Dividend declared to equity shareholders
28.

Total borrowings used for construction of an office building are Rs.30, 00000. Entity issued 8% debentures worth 10,00000 for this purpose and balance amount was utilized from its common pool including 10% bank loan of Rs.1000000 and 9.5% bank loan of Rs.1000000. What is the amount of borrowing cost to be capitalized?

A. 275000
B. 300000
C. 250000
D. 265000
Answer» A. 275000
29.

An entity shall cease capitalizing borrowing cost when

A. Expenditure on the asset is being incurred
B. Borrowing cost are being incurred
C. The asset is materially ready for its intended use
D. All of the above
Answer» C. The asset is materially ready for its intended use
30.

Capitalization of borrowing cost should not cease when

A. There is a delay and that delay is inherent in the asset acquisition process
B. There is a delay in payment of interest on loan
C. There is a permanent interruption
D. None of the above
Answer» A. There is a delay and that delay is inherent in the asset acquisition process
31.

Carrying amount of an asset as on 1st April 2015 is Rs. 1500000 and depreciation for the year 2015 – 2016 is 15000. Fair value of the asset less cost of disposal as on 31 March 2016 is Rs. 120000. Which of the following is the carrying amount at 1st April 2106?

A. 120000
B. 135000
C. 150000
D. 165000
Answer» A. 120000
32.

Ind AS 2 deals with…

A. Inventories
B. Depreciation
C. Employee benefits
D. Financial reporting
Answer» A. Inventories
33.

An item of property , plant and equipment that qualifies for recognition as an asset shall be measured at

A. Cost
B. Market price
C. Replacement value
D. Opportunity cost
Answer» A. Cost
34.

Inventory allocated to the construction of fixed asset should be……

A. Capitalized
B. Expensed
C. Reduced from value of inventory
D. None of the above
Answer» A. Capitalized
35.

Ind AS 38 deals with…….

A. Tangible assets
B. Impairment
C. Intangible assets
D. Borrowing cost.
Answer» C. Intangible assets
36.

…………. are the amount of income tax payable in future period for taxable temporary differences.

A. Deferred tax asset
B. Deferred tax liability
C. Current tax
D. Tax base
Answer» B. Deferred tax liability
37.

……………….is the price at which goods or services would be sold separately to a customer

A. Stand - alone price
B. Contract price
C. Individual price
D. Sales price
Answer» A. Stand - alone price
38.

……………..are employee benefits that are payable after the completion of employment

A. Retirement benefits
B. Post employee benefits
C. Share based payments
D. None of the above
Answer» B. Post employee benefits
39.

As per IFRS15, an agreement between two or more parties that creates enforceable right and obligation is called….

A. Agreement
B. Contract
C. Performance obligation
D. Liability
Answer» B. Contract
40.

Which of the following is not an exception for application of IFRS 15

A. Lease contract
B. Insurance contract
C. None monetary exchanges
D. All the above
Answer» D. All the above
41.

A……………………..is the liability of uncertain timing and uncertain amount.

A. Provision
B. Reserve
C. Current liability
D. None of the above
Answer» A. Provision
42.

When a lease transfers substantially all the risks and rewards of ownership to lessee, this is called…..

A. Operating lease
B. Finance lease
C. Hire purchase
D. None of the above
Answer» B. Finance lease
43.

Operating lease is

A. Short term agreement
B. Long term agreement
C. Medium term agreement
D. Any of the above
Answer» A. Short term agreement
44.

Finance leases are accounted for in a similar manner to:

A. Cash transaction
B. Credit transaction
C. Lease back transaction
D. Long forgiveness
Answer» B. Credit transaction
45.

Which of the following securities do not influence diluted EPS?

A. Equity shares not entitled to dividend, but which may in the future
B. Ordinary preference share
C. Convertible loan stock
D. Share option
Answer» B. Ordinary preference share
46.

Which of the following is not an example of a potential ordinary share?

A. Standard preference share
B. Convertible preference share
C. Stock warrant
D. Convertible debt
Answer» A. Standard preference share
47.

Theoretical ex-rights price (‘TERP’) is calculated when there is a:

A. Bonus issue
B. Right issue
C. Stock split
D. All of these
Answer» B. Right issue
48.

A biological asset used in agricultural activity whose fair value is readily determinable without undue cost or effort is accounted for using:

A. The fair value model.
B. The cost model or the fair value model (an accounting policy choice).
C. The cost model.
D. Any of the above
Answer» A. The fair value model.
49.

At the point of harvest an entity measures fruits (agricultural produce) that it picks from its orchards (biological assets):

A. At fair value.
B. At fair value less costs to sell.
C. At cost.
D. At the lower of cost and estimated selling price less costs to complete and sell.
Answer» B. At fair value less costs to sell.
50.

Two entities are not necessarily related parties if:

A. One entity has significant influence over the other.
B. One entity has control over the other.
C. The entities share joint control over a third entity
D. One entity has joint control over the other.
Answer» C. The entities share joint control over a third entity
51.

IAS 24 and Ind AS 24 are deal with……

A. Reporting
B. Joint control
C. Subsidiary
D. Related party
Answer» A. Reporting
52.

In a land lease, if title does not pass at the end of a lease to the lessee, it is normally treated as ‘Finance lease’.

A. Statement is true
B. Statement is false
C. Statement is not relevant
D. none
Answer» B. Statement is false
53.

Specific principles, bases, conventions, rules and practices applied in presenting financial statements, are called,

A. Accounting estimates
B. Accounting policies
C. Prospective application
D. Accounting estimates
Answer» B. Accounting policies
54.

Adjustment of the carrying amount of an asset or liability or the consumption of an asset is defined as,

A. A change in the accounting estimate
B. Accounting policies
C. Misstatements
D. Error
Answer» A. A change in the accounting estimate
55.

Applying a new policy to transaction as if that policy had always been applied. This is called,

A. Retrospective restatement
B. Retrospective application
C. Change in accounting estimates
D. None of the above
Answer» B. Retrospective application
56.

In selecting an accounting policy, we should review ________,

A. The standard only
B. The interpretation only
C. Framework only
D. All of the above
Answer» D. All of the above
57.

IAS 8 deals with…..

A. Selection and application of accounting policies
B. Changes in accounting estimates
C. Correction of prior period errors
D. All the above
Answer» D. All the above
58.

Which of the following is not a minimum item on the face of the statement of comprehensive income?

A. Revenue
B. Finance cost
C. Deferred tax
D. Profit or Loss
Answer» C. Deferred tax
59.

Under Ind AS 1, which of the following must be disclosed on the statement of financial position?

A. Property, Plant and Equipment
B. Biological assets
C. Provisions
D. All of the above
Answer» D. All of the above
60.

Which of the following is not a requirement for current liabilities?

A. Expected to be settled in entity’s operating cycle
B. Held primarily for trading
C. Expected to be settled within 12 months from the reporting period
D. Entity holds an unconditional right to defer settlement for over 12 months after
Answer» D. Entity holds an unconditional right to defer settlement for over 12 months after
61.

Which of the following are cash and cash equivalents?

A. Cash in hand
B. Foreign currency in hand
C. Bank balance
D. All of the above
Answer» D. All of the above
62.

Cash receipts from customers for the sale of goods are cash flows from:

A. Operating activities
B. Investing activities
C. Operating or financing activities
D. Financing activities
Answer» A. Operating activities
63.

Cash payments to acquire the entity’s own shares (ie, treasury shares) are:

A. Cash outflows from operating activities
B. Cash outflows from investing activities
C. Cash outflows from financing activities
D. None of the above
Answer» B. Cash outflows from investing activities
64.

When after the end of the reporting period an event occurs that is indicative of conditions that arose after the end of the reporting period:

A. The entity discloses the nature and effect of the event in the financial statements.
B. The entity adjusts the related amounts recognised in the financial statements.
C. Both of the above statements are true.
D. None of the above
Answer» A. The entity discloses the nature and effect of the event in the financial statements.
65.

Events after the end of the reporting period are defined as:

A. Events, favourable and unfavourable, that, occur between the end of the reporting period and the date of the entity’s next annual financial statements.
B. Events, favourable and unfavourable, that, occur between the end of the reporting period and the date of the entity’s next interim (or annual) financial statements.
C. Events, favourable and unfavourable, that, occur between the end of the reporting period and the date when the financial statements are authorised for issue.
D. None of the above
Answer» C. Events, favourable and unfavourable, that, occur between the end of the reporting period and the date when the financial statements are authorised for issue.
66.

Adjusting events are those that:

A. Provide evidence of conditions that existed at the end of the reporting period.
B. Are indicative of conditions that arose after the end of the reporting period.
C. Are favourable or unfavourable, and indicative of conditions that arose after the end of the reporting peri
Answer» A. Provide evidence of conditions that existed at the end of the reporting period.
67.

A change of estimate should be made to the income statement of ……..

A. Current period and future period
B. Prior period
C. Current year
D. None of the above
Answer» A. Current period and future period
68.

Liquidation of a major customer after the end of the period end is….

A. Adjusting events
B. Non adjusting event
C. Error
D. Changes in estimate
Answer» A. Adjusting events
69.

Principal revenue producing activity of an entity is called…

A. Operating activity
B. Financing Activity
C. Investment activity
D. None of the above
Answer» A. Operating activity
70.

Cash equivalents do not include

A. Demand deposit
B. Goodwill
C. Money at call
D. Bank overdraft
Answer» B. Goodwill
71.

Ind AS 1 deals with……………

A. Presentation of financial statements
B. Cash flow statement
C. Intangible assets
D. Accounting policies, changes in accounting estimates and errors
Answer» A. Presentation of financial statements
72.

Indian accounting standards converged with IFRS is known as……….

A. IASs
B. ASs
C. IFRSIC
D. Ind Ass
Answer» D. Ind Ass
73.

IASC head quartered at….

A. Delhi
B. London
C. New York
D. Tokyo
Answer» B. London
74.

…..are resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

A. Assets
B. Income
C. Liability
D. Current assets
Answer» A. Assets
75.

GAAP stands for

A. Generally accepted accounting practices
B. Generally accepted accounting policy
C. Globally accepted accounting practices
D. Generally accepted accounting principles
Answer» D. Generally accepted accounting principles
76.

Original cost at which asset or liability is acquired is known as ..

A. Carrying amount
B. Replacement cost
C. Historical cost
D. Purchase price
Answer» C. Historical cost
77.

The process of converting foreign subsidiary financial statement into the home currency is known as …

A. Transmission
B. Translation
C. Consolidation
D. Reconstruction
Answer» B. Translation
78.

What is conceptual framework for accounting?

A. A set of rules and regulations
B. A set of financial statements
C. Components of financial statements
D. A set of principles underpinning financial reporting
Answer» D. A set of principles underpinning financial reporting
79.

Present value of expected future cash flows generated by an asset, plus its expected disposal value is called.

A. Value in use
B. Recoverable amount
C. Carrying amount
D. NRV
Answer» A. Value in use
80.

Useful life of an intangible asset with finite useful life is reviewed at …

A. Every year
B. At the end of the useful life
C. In case any changes in accounting estimated
D. None of the above.
Answer» A. Every year
81.

When the recoverable amount of an asset is less than its carrying value in the statement of financial position, the asset is said to be

A. Obsolete
B. Value less
C. Impaired
D. Fully depreciated
Answer» C. Impaired
82.

Ind AS 33 deals with

A. Related party disclosure
B. PER
C. Accounting for basic and diluted EPS
D. None of the above
Answer» C. Accounting for basic and diluted EPS
83.

……….is the amount of income taxes payable on the taxable profit for a period, in accordance with rules established by the tax authorities

A. Tax expense
B. Tax base
C. Deferred tax
D. Current tax
Answer» D. Current tax
84.

Which of the following is not coming under the scope of Ind AS 16

A. Asset classified as held for sale
B. Exploration assets
C. Biological asset related to agricultural activity
D. All the above
Answer» D. All the above
85.

As per Ind AS 23, assets that require substantial time to bring to their intended use or to salable condition are known as

A. Tangible asset
B. Intangible asset
C. Qualifying asset
D. None of the above
Answer» C. Qualifying asset
86.

IAS 17 does not applies to

A. Biological asset held by lessee under finance leases
B. Biological asset provided by lessor under operating leases
C. Investment property provided by lessor under operating leases
D. All of the above
Answer» D. All of the above
87.

Consideration which varies upon certain future events which may or may not occur is called….

A. Variable consideration
B. Future consideration
C. Agreed price
D. None of these
Answer» A. Variable consideration
88.

Income tax consists of

A. Domestic taxes that are based on taxable profit
B. Foreign taxes that are based on taxable profit
C. Tax that are payable by a subsidiary on distribution to the reporting entity
D. All of the above
Answer» D. All of the above
89.

Operating lease is :

A. Short term agreement
B. Long term agreement
C. Medium term agreement
D. Any of the above
Answer» A. Short term agreement
90.

Ind AS 41 deals with

A. Biological assets
B. Accounting for agriculture
C. Interim reporting
D. None of these
Answer» B. Accounting for agriculture
91.

….. is a financial reporting period shorter than a full financial year

A. Short period
B. A quarter
C. Interim period
D. None of these
Answer» C. Interim period
92.

Land related to agricultural activities is coming under the scope of Ind AS….

A. 16
B. 36
C. 115
D. 2
Answer» A. 16
93.

A…………. is an operating segment or results from the aggregation of two or more operating segments that meets quantitative thresholds.

A. Joint Venture
B. Associates
C. Reportable segment
D. None of the above
Answer» C. Reportable segment
94.

Theoretical ex-right price is calculated when there is :

A. Bonus issue
B. Right issue
C. Stock split
D. All of these
Answer» B. Right issue
95.

Activities that result in changes in the size and composition of equity capital and borrowing of an entity are called

A. Operating activity
B. Investment activity
C. Income producing activity
D. Financing activity
Answer» D. Financing activity
96.

A statement showing information on increase or decrease in net asset or wealth of an entity is called…

A. Statement of financial position
B. Statement of comprehensive income
C. Cash flow statement
D. Statement of Changes in equity
Answer» D. Statement of Changes in equity
97.

” Deferred tax asset is not a component of statement of financial position”

A. Statement is true
B. Statement is false
C. Statement is not relevant as per IAS1
D. This item is not considered for reporting
Answer» B. Statement is false
98.

Omission or misstatement in entity’s financial statement for one or more prior period is called

A. Change in accounting estimate
B. Prior period errors
C. Change in accounting policy
D. None of these
Answer» B. Prior period errors
99.

Amount attributed to the asset or liability for tax purpose is called

A. Carrying amount
B. NRV
C. Depreciation
D. Tax base
Answer» D. Tax base
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