Accounting Standards

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In the accounting year 2001-2002 there was a change in the method of depreciation ( from SLM to WDV ) in such a case

a. There is no need to disclose a new accounting policy

b. Disclose the new accounting policy

c. Show the effect in change in policy

d. Disclose the old policy

Both (b) and (c) of above

None

Which of the following statements are/is true? "Events after balance sheet date" are

All the significant events after the balance sheet date

The events after balance sheet date but before its approval by the board.

The events after balance sheet date but before submitting it to the Registrar of Companies

All changes after balance sheet date but before its approval

All the errors rectified after the balance sheet date

None

Which of the following is the example of contingencies?

a. Compulsory acquisition of part of land of the company by the government

b. A suit filed by the employee against the company

c. A debtor of the company is declared insolvent, resulting in bad debts to the company

Both (b) and (C) of above

All of (a), (b) and (c) of above

None

Cost incurred by a contractor before securing a contract which are not specifically is/are

a. Treated as part of contract cost

b. Deferred to future

c. Treated as a revenue cost

Both (b) and (c) of above

None of the Above

None

In case of fixed price contracts using the percentage of completion methods profits can be recognized only

On completion of contract

At the time of entering contarct

At the commencement of the contract

If 20% to 25% of work is completed

If 50% of work is completed

None

Payments received in advance from an customer for a contract can be

a. Shown as deduction from contract work-in-progress on asset side

b. Shown as liability

c. Shown as an asset

d. Credited to P&L account

Either (a) or (b) above

None

As per the delivery method revenue should be recognized

When the goods are transferred ( Delivered )

Only when the title of goods is transferred

When the invoice of the goods is raised

On the receipt of order for goods

Only on the payment of the amount

None

Delivery method of revenue recognition is not applicable in case of

a. Hire Purchase

b. Consignment

c. Goods sent on approval basis

Both (b) and (C) of above

Both (a) and (c) of above

None

Which of the following statements is/are true or false?

a. Under Hire Purchase scheme only possession of goods is transferred

b. The buyer has the option to dispose of the asset before the payment of the final installment in Hire Purchase

c. The installment sale loss due to any damage of the goods is borne by the seller

d. The buyer cannot terminate the agreement by returning the goods in installment method

a, b, and c

b and c

a,b,c and d,

c and d

a and d

None

Which of the following is/are monetary items?

a. Foreign currency balances in bank

b. Loans in foreign currency

c. Payables in foreign currency

d. Both a and b

e. All of a, b and c

None

In which of the following cases closing rate is used for conversion (if denominated in foreign currency) ?

a. Closing inventory

b. Debtors

c. Salaries paid

Both a and b

Both b and c

None

Which of the following is true with respect to reporting of contingencies?

Guarantee of other indebtedness are reported as a loss contingency only if the loss is considered remote

Disclosure of loss contingency is to be made if there is a remote possibility that the loss has been incurred

Disclosure of a loss contingency must include a rupee estimate of the loss

Disclosure of a loss contigency is required for unasserted claims even if there is no manifestation of the claim and only a remote possibility that the out coe will be unfavourable

A loss that is probable but cannot be estimated must be disclosed with a notation that the amount of the loss cannot be estimated.

None

If a company has contingent liabilities, they appear in the

Balance sheet

Directors Report

Notes on account to the balance sheet

Chairman's report

Notice to shareholders

None

Which of the following statements is/are true as per Accountingstandards

a. Change in accounting estimate which has a material effect on the financial statements should be disclosed and quantified

b. If it is difficult to clearly distinguish between changes in accounting policy and change in accounting estimates, then such changes should be treated as changes in accounting estimate

c. If an estimate of contingent loss cannot be made, then the existence and and nature of contingency should be disclosed

d. By-products (inventory) is measured at cost and their value is deducted from cost of main product

a and b only

a ad c only

b and c only

a, b, and c only

all, a, b, c and d

None

A fixed asset has been acquired on credit from a foreign company the previous year. A change i the exchange rate has increased the liability of the company. The adjustment corresponding to increase in liability will be

Shown as a foot note in the balance sheet as a contigent liability

Added to the cost of the fixed asset

Shown as a loss in profit and loss account

Shown under miscellaneous expenditure in the balance sheet

increase liability not effect the financial statements

None

The Accounting Standard on revenue recognition (AS-9) deals with

Revenue obtained from execution of construction contracts

Revenue from sale under hire purchase and lease agreements

Interest, royalities and dividends obtained from other concerns using resources of the enterprise

Revenues from government grants and subsidies

Insurance premia relating to contracts received by insurance companies

None

Which of the following is treated as contingency as per AS-4?

Commitments on long term lease contracts

Providing for depriciation of a fixed asset

Arrears of fixed cumulative dividends or uncalled liability on shares partly paid

Liability under retirement benefit plans

Claims against company acknowledged as debts

None

Accounting policies may differ from one firm to another firm in respect of one of the following:

Deciding on credit and debit aspects of transactions

Classification of assets and liabilities

Classification of revenue and and expense

Classification of revenue and capital expenditure

Classification of fixed and current assets

None

Accounting Standard for Research and Development (AS-8) identified all of the following costs ans R&D costs except

Costs of materials and services consumed i the course of R&D

Costs incurred to promote sales of existing products

Payment to outside agencies for R&D projects related to the enterprise

Depriciation building, equipment and other facilities used fo R&D

Amortization of patents and licences related to R&D

None

Which of the following is not a contingent liability?

Claims against the company not acknowledged as debts

Debts included on debtors which are doubtful in nature

Ucalled liability on partly paid shares

Arrears of cumulative fixed divedends

Estimated amount of contracts remaining to be executed on capital account and not provided for

None

Accounting Standard 4 deals with

Prior period and extraordinay items

Contingencies and events occuring after the balance sheet date

Depreciation accounting

Valuation of inventories

Disclosure of accounting Policies

None

Events occurring after balance sheet which have no bearing on balance sheet and are of substantial interest/amount should be disclosed in the

Balance sheet

Notes on accounts

Directors report

Auditor's report

Profit and Loss account

None

Which of the following is not classified as not Research and Development cost?

Salaries of individuals engaged in research

Cost of materials used i the course of research and Development

Allocated overhead costs apportioned to research and development department

Costs incurred to maintain production

Payment to outside agencies for research and development projects

None

According to AS-2, inventories should be valued at

Realization value

Lower of historical cost and net reliazable value

Lower of historical cost and replacement cost

Replacement cost

Market cost

None

Which of the following is not treated as unusual item by AS-5?

Sale of significant part of business

Sale of investment acquired without an intention of resale

Write -off of inventory due to obsolescence

Liability arising out of legislative changes

Liability arising out of judicial pronouncements

None

Which of the following areas of accounting does not encounter multiplicity of accounting policies?

a. Valuation of inventories

b. Treatment of contingent liabilities

c. Treatment of goodwill

Both b and c

None of the above

None

Which of the following items is/are covered under accounting standard -2 with regard to accounting for inventory?

a. Financial instruments held as stock-in-trade

b. Work-in progress arisig under construction contracts

c. Work in progress of service providers

d. Work in progress of a manufacturing industry

Only a

only d

Both a and b

Both c and d

b,c and d

None

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