Question 1

What do you mean by ASB?
A)Accounting Security Board
B)Accounting Standard Board
C)Accounting Standardization Board
D)None of these

Accepted Answer

The correct term is "Accounting Standards Board" which is responsible for developing and issuing accounting standards.

Question 2

IASB was established in the year….
A)1999
B)1977
C)1972
D)2001

Accepted Answer

B

Question 3

FASB is based in…………….
A)London
B)Chennai
C)New York
D)Norwalk

Accepted Answer

The Financial Accounting Standards Board (FASB) is based in Norwalk, Connecticut.

Question 4

…………….is the residual interest in the asset of an entity after deducting all liabilities
A)Capital
B)Net Asset
C)Depreciation
D)Equity

Accepted Answer

Equity represents the residual interest in the assets of an entity after deducting all its liabilities. It is the owner's claim on the company's assets after all debts have been paid.

Question 5

ASB was set up in India on………………
A)21 April 1977
B)1 April 1977
C)1 January 1976
D)31 March 1978

Accepted Answer

ASB was set up in India on 1 April 1977.

Question 6

Indian Accounting Standard 3 (AS3) deals with….
A)Amalgamation
B)Lease
C)Cash flow Statement
D)Depreciation Accounting

Accepted Answer

Indian Accounting Standard 3 (AS3) deals with the Cash Flow Statement, which outlines the inflows and outflows of cash and cash equivalents for a company over a specific period.

Question 7

Accounting profession of India is governed by………………….
A)ICAI
B)Ministry of Corporate Affairs
C)Govt. Of India
D)ASB

Accepted Answer

The Institute of Chartered Accountants of India (ICAI) governs the accounting profession in India. It is a statutory body established under the Chartered Accountants Act, 1949 for regulating the profession in the country.

Question 8

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

Accepted Answer

Property, Plant, and Equipment (PP&E) are tangible assets that are used in the production or supply of goods and services, for rental to others, or for administrative purposes and are expected to be used during more than one period. They are not intended for sale in the ordinary course of business, which eliminates option A. Option B describes investment property rather than PP&E.

Question 9

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

Accepted Answer

After initial recognition, Property, Plant, and Equipment (PPE) should be measured at cost less accumulated depreciation and any impairment losses. This reflects the wear and tear, usage, and aging of the asset over time, as well as any decline in its recoverable amount. Day-to-day servicing costs are typically recognized as expenses when incurred and do not reduce the carrying amount of PPE.

Question 10

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

Accepted Answer

The unit production method based on air miles flown is most appropriate for jet engines because their wear and tear is closely related to how much they are used, rather than simply the passage of time. The straight-line method (SLM) is suitable for other parts of the aircraft that depreciate more uniformly over time, regardless of usage.

Question 11

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

Accepted Answer

Ind AS 16 pertains to Property, Plant, and Equipment and does not cover the rights to extract minerals, oil, natural gas, and similar non-regenerative resources, which are instead covered by Ind AS 106 (Exploration for and Evaluation of Mineral Resources).

Question 12

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

Accepted Answer

An intangible asset is identified when it is either separable or arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity.

Question 13

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)

Accepted Answer

The cost of an intangible asset at initial recognition is measured at its fair value when it is acquired as part of a business combination or by way of a government grant. This is because the fair value can be reliably measured in these situations, providing a basis for the asset's initial recognition on the balance sheet.

Question 14

The useful life of an intangible asset may be,
A)Finite
B)Infinite
C)Either (a) or (b)
D)None of these

Accepted Answer

The useful life of an intangible asset can be either finite or infinite, depending on factors such as legal or contractual provisions, the asset's ability to generate future economic benefits, and competition or other economic factors.

Question 15

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

Accepted Answer

Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount, meaning the asset is recorded on the balance sheet at a value higher than what can be recovered through use or sale.

Question 16

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

Accepted Answer

Inventories should be assessed for impairment at each reporting date to determine whether their carrying amount exceeds their recoverable amount, reflecting a systematic approach to recognizing and measuring any losses.

Question 17

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

Accepted Answer

Inventories should be measured at the lower of cost and net realizable value, which is the estimated selling price less costs to complete and sell.

Question 18

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

Accepted Answer

The cost of inventory includes the cost of purchase (buying price, import duties, transport, handling), cost of conversion (direct labor, manufacturing overheads), and other costs necessary to bring the materials to their present location and condition.

Question 19

Consumable stores are
A)Inventories
B)Property, Plant and Equipment
C)Investment Property
D)Intangible Asset

Accepted Answer

Consumable stores are considered inventories because they are assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

Question 20

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

Accepted Answer

Cost of inventory includes all costs necessary to bring the items to their present location and condition, but it does not include the cost of abnormal wastage, as this is not considered a necessary cost of production or acquisition.

Quiz 1: Accounting Standards and Principles: Part A

What do you mean by ASB?

IASB was established in the year….

FASB is based in…………….

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

ASB was set up in India on………………

Indian Accounting Standard 3 (AS3) deals with….

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

Property, Plant and Equipment are defined as,

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

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

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

An intangible asset is identified when,

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

The useful life of an intangible asset may be,

Impairment loss is recognised when,

An entity assesses inventories for impairment,

Inventories must be measured at

Cost of inventory is a sum of

Consumable stores are

Cost of inventory does not include