Overview of Accounting Standards – Corporate and Management Accounting MCQ

Going through the Overview of Accounting Standards – Corporate and Management Accounting CS Executive MCQ Questions with Answers you can quickly revise the concepts.

Overview of Accounting Standards – Corporate and Management Accounting MCQs

Question 1.
Accounting Standards (ASs) are written policy documents issued by –
X. Expert accounting body
Y. Government
Z. Other regulatory body
Select the correct answer from the options given below –
(A) X but not Y and Z
(B) Y but not Y and Z
(C) Z but not X and Y
(D) All X, Y & Z
Answer:
(D) All X, Y & Z

Question 2.
Accounting standards cover the aspects of ……….. of accounting transactions in the financial statements.
(A) Recognition
(B) Measurements
(C) Presentation and disclosure
(D) Any of the above
Answer:
(D) Any of the above

Question 3.
In India Accounting standards are issued by -…….
(A) ICSI
(B) ICAI
(C) ICWA
(D) RBI
Answer:
(B) ICAI

Question 4.
Accounting standards are issued for the purpose of -……
(A) Improving reliability of financial statements
(B) Harmonizing diverse accounting practices
(C) Elimination of non-comparability between financial statements
(D) All of the above
Answer:
(D) All of the above

Question 5.
The Institute of Chartered Accountants of India (ICAI) constituted the , with a view to harmonizing the diverse accounting policies and practices in use in India.
(A) Standards Board of Accounting (SBA)
(B) Accounting Standards Board (ASB)
(C) Accounting Standards Committee (ASC)
(D) Accounting Committee (AC)
Answer:
(B) Accounting Standards Board (ASB)

Question 6.
The Institute of Chartered Accountants of India (ICAI) constituted the Accounting Standards Board (ASB) on …… with a view to harmonizing the diverse accounting policies and practices in use in India.
(A) 2nd Oct, 1977
(B) 21st April, 1977
(C) 15th Aug, 1977
(D) 21st April, 1997
Answer:
(B) 21st April, 1977

Question 7.
The ICAI so far has issued accounting standards.
(A) 29
(B) 30
(C) 32
(D) 35
Answer:
(C) 32

Question 8.
Match the following:
Overview of Accounting Standards – Corporate and Management Accounting MCQ 1
Select the correct answer from the options given below:
Overview of Accounting Standards – Corporate and Management Accounting MCQ 2
Answer:
(C)

Question 9.
Accounting standards are issued for the purpose of –
(a) Improving dependability of financial statements
(b) Auditing work becomes easy task for the auditor
(c) Elimination of non-comparability between financial statements
The correct answer is –
(A) (a) only
(B) (b) only
(C) (c) only
(D) All of the above
Answer:
(C) (c) only

Question 10.
Accounting standards are –
(A) Written policy documents issued by expert accounting body
(B) Set of broad accounting policies to be followed by an entity.
(C) Set in the form of general principles
(D) All of the above
Answer:
(D) All of the above

Question 11.
AS-3 deals with
(A) Accounting for government grants
(B) Accounting for amalgamations
(C) Cash Flow Statement
(D) Fund Flow Statement
Answer:
(C) Cash Flow Statement

Question 12.
AS-11 deals with
(A) Accounting for Government grants
(B) Accounting for foreign exchange transaction
(C) Cash Flow Statement
(D) Fund Flow Statement
Answer:
(B) Accounting for foreign exchange transaction

Question 13.
______ refer to the specific accounting principles and the methods of applying those principles adopted by the enterprise in the preparation and presentation of financial statements.
(A) Accounting methods
(B) Accounting policies
(C) Accounting concepts
(D) Accounting assumptions
Answer:
(B) Accounting policies

Question 14.
Accounting policies followed by organizations –
(A) Can be changed every year.
(B) Should be consistently followed from year to year
(C) Can be changed after 5 years
(D) None of the above
Answer:
(B) Should be consistently followed from year to year

Question 15.
When a change in accounting policy is justified?
(A) To comply with accounting standard
(B) To ensure more appropriate presentation of the financial statement of the enterprise
(C) To comply with law
(D) All of the above
Answer:
(D) All of the above

Question 16.
It is essential to standardize the accounting principles and policies in order to ensure –
(A) Transparency
(B) Profitability
(C) Reputation
(D) All of the above
Answer:
(A) Transparency

Question 17.
Different accounting policies can be adopted in following areas –
(A) Stock valuation
(B) Investment valuation
(C) Charging depreciation
(D) All of the above
Answer:
(D) All of the above

Question 18.
The determination of the amount of bad debts is an accounting –
(A) Policy
(B) Estimate
(C) Parameter
(D) None of the above
Answer:
(B) Estimate

Question 19.
A specific accounting policy refers to –
(A) Principles
(B) Methods of applying those principals
(C) Both (A) & (B)
(D) None of the above
Answer:
(C) Both (A) & (B)

Question 20.
Match the following:
Overview of Accounting Standards – Corporate and Management Accounting MCQ 3
Answer:
(A)

Question 21.
Accounting policy for inventories of X Ltd. states that inventories are valued at the lower of cost or net realizable value. Which accounting principle in followed in adopting the above policy?
(A) Materiality
(B) Prudence
(C) Substance over form
(D) All of the above
Answer:
(B) Prudence

Question 22.
Provisions for doubtful debts, provision for discount on debtors are based on prudence –
(A) Prudence
(B) Substance over from
(C) Materiality
(D) All of the above
Answer:
(A) Prudence

Question 23.
Assets should be valued at the price paid to acquire them is based on –
(A) Realization concept
(B) Cost concept
(C) Matching concept
(D) Periodicity concept
Answer:
(B) Cost concept

Question 24.
Central Government may, by notification, constitute a National Financial Reporting Authority (NFRA) under of the Companies Act, 2013.
(A) Section 131
(B) Section 132
(C) Section 133
(D) Section 134
Answer:
(B) Section 132

Question 25.
AS-8 on Accounting for Research and Development:
(A) Is replaced by AS-26
(B) Is applicable only to listed companies
(C) Is mandatory for Research Institutions
(D) Is still in use.
Answer:
(A) Is replaced by AS-26

Question 26.
AS-2 is on:
(A) Disclosure of Accounting Policies
(B) Valuation of Inventories
(C) Revenue Recognition
(D) Depreciation Accounting
Answer:
(B) Valuation of Inventories

Question 27.
Consistency with reference to application of accounting principles refer to the:
(A) All the companies in the same industries should use identical procedures and methods.
(B) Income and assets have not been overstated.
(C) Accounting methods and procedures used have to be consistently applied from year to year.
(D) Any accounting method or procedure can be utilized.
Answer:
(C) Accounting methods and procedures used have to be consistently applied from year to year.

Question 20.
Accounting Standards ………. the statue:
(A) Can over-ride
(B) Cannot over-ride
(C) May over-ride
(D) None of the above
Answer:
(A) Can over-ride

Question 21.
The global key professional accounting body is the —
(A) International Accounting Standards Board
(B) Financial Accounting Standards Board
(C) Institute of Chartered Accountants of India
(D) International Accounting Standards Committee
Answer:
(B) Financial Accounting Standards Board

Question 22.
The original cost at which an asset or liability is acquired is known as —
(A) Carrying cost
(B) Replacement cost
(C) Amortization
(D) Historical cost
Answer:
(A) Carrying cost

Question 23.
As per AS-11, the process of converting foreign-subsidiary financial statements into the home currency is known as —
(A) Consolidation
(B) Translation
(C) Transmission
(D) Reconstruction
Answer:
(B) Translation

Question 24.
As per AS-21, the accounting process in which the financial statements of a parent company and its subsidiaries are added together to yield a unified set of financial statements is called —
(A) Amalgamation
(B) Amortization
(C) Consolidation
(D) Translation
Answer:
(B) Amortization

Question 25.
The council of ICAI has so far issued accounting standards. However, AS-8 has been withdrawn. Thus, effectively there are accounting standards
(A) 33; 32
(B) 32; 31
(C) 31; 30
(D) 34; 33
Answer:
(A) 33; 32

Question 26.
Which section of the Companies Act, 2013 provides that the financial statements of every company shall comply with the accounting standards?
(A) Section 129
(B) Section 130
(C) Section 131
(D) Section 132
Answer:
(B) Section 130

Question 27.
In case of charitable trusts and co-operative societies –
(A) If their activities are purely charitable or non-commercial then accounting standards are not applicable.
(B) Even if a very small proportion of the activities of trusts/co-operative societies are considered to be commercial, industrial or business in nature, then accounting standards are applicable.
(C) Both (A) and (B)
(D) None of the above
Answer:
(C) Both (A) and (B)

Question 28.
Which of the following is Level-I enterprise?
(A) All commercial, industrial and business reporting enterprises having borrowings, including public deposits, in excess of ₹ 1 Crore but not in excess of ₹ 10 Crore.
(B) All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period exceeds ₹40 lakhs but does not exceed ₹ 50 Crore.
(C) All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period ₹5 Crore but not in excess of ₹ 25 Crore.
(D) None of the above
Answer:
(B) All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period exceeds ₹40 lakhs but does not exceed ₹ 50 Crore.

Question 29.
Which of the following is Level-II enterprise?
I. Listed enterprises outside India.
II. All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period exceeds ₹ 50 Crore.
III. Financial institutions
IV. Enterprises carrying on insurance business.
Select the correct answer from the options given below.
(A) I & III
(B) II & IV
(C) III only
(D) II only
Answer:
(A) I & III

Question 30.
Which aspect of Financial Instruments is death by AS-31?
(A) Recognition & Measurement
(B) Presentation
(C) Disclosures
(D) Limited Revision
Answer:
(D) Limited Revision

Question 31.
Which of the following are fundamental accounting assumptions?
A. Going Concern
B. Matching
C. Consistency
D. Dual Aspect
E. Materiality
F. Accrual
Select the correct answer from the options given below:
(A) A, C &E
(B) B, D & F
(C) A, C & F
(D) A, D & F
Answer:
(B) B, D & F

Question 32.
Which of the following is Non-SMC as per the Companies (Accounting Standards) Rules?
(A) Whose equity or debt securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India
(B) Which is not a bank, financial institution or an insurance company
(C) Whose turnover excluding other income does exceeds ₹ 50 Crore in the immediately preceding accounting year
(D) All of the above
Answer:
(C) Whose turnover excluding other income does exceeds ₹ 50 Crore in the immediately preceding accounting year

Question 33.
The council of ICAI has so far issued accounting standards. However, AS-8 has been withdrawn. Thus, effectively there are accounting standards
(A) 33; 32
(B) 32; 31
(C) 31; 30
(D) 34; 33
Answer:
(B) 32; 31

Question 34.
Which section of the Companies Act, 2013 provides that the financial statements of every company shall comply with the accounting standards
(A) Section 129
(B) Section 130
(C) Section 131
(D) Section 132
Answer:
(A) Section 129

Question 35.
In case of charitable trusts and co-operative societies –
(A) If their activities are purely charitable or non-commercial then accounting standards are not applicable.
(B) Even if a very small proportion of the activities of trusts/co-operative societies are considered to be commercial, industrial or business in nature, then accounting standards are applicable.
(C) Both (A) and (B)
(D) None of the above
Answer:
(C) Both (A) and (B)

Question 36.
Which of the following is Level-I enterprise
(A) All commercial, industrial and business reporting enterprises having borrowings, including public deposits, in excess of ₹ 1 Crore but not in excess of ₹ 10 Crore.
(B) All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period exceeds ₹ 40 lakhs but does not exceed ₹ 50 Crore.
(C) All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period ₹ 5 Crore but not in excess of ₹ 25 Crore.
(D) None of the above
Answer:
(D) None of the above

Question 37.
Which of the following is Level-II enterprise
I. Listed enterprises outside India.
II. All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period exceeds ₹ 50 Crore.
III. Financial institutions
IV. Enterprises carrying on insurance business.
Select the correct answer from the options given below.
(A) I & III
(B) II & IV
(C) IV only
(D) II only
Answer:
(D) II only

Question 38.
Which aspect of Financial Instruments is death by AS-31
(A) Recognition & Measurement
(B) Presentation
(C) Disclosures
(D) Limited Revision
Answer:
(B) Presentation

Question 39.
Which of the following are fundamental accounting assumptions
A. Going Concern
B. Matching
C. Consistency
D. Dual Aspect
E. Materiality
F. Accrual
Select the correct answer from the options given below:
(A) A, C&E
(B) B, D & F
(C) A, C & F
(D) A, D & F
Answer:
(C) A, C & F

Question 40.
Which of the following is Non-SMC as per the Companies (Accounting Standards) Rules
(A) Whose equity or debt securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India
(B) Which is not a bank, financial institution or an insurance company
(C) Whose turnover excluding other income does exceeds ₹ 50 Crore in the immediately preceding accounting year
(D) All of the above
Answer:
(C) Whose turnover excluding other income does exceeds ₹ 50 Crore in the immediately preceding accounting year

Question 41.
Consider following cases:
(i) A (P) Ltd., a subsidiary of a multi-national company listed on London Stock Exchange. It has a turnover of ₹ 12 Crores and borrowings of ₹ 5 Crores.
(ii) B (P) Ltd. has a turnover of ₹ 45 Crores, other income of ₹ 7 Crores and bank borrowings of ₹ 9 Crores.
(iii) C Ltd. has appointed Merchant Bankers to prepare a Red-herring prospectus for the purpose of filing the same with SEBI.
Classify above enterprises as SMC or Non- SMC and select the correct option given below:
Overview of Accounting Standards – Corporate and Management Accounting MCQ 4
Answer:
(C)

Question 42.
As per the Companies (Accounting Standards) Rules, an existing company, which was previously Non-SMC and subsequently becomes an SMC, shall not be qualified for exemption or relaxation in respect of Accounting Standards available to an SMC until the company remains an SMC for:
(A) Three consecutive accounting periods
(B) Four consecutive accounting periods
(C) Two consecutive accounting periods
(D) Five consecutive accounting periods
Answer:
(C) Two consecutive accounting periods

Question 43.
AS-20 deals with:
(A) Earnings Per Share
(B) Lease
(C) Segment Reporting
(D) Taxes on Income”
Answer:
(A) Earnings Per Share

Question 44.
Which of the following is treated as Potential Equity Share as per AS-20?
(A) Convertible debentures
(B) Share warrants
(C) Employee Stock Options
(D) All of the above
Answer:
(D) All of the above

Question 45.
If rights and beneficial interest in a property is transferred but documentation and legal formalities are pending then seller & purchaser should record in their accounts as sale & purchase. This the example of –
(A) Prudence
(B) Substance over from
(C) Materiality
(D) Realization
Answer:
(B) Substance over from

Question 46.
Which of the following is included in cost of inventory as per AS-2?
(A) Duties and taxes subsequently recoverable from taxing authorities
(B) Freight inwards
(C) Rebates
(D) Duty drawbacks
Answer:
(B) Freight inwards

Question 47.
Payment of penalties/fines for violation of law should be disclosed separately. It should not be clubbed with “Office Expenses” or “Miscelianeous Expenses”. This the example of –
(A) Prudence
(B) Substance over from
(C) Materiality
(D) Realization
Answer:
(C) Materiality

Question 48.
As per AS-3, unrealized gains and losses arising from changes in foreign exchange rates are –
(A) Cashflows
(B) Cash equivalents
(C) Cash inflows
(D) Not cash flows
Answer:
(D) Not cash flows

Question 49.
Provisions for doubtful debts, provision for discount on debtors are based on:
(A) Prudence
(B) Substance over from
(C) Materiality
(D) Realization
Answer:
(A) Prudence

Question 50.
Which of the following required to be disclosed as per AS-1?
(A) Significant accounting policies
(B) Fundamental accounting assumptions
(C) Change in accounting policies
(D) All of the above
Answer:
(D) All of the above

Question 51.
As per AS-2, inventories should be valued at:
(1) Cost
(2) Net Realizable Value
Select the correct answer from the options given below.
(A) (1) only
(B) Higher of (1) and (2)
(C) (2) only
(D) Lower of (1) and (2)
Answer:
(D) Lower of (1) and (2)

Question 52.
As per AS-2, the historical cost of inventories should normally be determined by using
(A) FIFO and LIFO Method
(B) LIFO and Weighted Average Cost Method
(C) FIFO and Weighted Average Cost Method
(D) FIFO and Simple Average Cost Method
Answer:
(C) FIFO and Weighted Average Cost Method

Question 53.
As per AS-3, an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, from
the date of acquisition.
(A) Two months or less
(B) Four months or less
(C) Three months or less
(D) Six months or less
Answer:
(C) Three months or less

Question 54.
NRV or net realizable value of inventory is the expected selling price or market value less
(A) Carry value of the inventory
(B) Expenses necessary to complete sale
(C) Cost of the stock
(D) replacement cost
Answer:
(B) Expenses necessary to complete sale

Question 55.
AS-6: Depreciation applies to –
(A) Goodwill and other intangible assets
(B) Forests, plantations and similar re-generative natural resources
(C) Wasting assets including expenditure on the exploration for and extraction of minerals, oils, natural gas and similar non-regenerative resources
(D) None of the above
Answer:
(D) None of the above

Question 56.
Due to which of the following concept inventory is valued at cost or net realizable value, whichever is less?
(A) Going Concern
(B) Separate Entity
(C) Prudence
(D) Matching
Answer:
(C) Prudence

Question 57.
AS-7: Construction Contracts should be applied in accounting for construction contracts in the financial statements of:
(A) Contractee
(B) Contractors
(C) Both (A) and (B)
(D) Only (A) not (B)
Answer:
(B) Contractors

Question 58.
While finalizing the current year profit, the company realized that there was an error in the valuation of closing stock of the previous year. In the previous year, closing stock was overvalued. As a result
(A) Previous year profit is overstated and current year profit is also overstated.
(B) Previous year profit is understated and current year profit is overstated
(C) Previous year profit is understated, and current year profit is also understated.
(D) Previous year profit is overstated and current year profit is understated.
Answer:
(D) Previous year profit is overstated and current year profit is understated.

Question 59.
As per AS-7: Construction Contracts, an expected loss on the construction contract should be –
(A) Charged to other profitable contracts
(B) Charged to that contract itself
(C) Recognized as an expense immediately Le. debited to P & L A/c.
(D) Should be carried forward.
Answer:
(C) Recognized as an expense immediately Le. debited to P & L A/c.

Question 60.
Which of the following method of inventory valuation is not recommended by AS-2?
(A) Specific Identification Method
(B) Last-in-First Out Method
(C) Weighted Average Cost Method
(D) First-in-First Out Method
Answer:
(B) Last-in-First Out Method

Question 61.
Which of the following is not a method of determining stage of completion of a contract as per AS-7?
(A) Physical completion method
(B) Residual completion method
(C) Surveys of work performed method
(D) Proportionate cost method
Answer:
(B) Residual completion method

Question 62.
If closing stock is overstated
(A) Profit will increase and current assets will decrease
(B) Profit will decrease and current assets will increase
(C) Both profit & current assets will increase
(D) Both profit & current assets will decrease
Answer:
(C) Both profit & current assets will increase

Question 63.
AS-9 is concerned with the recognition of revenue arising in the course of the ordinary activities of the enterprise from:
(A) Sale of goods
(B) Rendering of services
(C) Use by others of enterprise resources yielding interest, royalties and dividends
(D) All of the above
Answer:
(D) All of the above

Question 64.
Which of the following is ‘revenue’ as per AS-9?
(A) Realized gains from the disposal of non-current assets
(B) Natural increases in herds and agricultural and forest products
(C) Realized or unrealized gains resulting from changes in foreign exchange rates
(D) None of the above
Answer:
(D) None of the above

Question 65.
Which of the following statements is correct with respect to inventories?
(A) The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.
(B) It is generally good business management to sell the most recently acquired goods first.
(C) Under FIFO, the ending inventory is based on the latest units purchased.
(D) FIFO seldom coincides with the actual physical flow of inventory.
Answer:
(C) Under FIFO, the ending inventory is based on the latest units purchased.

Question 66.
Revenue from service transactions is usually recognized as the service is performed, by the: .
(A) Proportionate completion method
(B) Completed service contract method
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(C) Both (A) and (B)

Question 67.
As per AS-9, revenue from interest should be recognized –
(A) On time proportion basis.
(B) On accrual basis as per the term of agreement
(C) When right to receive is established
(D) Any of the above
Answer:
(A) On time proportion basis.

Question 68.
AS-13 deals with:
(A) Accounting for borrowings
(B) Accounting for investments
(C) Finance lease
(D) Operating lease
Answer:
(B) Accounting for investments

Question 69.
As per AS-13 shares, debentures and other securities held for sale in the ordinary course of business Eire –
(A) Disclosed as stock-in-trade under the head Current Assets.
(B) Disclosed as temporary investments under the head Current Assets.
(C) Debited to Investment A/c
(D) Disclosed as long term investments under the head Non-Current Assets.
Answer:
(A) Disclosed as stock-in-trade under the head Current Assets.

Question 70.
As per AS-13, where, long-term investments are reclassified as current investments, transfers Eire made at the:
(A) Higher of Cost or Fair Value at the date of transfer.
(B) Lower of Cost or Carrying Amount at the date of transfer.
(C) Lower of Cost or Fair Value at the date of transfer.
(D) Higher of Cost or CEirrying Amount at the date of transfer.
Answer:
(B) Lower of Cost or Carrying Amount at the date of transfer.

Question 71.
As per AS-13, where investments are reclassified from current to long-term, transfers are made at the -………
(A) Lower of Cost or Fair Value at the date of transfer.
(B) Higher of Cost or Fair Value at the date of transfer.
(C) Lower of Cost or Carrying Amount at the date of transfer.
(D) Higher of Cost or Carrying Amount at the date of transfer.
Answer:
(A) Lower of Cost or Fair Value at the date of transfer.

Question 72.
As per AS-13, if an investment is acquired in exchange for another asset, the acquisition cost of the investment is determined by reference to:
(A) Fair value of the asset given up or fair value of the investment acquired whichever is more.
(B) Fair value of the asset given up or fair value of the investment acquired whichever is less.
(C) Fair value of the asset given up or fair value of the investment acquired whichever is more clearly evident.
(D) Market value of the asset given up or market value of the investment acquired whichever is more clearly evident.
Answer:
(C) Fair value of the asset given up or fair value of the investment acquired whichever is more clearly evident.

Question 73.
AS-14 deals with
(A) Accounting for takeovers
(B) Accounting for lease
(C) Accounting for amalgamation
(D) Accounting for taxes
Answer:
(C) Accounting for amalgamation

Question 74.
One of the conditions for amalgamation in the nature of merger is that shareholders holding not less than of the face value of the equity shares of the transferor company become equity shareholders of the transferee company by virtue of the amalgamation.
(A) 75%
(B) 8096
(C) 6096
(D) 9096
Answer:
(D) 9096

Question 75.
Amalgamation in the Nature of Merger is also known as –
(A) Amalgamation in the Nature of Takeover
(B) Pooling of interest
(C) Added value merger
(D) Amalgamation in the Nature of consolidation
Answer:
(B) Pooling of interest

Question 76.
As per amalgamation in the nature of merger method all assets, liabilities, reserves and surplus of the transferor company are incorporated in the financial statements of the transferee company at –
(A) Book value
(B) Agreed value
(C) Either at book value or agreed value
(D) Market value
Answer:
(B) Agreed value

Question 77.
As per amalgamation in the nature of merger method difference between the consideration and share capital of the transferor company is adjusted against:
(A) Reserves or profit & loss balance
(B) Goodwill or capital reserve
(C) General reserve or goodwill
(D) Goodwill or profit & loss balance
Answer:
(A) Reserves or profit & loss balance

Question 78.
As per AS-14, to carry forward “Statutory Reserve”, which account is opened as per Amalgamation in the Nature of Purchase?
(A) Reserve Adjustment A/c
(B) Adjusted Statutory Reserve A/c
(C) Amalgamation Adjustment A/c
(D) Adjusted Profit & Loss A/c
Answer:
(C) Amalgamation Adjustment A/c

Question 79.
As per AS-4, events occurring after the balance sheet date are those ……… that occur between the balance sheet date and the date on which the financial statements are approved by appropriate authority.
(A) Significant Events
(B) Occurring Events
(C) Non-Adjusting Events
(D) Contingent Events
Answer:
(A) Significant Events

Question 80.
As per AS-5, prior period items are income or expenses which arise in the current period as a result of in the preparation of the financial statements of one or more prior periods.
(A) Errors
(B) Omissions
(C) Errors or omissions
(D) Errors or rectifications
Answer:
(C) Errors or omissions

Question 81.
X Ltd. purchased goods at the cost of ₹ 40 lakhs in October, 2018. Till March, 2019, 75% of the stocks were sold. The company wants to disclose closing stock at ₹ 10 lakhs. The expected sale value is ₹ 11 lakhs and a commission at 10% on sale is payable to the agent. What is the correct closing stock to be disclosed as at 31.3.2019 as per AS-2?.
(A) 10 Lakhs
(B) 9.9 Lakhs
(C) 11 lakhs
(D) 12 lakhs
Answer:
(B) 9.9 Lakhs
As per AS-2, Inventories should be valued at the lower of:

  • Cost (40 Lakhs × 25%) 10 Lakhs
  • Net Realizable Value (11 Lakhs – 1.1 Lakhs) — ₹ 9.9 Lakhs
    Hence, as per AS-2, Inventory should be valued an — ₹ 9.9 Lakhs.

Question 82.
On 31.3.2018 a business firm finds that cost of a partly finished unit on that date is ₹ 530. The unit can be finished in 2018-2019 by an additional expenditure of ₹ 310. The finished unit can be sold for ₹ 750 subject to payment of 4% brokerage on selling price. The firm seeks your advice regarding the amount at which the unfinished unit should be valued as at 31.3.2019 for preparation of final accounts?
(A) 530 per unit
(B) 410 per unit
(C) 440 per unit
(D) 720 per unit
Answer:
(B) 410 per unit
As per AS-2, Inventories should be valued at the lower of:
– Cost ₹ 530
– Net Realizable Value (750 – 310 – 30) ₹ 410
Hence, as per AS-2, Inventory should be valued at ₹ 410 per unit.

Question 83.
X Ltd. manufactures a product and details of costs are as under:
Raw material — ₹ 4,00,000
Direct labour — ₹ 2,50,000
Variable production overheads — ₹ 1,50,000
Fixed production overheads — ₹ 2,90,000
(including interest — ₹ 1,00,000)
Normal production capacity is 55,000 units. At the year end closing stock was 2,500 units. Compute the value of closing stock.
(A) ₹ 45,000
(B) ₹ 40,000
(C) ₹ 55,000
(D) ₹ 50,000
Answer:
(A) ₹ 45,000
Overview of Accounting Standards – Corporate and Management Accounting MCQ 10
Question 84.
In process, 100 units of raw materials were introduced at a cost of ₹ 1,000. The other expenditure incurred by the process was ₹ 600. Of the units introduced, 10% are normally lost in the course of manufacturing and they possess a scrap value of ₹ 3 each. The output of Process was only 75 units. Calculate the value of final output.
(A) ₹ 262
(B) ₹ 1,308
(C) ₹ 1,406
(D) ₹ 863
Answer:
(B) ₹ 1,308
Overview of Accounting Standards – Corporate and Management Accounting MCQ 11

Question 85.
Z Ltd. operates retails business. For the financial year following data is given.
Overview of Accounting Standards – Corporate and Management Accounting MCQ 5
Calculate the cost of closing stock, if sales made during the year is ₹ 2,00,000.
(A) ₹ 16,436
(B) ₹ 14,366
(C) ₹ 16,364
(D) ₹ 14,346
Answer:
(C) ₹ 16,364
Average percentage of cost to retail price \( =\frac{60,000+1,20,000}{80,000+1,40,000} \times 100=\frac{1,80,000}{2,20,000} \times 100=81.82 \%\)
Margin on retail price = 100°6 – 81.82% = 18.18%
Closing inventory at retail price = 80,000 + 1,40,000 – 2,00,000 = 20,000
Value of closing inventory = 20,000 – 3,636 = 16,364.

Question 86.
Best Ltd. deals in five products, P, Q, R, S and T which are neither similar nor interchangeable. At the time of closing of its accounts for the year ending 31 st March 2019, the historical cost and net realizable value of the items of the closing stock are determined as follows:
Overview of Accounting Standards – Corporate and Management Accounting MCQ 6
What will be the value of closing stock for the year ending 31st March, 2019 as per AS-2 “Valuation of Inventories”?
(A) ₹ 23,29,000
(B) ₹ 24,51,000
(C) ₹ 24,36,000
(D) ₹ 23,42,000
Answer:
(A) ₹ 23,29,000
4,75,000 + 9,80,000 + 2,89,000 + 4,25,000 + 1,60,000 = 23,29,000

Question 87.
Books of T Ltd. revealed the following information:
Opening inventory ₹ 16,00,000
Purchases during the year ₹ 34,00,000
Sales during the year ₹ 48,00,000
At year end, the value of inventory as per physical stock-taking was ₹ 3,25,000. The company’s gross profit on sales has remained constant at 25%. The management of the company suspects that some inventory might have been pilfered by a new employee. What is the estimated cost of missing inventory?
(A) ₹ 75,000
(B) ₹ 25,000
(C) ₹ 1,00,000
(D) ₹ 1,50,000
Answer:
(A) ₹ 75,000
Overview of Accounting Standards – Corporate and Management Accounting MCQ 12

Question 88.
NS Ltd., a dealer in second-hand cars has the following five vehicles of different models and makes in their stock at the end of the financial year 2018-2019:
Overview of Accounting Standards – Corporate and Management Accounting MCQ 7
Value of stock included in the balance sheet of the company as on March 31, 2019 was
(A) ₹ 7,62,500
(B) ₹ 7,70,000
(C) ₹ 7,90,000
(D) ₹ 8,70,000
Answer:
(B) ₹ 7,70,000
Closing stock has to value at cost or NRV whichever is less.
90,000 + 1,15,000 + 2,65,000 + 1,00,000 + 2,00,000 = 7,70,000.

Question 89.
An amount of ₹ 9,90,000was incurred on a contract work up to 31.3.2018. Certificates have been received to date to the value of ₹ 12,00,000 against which ₹ 10,80,000 has been received in cash. The cost of work done but not certified amounted to ₹ 22,500. It is estimated that by spending an additional amount of ₹ 60,000 the work can be completed in all respects in another two months. Agreed contract price of work is ₹ 12,50,000. Compute a profit to be taken to the P&L A/c as per AS-7.
(A) ₹ 1,88,625
(B) ₹ 1,65,288
(C) ₹ 1,62,885
(D) ₹ 1,88,562
Answer:
(A) ₹ 1,88,625
Overview of Accounting Standards – Corporate and Management Accounting MCQ 14

Question 90.
From the following details determine the expected profit or loss that should be recognized in the accounts for the year.
Contract price = ₹ 12,50,000
Cost incurred till date = ₹ 10,90,000
Cost expected to be incurred to complete the contract = ₹ 3,60,000
(A) ₹ 2,00,000 profit
(B) ₹ 49,625 loss
(C) ₹ 2,00,000 loss
(D) 149,625 profit
Answer:
(C) ₹ 2,00,000 loss

Question 91.
Z Ltd. purchased 10,000 shares of N Ltd. @ ₹ 300. Brokerage @ 2% and stamp duty was 10 paisa per ₹ 100. What is the value of investment as per AS-13?
(A) ₹ 30,63,000
(B) ₹ 30,60,000
(C) ₹ 30,00,000
(D) ₹ 30,93,000
Answer:
(A) ₹ 30,63,000
Overview of Accounting Standards – Corporate and Management Accounting MCQ 15

Question 92.
P Ltd. purchased 10,000 shares of Q Ltd. and issued its 5,000 shares. Nominal value of shares of both P Ltd. & Q Ltd. is ₹ 10. The fair value of shares of P Ltd. & Q Ltd. are ₹ 11.5 & ₹ 12 respectively. Calculate the cost of investment acquired as per AS-13.
(A) ₹ 57,500
(B) ₹ 1,15,000
(C) ₹ 60,000
(D) ₹ 1,20,000
Answer:
(A) ₹ 57,500
Cost of investment = 5,000 × 11.5 = 57,500

Question 93.
N Ltd. acquired certain investment by giving its machinery having WD V ₹ 47,000 and cash ₹ 16,000. Realizable value of machinery was ₹ 20,000. Calculate the cost of investment acquired as per AS-13.
(A) ₹ 31,000
(B) ₹ 36,000
(C) ₹ 27,000
(D) ₹ 11,000
Answer:
(B) ₹ 36,000
Cost of investment = 20,000 + 16,000 = 36,000

Question 94.
A Ltd. is absorbed by B Ltd., the consideration being the takeover of liabilities, the payment of cost of absorption as part of purchase consideration not exceeding ₹ 20,000, the payment of the 9% Debenture of ₹ 1,00,000 at a premium of 10% to the debenture holders of A Ltd. Equity shareholders of A Ltd. are entitled to ₹ 16 per share in cash and allotment of one 14% Preference Share of ₹ 10 each and 6 equity share of ₹ 10 each fully paid for every 4 share in A Ltd. The numbers of shares of A Ltd. are 2,00,000 of ₹ 10 each fully paid. Purchases consideration as per AS-14 = ?
(A) ₹ 67,00,000
(B) ₹ 62,00,000
(C) ₹ 67,20,000
(D) ₹ 62,20,000
Answer:
(A) ₹ 67,00,000
Overview of Accounting Standards – Corporate and Management Accounting MCQ 16
Overview of Accounting Standards – Corporate and Management Accounting MCQ 17

Question 95.
On 1.1.2019, 7,200 equity shares outstanding in the books of ₹ Ltd.
On 31.5.2019,2,400 shares issued for cash.
1.11.2019, the company made buy back of 1,200 shares.
Net profit for the year ended 31.12.2019 is ₹ 6,30,000.
Basic EPS as per AS-20 = ?
(A) 75 per share
(B) 80 per share
(C) 35 per share
(D) 55 per share
Answer:
(A) 75 per share
Overview of Accounting Standards – Corporate and Management Accounting MCQ 18

Question 96.
On 1.1.2019, 10,800 equity shares of ₹ 10 each fully paid-up outstanding in the books of Y Ltd.
On 31.10.2019 the company issued 3,600 shares of ₹ 10 each, ₹ 5 paid-up. Partly paid shares are entitled to participate in the dividend to the extent of amount paid. Net profit for the year ended 31.12.2019 is ₹ 13,32,000. Basic EPS as per AS-20 = ?
(A) ₹ 80 per share
(B) ₹ 90 per share
(C) ₹ 110 per share
(D) ₹ 120 per share
Answer:
(D) ₹ 120 per share
Overview of Accounting Standards – Corporate and Management Accounting MCQ 19
Overview of Accounting Standards – Corporate and Management Accounting MCQ 20

Question 97.
Details of shares of XM Ltd. are given below.
Overview of Accounting Standards – Corporate and Management Accounting MCQ 8
Weighted average number of equity shares = ?
(A) 6,60,000 shares
(B) 6,40,000 shares
(C) 6,20,000 shares
(D) 6,30,000 shares
Answer:
(D) 6,30,000 shares
Overview of Accounting Standards – Corporate and Management Accounting MCQ 21

Question 98.
Following are the details in respect of JPJ Ltd.
Net profit 2017-2018: ₹ 11,40,000
Net profit 2018-2019: ₹ 22,50,000
No. of equity shares outstanding until 31.12.2018: 5,00,000
Bonus issue on 1.1.2019, one equity share for each equity share outstanding as at 31.12.2018.
Calculate (a) Basic EPS for the current year and (b) Adjusted EPS for the last year?
(A) 2.25 per share & 1.14 per share
(B) 2.50 per share & 1.50 per share
(C) 2.24 per share & 1.12 per share
(D) 2.20 per share & 1.10 per share
Answer:
(A) 2.25 per share & 1.14 per share
Overview of Accounting Standards – Corporate and Management Accounting MCQ 22
For the year 2018-2019, the company had issued bonus shares, hence it should also re-state the EPS for earlier year 2017-2018 while stating EPS for current year i.e. 2018-2019.
Overview of Accounting Standards – Corporate and Management Accounting MCQ 23
Since, the bonus issue is an issue without consideration, the issue is treated as if it had occurred prior to the beginning of the year 2017-2018, the earliest period reported.

Question 99.
X Ltd. supplies following information:
Net profit for the Year 2018: ₹ 20,00,000
Net profit for the Year 2019: ₹ 30,00,000
No. of shares outstanding prior to right issue: 10,00,000 shares
Right issue: One new share for each four outstanding ie. 2,50,000 shares.
Right issue price: ₹ 20
Last date of exercise rights: 31.3.2019.
Fair value of one equity share immediately prior to exercise of rights on 31.3.2019:₹ 25
Basic EPS = ?
(A) ₹ 2.34 per share
(B) ₹ 2.83 per share
(C) ₹ 2.50 per share
(D) ₹ 2.77 per share
Answer:
(C) ₹ 2.50 per share
Overview of Accounting Standards – Corporate and Management Accounting MCQ 24
Overview of Accounting Standards – Corporate and Management Accounting MCQ 25
Overview of Accounting Standards – Corporate and Management Accounting MCQ 26

Question 100.
Net profit for the year attributable to equity shareholder = ₹ 50,00,000
Number of equity shares outstanding = 10,00,000
12% Convertible preference shares of ₹ 100 each = 50,000
(Each preference share is convertible into 8 equity shares)
Corporate tax is 30% while dividend distribution tax is 12.5%.
Diluted EPS = ?
(A) ₹ 5.05 per share
(B) ₹ 4.05 per share
(C) ₹ 4.85 per share
(D) ₹ 3.95 per share
Answer:
(B) ₹ 4.05 per share
Overview of Accounting Standards – Corporate and Management Accounting MCQ 27
Overview of Accounting Standards – Corporate and Management Accounting MCQ 28

Question 101.
Net profit for year = ₹ 2,00,00,000
Number of equity shares outstanding are 40,00,000.
Number of 11% convertible debentures of ₹ 100 each = 50,000
(Each debenture is convertible into 8 equity shares)
Tax rate = 30%
Diluted EPS = ?
(A) ₹ 5.63 per share
(B) ₹ 3.63 per share
(C) ₹ 4.63 per share
(D) ₹ 5.83 per share
Answer:
(C) ₹ 4.63 per share
Overview of Accounting Standards – Corporate and Management Accounting MCQ 29

Question 102.
Following details are available for Z Ltd.
Overview of Accounting Standards – Corporate and Management Accounting MCQ 9
(A) ₹ 2.40 per share
(B) ₹ 2.29 per share
(C) ₹ 2.04 per share
(D) ₹ 2.79 per share
Answer:
(B) ₹ 2.29 per share
Overview of Accounting Standards – Corporate and Management Accounting MCQ 30
Overview of Accounting Standards – Corporate and Management Accounting MCQ 31

Question 103.
Z Ltd. had 12,00,000 equity shares on 1.4.2012. It earned a profit of ₹ 30,00,000 during the year 2015-2016. The fair value of share is ₹ 25. The company has given Share Option to its employees of 2,00,000 equity shares at an option price of ₹ 15. Calculate diluted EPS.
(A) ₹ 2.43 per share
(B) ₹ 2.50 per share
(C) ₹ 2.34 per share
(D) ₹ 2.23 per share
Answer:
(C) ₹ 2.34 per share
Overview of Accounting Standards – Corporate and Management Accounting MCQ 32

Question 104.
Jeevan Ltd. earned a net profit after tax of ₹ 90,00,000 during the year ended 31.3.2012. The company’s equity capital is 10,000 shares of ₹ 10 each. The company has also issued 5,000, 20% convertible debentures of ₹ 20 each, convertible into shares at par. Compute diluted EPS as per AS-20, assuming income tax rate at 30%.
(A) ₹ 470.50 per share
(B) ₹ 405.70 per share
(C) ₹ 405.07 per share
(D) ₹ 450.70 per share
Answer:
(D) ₹ 450.70 per share
Overview of Accounting Standards – Corporate and Management Accounting MCQ 33

Question 105.
Net profit for year = ₹ 83,00,000
Number of equity shares outstanding are 20,00,000.
Number of 10% convertible debentures of ₹ 100 each = 1,00,000 (Each debenture is convertible into 8 equity shares)
Interest expense = ₹10,00,000
Tax rate = 30%
Diluted EPS = ?
(A) ₹ 4.63 per share
(B) ₹ 3.63 per share
(C) ₹ 3.00 per share
(D) ₹ 2.83 per share
Answer:
(C) ₹ 3.00 per share
Overview of Accounting Standards – Corporate and Management Accounting MCQ 34
Overview of Accounting Standards – Corporate and Management Accounting MCQ 35