Tag: accounting standards

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Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Valuation of inventory is dealt with in ______.

  1. $AS - 1$

  2. $AS - 2$

  3. $AS - 3$

  4. $AS - 4$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As per AS-2, Valuation of inventories prescribed the accounting treatment for inventories and sets the guidance to determine the value at which the inventories are carried in the financial statement. 

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs. 

The cost of inventories should comprise all costs of purchase, Costs of conversion and other costs incurred in bringing  the inventories to their present location and condition. 

As per AS-2, "Inventories should be valued at the lower of cost and net realisable value."

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Accounting standard on inventory valuation is not applicable to _____________.

  1. Construction contracts

  2. Inventories of livestock, agricultural and forest products

  3. Stock of mineral oils, ores and gases

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

AS-2 explicitly excludes certain types of inventories from its scope, including construction contracts, livestock, and mineral ores, as these are covered by other specific standards.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

In reference to the accounting standards, choose the correct statement _______________________.

  1. Accounting standards codify the generally accepted accounting principles.

  2. They law down the norms of accounting policies and practices by way of codes or guideline.

  3. The main purpose of accounting standards is to provide information to the used as to the basis on which the accounts have been prepared.

  4. All of the above.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting standards serve to codify principles, establish norms for policies, and provide a basis for financial reporting, making all the provided statements correct.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

As per $AS - 2$, inventory is to be valued at _______________.

  1. Actual cost

  2. Sales value

  3. Net realisable value

  4. The lower of cost or net realisable value
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

As per AS-2, Valuation of inventories prescribed the accounting treatment for inventories and sets the guidance to determine the value at which the inventories are carried in the financial statement. 

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs. 

The cost of inventories should comprise all costs of purchase, costs of conversion and other costs incurred in bringing  the inventories to their present location and condition. 

As per AS-2, "Inventories should be valued at the lower of cost and net realisable value."

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Which of the following is not required to be disclosed according to $AS-6$?

  1. The depreciation methods used

  2. The total depreciation for the period for each class of assets

  3. The gross amount of each class of depreciable assets and the related accumulated depreciation

  4. Depreciated value of the assets
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

AS-6 (now superseded by AS-10) required disclosure of methods, total depreciation, and gross/accumulated values. The 'depreciated value' (Net Book Value) is a result of the calculation, not a specific disclosure requirement in the same sense as the others.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

$AS-6$ deals with depreciation accounting and applies to all depreciable assets, except _____________.

  1. Forests, plantations and similar regenerative natural resources

  2. Wasting assets and expenditure on research and development

  3. Goodwill and livestock

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

AS-6 excludes assets like forests, wasting assets, and goodwill because they are subject to different valuation or depletion methods rather than standard depreciation.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Choose the correct statement.

  1. According to $AS-6$ depreciation is to be provided on land

  2. According to $AS-6$ depreciation is not to be provided on land under any situation

  3. According to $AS-6$ depreciation is not to be provided on land unless it has a limited useful life of the enterprise

  4. $AS-6$ is silent on the questions providing depreciation on land
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Land is generally not depreciated because it has an unlimited useful life. However, if land has a limited useful life to the enterprise, it may be depreciated.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

According to $AS-6$, 'Depreciable assets' are assets which __________.

  1. are expected to be used during more than one accounting period

  2. have a limited useful life

  3. are held by an enterprise for use in the production or supply of goods and services, for rental to others, or for administrative purposes and not for the purpose of sale in the ordinary course of business

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

According to AS-6, depreciable assets are defined by their usage, limited useful life, and the fact that they are held for production or administrative purposes rather than sale.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

According to AS-6 "Depreciation Accounting", issued by the ICAI, change in method is permitted _____________.

  1. Prospectively

  2. Retrosecpectively

  3. Negatively

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under AS-6, a change in the method of depreciation is treated as a change in accounting policy and is applied retrospectively to the date of the asset's acquisition.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

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 ____________.

  1. (a) only

  2. (b) only

  3. (c) only

  4. All of the above
Reveal answer Fill a bubble to check yourself
C Correct answer