Tag: accounting standards (as) and ifrs

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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

As per AS-1 significant accounting policies may not be ________.

  1. Disclosed at all

  2. Omitted from financial disclosure

  3. Selected on random basis

  4. Changed from time to time
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Financial statement must be prepared with a true and fair view. All the relevant information which is of the interest of the owner, investors, creditors should be fully disclosed. All the significant policies should also be disclosed.  

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

Inappropriate selection of the accounting policy decision may lead to _________.

  1. Overstating the financial position performance

  2. Over/understating the performance of financial position

  3. Overstatement of losses

  4. Understatement of profit
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Financial statements are prepared by selecting certain policies. A proper balance has to done while selecting an appropriate policies which are useful for better presentation of financial statement. Improper selection of accounting policy may lead to ambiguity in performance of financial position.
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, cost of inventory is determined by applying___________.

  1. FIFO

  2. LIFO

  3. highest in first out

  4. next in first out
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

AS-2 (Valuation of Inventories) requires that the cost of inventory be determined using specific formulas such as FIFO (First-In, First-Out) or weighted average cost. LIFO is generally not permitted under current accounting standards.

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-2 inventories means tangible property held_________.

  1. For sale in the ordinary course of business

  2. In the process of production of such goods or

  3. In the production of goods or services for sale including maintenance supplies and consumables other than machinery spares

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

According to AS 2 inventory means tangible property held for sale in the ordinary course of business or in the process of production of such goods or in the production of goods or services for sale including maintenance supplies and consumables other than machinery spares.

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

AS-2 is not applicable to________.

  1. Financial instruments held as stock in trade

  2. Live-stock,agricultural and forest products, mineral oils, ores and gases

  3. Work in progress arising under construction contracts.

  4. All the three
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. 

Hence, it does not include any of the items given in the options.

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

AS-2 requires that the financial statements should disclose________.

  1. The accounting policies adopted in measuring inventories, including the cost formula

  2. The total carrying amount of inventories and classification appropriate to the enterprise

  3. Both (a) & (b)

  4. Either (a) or (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to AS - 2 financial statements should disclose the accounting policies adopted in measuring inventories, including the cost formula and the total carrying amount of inventories and classification appropriate to the enterprise.

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 these AS deals with inventory valuation?

  1. AS-13

  2. AS-12

  3. AS-2

  4. AS-5
Reveal answer Fill a bubble to check yourself
C 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

As per AS-2, inventories are valued at lower of cost or_______.

  1. Realisable value

  2. Replacement value

  3. Net realisable value

  4. Market value
Reveal answer Fill a bubble to check yourself
C 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

As per AS-2, inventory means goods_______.

  1. Spare parts held for break down of machinery

  2. Held for sale in the ordinary course of business

  3. Fixed assets purchased for sale

  4. Shares purchased for sale
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. 

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

When we say that inventory is to be valued at cost or market price whichever is less. The Term "market" means________.

  1. Current replacement cost

  2. Discounted price

  3. Net realizable value

  4. Historical cost
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When we say that inventory is to be valued at cost or market price whichever is less. The Term "market" means Net realizable value. By net realizable value we mean the realizable amount of the asset that will be realized when the asset is sold.