Financial Accounting - Mms I Mid Term Test

34 Questions | Total Attempts: 119

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Financial Accounting - Mms I Mid Term Test

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Questions and Answers
  • 1. 
    Write a Brief Note on non-applicability of Ind AS
  • 2. 
    Describe in brief the process of accounting
  • 3. 
    Which of the following is not a sub field of Accounting?
    • A. 

      Book Keeping

    • B. 

      Management Accounting

    • C. 

      Financial Accounting

    • D. 

      Cost Accounting

  • 4. 
    Purpose of an accounting system includes all of the following except
    • A. 

      Interpret and record the effects of business transaction

    • B. 

      Classify the effects of transactions to facilitate the preparation of reports

    • C. 

      Summarize and communicate information to users

    • D. 

      Dictate the specific types of business enterprise transactions that the enterprise may engage in

  • 5. 
    Book Keeping is mainly concerned with
    • A. 

      Recording of financial data

    • B. 

      Designing the systems in recording, classifying and summarizing the recorded data

    • C. 

      Interpreting the data for internal and external users

    • D. 

      Analyzing the financial data

  • 6. 
    All of the following is function of accounting except
    • A. 

      Decision Making

    • B. 

      Forecasting

    • C. 

      Measurement

    • D. 

      Ledger Posting

  • 7. 
    Financial Position of a business is ascertained on the basis of
    • A. 

      Records under the book keeping process

    • B. 

      Trial Balance

    • C. 

      Accounting Reports

    • D. 

      Balance Sheet

  • 8. 
    Financial Statements are not a part of book keeping
    • A. 

      True

    • B. 

      False

  • 9. 
    Financial Statements do not consider
    • A. 

      Assets expressed in monetary terms

    • B. 

      Liabilities expressed in monetary terms

    • C. 

      Only assets expressed in non-monetary terms

    • D. 

      Assets and Liabilities expressed in non-monetary terms

  • 10. 
    On January 1st Mr Kulkarni paid rent of Rs. 5,000. This can be classified as
    • A. 

      An event

    • B. 

      A Transaction

    • C. 

      A transaction as well as an event

    • D. 

      Neither a transaction nor an event

  • 11. 
    Users of accounting information includes
    • A. 

      Creditors & Customers

    • B. 

      Creditors but not Customers

    • C. 

      Neither Customers Nor Creditors

    • D. 

      Customers but not Creditors

  • 12. 
    On March 31, 2015 after sale of goods worth Rs. 2,000 Ms Sumedha is left with a closing inventory of Rs. 10,000. This is
    • A. 

      An event

    • B. 

      A Transaction

    • C. 

      A transaction as well as an event

    • D. 

      Neither a transaction nor an event

  • 13. 
    All the following items are classified as fundamental accounting assumption except
    • A. 

      Consistency

    • B. 

      Entity

    • C. 

      Going Concern

    • D. 

      Accrual

  • 14. 
    Two primary qualitative charactereistics of financial statements are
    • A. 

      Understandability and Materiality

    • B. 

      Relevance and Reliability

    • C. 

      Neutrality and Understandability

    • D. 

      Materiality and Reliability

  • 15. 
    Cindrella Enterprises follows the written down value method of depreciation year after year due to
    • A. 

      Comparability

    • B. 

      Convenience

    • C. 

      Consistency

    • D. 

      Computability

  • 16. 
    Mr Nitesh purchased goods for Rs. 15,00,000 and sold 80% of them amounting Rs. 18,00,000 and met expenses amounting Rs. 2,50,000 during the year 2014-15. He counted net profit as Rs. 3,50,000. Which of the accounting concept was followed by him? 
    • A. 

      Entity

    • B. 

      Periodicity

    • C. 

      Matching

    • D. 

      Conservatism

  • 17. 
    Mr. Nitesh purchased goods for Rs. 25,00,000 and sold 80% of them during the accounting year 2014-15. The market value of the remaining goods was Rs. 4,00,000. He valued the closing inventory at cost. He violated the concept of
    • A. 

      Money Measurement

    • B. 

      Conservatism

    • C. 

      Cost

    • D. 

      Periodicity

  • 18. 
    Assets are held in business for
    • A. 

      Resale

    • B. 

      Conversion into Cash

    • C. 

      Earning Revenue

    • D. 

      Creating Liabilities

  • 19. 
    The determination of expenses for an accounting period is based on the principle of
    • A. 

      Objectivity

    • B. 

      Materiality

    • C. 

      Matching

    • D. 

      Periodicity

  • 20. 
    Economic life of an enterprise is split into the periodic interval to measure its performance as per
    • A. 

      Entity

    • B. 

      Matching

    • C. 

      Periodicity

    • D. 

      Accrual

  • 21. 
    Consider following data pertaining to DBCL:Cost of Machinery Rs. 10,00,000; Installation Charges Rs. 1,00,000; Market Value as on 31st March 2015 Rs. 12,00,000.While finalizing accounts, DBCL values the machinery at Rs. 12,00,000. Which of the following concept is violated by DBCL
    • A. 

      Cost

    • B. 

      Matching

    • C. 

      Accrual

    • D. 

      Periodicity

  • 22. 
    Accounting Standards in India are issued by
    • A. 

      Central Government

    • B. 

      Reserve Bank of India

    • C. 

      Ministry of Finance

    • D. 

      Institute of Chartered Accountants of India

  • 23. 
    Functions of Accounting Standards includes following except
    • A. 

      Harmonize Accounting Policies

    • B. 

      Eliminate the non-comparability of financial statements

    • C. 

      Improve the reliability of financial statements

    • D. 

      Facilitate manipulation

  • 24. 
    How many Accounting Standards have been issued by ICAI?
    • A. 

      25

    • B. 

      39

    • C. 

      32

    • D. 

      22

  • 25. 
    It is essential to standardize the accounting principle and policies in order to ensure
    • A. 

      Transparency

    • B. 

      Consistency

    • C. 

      Comparability

    • D. 

      All of the options given

  • 26. 
    A change in accounting policy is not justified 
    • A. 

      To comply with accounting standard

    • B. 

      To comply with management's request

    • C. 

      To comply with law

    • D. 

      To ensure more appropriate presentation of the financial statements

  • 27. 
    In which of the following different accounting policy cannot be adopted
    • A. 

      Depreciation Provision

    • B. 

      Valuation of Inventories

    • C. 

      Valuation of Investments

    • D. 

      Debtors

  • 28. 
    Accounting policies refer to specific accounting ____________________________
  • 29. 
    All of the following are valuation principle except
    • A. 

      Historical Cost

    • B. 

      Present Value

    • C. 

      Future Value

    • D. 

      Realiseable Value

  • 30. 
    Measurement discipline deals with identification of objects and events
    • A. 

      True

    • B. 

      False

  • 31. 
    Ms Gina Purchased a machinery amounting Rs. 10,00,000 on 1st April 2014. On 31st March 2015 similar machinery could be purchased for Rs. 20,00,000 but the realizable value of the machinery purchased on 1st April 2014 was estimated to be Rs. 15,00,000. The present discounted value of the future net cash inflows that machinery was expected to generate in the normal course of business was calculated as Rs. 12,00,000. The current cost of the machinery is  Rs.
    • A. 

      10,00,000

    • B. 

      20,00,000

    • C. 

      15,00,000

    • D. 

      12,00,000

  • 32. 
    Ms Gina Purchased a machinery amounting Rs. 10,00,000 on 1st April 2014. On 31st March 2015 similar machinery could be purchased for Rs. 20,00,000 but the realizable value of the machinery purchased on 1st April 2014 was estimated to be Rs. 15,00,000. The present discounted value of the future net cash inflows that machinery was expected to generate in the normal course of business was calculated as Rs. 12,00,000. The historical cost of the machinery is  Rs.
    • A. 

      10,00,000

    • B. 

      20,00,000

    • C. 

      15,00,000

    • D. 

      12,00,000

  • 33. 
    Ms Gina Purchased a machinery amounting Rs. 10,00,000 on 1st April 2014. On 31st March 2015 similar machinery could be purchased for Rs. 20,00,000 but the realizable value of the machinery purchased on 1st April 2014 was estimated to be Rs. 15,00,000. The present discounted value of the future net cash inflows that machinery was expected to generate in the normal course of business was calculated as Rs. 12,00,000. The present value of the machinery is  Rs.
    • A. 

      10,00,000

    • B. 

      20,00,000

    • C. 

      15,00,000

    • D. 

      12,00,000

  • 34. 
    Ms Gina Purchased a machinery amounting Rs. 10,00,000 on 1st April 2014. On 31st March 2015 similar machinery could be purchased for Rs. 20,00,000 but the realizable value of the machinery purchased on 1st April 2014 was estimated to be Rs. 15,00,000. The present discounted value of the future net cash inflows that machinery was expected to generate in the normal course of business was calculated as Rs. 12,00,000. The realizable value of the machinery is  Rs.
    • A. 

      10,00,000

    • B. 

      20,00,000

    • C. 

      15,00,000

    • D. 

      12,00,000