Tag: accounting standards: concept and objectives

Questions Related to accounting standards: concept and objectives

Which of the following items are capitalized along with the purchase price of the fixed asset?

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

  1. Import duties

  2. Initial delivery and handling costs

  3. Trade discounts

  4. (A) and (B)

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Correct Option: D
Explanation:

Initial delivery and handling costa and trade discounts are capitalized along with the purchase price of the fixed assets. 

All the cost incurred to bring the machinery in state of being used or to put machinery to use are included in the cost of machinery and discount received is reduced from the cost of the asset. 

Net book value of a fixed asset is its_____________.

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

  1. Historical cost

  2. Historical cost less accumulated deprecation

  3. Historical cost less gross book value

  4. Fair market value

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Correct Option: B
Explanation:

Net Book Value is the value of fixed assets after deducting the accumulated depreciation, and accumulated impairment expenses from original cost of fixed assets. Accumulated depreciation expenses are the total depreciation expenses of assets from the beginning to the reporting date.

Allocation of depreciable amount of fixed assets to future periods is deals with in_________________________.

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

  1. Account Standard-6 on depreciation accounting

  2. Accounting Standard-10 on fixed assets

  3. Accounting Standard-9 on revenue recognition

  4. Accounting Standard-1 on disclosure of accounting policies

Show answer
Correct Option: A
Explanation:

Accounting Standard-6 issued by The Institute of Chartered Accountants of India (ICAI) defines depreciation as “a measure of the wearing out, consumption or other loss of value of depreciable asset arising from use, effluxion of time or obsolescence through technology and market-change. 

Depreciation is allocated so as to charge fair proportion of depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortisation of assets whose useful life is pre-determined”.

Accounting Standard-10 deals with the following fixed assets___________.

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

  1. Land

  2. Forests

  3. Plantations

  4. Mines

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Correct Option: A
Explanation:

Accounting standard - 10 (Property, plat and equipment - updated) deals with all the fixed assets like goodwill, patent, trademarks, machinery, land etc. It deals with fixed assets in which the enterprise has invested into. In the given question AS - 10 deals with Land. 

Gross book value of a fixed asset is its___________.

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

  1. Cost less depreciation

  2. Historical cost

  3. Historical cost less accumulated deprecation

  4. Fair market value

Show answer
Correct Option: B
Explanation:

Gross book value of a fixed asset is its historical cost or other amount substituted for historical cost in the books of account or financial statements. When this amount is shown net of accumulated depreciation, it is termed as net book value.

The Main object of 'Rajiv Gandhi Equity Saving Scheme' (RGESS) is__________________.

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

  1. To encourage workers participation in management

  2. To encourage money market of India

  3. To encourage retail participation in capital market

  4. To encourage unlisted companies in Stock Exchanges

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Correct Option: C

Traditional method of book keeping is known as _________ .

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

  1. Modern system

  2. Conventional system

  3. Indian system

  4. None of the above

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Correct Option: B
Explanation:

Traditional method of book-keeping is known conventional system of accounting. It is the oldest form of book keeping and usually is suitable for the small business firms. It focuses more on decision making, timeliness etc. 

In India Accounting Standards are issued by _______.

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

  1. ICAI

  2. ICSI

  3. ICWAI

  4. IDBI

Show answer
Correct Option: A
Explanation:

Accounting standards are written statements of uniform accounting rules and guidelines or practices for preparing the uniform and consistent financial statements and for other disclosures affecting the user of accounting information. The Institute of Chartered Accountants of India, (ICAI), which is the regulatory body for standardization of accounting policies of the country has issued Accounting Standards which are expected to be uniformly adhered to, in order to bring consistency in the accounting profession.

Objective of Accounting Standards is __________________.

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

  1. To help the Government in raising the taxes

  2. To standardize the diverse accounting policies and practices

  3. To make the account simple

  4. None of the above

Show answer
Correct Option: B
Explanation:

Main objective of accounting standards is to make financial statement more meaningful and comparable. Accounting standards provides a standards set of accounting policies, procedures, valuation methods and disclosure requirements on the basis of which financial statements are prepared.

All are the limitations of accounting standards except _________.

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

  1. it is difficult to choose the different alternatives between different accounting treatments

  2. they may lead to the rigidity

  3. they cannot override the statute

  4. difference in accounting standards are bound to be there due to difference in tradition and legal system in different countries

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Correct Option: A
Explanation:

The limitations of accounting standards are that they may lead to rigidity, they cannot override the statute and difference is accounting standards are bound to be there due to difference in tradition and legal system in different countries.