Tag: accounting standards: concept and objectives

Questions Related to accounting standards: concept and objectives

Which of the following is one of the objectives of accounting standard?

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

  1. To standardize diverse accounting practices and policies

  2. To improve financial performance of business enterprises

  3. To minimize tax liabilities

  4. All the three

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Correct Option: A
Explanation:

Accounting standards set 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.

The disadvantage of accounting standard is _________.

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

  1. It facilitates the comparison of non-comparable accounts

  2. Sometime the principles of AS are against the tradition

  3. It leads to rigidity and eliminates flexibility

  4. It flouts the law of the land.

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Correct Option: A
Explanation:

The disadvantage of accounting standard involves the inflexible framework the firm must comply with. Each firm face different experience while preparing financial statement. It facilitate the comparison of non comparable accounts.

The accounting standards are issued for the purpose of____________.

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

  1. Harmonizing accounting policies

  2. Elimination of non-comparability between financial statements

  3. For improving the reliability of financial statements

  4. All of the above

Show answer
Correct Option: D
Explanation:

The basic objective of accounting standards set 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.

How many Accounting Standards have been issued in India so far?

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

  1. 28

  2. 32

  3. 30

  4. 27

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Correct Option: B
Explanation:

In India, Standards of Accounting is issued by the Institute of Chartered Accountants of India (ICAI). 

The Council of the Institute of Chartered Accountants of India constituted Accounting Standards Board (ASB) on 21st April, 1977 recognising the need for Accounting Standards in India.

The Council of the Institute of Chartered Accountants of India has so far issued thirty two accounting standards.

Which of the following statement is true?

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

  1. So far 28 Accounting standards have been issued in India

  2. Non-compliance of accounting standards is a criminal offence

  3. Accounting Standards are issued by CBDT

  4. Accounting Standard Board (ASB) was set up in 1977

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Correct Option: D
Explanation:

Recognizing the need to have a common platform for diversified accounting policies and practices in India and keeping in view the International development, the Institute of Chartered Accountants of India has set up a governing body i.e. Accounting Standard Board in 1977. 

Generally Accepted accounting principles can be applied to the financial statements in which of the following ________.

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

  1. Sole proprietor

  2. Partnership firm

  3. Corporate body

  4. All the three

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Correct Option: D
Explanation:

Accounting is based on the certain principles which are known as Generally Accepted Accounting Principles. These are applicable to all kind of ownership.

Select the correct statement.

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

  1. Representative of political parties also is a member of ASB in India

  2. Accounting standards issued by ICAI are mandatory in India

  3. Accounting Standards are true copy of International Accounting Standards.

  4. Accounting standard once issued cannot be withdrawn

Show answer
Correct Option: B
Explanation:

Indian Accounting Standards issued by the the Institute of Chartered Accountants of India are followed by the Indian companies. This is governed by Accounting Standard Board which was set up in 1977.

The Accounting standards are mandatory for _________.

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

  1. Charitable organization

  2. Government departments

  3. Companies

  4. Central Government

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Correct Option: C
Explanation:

The Institute of Chartered Accountants of India has issued various accounting standards. It is mandatory for all the companies to follow these.

Different accounting policies can be adopted in following area(s) _______.

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

  1. Charging depreciation

  2. Investment valuation

  3. Inventory valuation

  4. All of the above

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Correct Option: D
Explanation:

Consistency is the basic assumption and it is assumed that various policies or methods adopted by the firm while preparing the financial statement are consistent from one period to another. However, different firms may follow the different accounting policies on depreciation, investment valuation or inventory valuation.

Changes in accounting policies can be made only _________.

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

  1. To comply with accounting standards

  2. To ensure better presentation of the financial statement

  3. To comply with law

  4. All of the above

Show answer
Correct Option: D
Explanation:

Consistency is the basic assumption and it is assumed that various policies or methods adopted by the firm while preparing the financial statement are consistent from one period to another. 

However, changes in the policies can be made if this is required to comply with law, to comply with the accounting standards or to ensure better presentation. In case of changes, a disclosure has to be given with the financial statement.