Tag: accounting standards: concept and objectives

Questions Related to accounting standards: concept and objectives

Valuation of inventory is dealt with in ______.

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

  1. $AS - 1$

  2. $AS - 2$

  3. $AS - 3$

  4. $AS - 4$

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Correct Option: B
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."

Accounting standard on inventory valuation is not applicable to _____________.

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

  1. Construction contracts

  2. Inventories of livestock, agricultural and forest products

  3. Stock of mineral oils, ores and gases

  4. All of the above

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Correct Option: D

In reference to the accounting standards, choose 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. 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.

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Correct Option: D

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

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

  1. Actual cost

  2. Sales value

  3. Net realisable value

  4. The lower of cost or net realisable value

Show answer
Correct Option: D
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."

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

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

  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

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Correct Option: D

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

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

  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

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Correct Option: D

Choose 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. 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

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Correct Option: C

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

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

  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

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Correct Option: D

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

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

  1. Prospectively

  2. Retrosecpectively

  3. Negatively

  4. None of the above

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Correct Option: B

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 ____________.

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

  1. (a) only

  2. (b) only

  3. (c) only

  4. All of the above

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Correct Option: C