Advanced Financial Accounting MCQs with Answers pdf

Advanced Financial Accounting MCQs with Answers pdf download for preparation of MBA, BBA, MCA, BCA & Competitive examinations.

Advanced Financial Accounting MCQs with Answers

1. When a partner leaves the firm with the consent of other partners, it is called ___
Ans: Retirement.

2. In the absence of agreement, the loan account of the deceased partner carries interest @ 8% p.a. (True / False)
Ans: False

3. The balance in the capital account of the deceased partner is transferred to his current a/c.
(True / False)
Ans: False

4. The share of profit due to the deceased partner will be calculated from the date of the death till the date of settlement of the claim. (True / False)
Ans: True

5. In ordinary business, ___ are intended to be used and not sold.
Ans: Fixed assets

6. The business of a company is being carried out by ___.
Ans: Board of Directors

7. On the basis of liability of the members, the Companies are classified as ___, ___ and ___.
Ans: Limited by shares, limited by guarantee & unlimited

8. The maximum number of members excluding persons who are employees of the company is ___ for a private company.
Ans: fifty

9. In the case of unlimited companies, the liability of members is ___.
a) Limited to the extent unpaid on the shares held by them.
b) Limited to the amount which the members undertake to contribute to the event of the winding-up of the company.
c) Unlimited
d) Limited to the extent paid on the shares held by them.
Ans: (c) Unlimited

10. Companies that are created by special acts of the Legislature are ___
a. Registered companies
b. Private companies
c. Public companies
d. Statutory companies
Ans: (d) Statutory company

11. To form an incorporated public company, a group of ___ persons should subscribe their names to the Memorandum of Association.
Ans: Seven

12. The three important states involved in the formation of a company are ___, ___ and ___.
Ans: Promotion, incorporation & Commencement of Business

13. A public company can commence business immediately after incorporation. (True / False)
Ans: False

14. For incorporation of a company, a certificate from the Central Government for permission to the issue of capital is to be filed with the Registrar if the nominal capital exceeds Rs.25 lakhs.
(True / False)
Ans: True

15. ___ is the nominal value of the shares which are offered to the public for subscription.
Ans: Issued Capital

16. Share capital of a company is divided into certain indivisible units of a fixed amount called___.
Ans: Shares

17. In the case of cumulative preference shares unpaid dividend is treated as ___.
Ans: Arrears

18. ___ Preference shares can be converted into equity shares according to the terms of the issue.
Ans: Convertible

19. The application money received should be at least 5% of the face value of the shares in the case of a private company. (True / False)
Ans: False

20. The prospectus mentions the number and class of shares offered and the manner in which the amount of shares payable by the public. (True / False)
Ans: True

21. When the company receives applications for less number of shares than offered to the public for subscription, it is said to be ___.
Ans: Under subscription

22. Shares that can be allotted by a company should not exceed what it has ___.
Ans: Offered

23. Excess application money received in the case of partial allotment of shares can be adjusted against ___ if the Articles of Association of the company so authorizes.
Ans: Calls in Advance

24. Interest on Calls in Advance is treated as ___ in the Profit and Loss account.
Ans: Expense

25. The call money demanded by the company if not paid by a shareholder will be debited to ___ A/c.
Ans: Calls in Arrears

26. Call in Advance A/c is shown on the ___ side of the Balance Sheet.
Ans: Liability

27. If a shareholder fails to pay the due amount on shares, the board of directors may decide to ___ shares.
Ans: Forfeit

28. The Board of Directors has to give at least ___ days’ notice to the defaulting members.
Ans: 14 days

29. When the shares are originally issued at par, the maximum permissible discount for reissue of shares is equal to the amount ___ on such shares.
Ans: Forfeited

30. State true or false:
a) Share forfeited account can show a zero balance.
b) Discount allowed on the reissue of forfeited shares will be debited to discount on issue of shares account.
c) Balance amount of share forfeited account after adjusting discount allowed on the reissue of these share remains in the same account
Ans: (a) True, (b) True, (c) False

31. A 10% debenture of the nominal value of Rs.100 has been issued at Rs.90 is said to be issued at ___
Ans: Discount

32. 100, 8% debentures of Rs.100 each have been issued to vendors for plant purchased the debentures are said to be issued ___
Ans: Consideration other than cash

33. The objective of accounting standards is to standardize various accounting concepts and conventions. (True / False)
Ans: False

34. The study group of the Accounting Standard Board formulates Accounting Standards (True / False)
Ans: False

35. The Council of ICAI issues Accounting standards as and when formulated. (True / False)
Ans: True

36. Accounting standard differ from country to country. This is due to the difference in:
(a) the institutions
(b) the tradition
(c) the legal system
(d) the accounting policy
Ans: (d) the accounting policy

37. The council of ICAI approves the draft prepared by the Accounting Standards Board which in turn is assisted by ___.
Ans: Study group

38. Match the following
1. AS-1, a. Valuation of inventory
2. AS-2, b. Cash Flow statement
3. AS-3, c. Depreciation Accounting
4. AS-6, d. Disclosure of Accounting Policy
Ans: 1 – d, 2 – a, 3 – b, 4 – c

39. ___ are income or expenses that arise in the current period as a result of error or omission in the preparation of the financial statement of one or more previous period.
(a) Prior period items
(b) Extraordinary items
(c) Ordinary business activities
(d) Net profit
Ans: (a) Prior period items

40. The objective of AS-7 is the allocation of contract revenue and contract cost to the period in which the work is performed. (True / False)
Ans: True

41. Which accounting standard was withdrawn?
(a) AS-7
(b) AS-8
(c) AS-12
(d) AS-28
Ans: AS-8

42. According to AS-10, fixed assets are valued at their ___ cost or at the ___ price.
Ans: Historical, revalued

43. Impairment of assets is ___ in the value of the asset.
Ans: Weakening

44. Government grants are received in various ways. Choose the odd answer:
a) Grants related to the acquisition of fixed assets
b) Grants related to the acquisition of current assets
c) Grants related to promoters’ contribution
d) Grants related to compensation for expenses
Ans: (b) Grants related to the acquisition of current assets

45. According to AS-13, Accounting for investment does not deal with the investment of mutual funds and banks. (True / False)
Ans: True

46. According to AS-14, for accounting purpose, the pooling of interest method is used in the case of ___.
Ans: Merger

47. Fill in the blanks:
a. AS-16 deals with ___
b. AS-17 deals with ___
Ans: (a) Borrowing cost, (b)segment reporting

48. According to AS-17, business and geographic segments are identified and reported on the basis of ___
Ans: Dominance

49. Accounting to AS-19, in which type of lease the lessor does not transfer all the risk and reward incidental to ownership:
(a) Finance lease
(b) Operating lease
(c) Sell and leaseback
(d) Cross currency lease
Ans: (b) Operating lease

50. CFO = Increase in C.A + Increase in C.L.
a. True
b. False
Ans: False