Accounts Quizzes For FCI Phase 2 2023- 17th January

Q1. When items of income and expenses and assets and liabilities are arranged one below the other, it is called _ a form of the balance sheet.
(a) Horizontal form
(b) Vertical Form
(c) T form
(d) Income statement
(e) None of the above

Q2. AS8 on accounting for research and development
(a) Is replaced by AS 26
(b) is applicable only to listed companies
(c) is mandatory for research institution
(d) is still in use
(e) None of the above

Q3. Which of the following ethical principles are included in code of ethics for professional accountants (IESBA Code) for audit of Financial statements?
(a) Integrity
(b) Objectivity
(c)Professional competence
(d) Confidentiality
(e) All the above

Q4. Which of the following statement is incorrect?
(a) The basic objective of audit does not change with reference to nature, size , form of an entity.
(b) The purpose of an audit is to enhance the degree of confidence of intended users in the financial statements
(c) The auditor is not expected to, and cannot, reduce audit risk to zero, hence cannot therefore obtain absolute assurance that the financial statements are free from material misstatement due to fraud or error.
(d) The audit engagement letter is sent by the client to auditor
(e) None of the above

Q5. Current asset that can be transferred into cash within three months is known as:
(a) Cash equivalent
(b) Intangible asset
(c) Operating asset
(d) Cash asset
(e) IllLiquid Asset

Q6. The analysis of financial statements by a shareholder is an example of____
(a) Internal analysis
(b) External analysis
(c) Horizontal analysis
(d) Vertical analysis
(e) None of the above

Q7. Determine Debtors turnover ratio if, closing debtors is Rs 40,000, Net sales is Rs 90000 and excess of closing debtors over opening debtors is Rs 20,000.
(a) 4 times
(b) 2 times
(c) 6 times
(d) 8 times
(e) 3 times

Q8. When can acceptance may be revoked:
(a) An acceptance may be revoked at any time before the communication of the acceptance is complete as against the proposer, but not afterwards.
(b) An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.
(c) An acceptance may be revoked at any time before the communication of the acceptance is incomplete as against the acceptor, but not afterwards.
(d) An acceptance may be revoked at any time after the communication of the acceptance is complete as against the acceptor, but not afterwards.
(e) None of the above

Q9. X, being in debt to Y, the money lender of his village, contracts a fresh loan on terms which appear to be unconscionable. This will be termed as:
(a) Fraud
(b) Coercion
(c) Undue influence
(d) Misrepresentation
(e) None of the above

Q10. Which one of the following is a real time operating system?
(a) RTLinux
(b) VxWorks
(c) Windows CE
(d) All of the above
(e) None of the above

Solutions

S1. Ans (b)
Sol.In the Horizontal form also called as T form, the assets and liabilities are represented side by side based on liquidity and permanence. In the vertical form items of income and expenses and assets and liabilities are arranged one below the other. It contains 2 years of data.

S2.Ans (a)
Sol.AS8 on accounting for research and development was returned with the effect from 1st April 2003 and on and from the date AS 26 intangible assets come mandatory day AS 8 was replaced to AS 26.

S3.Ans (e)
Sol.The Code establishes the five fundamental
professional ethics relevant to the auditor when conducting an audit of Financial statements.Which includes (a) Integrity, (b) Objectivity; (c)Professional competence
(d) Confidentiality; and (e) Professional behavior.

S4.Ans (d)
Sol.The basic objective of audit does not change with reference to nature, size , form of an entity.
(b) The purpose of an audit is to enhance the degree of confidence of intended users in the financial statements
(c) The auditor is not expected to, and cannot, reduce audit risk to zero, hence cannot therefore obtain absolute assurance that the financial statements are free from material misstatement due to fraud or error.
(d) The audit engagement letter is sent by the auditor to the client.

S5.Ans (a)
Sol.Current asset that can be transferred into cash within three months is known as Cash Equivalents. Cash equivalents are the total value of cash on hand that includes items that are similar to cash; cash and cash equivalents must be current assets. A company’s combined cash or cash equivalents is always shown on the top line of the balance sheet since these assets are the most liquid assets

S6.Ans (b)
Sol.Financial analysis helps to know financial position, operational efficiency, future prospectus of business and also helps to make decisions in future. The analysis of financial statements by a shareholder is an example of External Analysis. Analyzing the external environment in which a corporation operates is referred to as “external environment analysis.”
It entails examining the outside factors that either directly or indirectly influence how businesses operate.

S7.Ans (e)
Sol.Debtors Turnover Ratio = Net Sales/Average Account Receivable. Where, Average Account Receivable includes trade debtors and bill receivables. Higher the Debtors turnover ratio, better is the credit management of the firm.
Average debtors= 40000+20000 = 60000/2 = 30000
Debtor turnover ratio= 90000/30000= 3 times

S8.Ans (b)
Sol.An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

S9.Ans (c)
Sol.X, being in debt to Y, the money lender of his village, contracts a fresh loan on terms which appear to be unconscionable then such agreement is void as it is entered under undue influence.

S10.Ans (d)
Sol.Eeal-time operating system (RTOS) is an OS that guarantees real-time applications a certain capability within a specified deadline. RTOSes are designed for critical systems and for devices like microcontrollers that are timing-specific. RTOS processing time requirements are measured in milliseconds.example: RTLinux, VxWorks, Windows CE.