Financial Accounting MCQ Quiz in मल्याळम - Objective Question with Answer for Financial Accounting - സൗജന്യ PDF ഡൗൺലോഡ് ചെയ്യുക

The correct option is option 3 

Additional Information:

• Relevance is a fundamental characteristic because it influences economic decisions, while timeliness is an enhancing characteristic, improving the usefulness of relevant and faithfully represented information.
• The Conceptual Framework classifies qualitative characteristics into two main categories: fundamental and enhancing. 
• Relevance and faithful representation are the two fundamental qualitative characteristics.  Information is relevant if it has the ability to influence the economic decisions of users. 
• Timeliness is one of the enhancing qualitative characteristics (along with comparability, verifiability, and understandability) that improves the usefulness of information that is already relevant and faithfully represented. 

• Option 1. 
  This is incorrect. Faithful representation is a fundamental characteristic, not an enhancing one.  While it does aim for completeness and being free from material error, it's not an enhancing feature.  Verifiability is an enhancing characteristic, not a fundamental one.

• Option 2. 
  This is incorrect. Comparability is an enhancing characteristic, not a fundamental one.  While prudence is an important concept in accounting (ensuring assets and income are not overstated and liabilities and expenses are not understated), it is not listed as a fundamental qualitative characteristic in the Conceptual Framework. 

• Option 4. This statement correctly identifies understandability as an enhancing characteristic and describes its purpose.  However, it incorrectly states that materiality is a fundamental characteristic. Materiality is a component of relevance (a fundamental characteristic) and acts as a threshold, meaning information is material if its omission or misstatement could influence users' decisions.  It is not a separate fundamental characteristic.

The correct option is option 2

Additional Information:

• This scenario represents a clear breach of sound corporate governance principles. Directors have a general duty of care to act in good faith for the benefit of the company and its shareholders, and specifically, a duty to avoid conflicts of interest. Failure to disclose a significant personal interest when participating in a decision that directly benefits that interest is a fundamental failure of this duty and can lead to biased decision-making that is not in the best interest of the company. 

• option 1. The board of directors delegates the preparation of interim financial reports to the finance department to save costs, which are then reviewed by the audit committee before publication.
  This is a normal and acceptable practice. The board remains collectively responsible for the financial statements, but it is appropriate to delegate the preparation to relevant departments, with oversight by a committee (like the audit committee) and ultimate approval by the board. This is a common way for companies to ensure efficiency while maintaining control.
  Option 3. The external auditors discover a material misstatement in the company's financial statements due to an accounting error, which the directors promptly correct before the statements are finalized.
  This demonstrates proper functioning of internal controls and the audit process. Errors can occur, and the role of the external auditor is to identify material misstatements.  The directors' responsibility is to correct such errors, and doing so promptly indicates good governance. 

  Option 4. The company's annual general meeting (AGM) is held online, limiting direct interaction between shareholders and directors, but all necessary financial statements and reports are made available electronically well in advance.
  While direct interaction might be reduced, holding AGMs online has become common and acceptable, especially with technological advancements. The key governance aspect is that shareholders still receive timely and comprehensive information to make informed decisions and exercise their rights, which is stated as being done here. This is generally compliant with modern corporate governance frameworks that allow for virtual meetings.

The correct option is option 4 

Additional Information:

• Research costs ($150,000): These costs were incurred during the research phase (1 Jan 20X4 - 30 June 20X4) and must be expensed as incurred in the year 20X4, as per IAS 38.
• Development costs incurred before capitalization criteria met ($200,000): These costs were incurred from 1 July 20X4 to 31 December 20X4. Since the capitalization criteria were only met from 1 January 20X5, these costs must also be expensed in 20X4. Costs expensed in a prior period cannot be subsequently reinstated as an asset.
• Development costs incurred after capitalization criteria met ($100,000): These costs were incurred between 1 January 20X5 and 30 June 20X5. Since all IAS 38 capitalization criteria were met from 1 January 20X5, these costs are capitalized as an intangible asset.
• Amortisation charge for 20X5: Commercial production and internal use commenced on 1 July 20X5. Amortisation begins when the asset is available for use. The capitalized cost is $100,000, and the estimated useful life is 5 years.
  • Annual amortisation: $100,000 / 5 years = $20,000.
  • Amortisation for 20X5 (from 1 July 20X5 to 31 December 20X5): $20,000 * (6/12) = $10,000.
  • Therefore, the only amount recognized as an expense in Alpha Co's statement of profit or loss for the year ended 31 December 20X5 from this project is the amortisation charge.

The correct option is option 2 

Additional Information:

• The definition of a provision, according to IAS 37, requires a present obligation as a result of a past event. In this scenario, the environmental law was enacted on 1 January 20X6. Therefore, at the reporting date of 31 December 20X5, there was no present obligation arising from a past event, as the law was not yet in force. While the outflow is probable and the amount is estimable, the crucial "past event" that creates the present obligation has not occurred by the 20X5 year-end. However, as the event (enactment of the law) occurs between the reporting date and the date the financial statements are authorized for issue, and it is a significant future event that could impact the entity, it would typically be disclosed as a material non-adjusting event, which often takes the form of a contingent liability when the likelihood of outflow is not yet certain at the reporting date itself.

The correct option is option 4 

Additional Information:

According to IAS 37, a provision should be recognized when three criteria are met:

1. Present obligation as a result of a past event: The faulty product was sold in the previous financial year (a past event), creating a present obligation.
2. Probable outflow of resources embodying economic benefits: The legal team advises it is "more likely than not" that compensation will be paid, which indicates a probable outflow.
3. A reliable estimate of the amount of the obligation can be made: The estimated range of $5 million to $10 million, with all outcomes equally probable, allows for a reliable estimate. When a range of equally probable outcomes exists, the midpoint of the range is often used as the best estimate. In this case, ($5 million + $10 million) / 2 = $7.5 million.

The correct option is option 2 

Additional Information:

• Under FIFO, the oldest costs are issued first. Closing inventory consists of 100 units at $6 each.

• Units sold = 400

  • First 200 units from opening inventory ($5 each) = 200 × $5 = $1,000

  • Next 200 units from purchases ($6 each) = 200 × $6 = $1,200

  • Total cost of goods sold = $2,200

• Closing inventory:

  • Purchased 300 units, sold 200, so 100 remain from purchases at $6/unit = $600.

The correct option is option q 
Additional information:

Oldest (cheaper) units are issued first, so cost of sales is lower and closing inventory is higher.

The correct option is option 3 

Additional Information:

• Abnormal waste is treated as an expense in the period it occurs, not included in the cost of inventory.

The correct option is option 1 

Additional Information:

• Purchases: Debit $12,000 (net purchase).
• Sales tax payable: Debit $1,200 (sales tax payable).
• Payables: Credit $13,200 (total invoice amount).

The correct option is option 2 

Additional Information:

• The company owed $4,800 (Payables), so debit Payables $4,800.

• The penalty of $200 is an expense, so debit Penalty Expense $200.

• Credit Cash $5,000 for the total payment.