Preparation and Presentation of Financial Statements MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Preparation and Presentation of Financial Statements, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Preparation and Presentation of Financial Statements MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Preparation and Presentation of Financial Statements mcq questions that explore various aspects of Preparation and Presentation of Financial Statements problems. Each MCQ is crafted to challenge your understanding of Preparation and Presentation of Financial Statements principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Preparation and Presentation of Financial Statements MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

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Preparation and Presentation of Financial Statements MCQs | Page 10 of 11

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Q91.
In the context of an insurance company's cash flow statement, what is the primary indicator of the extent to which the operations have generated sufficient cash flows to maintain the operating capability and meet financial obligations?

a.

Investing Activities

b.

Financing Activities

c.

Cash Flows from Operating Activities

d.

Cash Equivalents

Discuss
Answer: (c).Cash Flows from Operating Activities Explanation:In an insurance company's cash flow statement, "Cash Flows from Operating Activities" is a key indicator of the extent to which the operations have generated sufficient cash flows to maintain the operating capability, pay claims, commissions, management expenses, and meet financial obligations.
Q92.
According to IRDA regulations, which method should be used for preparing the cash flow statement in an insurance company?

a.

Indirect Method

b.

Direct Method

c.

Modified Method

d.

Hybrid Method

Discuss
Answer: (b).Direct Method Explanation:According to IRDA regulations, the cash flow statement in an insurance company should be prepared using the Direct Method, and Accounting Standard 3 (Cash-flow Statement) is not applicable in this context.
Q93.
According to Section 129 of the Companies Act, 2013, what does it state regarding the financial statements of a company?

a.

The financial statements should comply with the accounting standards and be in the form provided in Schedule III.

b.

The financial statements are not required for mutual funds or Asset Management Companies.

c.

The financial statements should be prepared in any format the company prefers.

d.

The financial statements are only required for companies listed on stock exchanges.

Discuss
Answer: (a).The financial statements should comply with the accounting standards and be in the form provided in Schedule III. Explanation:Section 129 of the Companies Act, 2013, states that the financial statements should comply with the accounting standards notified under Section 133 and be in the form provided for different classes of companies in Schedule III.
Q94.
What is the requirement of Section 210 of the Companies Act, 1956, regarding financial statements at the annual general meeting of a company?

a.

The Board of Directors shall present a Profit and Loss Account only.

b.

The Board of Directors shall present a Balance Sheet only.

c.

The Board of Directors shall present a Balance Sheet and a Profit and Loss Account.

d.

The Board of Directors is not required to present any financial statements.

Discuss
Answer: (c).The Board of Directors shall present a Balance Sheet and a Profit and Loss Account. Explanation:Section 210 of the Companies Act, 1956, requires the Board of Directors to present both a Balance Sheet and a Profit and Loss Account at every annual general meeting of the company.
Q95.
What does lAS 1 (International Accounting Standard 1) require a company to disclose in its financial statements?

a.

Only a statement of financial position (balance sheet) at the end of the period.

b.

A statement of comparative income for the period (or an income statement and a statement of comparative income).

c.

A statement of changes in equity for the period.

d.

All of the above.

Discuss
Answer: (d).All of the above. Explanation:lAS 1 requires a company to disclose a statement of financial position, a statement of comparative income (or an income statement and a statement of comparative income), and a statement of changes in equity for the period.
Q96.
What does Schedule III of the Companies Act, 2013, contain?

a.

General instructions for the preparation of Balance Sheet and Statement of Profit and Loss of a company.

b.

Specific guidelines for mutual funds only.

c.

Guidelines for private companies only.

d.

Instructions for preparing the income statement.

Discuss
Answer: (a).General instructions for the preparation of Balance Sheet and Statement of Profit and Loss of a company. Explanation:Schedule III of the Companies Act, 2013, contains general instructions for the preparation of the Balance Sheet and Statement of Profit and Loss of a company.
Q97.
In the notes to accounts, what are the items that a company is required to disclose according to Schedule III?

a.

Only tangible assets and inventories.

b.

Only trade receivables and non-current investments.

c.

A variety of items including share capital, reserves, long-term borrowings, and more.

d.

Only short-term loans and advances and contingencies.

Discuss
Answer: (c).A variety of items including share capital, reserves, long-term borrowings, and more. Explanation:In the notes to accounts, a company is required to disclose various items including share capital, reserves and surplus, long-term borrowings, and other relevant information as per Schedule III.
Q98.
According to Section 11 of the Insurance Act, 1938, what are the financial statements that every insurer is required to prepare at the expiration of each financial year?

a.

Only a Balance Sheet.

b.

Only a Profit and Loss Account.

c.

A Balance Sheet, a Profit and Loss Account, a separate Account of Receipts and Payments (Cash Flow Statement), and Revenue Accounts.

d.

Only a separate Account of Receipts and Payments.

Discuss
Answer: (c).A Balance Sheet, a Profit and Loss Account, a separate Account of Receipts and Payments (Cash Flow Statement), and Revenue Accounts. Explanation:Section 11 of the Insurance Act, 1938, requires every insurer to prepare a Balance Sheet, a Profit and Loss Account, a separate Account of Receipts and Payments (Cash Flow Statement), and Revenue Accounts in accordance with the regulations made by the Authority at the expiration of each financial year.
Q99.
According to IRDA (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations, 2002, what does Schedule 'A' contain, and which insurers should comply with it?

a.

Schedule 'A' contains requirements for life insurance business, and all insurers carrying on life insurance business should comply with it.

b.

Schedule 'A' contains requirements for general insurance business, and all insurers carrying on general insurance business should comply with it.

c.

Schedule 'A' contains requirements for both life and general insurance business, and all insurers should comply with it.

d.

Schedule 'A' is not mentioned in the regulations.

Discuss
Answer: (a).Schedule 'A' contains requirements for life insurance business, and all insurers carrying on life insurance business should comply with it. Explanation:According to IRDA regulations, Schedule 'A' contains requirements for life insurance business, and all insurers carrying on life insurance business should comply with it.
Q100.
What does Schedule 'C' of IRDA (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations, 2002, pertain to?

a.

Requirements for preparing financial statements for life insurance business.

b.

Requirements for preparing financial statements for general insurance business.

c.

Requirements for the Report of Auditors on the Financial Statements of every insurer or re-insurer.

d.

Requirements for preparing financial statements for mutual funds.

Discuss
Answer: (c).Requirements for the Report of Auditors on the Financial Statements of every insurer or re-insurer. Explanation:Schedule 'C' of IRDA regulations pertains to the requirements for the Report of Auditors on the Financial Statements of every insurer or re-insurer.
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