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.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Preparation and Presentation of Financial Statements. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Preparation and Presentation of Financial Statements knowledge to the test? Let's get started with our carefully curated MCQs!

Preparation and Presentation of Financial Statements MCQs | Page 2 of 11

Discover more Topics under IC 89 Management Accounting

Q11.
lAS 1.114 suggests presenting notes in which order?

a.

First, information required by IFRS; second, significant accounting policies; third, supporting information for items presented on the face of the financial statements; fourth, other disclosures.

b.

First, a summary of significant accounting policies; second, supporting information for items presented on the face of the financial statements; third, a statement of compliance with IFRS; fourth, other disclosures.

c.

First, supporting information for items presented on the face of the financial statements; second, information required by IFRS; third, significant accounting policies; fourth, other disclosures.

d.

First, a statement of compliance with IFRS; second, a summary of significant accounting policies; third, supporting information for items presented on the face of the financial statements; fourth, other disclosures.

Discuss
Answer: (b).First, a summary of significant accounting policies; second, supporting information for items presented on the face of the financial statements; third, a statement of compliance with IFRS; fourth, other disclosures. Explanation:lAS 1.114 suggests presenting notes in the following order: a summary of significant accounting policies, supporting information for items presented on the face of the financial statements, a statement of compliance with IFRS, and other disclosures.
Q12.
What is the purpose of presenting notes in the order suggested by lAS 1.114?

a.

To simplify the presentation for readers

b.

To comply with regulatory requirements

c.

To facilitate cross-verification from the face of the financial statements to the relevant note

d.

To prioritize information required by IFRS over other disclosures.

Discuss
Answer: (c).To facilitate cross-verification from the face of the financial statements to the relevant note Explanation:The order suggested by lAS 1.114 is designed to facilitate cross-verification from the face of the financial statements to the relevant note, ensuring clarity and coherence.
Q13.
According to Schedule III of the Act 2013, if compliance with the requirements of the Act necessitates any change in the financial statements, how should companies proceed?

a.

No changes are required; companies should maintain the existing format.

b.

Changes should be made only if the company deems it necessary.

c.

Changes, including addition, amendment, substitution, or deletion, should be made, and the Schedule III requirements shall be modified accordingly.

d.

Companies can choose to comply with either the Act or Schedule III.

Discuss
Answer: (c).Changes, including addition, amendment, substitution, or deletion, should be made, and the Schedule III requirements shall be modified accordingly. Explanation:According to Schedule III, if compliance with the requirements of the Act necessitates any change in the financial statements, companies should make the changes, and the Schedule III requirements shall be modified accordingly.
Q14.
How does Schedule III specify the relationship between its disclosure requirements and the Accounting Standards prescribed under the Companies Act, 2013?

a.

Schedule III entirely replaces the disclosure requirements of Accounting Standards.

b.

Schedule III and Accounting Standards have no connection; they are independent of each other.

c.

Schedule III requirements are in addition to and not in substitution of the disclosure requirements specified in Accounting Standards.

d.

Accounting Standards replace the disclosure requirements specified in Schedule III.

Discuss
Answer: (c).Schedule III requirements are in addition to and not in substitution of the disclosure requirements specified in Accounting Standards. Explanation:Schedule III specifies that its disclosure requirements are in addition to and not in substitution of the disclosure requirements specified in Accounting Standards.
Q15.
What is the purpose of cross-referencing each item on the face of the Balance Sheet and Statement of Profit and Loss to related information in the notes to accounts?

a.

To simplify the Financial Statements

b.

To maintain balance between providing excessive detail and not providing important information

c.

To replace the information presented on the face of the Financial Statements

d.

To avoid providing any additional information in the notes to accounts.

Discuss
Answer: (b).To maintain balance between providing excessive detail and not providing important information Explanation:Cross-referencing is done to maintain a balance between providing excessive detail and not providing important information in the Financial Statements and notes to accounts.
Q16.
How should figures in the Financial Statements be rounded off based on the turnover of the company?

a.

Figures should be rounded off to the nearest tens or hundreds.

b.

Figures should be rounded off to the nearest lakhs, millions, or crores, depending on the turnover.

c.

Figures should be rounded off to the nearest thousands, lakhs, or millions, or decimals thereof, based on the turnover.

d.

Rounding off is not specified; companies can choose any rounding method.

Discuss
Answer: (c).Figures should be rounded off to the nearest thousands, lakhs, or millions, or decimals thereof, based on the turnover. Explanation:Depending upon the turnover of the company, figures in the Financial Statements may be rounded off to the nearest thousands, lakhs, or millions, or decimals thereof.
Q17.
When should corresponding amounts (comparatives) for the immediately preceding reporting period be given in the Financial Statements?

a.

Only in the first Financial Statements laid before the Company

b.

Only when the turnover exceeds one hundred crore rupees

c.

In every Financial Statement regardless of turnover

d.

Only when the company deems it necessary.

Discuss
Answer: (a).Only in the first Financial Statements laid before the Company Explanation:Corresponding amounts (comparatives) for the immediately preceding reporting period should be given, except in the case of the first Financial Statements laid before the Company.
Q18.
What criteria classify an asset as current?

a.

It is held primarily for the purpose of being traded.

b.

It is expected to be realised within twelve months after the reporting date.

c.

It is cash or cash equivalent unless restricted from being exchanged for at least twelve months.

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:An asset can be classified as current if it meets any of the mentioned criteria. Assets held for trading, expected realization within twelve months, and cash equivalents fall under the category of current assets.
Q19.
How is the operating cycle defined in the context of balance sheet preparation?

a.

The time between acquiring assets and their realization in cash or cash equivalents.

b.

The time between settling current liabilities and acquiring non-current assets.

c.

The time between the reporting date and the next fiscal year.

d.

The time between the acquisition of assets and their sale in the normal operating cycle.

Discuss
Answer: (a).The time between acquiring assets and their realization in cash or cash equivalents. Explanation:The operating cycle is defined as the time between the acquisition of assets for processing and their realization in cash or cash equivalents.
Q20.
What classifies a liability as non-current?

a.

It is expected to be settled in the company's normal operating cycle.

b.

It is due to be settled within twelve months after the reporting date.

c.

The company does not have an unconditional right to defer settlement for at least twelve months.

d.

It is held primarily for the purpose of being traded.

Discuss
Answer: (c).The company does not have an unconditional right to defer settlement for at least twelve months. Explanation:A liability is classified as non-current if the company does not have an unconditional right to defer settlement for at least twelve months after the reporting date.
Page 2 of 11