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 3 of 11

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Q21.
When is a receivable classified as a 'trade receivable'?

a.

When it is held primarily for the purpose of being traded.

b.

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

c.

When it is in respect of the amount due on account of goods sold or services rendered in the normal course of business.

d.

When it is expected to be realized in the company's normal operating cycle.

Discuss
Answer: (c).When it is in respect of the amount due on account of goods sold or services rendered in the normal course of business. Explanation:A receivable is classified as a 'trade receivable' if it is in respect of the amount due on account of goods sold or services rendered in the normal course of business.
Q22.
When is a payable classified as a 'trade payable'?

a.

When it is held primarily for the purpose of being traded.

b.

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

c.

When it is in respect of the amount due on account of goods purchased or services received in the normal course of business.

d.

When it is expected to be realized in the company's normal operating cycle.

Discuss
Answer: (c).When it is in respect of the amount due on account of goods purchased or services received in the normal course of business. Explanation:A payable is classified as a 'trade payable' if it is in respect of the amount due on account of goods purchased or services received in the normal course of business.
Q23.
What information should be disclosed in the notes to accounts regarding share capital?

a.

Only the number and amount of shares authorized.

b.

Number of shares issued and subscribed.

c.

Rights, preferences, and restrictions attaching to each class of share capital.

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The notes to accounts regarding share capital should include information such as the number and amount of shares authorized, number of shares issued and subscribed, and rights, preferences, and restrictions attaching to each class of share capital.
Q24.
Which of the following is not disclosed in the notes to accounts regarding share capital?

a.

Shares in the company held by any shareholder holding more than 5 percent shares.

b.

Aggregate number and class of shares bought back.

c.

Total revenue of the company.

d.

Calls unpaid, showing the aggregate value of calls unpaid by directors and officers.

Discuss
Answer: (c).Total revenue of the company. Explanation:The notes to accounts regarding share capital do not typically disclose the total revenue of the company. They focus on specific details related to share capital.
Q25.
How should reserves and surplus be classified?

a.

Capital Reserves, Securities Premium Reserve, and Debenture Redemption Reserve only.

b.

Capital Reserves, Securities Premium Reserve, and Surplus.

c.

Capital Reserves, Debenture Redemption Reserve, and Other Reserves.

d.

Capital Reserves, Debenture Redemption Reserve, and Surplus.

Discuss
Answer: (d).Capital Reserves, Debenture Redemption Reserve, and Surplus. Explanation:Reserves and Surplus shall be classified as Capital Reserves, Debenture Redemption Reserve, and Surplus, among other specified categories.
Q26.
What is the term used for a reserve specifically represented by earmarked investments?

a.

Capital Reserves

b.

Securities Premium Reserve

c.

Fund

d.

Other Reserves

Discuss
Answer: (c).Fund Explanation:A reserve specifically represented by earmarked investments is termed as a 'fund'.
Q27.
How should the debit balance of the Statement of Profit and Loss be presented?

a.

As a positive figure under the head 'Surplus'.

b.

As a negative figure under the head 'Surplus'.

c.

As a positive figure under the head 'Reserves and Surplus'.

d.

As a negative figure under the head 'Reserves and Surplus'.

Discuss
Answer: (b).As a negative figure under the head 'Surplus'. Explanation:The debit balance of the Statement of Profit and Loss should be shown as a negative figure under the head 'Surplus'.
Q28.
How are long-term borrowings classified?

a.

Only as Bonds/Debentures and Term Loans.

b.

Bonds/Debentures, Term Loans, and Deferred Payment Liabilities.

c.

Term Loans, Deposits, and Loans and Advances from Related Parties.

d.

Bonds/Debentures, Term Loans, and Long-term Maturities of Finance Lease Obligations.

Discuss
Answer: (b).Bonds/Debentures, Term Loans, and Deferred Payment Liabilities. Explanation:Long-term borrowings are classified as Bonds/Debentures, Term Loans, and Deferred Payment Liabilities, among other specified categories.
Q29.
When loans are guaranteed by directors or others, what information should be disclosed?

a.

The names of the guarantors only.

b.

A mention thereof and the aggregate amount of such loans under each head.

c.

The terms of repayment only.

d.

The reasons for the guarantee.

Discuss
Answer: (b).A mention thereof and the aggregate amount of such loans under each head. Explanation:When loans are guaranteed by directors or others, the disclosure should include a mention thereof and the aggregate amount of such loans under each head.
Q30.
How should bonds/debentures be presented in the financial statements?

a.

In ascending order of maturity date.

b.

In alphabetical order of the bondholders.

c.

In descending order of maturity or conversion date, starting from the farthest redemption or conversion date.

d.

In order of the issuance date.

Discuss
Answer: (c).In descending order of maturity or conversion date, starting from the farthest redemption or conversion date. Explanation:Bonds/debentures should be presented in descending order of maturity or conversion date, starting from the farthest redemption or conversion date.
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