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 6 of 11

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Q51.
How should inventories be classified?

a.

Only as raw material, work-in-progress, and finished goods.

b.

Raw material, work-in-progress, finished goods, stock-in-trade, stores and spares, loose tools, and others with a specified nature.

c.

Only as raw material, work-in-progress, finished goods, and stock-in-trade.

d.

Raw material, work-in-progress, and others with a specified nature.

Discuss
Answer: (b).Raw material, work-in-progress, finished goods, stock-in-trade, stores and spares, loose tools, and others with a specified nature. Explanation:Inventories should be classified as raw material, work-in-progress, finished goods, stock-in-trade, stores and spares, loose tools, and others with a specified nature.
Q52.
How should goods-in-transit be disclosed in inventories?

a.

They should not be disclosed separately.

b.

They should be classified as stock-in-trade.

c.

They should be disclosed under the relevant sub-head of inventories.

d.

They should be disclosed as finished goods.

Discuss
Answer: (c).They should be disclosed under the relevant sub-head of inventories. Explanation:Goods-in-transit should be disclosed under the relevant sub-head of inventories.
Q53.
What should be stated regarding the mode of valuation of inventories?

a.

Only whether it is based on historical cost.

b.

Only whether it is based on replacement cost.

c.

Only whether it is based on net realizable value.

d.

The mode of valuation should be stated.

Discuss
Answer: (d).The mode of valuation should be stated. Explanation:The mode of valuation of inventories should be stated.
Q54.
How should trade receivables be classified?

a.

Only as to the extent secured and others, considered good.

b.

Only as doubtful.

c.

As to the extent secured, considered good; others, considered good; and doubtful.

d.

Only as doubtful and bad debts.

Discuss
Answer: (c).As to the extent secured, considered good; others, considered good; and doubtful. Explanation:Trade receivables should be classified as to the extent secured, considered good; others, considered good; and doubtful.
Q55.
What should be separately stated regarding cash and cash equivalents?

a.

Only bank balances.

b.

Only repatriation restrictions.

c.

Only earmarked bank balances.

d.

Earmarked bank balances and repatriation restrictions.

Discuss
Answer: (d).Earmarked bank balances and repatriation restrictions. Explanation:Regarding cash and cash equivalents, earmarked bank balances and repatriation restrictions should be separately stated.
Q56.
How are short-term loans and advances classified?

a.

Only as loans and advances to related parties.

b.

Only as doubtful.

c.

Loans and advances to related parties and others with a specified nature, sub-classified as to the extent secured, considered good; others, considered good; and doubtful.

d.

Loans and advances to related parties, sub-classified as to the extent secured, considered good; and doubtful.

Discuss
Answer: (c).Loans and advances to related parties and others with a specified nature, sub-classified as to the extent secured, considered good; others, considered good; and doubtful. Explanation:Short-term loans and advances are classified as loans and advances to related parties and others with a specified nature, sub-classified as to the extent secured, considered good; others, considered good; and doubtful.
Q57.
What should be disclosed regarding other current assets?

a.

Only the nature of other current assets.

b.

Only the aggregate amount of other current assets.

c.

The nature of other current assets should be specified.

d.

Other current assets should not be disclosed separately.

Discuss
Answer: (c).The nature of other current assets should be specified. Explanation:Regarding other current assets, the nature of these assets should be specified.
Q58.
How are contingent liabilities classified?

a.

Only as claims against the company not acknowledged as debt.

b.

Only as guarantees.

c.

Only as other money for which the company is contingently liable.

d.

Claims against the company not acknowledged as debt, guarantees, and other money for which the company is contingently liable.

Discuss
Answer: (d).Claims against the company not acknowledged as debt, guarantees, and other money for which the company is contingently liable. Explanation:Contingent liabilities are classified as claims against the company not acknowledged as debt, guarantees, and other money for which the company is contingently liable.
Q59.
What should be disclosed regarding dividends?

a.

Only the amount of dividends proposed to be distributed.

b.

Only the amount of arrears of fixed cumulative dividends.

c.

The amount of dividends proposed to be distributed to equity holders for the period, the related amount per share, and arrears of fixed cumulative dividends should be disclosed separately.

d.

Dividends should not be disclosed separately.

Discuss
Answer: (c).The amount of dividends proposed to be distributed to equity holders for the period, the related amount per share, and arrears of fixed cumulative dividends should be disclosed separately. Explanation:Regarding dividends, the amount proposed to be distributed to equity holders for the period, the related amount per share, and arrears of fixed cumulative dividends should be disclosed separately.
Q60.
In the notes to the financial statements, how should revenue from operations be disclosed for a company other than a finance company?

a.

Only as a total amount without any further classification.

b.

Separately as sale of products, sale of services, and other operating revenues; less excise duty.

c.

Only as sale of products and other operating revenues.

d.

Separately as sale of services and other operating revenues.

Discuss
Answer: (b).Separately as sale of products, sale of services, and other operating revenues; less excise duty. Explanation:For a company other than a finance company, revenue from operations should be disclosed separately in the notes as sale of products, sale of services, and other operating revenues; less excise duty.
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