AFB Module B CHAPTER 1

2/6/22, 11:41 AM Online Test Series
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MOCK TEST FOR BANKERS
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 Question 1
Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

ACCOUNTING STANDARDS,Level : MODERATE, Type : Single,Marks : 1.00,Neg Marks
: 0.00
Time Taken : 11 Sec

Generally accepted accounting principles or US GAAP, are the accounting rules used to
prepare financial statements for the publicly_________and _________ in the United
States.
Answer
SlNo Options Correct Answer Your Answer
1 Traded companies, private companies
2 Govt. bodies, Stat govt. bodies
3 Stock Exchange. Debt Market
Private companies, Govt. undetaking

4
companies
Solutions
Generally Accepted Accounting Principles (GAAP or US GAAP) is the accounting
standard adopted by the U.S. Securities and Exchange Commission (SEC). These are the
accounting rules to prepare financial statements for traded and private companies.

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 Question 2

: 0.00
Time Taken : 0 Sec

Enterprises whose equity or debt securities are listed on a recognised stock exchange in
India, and enterprises that are in the process of issuing equity or debt securities that will
be listed on a recognised stock exchange in India has to follow accounting standards.
Answer
1 True
2 False
Solutions
Enterprises whose equity or debt securities are listed on a recognised stock exchange in
India, and enterprises that are in the process of issuing equity or debt securities that will
be listed on a recognised stock exchange in India has to follow accounting standards.

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 Question 3

: 0.00
Time Taken : 0 Sec

The Accounting Standard - 03 requiers the cash flows to be classified into which following
heads?
Answer
1 Operating activities
2 Investing activities
3 Financing Activities
4 All of the above
Solutions
Accounting Standard (AS) 3, ‘Cash Flow Statements’ issued by the Council of the Institute
of Chartered Accountants of India, comes into effect in respect of accounting periods. It
includes cash, cash equivalents, Cash flows, Operating, Investing & financing activities.
1.Cash comprises cash on hand and demand deposits with banks.
2.Cash equivalents are short term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of changes in
value.
3.Cash flows are inflows and outflows of cash and cash equivalents.
4.Operating activities are the principal revenue-producing activities of the enterprise and
other activities that are not investing or financing activities.
5.Investing activities are the acquisition and disposal of long-term assets and other
investments not included in cash equivalents.
6.Financing activities are activities that result in changes in the size and composition of
the owners’ capital (including preference share capital in the case of a company) and
borrowings of the enterprise

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 Question 4

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Time Taken : 0 Sec

As per ________, "Taxable income" (tax loss) is the amount of the income (loss) for a
period, determined in accordance with the tax laws, based upon which income tax payable
(recoverable) is determined.
Answer
1 AS 22
2 AS 20
3 AS 16
4 AS 26
Solutions
As per AS 22, "Taxable income" (tax loss) is the amount of the income (loss) for a period,
determined in accordance with the tax laws, based upon which income tax payable
(recoverable) is determined.

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 Question 5

: 0.00
Time Taken : 0 Sec

The unified version of cost plus method and resale price method under transfer pricing is
called
Answer
1 Comparable uncontrolled price method
2 Cost plus method
3 Resale price method
4 Transactional net margin method
Solutions
The cost plus method is used to test the activities of manufacturing entities by comparing
gross profits to cost of sales. The resale price method is normally used to test gross profits
earned by sales and distribution entities. This method compares gross profit relative to
turnover of the tested party to gross margins earned by comparable third parties.
Both are related under transfer pricing which is called Transactional net margin method.
TNMM compares the net profit of a company involved in a non-arm's length transaction
with an appropriate base-line of sales, costs and assets employed in similar transactions
with adjustments made based on the actual circumstance of the transaction.

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 Question 6

: 0.00
Time Taken : 0 Sec

The agency which formulates the Accounting Standards in India is:
Answer
1 Reserve Bank
2 Ministry of Company Affairs
3 Accounting Standards Board (ASB)
4 Institute of Company Secretaries of India
Solutions
The mail function of the ASB is to formulate accounting standards so that the council of
ICAI may madate such standards.

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 Question 7

: 0.00
Time Taken : 0 Sec

Which Accounting Standard is related to presentation of financial statements?
Answer
1 AS 1
2 AS 10
3 AS 11
4 AS 22
Solutions
As per AS 1, Presentation of Financial Statements applies to all types of entities,
commercial, industrial and business entities, both private & public and whether presenting
consolidated or separate Financial Statements.

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 Question 8

: 0.00
Time Taken : 0 Sec

Which Accounting Statandars relates to events occurring after the balance sheet date?
Answer
1 AS 02
2 AS 03
3 AS 04
4 AS 05
Solutions
Accounting Standard (AS) 4, deals with contingencies and events occurring after the
Balance Sheet date which having adverse effect

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 Question 9

: 0.00
Time Taken : 0 Sec

Companies shall follow Indian AS either Voluntarily or Mandatorily. It is to be noted that,
once a company follows Indian AS, either mandatorily or voluntarily, it can't revert to old
method of Accounting.
Answer
1 True
2 False
Solutions
Companies shall follow Indian AS either Voluntarily or Mandatorily. It is to be noted that,
once a company follows Indian AS, either mandatorily or voluntarily, it can't revert to old
method of Accounting.

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 Question 10

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Which of the following is not part of the interim financial report as per AS 25?
Answer
1 Condensed balance sheet
Condensed statement of profit and loss

2
account
3 Condensed cash flow statement
4 None of the above
Solutions
Interim financial report means a financial report containing either a complete set of
financial statements (as described in Ind AS 1 Presentation of Financial Statements or a
set of condensed financial statements (as described in this Standard) for an interim
period.
Ind AS 1 defines a complete set of financial statements as including the following
components:
(a) a balance sheet as at the beginning and end of the period (including statement of
changes in equity for the period which is presented as a part of the balance sheet)
(b) a statement of profit and loss for the period
(c) a statement of cash flows for the period
(d) notes, comprising a summary of significant accounting policies and other explanatory
information

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 Question 11

: 0.00
Time Taken : 0 Sec

Which Accounting Standards relates to tax effect of timing difference:
Answer
1 AS 22
2 AS 20
3 AS 16
4 AS 26
Solutions
As per AS 22, ''Deferred Tax'' is the tax effects of Timing Difference. The whole concept of
deferred tax is depend on timing difference.

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 Question 12

: 0.00
Time Taken : 0 Sec

According to______, "Interim period" is a financial reporting period shorter than a full
financial year. It is not a complete financial period.
Answer
1 AS 22
2 AS 25
3 AS 16
4 AS 26
Solutions
AS 25 "Interim period" is a financial reporting period shorter than a full financial year. It is
not a complete financial

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 Question 13

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Time Taken : 0 Sec

"A lease is an agreement whereby the lessor conveys to the lessee in return for a payment
or series of payments the right to use an asset for an agreed period of time", falls under
which Accounting Standards:
Answer
1 AS 17 relating to fixed asset valuation
2 AS 12 relating to Leases
3 AS 19 relating to Leases
Solutions
Lease is defined under Accounting Standard 19. This Standard applies to agreements that
transfer the right to use assets even though substantial services by the lessor may be
called for in connection with the operation or maintenance of such assets. This Standard
does not apply to agreements that are contracts for services that do not transfer the right
to use assets from one contracting party to the other.

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 Question 14

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Time Taken : 0 Sec

US - GAAP is issued by which of the following?
Answer
American Institute of Certified Public

1
Accountants
2 Financial Accounting Standard Board
3 US Securities and Exchange Commission
4 Govt. Accounting Standards Board
Solutions
The Financial Accounting Standards Board (FASB) is a private, non-profit organization
standard setting body whose primary purpose is to establish and improve generally
accepted accounting principles (GAAP) within the United States in the public's interest.

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 Question 15

: 0.00
Time Taken : 0 Sec

State government and local government financial reporting issues in US are addressed by
which of the following:
Answer
American Institute of Certified Public

1
Accountants
2 Financial Accounting Standard Board
3 US Securities and Exchange Commission
4 Govt. Accounting Standards Board
Solutions
U.S.A has been the pioneer in setting up regulatory norms for transfer pricing. Transfer
pricing rules in the U.S.A. are strictly applied on related party transactions within a
multinational enterprise, with heavy penalties for any violation. The Govt. Accounting
Standards Board addressed the state government and local government financial
reporting issues in USA.

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 Question 16

: 0.00
Time Taken : 0 Sec

The fundamental quality of financial statements includes which of the following (a) these
should be relevant (b) these should be reliable (c) these should be comparable (d) these
should be consistent:
Answer
1 A to D all
2 B and C only
3 A, C and D only
4 B, C and D only
Solutions
Financial statements (or financial report) is a formal record of the financial activities and
position of a business, person, or other entity. The fundamental quality of this statements
is that it should be relevant, reliable, comparable and consistent.

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 Question 17

: 0.00
Time Taken : 0 Sec

The objective of Accounting StandarsProcedure applied that ensures carrying the amount
of an asset not more than the recoverable amount of the assets, is prescribed under
accounting standard:
Answer
3 AS 22 relating to impaired assets
4 AS 28 relating to impairment of assets
Solutions
IAS 28 "Impairment of Assets" seeks to ensure that an entity's assets are not carried at
more than their recoverable amount.

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 Question 18

: 0.00
Time Taken : 0 Sec

According to AS 22, the income tax determined to be payable in respect of taxable income
for period is called:
Answer
1 Income Tax
2 Current Tax
3 Deferred tax
4 Future tax
Solutions
As per Accounting Standard 22, Current tax is the amount of income tax determined to be
payable (recoverable) in respect of taxable income (tax loss ) for a period.

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 Question 19

: 0.00
Time Taken : 0 Sec

Which section of companies act states the compliance with accounting standards by the
company is the responsibility of board of directors?
Answer
1 217 (2AA)
2 277 (2AA)
3 207 (2AA)
4 217 (2AB)
Solutions
As per section 217 (2AA), board of directors to give Directors responsibility statement
confirming that to compliance with applicable accounting standards, deviations, if any,
consistency in adoption of accounting policies to reflect true and fair view of financial
statements & Maintenance of Accounting records for safeguarding assets and preventing
frauds.

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 Question 20

: 0.00
Time Taken : 0 Sec

The transfer price in the context of banking means:
Answer
Interest charged by the surplus funds

1 branch to the deficit fund branch on transfer
of funds
Interest charged by the surplus funds

2 branch to the surplus fund branch on
transfer of funds
Interest paid by the surplus funds branch to

3
the deficit fund branch on transfer of funds
Interest and other expenses charged by the

4 surplus funds branch to the deficit fund
branch on transfer of funds
Solutions
Transfer pricing is a neutral concept which needs to be regulated to ensure that the parent
country receives due revenue in the form of tax. While in the context of banking, Transfer
price is the interest charged by the surplus funds branch to the deficit funds branch on the
transfer of funds. The interest rate or price may vary from bank to bank.

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 Question 21

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Time Taken : 0 Sec

________ is a set of rules and criteria on the basis of that recording of financial
transactions is done.:
Answer
1 Accounting practices
2 Accounting procedures
3 Accounting Standards
4 Generally accepted accounting practices
Solutions
Accounting Standards records financial transactions on the basis of set of rules and
criteria.

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 Question 22

: 0.00
Time Taken : 0 Sec

The price at which two unrelated and non-desperate parties transact the business is
called:
Answer
1 US GAAP price
2 Transfer pricing
3 International transfers
4 Arm's length price
Solutions
When two or more unrelated parties transact with each other, independent market forces
determine the commercial price of the goods, services and intangibles transacted between
them is called Arm's length price. The arm’s length principle was established to prohibit
such transactions and to ensure fairness and a level playing field to all the entities in the
market.

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 Question 23

: 0.00
Time Taken : 0 Sec

Accounting Standards 09 relates to:
Answer
1 Revenue recognition
2 Income recognition
3 Wasting assets
4 Depreciation
Solutions
Accounting Standards 09 relates to revenue recognition which identifies the
circumstances in which revenue is recognised and provides practical guidance on the
application of the recognition criteria. Revenue is recognised on the provision of goods
and services that relate to the ordinary activities of the entity.

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 Question 24

: 0.00
Time Taken : 0 Sec

What is the objective of formulation and practicing of accounting standards?
Answer
To harmonies diverse accounting policies

1
and practices
2 To regulate accounting practices
To frame accounting policies of the

3
companies
To standardize accounts of companies and

4
firms
Solutions
The Accounting Standards recognize the principle of equity applicable for different users
of accounting information, viz creditors, investors, shareholders etc. Thus, the purpose of
setting Accounting Standards is to find a uniformity in accounting practice, to harmonies
diverse accounting policies while formulating financial reports and make consistency and
proper comparison of data which are contained in financial statements for the users of
accounting information.

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 Question 25

: 0.00
Time Taken : 0 Sec

___________ is an independent, private-sector body that develops and approves
International Financial Reporting Standards (IFRSs). The IASB operates under the
oversight of the IFRS Foundation.
Answer
1 UNO
International Accounting Practices and

2
Standards Board
3 International Monetary Fund
4 International Accounting Standards Board
Solutions
The International Accounting Standards Board (IASB) is an independent, private-sector
body that develops and approves International Financial Reporting Standards (IFRSs).
The IASB operates under the oversight of the IFRS Foundation.

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VIEW REPORT (../ONLINEEXAM/REPORT.ASPX?

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 11 Sec

1 Traded companies, private companies

2 Govt. bodies, Stat govt. bodies

3 Stock Exchange. Debt Market

Private companies, Govt. undetaking

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

4 All of the above

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

1 Comparable uncontrolled price method

2 Cost plus method

3 Resale price method

4 Transactional net margin method

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

2 Ministry of Company Affairs

3 Accounting Standards Board (ASB)

4 Institute of Company Secretaries of India

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

1 Condensed balance sheet

Condensed statement of profit and loss

3 Condensed cash flow statement

4 None of the above

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

1 AS 17 relating to fixed asset valuation

4 AS 12 relating to fixed asset valuation

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec

American Institute of Certified Public

2 Financial Accounting Standard Board

3 US Securities and Exchange Commission

4 Govt. Accounting Standards Board

Subject : MOCK TEST FOR BANKERS,Chapter : DEFINITION, SCOPE AND

Time Taken : 0 Sec