BCOM-AFM-1 MCQ

Question 101 : As per AS 2 while valuing inventories sales commission should be

1. Deducted in arriving at NRV
2. Added to cost
3. Deducted from cost
4. None

Question 102 : As per AS2, cost of inventories should exclude

1. Direct labour
2. Interest on loans
3. Factory overheads
4. Cost of designing the product

Question 103 : Following is not an inventory

1. Spare Parts
2. Finished Goods
3. Raw Material
4. WIP

Question 104 : Inventories are assets

1. held for sale in the ordinary course of business
2. held for long term capital appreciation
3. held for production of goods
4. (a) and (c)

Question 105 : Valuation of Inventory should be done at

1. Net realisable value
2. Fair market value
3. Present value
4. Replacement value

Question 106 : Main product is the target product of _____ value.

1. Inventory
2. Net realisable
3. All of the above
4. significant

Question 107 : As per AS2, inventory covers

1. Live stock
2. Goods purchased for resale
3. Investment held as stock in trade
4. WIP in construction contracts

Question 108 : Cost of transport of material

1. Increases landing cost of material
2. Increases conversin cost
3. Decreases variable cost
4. None of the above

Question 109 : Undervaluation of stock deflates profit.

1. True
2. False

Question 110 : As per AS2, cost of inventories should include

1. All cost of purchases
2. All cost of purchase, cost of conversion and cost incurred to bring the inventory to the present location
3. Cost of purchases and selling
4. Cost of purchases and transport on sale

Question 111 : Valuation of inventories is governed by

1. Companies Act
2. Income Tax Act
3. AS2
4. AS6

Question 112 : Inventories include machinery.

1. True
2. False

Question 113 : AS2 states that, inventory should be valued at

1. FIFO or weighted average basis
2. Retail price of standard cost
3. LIFO
4. Current replacement cost

Question 114 : Overvaluation of stock _____ profits.

1. Minimise
2. Inflates
3. None of the above
4. Deflates

Question 115 : As per AS2 (Revised) Inventories are defined as an asset.

1. True
2. False

Question 116 : Inventory should be valued at cost or M.V. whichever is _____.

1. More
2. Same
3. None of the above
4. Less

Question 117 : By-products, wastes and spares are to be valued at net realisable value if their value is not material.

1. True
2. False

Question 118 : Inventory covers

1. WIP in construction work
2. Biological Assets
3. WIP in service organisation
4. None of the above

Question 119 : By-products, wastes and spares are to be valued at net realisable price if their value is not _____.

1. Spare Parts
2. Finished Goods
3. None of the above
4. material

Question 120 : Cost of purchase does not include duties and taxes.

1. True
2. False

Question 121 : As per AS2 (Revised) ____ approach for costing inventories has been eliminated.

1. Direct labour
2. Factory overheads
3. Direct, costing,
4. All of the above

Question 122 : Cost of inventory does not include

1. Selling cost
2. Office overheads
3. Exceptional waste of material
4. All of the above

Question 123 : Inventories are defined as _____ (AS2 (Revise)).

1. Current Liability
2. Assets held for sale in the ordiniary course of business
3. asset
4. Non of the above

Question 124 : Under periodic inventory system, closing stock is valued

1. By actually counting the stock on a particular date
2. From the stores ledger
3. By deducting value of sales from value of purchases
4. On estimate basis

Question 125 : Inventory is valued of

1. Cost only
2. M.V. only
3. Cost or N.R.V. whichever is less
4. None of the above

Question 126 : LIFO method is not recognised by AS 2.

1. True
2. False

Question 127 : Cost of inventory should include

1. Purchase price and cost incurred to bring the inventory to present location
2. Purchase price only
3. Freight only
4. Cost of conversion only

Question 128 : AS2 (Revised) is applicable to _____ enterprise.

1. not all
2. Selective
3. None of the above
4. all

Question 129 : Abnormal wastage of material should not be included in the cost of inventories.

1. True
2. False

Question 130 : Revenue from service is recognised when

1. Service is rendered
2. Service is to be rendered
3. Contract of service is made
4. None of the above

Question 131 : Revenue from interest is recognised when

1. Interest is received
2. Loan is repaid
3. Interest accrues on time basis
4. When loan is taken

Question 132 : Trade discount should be

1. Added to revenue
2. Ignored
3. Deducted from revenue
4. Added to cost

Question 133 : The buyer requests delayed delivery although he purchases the _____, takes the _____, and accepts billing, in this case the sale is complete.

1. goods, title

Question 134 : AS 9 is optional.

1. True
2. False

Question 135 : AS 9 is mandatory.

1. True
2. False

Question 136 : Revenue from free sample is recognised when

1. Goods are distributed free of cost
2. Goods are used by the buyer
3. None of the above
4. Revenue not recognised

Question 137 : Following is not covered by AS 9

1. Dividend
2. Interest
3. Royalty
4. Lease Rent

Question 138 : AS9 suggests revenue from sale of goods is recognised when the seller transfers the goods to the buyer for a consideration.

1. True
2. False

Question 139 : AS 9 deals with government grants.

1. True
2. False

Question 140 : Revenue from Royalty is recognised on

1. Cash basis
2. Accrual basis
3. Signing the agreement
4. None of the above

Question 141 : Revenue from sale of goods is recognised when

1. Sale is made
2. Collection is made from debtors
3. Goods are produced
4. None of the above

Question 142 : Goods are installed at the buyer's place to his satisfaction, the revenue can be recognised.

1. True
2. False

Question 143 : Interest is recognised on receipt basis.

1. True
2. False

Question 144 : Dividend is recognised as income when it is declared.

1. True
2. False

Question 145 : The AS deals with revenue recognition is

1. AS1
2. AS9
3. AS3
4. AS10

Question 146 : Revenue from sale of goods arises when

1. Goods are sold out
2. Goods are delivered
3. Goods are depatched
4. None of the above

Question 147 : Revenue can be recognised if the goods are sent to the buyer by the seller without consideration.

1. True
2. False

Question 148 : Revenue from dividend is recognised when

1. Dividend is received
2. Right to receive dividend is established
3. Amount is credited to Bank Account
4. Dividend warrant is despatched by the company

Question 149 : Dividend is recognised revenue when

1. It is recommended
2. It is declared
3. It is appropriated
4. It is paid

Question 150 : AS 9 deals with insurance contracts.

1. True
2. False

Question 151 : Royalty is recognised on receipt basis.

1. True
2. False

Question 152 : The buyer purchases the goods, takes the title and accepts billing, the revenue will be recognised.

1. True
2. False

Question 153 : Revenue means

1. Sales
2. Income
3. Gains
4. Gross inflow of benefits from ordinary activities

Question 154 : AS9 explains when the _____ should be recognised in the Profit & Loss Account.

1. All of the above
2. revenue
3. Divedent
4. Royalty

Question 155 : Revenue from cosignment is recognised when

1. Goods are sent on consignment
2. Goods are sold by consignee
3. When account sale is received from the consignee
4. When proforma invoice is sent by the consignor

Question 156 : In consignment revenue is recognised when

1. Goods are sent on consignment
2. Goods are received by the consignee
3. Goods are sold out by the consignee
4. All of the above

Question 157 : Revenue from Advertising Agency Commission is recognised when

1. Advertisement appears before the public
2. Advertisement agreement is signed
3. Advertisement copy is drafted
4. None of the above

Question 158 : AS9 explains when the revenue should be recognised in Profit & Loss Account.

1. True
2. False

Question 159 : Installation fees are recognised as revenue when the installation is _____ and its is _____ by the client.

1. completed, accepted

Question 160 : AS9 is applicable to _____ enterprises.

1. all
2. selective
3. some
4. None of the above

Question 161 : Revenue from Hire purchase sale is recognised when

1. An agreement is signed
2. Goods are delivered
3. When last instalment is received
4. None of the above

Question 162 : Revenue from instalment sale is recognised when

1. An agreement is signed
2. Goods are delivered
3. Initial payment is received
4. Last instalment is paid

Question 163 : Revenue should be recognised when goods are installed at the buyer's place to his _____ and goods are inspected and _____ by the buyer.

1. satisfaction, accepted

Question 164 : AS9 : Revenue Recognition is mandatory and applicable to all enterprises.

1. True
2. False

Question 165 : AS9 does not deal with revenue arising from

1. Sale of goods
2. Interest
3. Service contracts
4. Construction contracts

Question 166 : As per AS9 revenue from sale of goods is recognised when the seller _____ the goods to the buyer for a _____.

1. transfers, consideration

Question 167 : Installation fees are recognised as revenue when installation is completed and it is accepted by the clients.

1. True
2. False

Question 168 : Trade discount should be

1. Deducted from revenue
2. Added to revenue
3. Ignored
4. None of the above

Question 169 : Under _____ method lots of stock should be identified.

1. LIFO
2. Weighted Average
3. All of the above
4. FIFO

Question 170 : The standard which governs inventory valuation is

1. AS 3
2. AS 2
3. AS 10
4. AS 6

Question 171 : Damaged inventory is valued at cost or market value whichever is lower.

1. True
2. False

Question 172 : FIFO Method is logical.

1. True
2. False

Question 173 : _____ method assumes that stock received last is issued first.

1. All of the above
2. LIFO
3. FIFO
4. Weighted Average

Question 174 : In _____ method, stock is valued at current rate.

1. LIFO
2. None of the above
3. FIFO
4. Weighted Average

Question 175 : _____ method is applied when the lots of goods are not identifiable.

1. FIFO
2. Weighted Average
3. LIFO
4. None of the above

Question 176 : Under _____ inventory system, stock is valued by physical stock taking.

1. Perpetual
2. None of the above
3. both (a) & (d)
4. Periodic

Question 177 : Current years profit is overstated when

1. Closing stock is overvalued
2. Closing stock is undervalued
3. When opening stock is undervalued
4. Both (a) and (c)

Question 178 : Under _____ method stock is valued at oldest rate.

1. FIFO
2. LIFO
3. All of the above
4. Weighted Average

Question 179 : Concept applicable for inventory valuation is

1. Consistency
2. Realisation
3. Conservatism
4. Matching

Question 180 : The system in which each and every item in the warehouse is physically verified is

1. Perpetual Inventory system
2. Physical Inventory system
3. Retail Inventory system
4. None of the above

Question 181 : Bin Card shows stock position in the Bin.

1. True
2. False

Question 182 : The system in which fluctuations in prices are averaged out

1. Weighted Average Method
2. FIFO Method
3. LIFO Method
4. None of the above

Question 183 : The method reflects latest purchase cost in the closing stock is

1. FIFO
2. LIFO
3. Weighted Average
4. None of the above

Question 184 : Current years profit is understated when

1. Opening stock is undervalued
2. Opening stock is overvalued
3. Closing stock is undervalued
4. Both (b) and (c)

Question 185 : Under periodic Inventory system, inventory is valued

1. Periodically
2. Yearly
3. Continuously
4. None of the above

Question 186 : Under _____ method, fluctuations in prices are overcome.

1. FIFO
2. LIFO
3. All of the above
4. Weighted Average

Question 187 : Under _____ method it is assumed that stock received first is issued first.

1. LIFO
2. All of the above
3. Weighted Average
4. FIFO

Question 188 : _____ _____ _____ is followed when there are fluctuations in prices.

1. FIFO
2. LIFO
3. None of the above
4. WAM

Question 189 : AS2 governs inventory valuation.

1. True
2. False

Question 190 : _____ method is suitable for perishable goods.

1. LIFO
2. None of the above
3. Weighted Average
4. FIFO

Question 191 : Inventory includes machinery purchased and held for giving on rental basis.

1. True
2. False

Question 192 : Historical cost is the cost to be incurred in future.

1. True
2. False

Question 193 : AS2 recognises _____ and _____ Methods.

1. LIFO ; Weighted Average
2. Non of the above
3. FIFO ; LIFO
4. FIFO ; Weighted Average

Question 194 : When closing stock is overvalued

1. Profit is overstated
2. Profit is understated
3. No effect on profit
4. None of the above

Question 195 : Inventory of a manufacturer includes

1. Stock of Raw Materials
2. Stock of WIP
3. Stock of Finished Goods
4. All of the above

Question 196 : Stock is valued at cost or at market value whichever is lower as per

1. Realisation concept
2. Cost concept
3. Matching concept
4. Entity Concept

Question 197 : In _____ method, stock is valued at oldest rate.

1. FIFO
2. LIFO
3. Weighted Average
4. None of the above

Question 198 : The system which keeps records continuously is

1. Perpetua
2. Periodic
3. Physical
4. None of the above

Question 199 : Inventory of a trading concern include

1. Raw Material
2. Finished Goods only
3. WIP
4. None of the above

Question 200 : Carriage on purchases is

1. Added to the cost of inventory
2. Deducted from the cost of inventory
3. Multiplied by the cost of inventory
4. None of the above