1. Which of the following statements regarding "Ind AS" (Indian Accounting Standards) is CORRECT?
They are rules-based standards unlike IFRS which is principle-based.
They are converged with IFRS (International Financial Reporting Standards) but not identical.
They apply only to manufacturing companies.
They are identical to US GAAP.
Explanation:
Ind AS is "converged" with IFRS, meaning it is largely based on IFRS but contains certain "Carve-outs" (deviations) to suit Indian economic and legal conditions.
2. IFRS stands for:
International Fund Regulatory Standards
International Financial Reporting Standards
Indian Financial Rating System
Indian Fiscal Reporting System
Explanation:
IFRS are issued by the London-based International Accounting Standards Board (IASB) to provide a common global language for business affairs.
3. AS 2 (Valuation of Inventories) states that inventory should be valued at:
Cost or Net Realizable Value (NRV), whichever is higher.
Cost or Net Realizable Value (NRV), whichever is lower.
Market Price.
Cost Price.
Explanation:
This is based on the principle of conservatism (Prudence). You anticipate losses (if NRV < Cost) but do not anticipate gains.
4. Ind AS is mandatory for unlisted companies if their Net Worth is equal to or greater than:
?250 Crore
?50 Crore
?100 Crore
?500 Crore
Explanation:
Under Phase II of Ind AS implementation, unlisted companies with a net worth of ?250 crore or more are required to comply with Ind AS.
5. In India, Accounting Standards are formulated by:
Institute of Chartered Accountants of India (ICAI)
Ministry of Finance
Securities and Exchange Board of India (SEBI)
Reserve Bank of India (RBI)
Explanation:
The Accounting Standards Board (ASB) constituted by ICAI formulates Accounting Standards. Ind AS are notified by the Ministry of Corporate Affairs (MCA) based on ICAI recommendations.
6. AS 1 deals with:
Valuation of Inventories
Cash Flow Statements
Depreciation Accounting
Disclosure of Accounting Policies
Explanation:
AS 1 requires enterprises to disclose the significant accounting policies followed in preparing and presenting financial statements.
7. Ind AS 1 requires a complete set of financial statements to include a "Statement of Changes in Equity". This statement shows:
Changes in Fixed Assets.
Changes in Cash Flow.
Changes in Market value of shares.
Changes in the owner's equity over the period (Share capital, Reserves).
Explanation:
Unlike traditional Indian GAAP, Ind AS requires a separate statement detailing the movement in Equity (Share Capital + Other Equity like Reserves) during the year.
8. Ind AS 16 deals with:
Income Taxes
Leases
Property, Plant and Equipment (PPE)
Employee Benefits
Explanation:
Ind AS 16 prescribes the accounting treatment for Property, Plant and Equipment (Fixed Assets), including recognition, measurement, and depreciation.
9. GAAP stands for:
Global Accounting and Audit Policies
General Asset Assessment Principles
Government Audit and Accounts Procedures
Generally Accepted Accounting Principles
Explanation:
GAAP refers to a common set of accounting principles, standards, and procedures that companies must follow when compiling their financial statements.
10. Ind AS 109 deals with:
Revenue Recognition
Leases
Financial Instruments
Consolidated Statements
Explanation:
Ind AS 109 covers Financial Instruments: Recognition, Measurement, Impairment (ECL model), and Hedge Accounting.
11. Under Ind AS 7, Interest paid by a non-financial enterprise is classified as:
Investing Activity
Operating Activity
Financing Activity
Extraordinary Activity
Explanation:
Interest paid is a cost of obtaining finance. Hence, for non-financial firms, it is a Financing Activity. (For banks, it is Operating).
12. Are NBFCs required to follow Ind AS?
Yes, all NBFCs.
Yes, if their Net Worth is ?500 Cr or more (Phase I) or ?250 Cr or more (Phase II).
No, they follow IFRS.
No, they follow RBI norms only.
Explanation:
MCA mandated Ind AS for NBFCs in phases based on net worth, similar to corporates.
13. Under Ind AS 16, subsequent expenditure on an item of PPE is capitalized only if:
It is mandated by law.
It increases the future economic benefits from the asset beyond its previously assessed standard of performance.
It restores the asset to its original condition.
The amount is significant.
Explanation:
Repairs that only maintain the asset are revenue expenses. Only those that enhance capacity, efficiency, or life are capitalized.