Copyright 2012 Dorling Kindersley (India) Pvt.

Ltd

Chapter 1: Introduction to Accounting

Multiple Choice Questions

1. Which of the following statement is not true in respect of financial accounting information: a. It is less detailed than management accounting information b. It is available to external users c. The reporting formats used are extremely flexible and tailor made to suit the requirement of users d. Periodicity of information is prescribed by law e. There is lot of emphasis on accuracy of information 2. Satelite Communications Limited prepared its annual budget. The budget information is available to be used by: a. Investors b. Shareholders c. Management d. Supplier of Goods e. Tax authorities 3. The financial statements of banking companies must be prepared in the format prescribed in: a. Schedule VI of the Companies Act 1956 b. Third Schedule of Banking Regulations Act, 1949 c. Income Tax Act, 1961 d. Listing Agreement e. None of the above 4. The financial statements of insurance companies must be prepared in the format prescribed in:

Sanjay Dhamija

Financial Accounting for Managers

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd

a. Schedule VI of the Companies Act 1956 b. Third Schedule of Banking Regulations Act, 1949 c. Schedule A (Life Insurance) or Schedule B (General Insurance) or IRDA Regulations, 2002. d. Listing Agreement e. None of the above 5. The financial statements of companies (other than banking and insurance companies) must be prepared in the format prescribed in: a. Schedule VI of the Companies Act 1956 b. Third Schedule of Banking Regulations Act, 1949 c. Income Tax Act, 1961 d. Listing Agreement e. None of the above

Objective Type Questions

1. Name them a. Branch of accounting that is primarily used by external stakeholders b. c. Financial statement that provides information about the uses and sources of cash Excess of expenses over income during a particular period

d. Statement of Assets and Liabilities of a business at the end of accounting period e. Agreement signed between an issuer of securities and a stock exchange 2. True or False a. Balance Sheet provides information about the assets and liabilities for a given accounting period b. Accounting principles are exact c. Income as per tax accounting and financial accounting may be different

Sanjay Dhamija

Financial Accounting for Managers

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd

d. Companies are free to follow either accrual basis or cash basis of accounting e. All companies are required to prepare and publish quarterly results.

Answers to Multiple Choice Questions

1. c : Reporting formats are standardized and often prescribed by law or by accounting standards. 2. c: Annual budget is a part of management accounting and is meant exclusively to be used by internal users. 3. b: 4. c: 5. a:

Answers to Objective Type Questions

1. Name them a. Financial Accounting b. Cash Flow Statement c. Loss d. Balance Sheet e. Listing Agreement 2. True or False a. False Balance Sheet gives cumulative information on a particular date b. False They do leave some latitude/discretion to the management c. True Tax accounting is based upon tax laws whereas Financial accounting follows GAAP and Accounting Standards d. False Accrual basis is compulsory as per the Companies Act, 1956 e. False Only listed companies are required to prepare and publish quarterly results.

Sanjay Dhamija

Financial Accounting for Managers