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Chapter 1
Introduction to accounting
[Note: All of you who want to pass the Accounting at first attempt must read manual of
ICAB before practicing the MCQ and are requested to practice the MCQ attentively as
these MCQ can be presented in the exam in many ways. Every true/false given in this book
may be given in the exam containing 4 options.]
1. Accounting is a way of …… the transactions of an entity.
a) Recording
b) Analyzing
c) Summarizing
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
Accounting is a way of recording, analyzing and summarizing the transactions of an entity.

2. Who are the prime users of published financial statements?

a) Managers
b) Present owners
c) Potential owners
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
Managers and (present and potential) owners are the prime users of published financial
statements.

3. People need financial information on a company to …

a) make economic decisions

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b) assess managers' stewardship of the company's resources

c) assess the level, timing and certainty of its future cash flows
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
People need financial information on a company to make economic decisions, to assess
managers' stewardship of the company's resources, and to assess the level, timing and
certainty of its future cash flows.

4. People need financial information on a company to assess the …… of its future cash
flows.
a) Level
b) Timing
c) Certainty
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
People need financial information on a company to make economic decisions, to assess
managers' stewardship of the company's resources, and to assess the level, timing and
certainty of its future cash flows.

5. Where the transactions are recorded?

a) in the books of original entry
b) in the ledgers
c) in the trial balance
d) in the financial statements
Answer: a
The transactions are recorded in 'books of original entry'.

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6. After analyzing where the transactions are posted?

a) in the books of original entry
b) in the ledgers
c) in the trial balance
d) in the financial statements
Answer: b
The transactions are then analyzed and posted to the ledgers

7. Finally, where the transactions are summarized?

a) in the books of original entry
b) in the ledgers
c) in the trial balance
d) in the financial statements
Answer: d
Finally, the transactions are summarized in the financial statements

8. The roles of an accountant is to measure …

a) revenue of an entity
b) expenditure of an entity
c) if the entity is a business, its profit
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
One of the roles of an accountant is to measure the revenue and expenditure of an entity
and, if it is a business, its profit.

9. How many types of profit-making business entity are existing mainly?

a) 3
b) 4

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c) 5
d) 6
Answer: a
There are three main types of profit-making business entity:
Sole traders, Partnerships, Limited liability companies.

10. The term sole trader refers to the ownership of the business.
a) True
b) False
Answer: a
The term sole trader refers to the ownership of the business; sole traders can have
employees.

11. From how many forms a partnership can be?

a) 2
b) 3
c) 4
d) 5
Answer: a
A partnership can take one of two forms:
A general partnership (like two or more sole traders) and
a Limited Liability Partnership LLP (more like a company).

12. The Conceptual Framework for financial reporting was issued by IASB in ……
a) September 2010
b) October 2010
c) September 2012
d) October 2012
Answer: a
The Conceptual Framework for Financial Reporting (from now on referred to as the
Conceptual Framework) was issued by the international Accounting Standards Board
(IASB) in September 2010.

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13. The conceptual framework set out concepts that underlie …

a) the preparation of financial statement
b) the presentation of financial statement
c) the preparation and presentation of financial statement
d) none of the above
Answer: c
The Conceptual Framework sets out concepts that underlie the preparation and presentation
of financial statements.

14. In reality key user groups of financial statement will vary between large & small
entities.
a) True
b) False
Answer: a
ln reality key user groups will vary between large and small entities.

15. The conceptual framework focuses on ……

a) small entities
b) medium entities
c) large entities
d) above all
Answer: c
The Conceptual Framework focuses on larger entities.

16. The objective of general-purpose financial reporting is to provide financial information

about the reporting entity.
a) True
b) False
Answer: a
'The objective of general-purpose financial reporting is to provide financial information
about the reporting entity that is useful to existing and potential investors, lenders and other
creditors in making decisions about providing resources to the entity.

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17. At the time of making economic decisions, users need to assess……

a) the ability of the business to generate cash
b) the timing and certainty of cash flows
c) above all
d) none of the above
Answer: c
When making economic decisions, users need to assess:
o The ability of the business to generate cash, and
o The timing and certainty of cash flows.

18. Whether the business can generate cash of the right amount determines whether it can
……
a) Pay its employees and suppliers
b) Meet interest payments
c) Repay loans
d) Pay something to its owners
Correct answers are …
a) a, b, c
b) b, c, d
c) a, c, d
d) Above all
Answer: d
Whether the business can generate cash of the right amount determines whether it can .
o Pay its employees and suppliers
o Meet interest payments
o Repay loans
o Pay something to its owners

19. IAS 1 refers ……

a) Preparation of financial statement
b) Presentation of financial statement
c) Preparation and presentation of financial statement
d) none of the above

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Answer: b
International Accounting Standard 1 (IAS 1) Presentation of Financial Statements

20. IAS 1 provides the objective of financial statement which is to provide information
about
a) financial position
b) financial performance
c) cash flow of the entity
d) all of the above
Answer: d
IAS 1 provide information about the financial position, financial performance and cash
flows of an entity that is useful to a wide range of users in making economic decisions.

21. According to IAS 1, the financial statement ……

a) show the results of management's stewardship of the resources entrusted to it
b) help users of financial statements in predicting the entity's future cash flows and
their timing and certainty
c) above all
d) none of the above
Answer: c
IAS 1 states that'the financial statements also:
• Show the results of management's stewardship of the resources entrusted to it, and
• Assist users of financial statements in predicting the entity's future cash flows and,
in particular, their timing and certainty.

22. Who exercise the stewardship function to make effective decisions in a business?
a) Managers
b) Directors
c) Owners of the company
d) Shareholder
Correct answers are …
a) a, b
b) a, b, c

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c) b, c, d
d) Above all
Answer: a
Managers/directors manage the business efficiently (exercising the stewardship function).

23. Who make effective decision about pricing, output, employment & financing?
a) Managers
b) Directors
c) Owners of the company
d) Shareholder
Correct answers are …
a) a, b
b) a, b, c
c) b, c, d
d) Above all
Answer: a
Managers/directors make effective decisions about matters such as pricing, output,
employment and financing.

24. Who want to assess the stewardship function?

a) Managers
b) Directors
c) Owners of the company
d) Shareholder
Correct answers are …
a) a, b
b) b, c
c) c, d
d) Above all
Answer: c
Owners of the company (shareholders) want to assess management performance
(stewardship function).

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25. Trade contacts include ……

a) suppliers who provide goods on credit
b) customers who purchase goods or services
c) above all
d) none of the above
Answer: c
Trade contacts include suppliers who provide goods on credit and customers who purchase
goods or services.

26. Who want to know about the company's ability to pay its debts?
a) Managers
b) Directors
c) Owners of the company
d) Suppliers
Answer: d
Suppliers want to know about the company's ability to pay its debts.

27. Who need to know that whether the company is a secure source of supply.to make sure
repeat purchase and after sales service will be available?
a) Directors
b) Shareholder
c) Customers
d) Suppliers
Answer: c
customers need to know that the company is a secure source of supply, so that repeat
purchases and after-sales care will be available.

28. Finance providers include banks which ……

a) allow the company to operate an overdraft
b) provide longer-term loan finance secured on the company's assets
c) above all
d) none of the above
Answer: c

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Finance providers include banks which allow the company to operate an overdraft, or
provide longer term loan finance secured on the company's assets.

29. Who have no interest regarding any matter of the company?

a) Employees
b) Government agencies
c) Public
d) None of the above
Answer: d
In the mentioned question everyone has interest regarding any matter of the company.

30. There are some information regarding the user of financial information ……
a) stockbrokers need information to advise investors
b) credit agencies want information to advise potential suppliers of goods to the
company
c) journalists need information for their reading public
d) Government agencies are interested in the efficient allocation of resources in order
to provide a basis for national statistics.
Correct answers are …
a) a, b
b) a, b, c
c) b, c, d
d) Above all
Answer: d
Financial analysts and advisers need information for their clients or audience. For example,
stockbrokers need information to advise investors; credit agencies want information to
advise potential suppliers of goods to the company; and journalists need information for
their reading public.
Government agencies are interested in the efficient allocation of resources and therefore in
the activities of enterprises. They also require information in order to provide a basis for
national statistics.

31. Accounting information is summarized in ledger to satisfy the information needs of

different groups.

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a) True
b) False
Answer: b
Accounting information is summarized in financial statements to satisfy the information
needs of these different groups.

32. Providing financial information has no cost.

a) True
b) False
Answer: b
It is also recognized in the Conceptual Framework that providing financial information has
a cost, and that the benefits to the users should be justified.

33. Managers of a business need the most information to ……

a) make planning
b) control decisions
c) above all
d) none of the above
Answer: c
Managers of a business need the most information, to help them make planning and control
decisions.

34. A bank might demand a cash flow forecast as a pre-condition of granting an overdraft.
a) True
b) False
Answer: a
A bank might demand a cash flow forecast as a pre-condition of granting an overdraft.

35. Who is responsible for issuing IAS and IFRS?

a) ICAB
b) IASB
c) ICAEW

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d) Above all
Answer: b
The IASB is responsible for issuing International Accounting Standards and International
Financial Reporting Standards (IASs and IFRSs).

36. IASB as a member of ICAB adopts IAS and IFRS in Bangladesh.

a) True
b) False
Answer: b
The IASB is responsible for issuing International Accounting Standards and International
Financial Reporting Standards (IASs and IFRSs). ICAB as a member of IASB adopts those
standards in Bangladesh.

37. Conceptual framework identifies… users of financial statements and their.

a) objective of financial reporting
b) users of financial statements
c) specific information needs of the user of financial statements.
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
As well as identifying the objectives of financial reporting the Conceptual Framework
identifies users of financial statements and their specific information needs

38. Who are the providers of risk capital for the company?
a) Investors
b) Current shareholders
c) Potential shareholders
Correct answers are …
a) a, b
b) b, c

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c) a, c
d) Above all
Answer: d
Investors (current and potential owners) are the providers of risk capital for the company,
so they are interested in the risk to their capital presented by the investment, and the return
they will get for taking that risk.

39. Employees and their representative groups need information about the stability and
profitability of their employers.
a) True
b) False
Answer: a
Employees and their representative groups need information about the stability and
profitability of their employers.

40. Lenders are likely to be interested in an entity over a shorter period than trade creditors,
unless they are dependent upon the continuation of the entity as a major customer.
a) True
b) False
Answer: b
Trade creditors are likely to be interested in an entity over a shorter period than lenders,
unless they are dependent upon the continuation of the entity as a major customer.

41. Management are primarily responsible for ……

a) the preparation of financial statement
b) the presentation of financial statement
c) the preparation and presentation of financial statement
d) none of the above
Answer: c
Management are primarily responsible for the preparation and presentation of the financial
statements.

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42. If the reliability of the financial information becomes compromised, the users will
depend on the information.
a) True
b) False
Answer: b
If this reliability becomes compromised then users will no longer depend on the
information and the value of the profession will be damaged.

43. Which of the followings have to be maintained by the accountants to gain public
confidence?
a) Code of conduct
b) Ethical behavior
c) Both of the above
d) None of the above
Answer: c
By adhering to a code of conduct and ethical behavior, accountants can maintain public
confidence in the profession and thus maintain the value of accounting.

44. Financial statements prepared under IASs collectively comprise ……

a) A statement of financial position
b) A statement of comprehensive income including an income statement
c) A statement of changes in equity
d) A statement of flow
e) Notes to the account
f) A revised statement of financial position from an earlier period
Correct answers are …
a) a, b, c, d
b) a, b, c, d, e
c) a, b, c, d, f
d) Above all
Answer: d
Financial statements prepared under IASs collectively comprise ……

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A statement of financial position, A statement of comprehensive income including an

income statement, A statement of changes in equity, A statement of flow, Notes to the
account, A revised statement of financial position from an earlier period.

45. IAS 1 sets out …

a) The form of financial statement
b) The content of financial statement
c) Both of the above
d) None of the above
Answer: c
IAS 1 sets out the form and content of financial statement.

46. Previous Balance Sheet is now known as ……

a) Statement of financial position
b) Statement of comprehensive income
c) Profit and loss account
d) Statement of cash flow
Answer: a
A statement of financial position as at the end of the reporting period (under the previous
standards this is called a balance sheet).

47. A statement of financial position is prepared …

a) as at the end of the reporting period
b) for the reporting period
c) Both of the above
d) None of the above
Answer: a
A statement of financial position is prepared as at the end of the reporting period.

48. A statement of comprehensive income is prepared …

a) as at the end of the reporting period
b) for the reporting period
c) Both of the above

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d) None of the above

Answer: b
A statement of comprehensive income is prepared for the reporting period.

49. A statement of comprehensive income can be prepared in a single-part format.

a) True
b) False
Answer: b
A statement of comprehensive income can be prepared in a two-part format.

50. Which of the followings are prepared for the reporting period?
a) Statement of financial position
b) Statement of comprehensive income
c) Statement of changes in equity
d) Statement of cash flow
Correct answers are …
a) a, b, c
b) a, b, d
c) b, c, d
d) Above all
Answer: c
Followings are prepared for the reporting period:
Statement of comprehensive income, Statement of changes in equity, Statement of cash
flow.

51. IAS 1 makes it clear that an entity may use “balance sheet” instead of “statement of
financial position”.
a) True
b) False
Answer: a
IAS 1 makes it clear that an entity may use titles for the statements other than those used
in the Standard. Many entities will no doubt continue to use the term 'balance sheet' instead

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of 'statement of financial position', 'income statement' instead of 'statement of

comprehensive income' and 'cash flow statement' instead of 'statement of cash flows'.

52. Notes to the financial statement comprise …

a) A summary of significant accounting policies
b) Other explanatory information
e) Both of the above
f) None of the above
Answer: c
Notes comprising a summary of significant accounting policies and other explanatory
information.

53. Statement of financial position refers a list of …… as at a particular date.

a) all the assets controlled by a business
b) all the liabilities owed by a business
c) Both of the above
d) None of the above
Answer: c
Statement of financial position: A list of all the assets controlled and all the liabilities owed
by a business as at a particular date:

54. IAS 1 refers to “equity holders” or “shareholders” rather than “owners”.

a) True
b) False
Answer: b
Equity: The amount invested in a business by the owners (IAS 1 refers to 'owners' rather
than 'equity holders' or 'shareholders')

55. There are a number of factors affecting a company's financial position …

a) economic resources
b) financial structure
c) liquidity
d) adaptability

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Correct answers are …

a) a, b, c
b) a, b, d
c) b, c, d
d) Above all
Answer: d
There are a number of factors affecting a company's financial position at any one time
which include:
(a) The economic resources it controls (cash, labor, materials, machinery, skills)
(b) Its financial structure (whether it is funded by owners, lenders, suppliers, or by all
three)
(c) Its liquidity (short term availability of cash) and solvency (long-term access to funds)
(d) Its adaptability to changes in its operating environment

56. Which of the followings are under “economic resources”?

a) cash
b) labor
c) materials
d) machinery
e) skills
f) owners
g) lenders
h) suppliers
Correct answers are …
a) a, b, c, d
b) a, b, d, e
c) a, b, c, d, e
d) Above all
Answer: c
The economic resources it controls (cash, labor, materials, machinery, skills)

57. Information about the nature and amounts of an entity's economic resources and claims
can help users to assess …

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a) The entity's liquidity and solvency

b) The entity's need for the additional financing
c) How successful the entity is likely to be in obtaining that financing
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
Information about the nature and amounts of an entity's economic resources and claims can
help users to assess:
• The entity's liquidity and solvency
• The entity's need for additional financing; and
• How successful the entity is likely to be in obtaining that financing.

58. By gaining knowledge of the economic resources a business control, users will be in a
better position to predict the entity's ability to generate cash in future.
a) True
b) False
Answer: a
By gaining knowledge of the economic resources a business control, users will be in a
better position to predict the entity's ability to generate cash in future.

59. Information on financial structure helps users …

a) To predict future borrowing needs
b) To predict how future profits and cash flows will be distributed among owners and
lenders
c) To predict how successfully it will be able to raise future finance
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d

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Information on financial structure helps users …

• To predict future borrowing needs
• To predict how future profits and cash flows will be distributed among owners and
lenders
• To predict how successfully it will be able to raise future finance

60. Information on Liquidity/solvency helps users …

a) To predict future borrowing needs
b) To predict how future profits and cash flows will be distributed among owners and
lenders
c) To predict how successfully it will be able to raise future finance
d) To predict its ability to meet financial commitments as they fall due
Answer: d
Information on Liquidity/solvency helps users to predict its ability to meet financial
commitments as they fall due.

61. In Bangladesh (sole proprietor and partnership businesses), the income statement part
of the statement of comprehensive income is mostly called the statement of profit or loss
and other comprehensive income.
a) True
b) False
Answer: b
In Bangladesh (sole proprietor and partnership businesses), the income statement part of
the statement of comprehensive income is mostly called the profit and loss account.

62. The reporting period chosen will depend on the limitation for which the statement is
produced.
a) True
b) False
Answer: b
The reporting period chosen will depend on the purpose for which the statement is
produced.

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63. The income statement which forms part of the published annual financial statements of
a limited liability company will usually be for the period of a year, commencing from the
date of the present year's financial statements.
a) True
b) False
Answer: b
The income statement which forms part of the published annual financial statements of a
limited liability company will usually be for the period of a year, commencing from the
date of the previous year's financial statements.

64. Management might want to keep a closer eye on a company's profitability by making
up …… statements.
a) Quarterly
b) Monthly
c) Weekly
d) Daily
Correct answers are …
a) a, b, c
b) a, b, d
c) b, c, d
d) Above all
Answer: d
Management might want to keep a closer eye on a company's profitability by making up
quarterly, monthly, weekly or even daily statements.

65. The Conceptual Framework sets out how information about the business's financial
performance is needed by users to …
a) understand the return
b) assesses how well management has discharged its responsibilities
c) help predict the business's future return
Correct answers are …
a) a, b
b) b, c
c) a, c

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d) Above all
Answer: d
The Conceptual Framework sets out how information about the business's financial
performance is needed by users to …
• understand the return
• assesses how well management has discharged its responsibilities
• help predict the business's future return

66. The link between the statement of financial position and the statement of
comprehensive income is provided by the statement of cash flow and the statement of
changes in equity.
a) True
b) False
Answer: a
The link between the statement of financial position and the statement of comprehensive
income is provided by the statement of cash flow and the statement of changes in equity.

67. Which of the followings are summaries of accumulated data?

a) Statement of financial position
b) Income statement
c) Both of the above
d) None of the above
Answer: c
Both the statement of financial position and the income statement are summaries of
accumulated data.

68. The balance sheet and the income statement form the basis of financial statements for
most businesses.
a) True
b) False
Answer: a
The balance sheet and the income statement form the basis of financial statements for most
businesses.

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69. Financial statements are regulated by…

a) Legislation
b) The application of judgement using established accounting concepts
c) Accounting and financial reporting standards
d) Generally Accepted Accounting Practice (GAAP)
e) The need for fair presentation.
Correct answers are …
a) a, b, c, d
b) a, b, d, e
c) b, c, d, e
d) Above all
Answer: d
Financial statements are regulated by…
• Legislation (Companies Act 1994)
• The application of judgement using established accounting concepts
• Accounting and financial reporting standards
• Generally Accepted Accounting Practice (GAAP)
• The need for fair presentation.

70. Which of the following factors have shaped the development of accounting?
a) Legislation (Companies Act 1998)
b) Accounting concepts and individual judgement
c) Accounting standards
d) Commonly used accounting practice
e) True and fair view/fair presentation
Correct answers are …
a) a, b, c, d
b) a, b, d, e
c) b, c, d, e
d) Above all
Answer: d
A number of factors have shaped the development of accounting. These are …
• Legislation (Companies Act 1998)

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• Accounting concepts and individual judgement

• Accounting standards
• Commonly used accounting practice
• True and fair view/fair presentation

71. Form and content of limited liability companies are regulated by legislation but must
comply with...
a) accepted accounting standards
b) financial reporting standards
c) Both of the above
d) None of the above
Answer: c
Limited liability companies are required by the Companies Act 1994 to prepare and publish
financial statements annually. Their form and content are regulated by legislation but must
comply with accepted accounting and financial reporting standards.

72. There is no figure in financial statements which is derived from the application of
judgement in applying fundamental accounting concepts.
a) True
b) False
Answer: b
Many figures in financial statements are derived from the application of judgement in
applying fundamental accounting concepts.

73. Which of the following areas the judgement of different people may vary?
a) Valuation of buildings in times of changing property prices
b) Research and development (R&D)
c) Brands
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d

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Examples of areas where the judgement of different people may vary are as follows.
• Valuation of buildings in times of changing property prices.
• Research and development (R&D): is it right to treat this only as an expense? ln a
sense it is an investment to generate future revenue.
• Brands such as 'snickers' or' iPod'. Are they assets in the same way that a fork lift
truck is an asset.

74. The exercise of judgement in accounting matters should not always be underpinned by
ethical principles.
a) True
b) False
Answer: b
The exercise of judgement in accounting matters should always be underpinned by ethical
principles.

75. How many fundamental principles of professional ethics is described by the IFAC Code
of Ethics?
a) 3
b) 4
c) 5
d) 6
Answer: c
The IFAC Code of Ethics for Professional Accountants describes five fundamental
principles of professional ethics that accountants must adhere to.

76. Which of the following fundamental principles of professional ethics is described by

the IFAC Code of Ethics?
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Confidentiality
e) Professional behavior
Correct answers are …
a) a, b, c, d

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b) a, b, d, e
c) b, c, d, e
d) Above all
Answer: d
The IFAC Code of Ethics for Professional Accountants describes five fundamental
principles of professional ethics that accountants must adhere to. These are: Integrity,
Objectivity, Professional competence and due care, Confidentiality, Professional behavior.

77. “A professional Accountant should be straightforward and honest in all professional

and business relationships” which falls under…
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Professional behavior
Answer: a
Integrity. A professional accountant should be straightforward and honest in all
professional and business relationships.

78. “A professional accountant should not allow bias, conflict of interest or undue influence
of others to override professional & business judgement.” which falls under …
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Professional behavior
Answer: b
Objectivity. A professional accountant should not allow bias, conflict of interest or undue
influence of others to override professional or business judgements.

79. “A professional accountant has a continuing duty to maintain professional knowledge

and skill to ensure that a client or employer receives competent professional service based
on current development and practice, legislation and technique.” which falls under …
a) Integrity
b) Objectivity
c) Professional competence and due care

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d) Professional behavior
Answer: c
Professional competence and due care. A professional accountant has a continuing duty to
maintain professional knowledge and skill at the level required to ensure that a client or
employer receives competent professional service based on current developments in
practice, legislation and techniques

80. “A professional accountant should act diligently.” which falls under …

a) Integrity
b) Objectivity
c) Professional competence and due care
d) Professional behavior
Answer: c
A professional accountant should act diligently and in accordance with applicable technical
and professional standards when providing professional services which considered under
Professional competence and due care.

81. “Confidential information should not be used for the personal advantage of the
professional accountant or third parties.” which falls under …
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Confidentiality
Answer: d
Confidential information acquired as a result of professional and business relationships
should not be used for the personal advantage of the professional accountant or third
parties.

82. “A professional accountant should comply with relevant laws and regulations.” which
falls under …
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Professional behavior

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Answer: d
Professional behavior. A professional accountant should comply with relevant laws and
regulations and should avoid any action that discredits the profession.

83. “A professional accountant should avoid any action that discredits the profession.”
which falls under …
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Professional behavior
Answer: d
Professional behavior. A professional accountant should comply with relevant laws and
regulations and should avoid any action that discredits the profession.

84. Which is known as the International Ethics Standards Board for Accountants (IESBA)
code?
a) ICAB code
b) IASB code
c) ICAEW code
d) IFAC code
Answer: d
The IFAC Code which is also known as the International Ethics Standards Board for
Accountants (IESBA) Code.

85. International Ethics Standards Board for Accountants (IESBA) code is revised in …
a) 2009
b) 2010
c) 2011
d) 2012
Answer: a
The IFAC Code which is also known as the International Ethics Standards Board for
Accountants (IESBA) Code, was revised in 2009 and the new Code became effective on 1
January 2011.

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86. New International Ethics Standards Board for Accountants (IESBA) code became
effective on …
a) 1 January 2009
b) 1 July 2009
c) 1 January 2011
d) 1 July 2011
Answer: c
The IFAC Code which is also known as the International Ethics Standards Board for
Accountants (IESBA) Code, was revised in 2009 and the new Code became effective on 1
January 2011.

87. ICAB code of ethics may apply …

a) to the paid activities of the professional accountants
b) to the life of the professional accountants
c) Both of the above
d) None of the above
Answer: c
ICAB code may apply not only to the paid activities of the professional accountant but also
to the life of the professional accountant.

88. Professional accountants are required to follow …

a) the spirit
b) the letter of the guidance
c) Both of the above
d) None of the above
Answer: c
The Code also states that professional accountants are required to follow the spirit as well
as the letter of the guidance.

89. A specific matter being excluded from the guidance means that the accountant does not
have to think about it.
a) True

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b) False
Answer: b
a specific matter being excluded from the guidance does not mean that the accountant does
not have to think about it.

90. A specific matter being excluded from the guidance does means that the accountant
does not have to think about it; rather he must determine if the spirit of guidance would
also apply to that situation.
a) True
b) False
Answer: a
A specific matter being excluded from the guidance does not mean that the accountant does
not have to think about it; rather he must determine if the spirit of guidance would also
apply to that situation.

91. The principle of professional competence and due care is of particular relevance to
prepares of financial statements.
a) True
b) False
Answer: a
The principle of professional competence and due care is of particular relevance to prepares
of financial statements.

92. Accounting standards were developed in order to …

a) deal with some subjectivity
b) achieve comparability between different organizations
c) Both of the above
d) None of the above
Answer: c
ln order to deal with some of this subjectivity, and to achieve comparability between
different organizations, accounting standards were developed.

93. Accounting standards were developed at national level by …

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a) ICAB
b) IASB
c) ICAEW
d) ICMAB
Answer: a
Accounting standards were developed at international level by the IASB and at the
Bangladesh level by the Institute of Chartered Accountants of Bangladesh (ICAB).

94. Accounting standards were developed at international level by …

a) ICAB
b) IASB
c) ICAEW
d) ICMAB
Answer: b
Accounting standards were developed at international level by the IASB and at the
Bangladesh level by the Institute of Chartered Accountants of Bangladesh (ICAB).

95. The standards and interpretations that are issued by the IASB comprise …
a) IFRS
b) IAS
c) IFRIC Interpretations
d) SIC Interpretations
Correct answers are …
a) a, b, c
b) a, b, d
c) b, c, d
d) Above all
Answer: d
The standards and interpretations that are issued by the IASB comprise …
• IFRS
• IAS
• IFRIC Interpretations
• SIC Interpretations

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96. The rules of Generally Accepted Accounting Practice (GAAP) derive from …
a) The Companies Act
b) Local and international accounting and financial reporting standards
c) Statutory requirements in other countries (particularly the US)
d) Stock exchange listing requirements
e) Local custom and practices
Correct answers are …
a) a, b, c, d
b) a, b, d, e
c) b, c, d, e
d) Above all
Answer: d
GAAP rules derive from:
• The Companies Act
• Local and international accounting and financial reporting standards
• Statutory requirements in other countries (particularly the US)
• Stock exchange listing requirements
• Local custom and practices

97. Financial statements are required to …

a) give a true and fair view
b) present fairly in all material respects
c) Both of the above
d) None of the above
Answer: c
Financial statements are required to give a true and fair view or present fairly in alt material
respects the financial results of the entity.

98. The Conceptual Framework states that if financial information is to be useful …

a) it must be relevant
b) it must be faithfully represented
c) it should give true and fair value
Correct answers are …
a) a, b

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b) b, c
c) a, c
d) Above all
Answer: a
The Conceptual Framework states that if financial information is to be useful, it must be
relevant and faithfully represent what it purports to represent.

99. The Companies Acts require that the financial statements …

a) must be relevant
b) must be faithfully represented
c) should give true and fair value
d) Above all
Answer: c
The Companies Act 1994 requires that the financial statements should give a true and fair
view of the financial position of the entity at a particular point in time.

100. In terms of IAS 1, financial statements should present fairly, and

a) the financial position of the entity
b) the financial performance of the entity
c) the cash flows of the entity
d) Above all
Answer: d
ln terms of IAS 1, financial statements should present fairly the financial position and
performance, and the cash flows, of the entity. This requires faithful representation of the
effects of transactions.

101. Financial information should be …

a) Relevant
b) Faithfully represent
c) Both of the above
d) None of the above
Answer: c

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Financial information should be relevant and faithfully represent what it purports to

represent.

102. The usefulness of financial information is enhanced if …

a) Comparable
b) Verifiable
c) Timely
d) Understandable
Correct answers are …
a) a, b, c
b) a, b, d
c) b, c, d
d) Above all
Answer: d
The usefulness of financial information is enhanced if it is comparable, verifiable, timely
and understandable.

103. Conceptual Framework identifies the fundamental qualitative characteristics to be …

a) Relevance
b) Faithful representation
c) Both of the above
d) None of the above
Answer: c
The Conceptual Framework identifies the fundamental qualitative characteristics to be
relevance and faithful representation.

104. Financial information can make a difference to decisions if it has …

a) predictive value
b) confirmatory value
c) completeness
d) free from error
Correct answers are …
a) a, b

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b) a, b, d
c) b, c, d
d) Above all
Answer: a
Financial information can make a difference to decisions if it has:
Predictive value. It can be used to predict future outcomes.
Confirmatory value. It provides feedback about previous evaluations (it confirms whether
past predictions were reasonable).

105. Which of the followings can be used to predict future outcome?

a) predictive value
b) confirmatory value
c) Both of the above
d) None of the above
Answer: a
Predictive value. It can be used to predict future outcomes.

106. Which of the followings provides feedback about previous evaluation?

a) predictive value
b) confirmatory value
c) Both of the above
d) None of the above
Answer: b
Confirmatory value. lt provides feedback about previous evaluations (it confirms whether
past predictions were reasonable).

107. Which of the followings confirms whether past prediction was reasonable?
a) predictive value
b) confirmatory value
c) Both of the above
d) None of the above
Answer: b

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Confirmatory value. It provides feedback about previous evaluations (it confirms whether
past predictions were reasonable).

108. Information's relevance is affected by …

a) its nature
b) its materiality
c) Both of the above
d) None of the above
Answer: c
Information's relevance is affected by its nature and materiality.

109. If there is undue delay in the reporting of information, it may become …

a) more relevant
b) less relevant
c) irrelevant
d) above all
Answer: b
Information may become less relevant if there is undue delay in its reporting.

110. A faithful representation will be …

a) Complete
b) Neutral
c) Unbiased
d) Free from error
Correct answers are …
a) a, b
b) a, b, d
c) b, c, d
d) Above all
Answer: d
Faithful representation. If information is to be useful, it must represent faithfully the
transactions and other events it purports to represent. A faithful representation will be:

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 38

• Complete. All information necessary for a user to understand the transactions or

events being depicted is included.
• Neutral (unbiased)
• Free from error. Free from error in the context of faithful representation does not
mean the information is perfectly accurate in all respects. Instead, it means there are
no errors or omissions in the description of it and the process used to produce the
reported information has been selected and applied with no errors in the process.

111. Free from error in the context of faithful representation does not mean the information
is perfectly accurate in all respect.
a) True
b) False
Answer: a
Free from error in the context of faithful representation does not mean the information is
perfectly accurate in all respects.

112. Faithful representation means …

a) There is no errors or omissions in the description of it.
b) The process used has been selected and applied with no error
c) Both of the above
d) None of the above
Answer: c
Free from error. Free from error in the context of faithful representation does not mean the
information is perfectly accurate in all respects. Instead, it means there are no errors or
omissions in the description of it and the process used to produce the reported information
has been selected and applied with no errors in the process.

113. Which of the followings are enhancing qualitative characteristics?

a) Comparability
b) Verifiability
c) Timeliness
d) Understandability
Correct answers are …
a) a, b

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b) a, b, d
c) b, c, d
d) Above all
Answer: d
According to the Conceptual Framework information that is relevant and faithfully
represented can be enhanced by the following 'enhancing' qualitative characteristics:
• Comparability
• Verifiability
• Timeliness
• Understandability

114. Applying consistency is a means of achieving comparability.

a) True
b) False
Answer: a
Applying consistency (using the same methods for the same items) is a means of achieving
comparability (comparability is the goal).

115. Verifiability means that different knowledgeable and independent observers could
consensus.
a) True
b) False
Answer: a
The Conceptual Framework states that 'verifiability means that different knowledgeable
and independent observers could reach consensus, although not necessarily complete
agreement, that a particular depiction is a faithful representation'.

116. Information is understandable if it is …

a) Classified
b) Characterized
c) Presented clearly
d) Presented concisely
Correct answers are …

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a) a, b
b) a, b, d
c) b, c, d
d) Above all
Answer: d
Information is understandable if it is classified, characterized and presented clearly and
concisely.

117. IAS 1 and the Conceptual Framework contains …

a) fundamental assumptions behind ledger accounting
b) preparation of the financial statement
c) Both of the above
d) None of the above
Answer: c
The fundamental assumptions behind ledger accounting and the preparation of financial
statements are contained in IAS 1 and the Conceptual Framework.

118. The main objectives of IAS 1 is to …

a) prescribe the basis for presentation
b) ensure comparability with the entity's financial statements of previous periods
c) ensure comparability with the financial statements of other entities
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
The main objective of IAS 1 is to prescribe the basis for presentation of general-purpose
financial statements, to ensure comparability both with the entity's financial statements of
previous periods and with the financial statements of other entities.

119. The objectives of financial statements are …

a) to provide information in making economic decisions

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 41

b) to show the result of management's stewardship

c) to assist users in predicting the entity's future cash flows, their timing and certainty.
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
The objectives of financial statements are:
To provide information about the financial position, performance and cash flows of an
entity that is useful to a wide range of users in making economic decisions
To show the result of management's stewardship of the resources entrusted to it
To assist users in predicting the entity's future cash flows and, in particular, their timing
and certainty.

120. Preparation of the financial statements is the responsibility of the …

a) lender
b) board of directors
c) owners of the company
d) shareholder
Answer: b
Preparation of the financial statements is the responsibility of the board of directors.

121. Financial statements should present fairly …

a) the financial position
b) financial performance
c) cash flows of the entity
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d

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Most importantly, financial statements should present fairly the financial position, financial
performance and cash flows of an entity.

122. Applying IASs is presumed to result in fair presentation.

a) True
b) False
Answer: a
Applying IASs is presumed to result in fair presentation.

123. Compliance with IASs should be implicitly stated in a note to the financial statements.
a) True
b) False
Answer: b
Compliance with IASs should be explicitly stated in a note to the financial statements.

124. According to IAS 1, what is required for a fair presentation?

a) Selection and application of accounting policies
b) Presentation of information
c) Additional disclosures
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
IAS 1 states what is required for a fair presentation.
• Selection and application of accounting policies
• Presentation of information in a manner which provides relevant, reliable,
comparable and understandable information.
• Additional disclosures where required to enable users to understand the impact of
particular transactions, events and conditions on the entity's financial position and
performance.

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125. Which types of information “Presentation of information” provides?

a) Relevant
b) Reliable
c) Comparable
d) Understandable
Correct answers are …
a) a, b, c
b) a, b, d
c) b, c, d
d) Above all
Answer: d
Presentation of information in a manner which provides relevant, reliable, comparable and
understandable information.

126. Which of the followings is required to enable users to understand the impact of
particular transactions, events, and conditions on the entity's financial and performance?
a) Accounting policies
b) Presentation of information
c) Additional disclosures
d) Above all
Answer: c
Additional disclosures where required to enable users to understand the impact of particular
transactions, events and conditions on the entity's financial position and performance.

127. When management decides that compliance with a requirement of an IAS would be
so misleading to meet their objectives, there is no way of departure from the IAS to achieve
a fair presentation.
a) True
b) False
Answer: b
When management decides that compliance with a requirement of an IAS would be so
misleading to meet their objectives, departure from the IAS may be required to achieve a
fair presentation.

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128. According to “Going Concern” the entity is viewed as continuing in operation for the
far-off future.
a) True
b) False
Answer: b
The entity is viewed as continuing in operation for the foreseeable future.

129. When preparing a normal set of financial statements, the business will continue to
operate in approximately the same manner for the foreseeable future at least the next 6
month.
a) True
b) False
Answer: b
Going concern concept assumes that, when preparing a normal set of financial statements,
the business will continue to operate in approximately tire same manner for the foreseeable
future (at least, but not limited to, the next 12 months).

130. When an entity is not going concern its assets are valued at their break-up value.
a) True
b) False
Answer: a
When an entity is not a going concern its assets are valued at their 'break up' value: the
amount they would sell for (their net realizable value) if they were sold off individually in
a forced sale and the business were broken up.

131. Financial statements prepared on a break-up basis will contain either non-current
assets or non-current liabilities.
a) True
b) False
Answer: b
Financial statements prepared on a break-up basis will contain neither non-current assets
nor non-current liabilities.

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132. If the going concern assumption is not followed that fact must be disclosed …
a) The basis on which the financial statements have been prepared.
b) The reasons why the entity is not considered to be a going concern.
c) Both of the above
d) None of the above
Answer: c
If the going concern assumption is not followed, that fact must be disclosed, together with:
o the basis on which the financial statements have been prepared.
o the reasons why the entity is not considered to be a going concern.

133. As per accrual basis of accounting, transactions are recorded in the financial
statements as the cash is paid or received.
a) True
b) False
Answer: b
As per accrual basis of accounting, Entities should prepare their financial statements on the
basis that transactions are recorded in them, not as the cash is paid or received (cash
accounting), but as the income or expenses are earned or incurred in the reporting period
to which they relate.

134. Transactions are recorded in the financial statements as the income or expenses are
earned or incurred in the reporting period.
a) True
b) False
Answer: a
As per accrual basis of accounting, Entities should prepare their financial statements on the
basis that transactions are recorded in them, not as the cash is paid or received (cash
accounting), but as the income or expenses are earned or incurred in the reporting period
to which they relate.

135. According to accrual basis at the time of computing profit income earned must be
matched against the expenses incurred in earning it.
a) True

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b) False
Answer: a
According to the accrual basis, when computing profit income earned must be matched
against the expenses incurred in earning it.

136. To maintain consistency, the presentation and classification of items in the financial
statements should stay the same from one period to the next, if …
a) There is a significant change in the nature of the operations
b) A review of the financial statements indicates a more appropriate presentation
c) A change in presentation is required by an IAS
d) None of the above
Answer: d
To maintain consistency, the presentation and classification of items in the financial
statements should stay the same from one period to the next, unless:
o There is a significant change in the nature of the operations, or a review of the financial
statements indicates a more appropriate presentation.
o A change in presentation is required by an IAS.

137. By having consistent presentation the comparability of financial statements in

enhanced …
a) over a period of time
b) between different companies
c) Both of the above
d) None of the above
Answer: c
By having consistent presentation, the comparability of financial statements is enhanced,
both over a period of time, and also between different companies.

138. Omissions or misstatements of items are material if they could …… influence the
economic decisions of users taken on the basis of financial statements.
a) individually
b) collectively
c) Both of the above

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 47

d) None of the above

Answer: c
Omissions or misstatements of items are material if they could, individually or collectively,
influence the economic decisions of users taken on the basis of the financial statements.

139. Materiality depends on the …… of the omission or misstatement.

a) size
b) nature
c) Both of the above
d) None of the above
Answer: c
Materiality depends on the size and nature of the omission or misstatement judged in the
surrounding circumstances.

140. Which of the followings could be the determining factor of materiality?

a) The size of an item
b) The nature of an item
c) A combination of both
d) Above all
Answer: d
Materiality depends on the size and nature of the omission or misstatement judged in the
surrounding circumstances. The size or the nature of an item, or a combination of both,
could be the determining factor.

141. Each material class of similar items shall be presented jointly in the financial
statements.
a) True
b) False
Answer: b
Each material class of similar items shall be presented separately in the financial
statements.

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142. Items of a dissimilar nature or function shall be presented separately if they are
immaterial.
a) True
b) False
Answer: b
Items of a dissimilar nature or function shall be presented separately unless they are
immaterial.

143. A specific disclosure requirement in an IAS need not be satisfied if the information is
immaterial.
a) True
b) False
Answer: a
A specific disclosure requirement in an IAS need not be satisfied if the information is
immaterial.

144. The Conceptual Framework links materiality particularly to the quantitative

characteristics of relevance.
a) True
b) False
Answer: b
The Conceptual Framework Iinks materiality particularly to the qualitative characteristic
of relevance.

145. There are 6 measurement system of materiality.

a) True
b) False
Answer: b
There is no absolute measure of materiality.

146. Some items are regarded as particularly sensitive as being material by size.
a) True

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 49

b) False
Answer: b
Some items are regarded as particularly sensitive as being material by nature.

147. An amount of 5000 taka as remuneration paid to director the director of the company
is material figure.
a) True
b) False
Answer: a
Transaction with related party is considered material by nature.

148. Assets, liabilities, income and expenditure must be presented jointly in the financial
statements.
a) True
b) False
Answer: b
Assets and liabilities, and income and expenditure must be presented separatety in the
financial statements.

149. IAS 1 allows assets, liabilities, income and expenditure to be offset against each other
if such a treatment is required or permitted by another IFRS.
a) True
b) False
Answer: a
IAS 1 does not allow these items to be offset against each other unless such a treatment is
required or permitted by another IFRS.

150. Income or expenses can be offset only when …

a) An IFRS requires or permits it.
b) Gain, losses and related expenses arising from the same / similar transactions are
not material in aggregate.
c) Both of the above

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d) None of the above

Answer: c
Income and expenses can be offset only when:
• A IFRS requires or permits it, or
• Gains, losses and related expenses arising from the same/similar transactions are not
material (in aggregate)

151. The business entity concept comprise that accountant’s regard a business as a separate
entity, distinct from it’s …
a) Owners
b) Managers
c) Both of the above
d) None of the above
Answer: c
The business entity concept has already been discussed in the context of the separate entity
principle: that accountants regard a business as a separate entity, distinct from its owners
or managers.

152. Items are normally measured in financial statements is at historical cost.

a) True
b) False
Answer: a
A basic principle of accounting is that the monetary amount at which items are normatly
measured in financial statements is at historical cost,

153. An important advantage of historical concept is that …

a) The objectivity of financial statements is minimized.
b) The objectivity of financial statements is maximized.
c) The subjectivity of financial statements is minimized.
d) The subjectivity of financial statements is maximized.
Answer: b
An important advantage of historical concept is that the objectivity of financial statements
is maximized.

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154. In historical concept, there is usually a source document to prove the amount paid …
a) to purchase an asset
b) to pay an expense
c) Both of the above
d) None of the above
Answer: c
In historical concept, there is usually a source document to prove the amount paid to
purchase an asset or pay an expense.

155. At historical cost concept, transaction are recorded at their cost when they occurred.
a) True
b) False
Answer: a
Historical cost: Transactions are recorded at their cost when they occurred.

156. Capital expenditure are those expenditure which results …

a) in the acquisition of long-term assets
b) an improvement of earning capacity
c) an enhancement of earning capacity
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
Capital expenditure: Expenditure which results in the acquisition of long-term assets, or an
improvement or enhancement of their earning capacity.

157. Long-term assets are those which will be kept in the entity for …
a) more than six months
b) less than six months
c) more than one year

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d) less than one year

Answer: c
Long-term assets are those which will be kept in the entity for more than one year.

158. Revenue expenditure are those expenditure which is incurred either …

a) For trade purposes
b) To maintain the existing earning capacity of long-term assets
c) Both of the above
d) None of the above
Answer: c
Revenue expenditure: Expenditure which is incurred either
For trade purposes. This includes purchases of raw materials or items for resale,
expenditure on wages and salaries, selling and distribution expenses, administrative
expenses and finance costs, or
To maintain the existing earning capacity of long-term assets

159. Which of the followings are capital expenditure?

a) Costs incurred in bringing a long-term asset to its final condition
b) Costs incurred in bringing a long-term asset to its final location
c) Legal fees
d) Duties
e) Carriage costs borne by the asset's purchaser
f) Installation costs
Correct answers are …
a) a, b, c, e, f
b) a, b, c, d, f
c) b, c, d, e, f
d) Above all
Answer: d
Long-term assets are those which will be kept in the entity for more than one year.
Capital expenditure is not charged as an expense in the income statement (although a
'depreciation' charge will usually be made to write off the capital expenditure gradually
over time; depreciation expense is shown in the income statement).

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Capital expenditure on long term assets appears in the statement of financial position.

160. Which of the followings are revenue expenditure?

a) Repair costs in relation to long-term assets
b) Maintenance costs in relation to long-term assets
c) Staff costs in relation to long-term assets
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
Revenue expenditure: Expenditure which is incurred either
For trade purposes. This includes purchases of raw materials or items for resale,
expenditure on wages and salaries, selling and distribution expenses, administrative
expenses and finance costs, or
To maintain the existing earning capacity of long-term assets

161. What proceeds from the sale of non-current assets?

a) Capital income
b) Revenue income
c) Capital expense
d) Revenue expense
Answer: a
Capital income: Proceeds from the sale of non-current assets.

162. The profits or losses from the sale of long-term assets are included in the statement of
financial position for the accounting period in which the sale takes place.
a) True
b) False
Answer: b
The profits (or losses) from the sale of long-term assets are included in the income
statement for the reporting period in which the sale takes place.

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163. Revenue income derives from …

a) the sale of trading assets
b) the provision of services
c) interest and dividends received from business investments
Correct answers are …
a) a, b
b) b, c
c) a, c
d) Above all
Answer: d
Revenue income: Income derived from
• The sale of trading assets, such as goods held in inventory
• The provision of services
• Interest and dividends received from business investment

164. When a loan is repaid, it …

a) reduces the liabilities and increases the assets
b) increases the liabilities and reduces the assets
c) increases the liabilities and the assets
d) reduces the liabilities and the assets
Answer: d
When a loan is repaid, it reduces the liabilities (loan) and the assets (cash).

165. Calculating profit for any accounting period depends on the correct and consistent
classification of revenue or capital items.
a) True
b) False
Answer: a
Calculating profit for any reporting period depends on the correct and consistent
classification of revenue or capital items.

166. The ISSB was formed in 2021 with responsibility for developing …

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a) financial disclosure standards

b) fraudulent disclosure standards
c) historical disclosure standards
d) sustainability disclosure standards
Answer: d
The ISSB was formed in 2021 with responsibility for developing sustainability disclosure
standards.

167. The aim of sustainability standards is to provide the users with the information they
require to understand …
a) entity’s environmental risks
b) entity’s social risks
c) entity’s governance risks
d) responses to the risks
Correct answers are …
a) a, b, c
b) b, c, d
c) a, c, d
d) Above all
Answer: d
The aim of sustainability standards is to provide the users with the information they require
to understand the entity’s environmental, social and governance (ESG) risks and its
responses to them.

168. IFRS Sustainability Disclosure Standards were issued in June 2024.

a) True
b) False
Answer: b
No IFRS Sustainability Disclosure Standards have been issued yet.

169. The ISSB was formed by …

a) ICAB
b) IFAC Foundation

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c) IFRS Foundation
d) IAS Foundation
Answer: c
The ISSB was formed by IFRS Foundation in 2021 with the responsibility for developing
a set of sustainability disclosure standards which will complement the existing IFRS
standards.

170. The aim of the IFRS Sustainability Disclosure Standards is to provide high-quality,
transparent and comparable information relating to …
a) sustainability in financial statements
b) sustainability disclosures
c) above all
d) none of the above
Answer: c
The aim of the IFRS Sustainability Disclosure Standards is to provide high-quality,
transparent and comparable information relating to sustainability in financial statements
and sustainability disclosures which are focused on the needs of investors and the financial
markets.

171. The aim of the IFRS Sustainability Disclosure Standards is to provide high-quality,
transparent and comparable information relating to sustainability in financial statements
and sustainability disclosures which are focused on …
a) the needs of investors
b) the financial markets
c) above all
d) none of the above
Answer: c
The aim of the IFRS Sustainability Disclosure Standards is to provide high-quality,
transparent and comparable information relating to sustainability in financial statements
and sustainability disclosures which are focused on the needs of investors and the financial
markets.

172. The intention is for the ISSB to cover a range of ESG sustainability topics on which
investors want information. It has begun with the fraud-related disclosures due to the
urgency regarding climate related matters.

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a) True
b) False
Answer: b
The intention is for the ISSB to cover a range of ESG sustainability topics on which
investors want information. It has begun with the climate-related disclosures due to the
urgency regarding climate related matters.

173. The ISSB initially built on the work of future organizations which have issued
guidance on voluntary disclosures relating to sustainability and value creation.
a) True
b) False
Answer: b
The ISSB initially built on the work of existing organizations which have issued guidance
on voluntary disclosures relating to sustainability and value creation.

174. There is no requirement regarding application of judgement in applying fundamental

accounting concepts.
a) True
b) False
Answer: b
Application of judgement is required in applying fundamental accounting concepts.

175. How many fundamental principles of professional ethics are described by the IESBA
Code of Ethics?
a) 3
b) 4
c) 5
d) 6
Answer: c
The IESBA Code of Ethics describes five fundamental principles of professional ethics
that accountants must adhere to: integrity, objectivity, professional competence and due
care, confidentiality, and professional behavior.

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176. Which of the followings are considered under fundamental principles of professional
ethics that accountants must adhere to?
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Confidentiality
e) Professional behavior
Correct answers are …
a) a, b, c, d
b) b, c, d, e
c) a, c, d, e
d) Above all
Answer: d
The IESBA Code of Ethics describes five fundamental principles of professional ethics
that accountants must adhere to: integrity, objectivity, professional competence and due
care, confidentiality, and professional behavior.

177. ICAB Code of Ethics is a …

a) principles-based system
b) rules-based system
c) above all
d) none of the above
Answer: a
ICAB Code of Ethics is a principles-based system.

178. A professional accountant should be straightforward and honest in all professional

and business relationships which is considered under …
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Professional behavior
Answer: a
Integrity. A professional accountant should be straightforward and honest in all
professional and business relationships.

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179. A professional accountant should not allow ...

a) bias
b) conflict of interest
c) undue influence of others
d) above all
Answer: d
Objectivity. A professional accountant should not allow bias, conflict of interest or undue
influence of others to override professional or business judgements

180. A professional accountant should not allow bias, conflict of interest or undue influence
of others to override professional or business judgements which is considered under …
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Professional behavior
Answer: b
Objectivity. A professional accountant should not allow bias, conflict of interest or undue
influence of others to override professional or business judgements

181. A professional accountant has a continuing duty to maintain professional knowledge

and skill at the level required to ensure that a client or employer receives competent
professional service based on current developments in …
a) practice
b) legislation
c) techniques
d) above all
Answer: d
Professional competence and due care. A professional accountant has a continuing duty to
maintain professional knowledge and skill at the level required to ensure that a client or
employer receives competent professional service based on current developments in
practice, legislation and techniques.

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182. A professional accountant has a continuing duty to maintain professional knowledge

and skill at the level required to ensure that a client or employer receives competent
professional service based on current developments in practice, legislation and techniques
which is considered under …
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Professional behavior
Answer: c
Professional competence and due care. A professional accountant has a continuing duty to
maintain professional knowledge and skill at the level required to ensure that a client or
employer receives competent professional service based on current developments in
practice, legislation and techniques.

183. When providing professional services, a professional accountant should act …

a) diligently
b) in accordance with applicable technical standards
c) in accordance with applicable professional standards
d) above all
Answer: d
A professional accountant should act diligently and in accordance with applicable technical
and professional standards when providing professional services.

184. A professional accountant should respect the confidentiality of information acquired

as a result of professional and business relationships and should not disclose any such
information to third parties without proper and specific authority if there is a legal or
professional right or duty to disclose.
a) True
b) False
Answer: b
Confidentiality. A professional accountant should respect the confidentiality of
information acquired as a result of professional and business relationships and should not
disclose any such information to third parties without proper and specific authority unless
there is a legal or professional right or duty to disclose.

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185. A professional accountant should comply with relevant laws and regulations and
should avoid any action that discredits the profession which is considered under …
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Professional behavior
Answer: d
Professional behavior. A professional accountant should comply with relevant laws and
regulations and should avoid any action that discredits the profession.

186. To maintain professional behavior a professional accountant should …

a) comply with relevant laws
b) comply with relevant regulations
c) avoid any action that discredits the profession
d) above all
Answer: d
Professional behavior. A professional accountant should comply with relevant laws and
regulations and should avoid any action that discredits the profession.

187. The structures and processes that support the operations of the IFAC are facilitated by
the IESBA.
a) True
b) False
Answer: b
The structures and processes that support the operations of the IESBA are facilitated by the
International Federation of Accountants (IFAC). IFAC is the global organization for the
accounting profession.

188. The ICAB Code of Ethics states that ‘Chartered Accountants are expected …
a) to demonstrate the highest standards of professional conduct
b) to take into consideration the public interest
c) to maintain the reputation of the accounting profession
d) above all

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Answer: d
The ICAB Code of Ethics states that ‘Chartered Accountants are expected to demonstrate
the highest standards of professional conduct and to take into consideration the public
interest and to maintain the reputation of the accounting profession’.

189. ICAB Code of Ethics may apply ...

a) either to the paid activities of the professional accountant or to the life of the
professional accountant
b) neither to the paid activities of the professional accountant nor to the life of the
professional accountant
c) not only to the paid activities of the professional accountant but also to the life of
the professional accountant
d) above all
Answer: c
ICAB Code of Ethics may apply not only to the paid activities of the professional
accountant but also to the life of the professional accountant.

190. A rules-based system places the onus on the individual to actively consider
independence for every given situation, rather than just agreeing a checklist of forbidden
items.
a) True
b) False
Answer: b
A principles-based system places the onus on the individual to actively consider
independence for every given situation, rather than just agreeing a checklist of forbidden
items.

191. A rules-based system prevents individuals interpreting legalistic requirements

narrowly to get around the ethical requirements.
a) True
b) False
Answer: b
A principles-based system prevents individuals interpreting legalistic requirements
narrowly to get around the ethical requirements.

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192. A rules-based system allows for the variations that are found in every individual
situation. Each situation is likely to be different.
a) True
b) False
Answer: b
A principles-based system allows for the variations that are found in every individual
situation. Each situation is likely to be different.

193. A principles-based system can accommodate a rapidly changing environment, such

as the one that professional accountants regularly face.
a) True
b) False
Answer: a
A principles-based system can accommodate a rapidly changing environment, such as the
one that professional accountants regularly face.

194. Which of the following system can contain prohibitions where these are necessary as
safeguards are not feasible?
a) Rules-based system
b) Principles-based system
c) Above all
d) None of the above
Answer: b
A principles-based system can contain prohibitions where these are necessary as safeguards
are not feasible.

195. Nobel Saha commences business on 1 January 2021 and buys 20 washing machines,
each costing CU100 which have useful life of 5 years & economic life of 10 years. During
the year he sells 17 machines at CU150 each. He is forced to close down his business at
the end of the year and the remaining machines will be expected to collect only CU60 each
in a forced sale and there need to pay sales commission amounting CU10 for each. How
should the remaining machines be valued at 31 December?

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a) 180
b) 150
c) 270
d) 240
Answer: b
(60-10)*3=150

196. Nobel Saha commences business on 1 January 2021 and buys 20 washing machines,
each costing CU100 which have useful life of 5 years & economic life of 10 years. During
the year he sells 17 machines at CU150 each. He intends to continue his business into the
next year. How should the remaining machines be valued at 31 December?
a) 180
b) 150
c) 270
d) 240
Answer: d
{100-(100/5)}*3=240

197. Nobel Saha bought 5 pens amounting CU 25 in total. He sold 3 pens amounting 30
total. What is the profit amount from the sale?
a) 30
b) 15
c) 5
d) 10
Answer: b
Matching concept.

198. Nobel Saha Maintains 3 bank account at AB bank, BC bank & AC bank to conduct
the coaching named Nobel Professional Academy. Nobel Saha has CU10000 at AB bank
and CU20000 at BC bank. He has an overdraft of CU10000 at AC bank. What is the cash
at bank balance of Nobel Saha?
a) 40000
b) 30000
c) 20000

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d) None of the above

Answer: b
No offsetting principle.

199. Nobel Saha Maintains 3 bank account at AB bank, BC bank & AC bank to conduct
the coaching named Nobel Professional Academy. Nobel Saha has CU10000 at AB bank
and CU20000 at BC bank. He has an overdraft of CU10000 at AC bank. If he shows cash
at bank amounting CU20000, it will not be fair presentation under no offsetting principle.
a) True
b) False
Answer: a
No offsetting principle.

200. Nobel Saha has a Smartphone named Huawei Mate XT Ultimate amounting
CU500000 which was bought in 1st January 2024 has useful life of 5 years and economic
life of 10 years and is used to conduct the class of Nobel Professional Academy. During
2025 the smartphone was sold at CU550000. What will be the capital income from this
sale?
a) 550000
b) 500000
c) 150000
d) 100000
Answer: a
Proceed from sale of non-current asset is considered as capital income.

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Alert! Alert! Alert!

Only the first chapter's

answers are included
in the book.

📖 To know the solutions

of the entire question bank,
all are requested to join
Nobel Professional
Academy. 👨‍🎓
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Chapter 6
Control accounts, errors and omissions
***[Note: All of you who want to pass the Accounting at first attempt must read manual
of ICAB before practicing the MCQ and are requested to practice the MCQ attentively as
these MCQ can be presented in the exam in many ways. Every true/false given in this book
may be given in the exam containing 4 options.]***

1. Control accounts in the nominal ledger for receivables and payables record total amounts
in respect of all …
a) customers
b) suppliers
c) above all
d) none of the above

2. The receivables and payables ledgers record each transaction for.

a) individual customers
b) individual suppliers
c) all customers
d) all suppliers
Correct answers are …
a) a, b
b) a, c
c) b, c
d) above all

3. Control accounts are used chiefly for …

a) trade receivables
b) trade payables
c) above all
d) none of the above

4. The balance on the receivables control account at any time will be the total amount due
to the business from all its …
a) customers

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b) credit customers
c) suppliers
d) a & b

5. The balance on the payables control account at any time will be the total amount owed
by the business to all its …
a) suppliers
b) credit suppliers
c) customers
d) a&b

6. For which control account can be kept?

a) wages and salaries
b) cash
c) VAT
d) non-current assets
Correct answers are …
a) a, b, d
b) a, c, d
c) b, c, d
d) above all

7. Control Accounts are considered as …

a) nominal ledger
b) memorandum ledger
c) individual ledger
d) above all

8. Personal Accounts are considered as …

a) nominal ledger
b) memorandum ledger
c) group ledger
d) above all

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9. When the balance on the receivables control account should be equal to the sum of the
individual balances on the receivables ledger?
a) at the end of the month
b) at the end of the year
c) at any time
d) none of the above

10. When a customer has overpaid the business, or paid for goods and then returned some,
it shows …
a) debit balance
b) credit balance
c) above all
d) none of the above

11. The balance on the receivables control account in the nominal ledger is an aggregate
balance and will ...
a) always be a credit balance
b) always be a debit balance
c) never be a debit balance
d) none of the above

12. A business has three trade receivables: A owes CU80, B owes CU310 and C owes
CU200. The journal for posting from the sales day book to the nominal ledger will be…
a) A dr 80, B dr 310, C dr 200; Sales cr 590
b) Receivables control account 590; Sales cr 590
c) above all
d) none of the above

13. Where individual entries in receivables and payables ledgers are summarised and
posted?
a) to relevant memorandum accounts
b) to relevant individual accounts
c) to relevant control accounts
d) above all

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14. Sales CU 5000 (excluding VAT) on credit where VAT is 15%. Journal will be …
a) Payable dr 5750; Sales cr 5000, VAT cr 750
b) Receivable dr 5000; Sales cr 4348, VAT cr 652
c) Receivable dr 5750; Sales cr 5000, VAT cr 750
d) None of the above

15. CU 4000 received as full settlement of a receivable of CU 5000. Journal will be…
a) Cash dr 4000; Receivable cr 4000
b) Cash dr 4000, Discount received dr 1000; Receivable cr 5000
c) Cash dr 4000, Discount allowed dr 1000; Receivable cr 5000
d) Cash dr 5000; Discount allowed cr 1000, Receivable cr 4000

16. Purchase CU 5000 (excluding VAT) on credit where VAT is 15%. Journal will be …
a) Purchase dr 4348, VAT dr 652; Payable cr 5000.
b) Purchase dr 5000, VAT dr 750; Receivable cr 5750.
c) Purchase dr 5750; VAT cr 750, Payable cr 5000.
d) Purchase dr 5000, VAT dr 750; Payable cr 5750.

17. CU 4000 paid as full settlement of a payable of CU 5000. Journal will be…
a) Payable dr 4000; Cash cr 4000
b) Cash dr 4000, Discount received dr 1000; Payable cr 5000
c) Payable dr 5000; Cash cr 4000, Discount received cr 1000
d) Cash dr 5000; Receivable cr 4000, Discount allowed cr 1000

18. Tanvir Rahman got service from Nobel Professional Academy for 5 subjects of
Certificate Level of CU 20,000 by attending Batch number 1 and 2. He provided CU 8000
for 2 subjects. Now he is refusing to pay CU 4000 saying that it was provided earlier. And
want to pay CU 8,000. But there is no evidence of the payment of CU 4000. For the
nonpayment, the journal will be…
a) Irrecoverable Debts dr 12000, Tanvir Rahman cr 12000
b) Irrecoverable Debts dr 8000, Tanvir Rahman cr 8000
c) Irrecoverable Debts dr 4000, Tanvir Rahman cr 4000
d) None of the above

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19. Nobel Professional Academy received a cheque of CU 8000 from Tanvir Rahman and
present it to bank for collection. But the cheque id refused. The journal will be.
a) Irrecoverable Debts dr 8000, Tanvir Rahman cr 8000
b) Tanvir Rahman dr 8000, Irrecoverable Debts cr 8000
c) Tanvir Rahman dr 8000, Cash/Bank cr 8000
d) Cash/Bank dr 8000, Tanvir Rahman 8000

20. Nobel Professional Academy get CU 10000 refund from supplier. The journal will be
….
a) Cash/ Bank dr 1000, Payable cr 1000
b) Cash/ Bank dr 1000, Receivable cr 1000
c) Receivable cr 10000, Cash/ Bank dr 10000
d) Cash/ Bank dr 10000, Payable cr 10000

21. The salary expense of Nobel Professional Academy for 2025 is CU 6000000. From this
CU 5000000 is paid during the year. At the beginning of 2026 the salary expense of Nobel
Professional Academy will be…
a) 1000000
b) 5000000
c) 6000000
d) 0

22. Memorandum ledger will be part of double entry system where Nominal ledger is
maintained for related account. The statement is …
a) True
b) False

23. Which of the following are not included in the cross-cast total column of cash book?
a) discounts allowed
b) discounts received
c) above all
d) none of the above

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24. In the nominal ledger, the total accounting entries are made …… at the end of the
month.
a) from the voucher to the ledger accounts
b) from the invoice to the ledger accounts
c) from the books of original entry to the ledger accounts
d) above all

25. Which of the following is not posted to the cash at bank account?
a) Cash purchase
b) Cash sales
c) Cash discount allowed
d) None of the above

26. A trial balance …… in the receivables ledger.

a) includes the balance on the personal accounts, but excludes the balance on the
control account
b) includes the balance on the control account, but excludes the balance on the personal
accounts
c) includes both the balance on the control account and the balance on the personal
accounts
d) excludes both the balance on the control account and the balance on the personal
accounts

27. There will be no irrecoverable debt entries in the receivables accounts.

a) True
b) False

28. Nobel Professional Academy is a customer as well as a supplier of Nobel Professional

Publication. To net off the amount of Nobel Professional Academy, Nobel Professional
Publication will make which of the following journal?
a) Nobel Professional Academy dr, Nobel Professional Publication cr
b) Nobel Professional Publication dr, Nobel Professional Academy cr
c) Nobel Professional Academy dr, Nobel Professional Academy cr
d) Nobel Professional Publication dr, Nobel Professional Publication cr

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29. Sometimes customers overpay, they are left with …… on their personal accounts.
a) a debit balance
b) a credit balance
c) nil balance
d) none of the above

30. Wages control account is considered as clearing account.

a) True
b) False

31. Which of the followings are the benefit of maintaining control account?
a) provide a check on the accuracy of postings
b) help to locate errors
c) provide an internal check
d) allow a total balance to be extracted quickly and easily
e) keep the number of nominal ledger accounts to a minimum
Correct answers are …
a) a, b, d, e
b) a, c, d, e
c) b, c, d, e
d) above all

32. The balance on the control account may not agree with the sum of balances extracted.
Because, sometimes the total column in the book of original entry may be miscast so an
incorrect amount is posted to the control account (i.e. adding up incorrectly the total value
of invoices or payments). Which of the following can be the effect of the mentioned reason?
a) The nominal ledger debit and credit postings will balance, as both nominal ledger
accounts will be incorrect
b) The nominal ledger debit and credit postings will balance, as both nominal ledger
accounts will be correct.
c) The control account balance will not agree with the (correct) sum of individual
balances extracted from the receivables ledger or payables ledger.
d) The control account balance will agree with the (correct) sum of individual balances
extracted from the receivables ledger or payables ledger.
Correct answers are …

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 74

a) a, b
b) a, c
c) b, c
d) above all

32. The balance on the control account may not agree with the sum of balances extracted.
Because, sometimes the total column in the book of original entry may be miscast so an
incorrect amount is posted to the control account (i.e. adding up incorrectly the total value
of invoices or payments). Which of the following can be the correction of the mentioned
reason?
a) A journal entry must be made in the nominal ledger to correct the control account
and the corresponding sales/VAT or expense/VAT accounts
b) A journal entry must be made in the memorandum ledger to correct the control
account and the corresponding sales/VAT or expense/VAT accounts
c) A journal entry must be made in the nominal ledger to correct the individual account
and the corresponding sales/VAT or expense/VAT accounts
d) A journal entry must be made in the memorandum ledger to correct the individual
account and the corresponding sales/VAT or expense/VAT accounts

33. The balance on the control account may not agree with the sum of balances extracted.
Because, sometimes an incorrect amount may be posted to an individual's transaction from
the book of original entry to the memorandum ledger, e.g. a sale to C Cloning of CU250
might be posted to his account as CU520. Which of the following can be the effect of the
mentioned reason?
a) The nominal ledger would not be affected, as CU250 would be correctly included
in the total of the sales day book and posted.
b) The nominal ledger would be affected, as CU250 would be correctly included in the
total of the sales day book and posted.
c) The receivables ledger would be incorrect, since it contains a transposition error in
recording CU250 as CU520. It is too high.
d) The receivables ledger would be correct, since it contains a transposition error in
recording CU250 as CU520. It is too high.
Correct answers are …
a) a, b
b) a, c
c) b, c
d) above all

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34. The balance on the control account may not agree with the sum of balances extracted.
Because, sometimes an incorrect amount may be posted to an individual's transaction from
the book of original entry to the memorandum ledger, e.g. a sale to C Cloning of CU250
might be posted to his account as CU520. Which of the following can be the correction of
the mentioned reason?
a) The sum of the memorandum ledger balances must be corrected, so in this case the
total will decrease by CU270.
b) The sum of the nominal ledger balances must be corrected, so in this case the total
will decrease by CU270.
c) No entry in the nominal ledger is required.
d) An entry in the nominal ledger is required.
Correct answers are …
a) a, b
b) a, c
c) b, c
d) above all

35. The balance on the control account may not agree with the sum of balances extracted.
Because sometimes a transaction may be recorded in the control account and not in the
memorandum ledger (vice versa). This requires an entry in the ledger that has been missed
out, which means ...
a) a double posting if the control account has to be corrected
b) a single posting if the control account has to be corrected
c) a single posting if it is the individual's balance in the memorandum ledger that is at
fault.
d) a double posting if it is the individual's balance in the memorandum ledger that is at
fault.
Correct answers are …
a) a, b
b) a, c
c) b, c
d) above all

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36. The balance on the control account may not agree with the sum of balances extracted.
Because sometimes the list of balances extracted from the memorandum ledger may be
incorrectly extracted or miscast. This would involve …
a) simply correcting the total of the balances.
b) simply correcting the single entry.
c) simply correcting the double entry.
d) simply correcting both the single entry and the double entry.

37. The cash at bank account in the nominal ledger is the memorandum account for the
cash book, although often they are one and the same.
a) True
b) False

38. The cash at bank account, the cash book and the bank statement all reflect transactions
through the ...
a) personal bank account
b) business's bank account
c) above all
d) none of the above

39. In many businesses, the cash book (comprising both receipts and payments) acts as ...
a) the book of original entry
b) nominal ledger account
c) above all
d) none of the above

40. Where there is a separate cash at bank account in the nominal ledger, making sure that
its balance at the end of a period agrees with the balance carried down on the cash book at
the same time is a useful ...
a) accuracy check
b) completion check
c) above all
d) none of the above

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41. If cash at bank is debited, which of the following can be applicable?

a) Decrease of income
b) Increase of asset
c) Decrease in liability
d) Decrease in capital account
e) Increase in expense
Correct answers are …
a) a, b, c, d
b) a, c, d, e
c) none of the above
d) above all

42. If cash at bank is credited, which of the following can be applicable?

a) Increase of income
b) Decrease of asset
c) Increase in liability
d) Increase in capital account
e) Decrease in expense
Correct answers are …
a) a, b, c, d
b) a, c, d, e
c) none of the above
d) above all

43. Bank statement can be defined as a record of transactions on the business's bank
account maintained by the entity in its own books.
a) True
b) False

44. The bank statement is the …… image of the cash book.

a) same
b) opposite
c) mirror
d) similar

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Correct answers are …

a) a, b
b) a, c
c) b, c
d) above all

45. Every item recorded as a debit in the business’s books will be shown as a ...
a) credit on the bank statement
b) debit on the bank statement
c) above all
d) none of the above

46. Every credit entry in the business’s books will be shown as a ...
a) credit on the bank statement
b) debit on the bank statement
c) above all
d) none of the above

47. There are some common explanations for differences between cash book and bank
statement. Which of the following are correct?
a) Error
b) Bank charges or bank interest
c) Automated payments and receipts
d) Dishonoured cheques
e) Timing differences
Correct answers are …
a) a, b, c, d
b) a, c, d, e
c) none of the above
d) above all

48. Bank reconciliation is a comparison of a bank statement with the cash book.
a) True
b) False

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49. Nobel Saha gets CU 5000 from a student and records 500. Which type of error Nobel
Saha does?
a) Transposition errors
b) Errors of omission
c) Errors of commission
d) Compensating errors

50. Transposition errors is considered under which of the following?

a) Errors in the cash book
b) Errors in the bank statement
c) Above all
d) None of the above

51. Which of the following is not considered under Corrections and adjustments to the cash
book?
a) Payments made into or from the bank account by way of standing order, direct debit
or online transfer which have not yet been entered in the cash book
b) Bank interest and bank charges, not yet entered in the cash book.
c) Dishonoured cheques not yet entered in the cash book
d) Cheques sent out but omitted from the cash book.

52. Which of the following can be occurred due to timing difference?

a) Unpresented cheques
b) Uncleared Payment
c) Uncleared lodgements
d) Above all

53. The condition of cheques paid out by the business and credited in the cash book which
have not yet been presented to the bank, or 'cleared', and so do not yet appear on the bank
statement is known as …
a) Unpresented cheques
b) Uncleared Payment
c) Uncleared lodgements

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Correct answers are …

a) a, b
b) a, c
c) b, c
d) above all

54. The condition of cheques received by the business, paid into the bank and debited in
the cash book, but which have not yet been cleared and entered in the bank account, and
so do not yet appear on the bank statement is known as …
a) Unpresented cheques
b) Uncleared Payment
c) Uncleared lodgments
d) Above all

55. A bank reconciliation statement is being prepared. Using the table select the effect of
each of the following on the closing balance shown by the bank statement of CU388 in
hand. The closing balance shown by the cash book is CU106 in hand.
Which of the following will effect on the closing balance shown by the cash at bank
account?
a) The bank has made a mistake in crediting the account with CU110 belonging to
another customer – an error not yet rectified.
b) CU120 received by the bank under a standing order arrangement has not been
entered in the cash book.
c) Cheques totaling CU5,629 have been drawn, entered in the cash book and sent out
to suppliers but they have not been presented for payment.
d) Cheques totaling CU5,577 have been received and entered in the cash book but not
yet credited in the bank statements.

56. When some digits in the amount are accidentally recorded in the wrong way round is
called …
a) Transposition errors
b) Errors of omission
c) Errors of commission
d) Compensating errors

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57. Nobel Saha gets CU 5000 from a student and records 500. Which type of error Nobel
Saha does?
a) Transposition errors
b) Errors of omission
c) Errors of commission
d) Compensating errors

58. Nobel Saha gets CU 5000 from a student and records 50000. To rectify this, which of
the following journal will be appropriate?
a) Revenue dr 5000; Cash/Bank cr 5000
b) Cash/Bank dr 45000; Revenue cr 45000
c) Revenue dr 50000; Cash/Bank cr 50000
d) Revenue dr 45000; Cash/Bank cr 45000

59. Nobel Saha gets CU 5000 from a student & failed to record the transaction. It is an
example of …
a) Transposition errors
b) Errors of omission
c) Errors of commission
d) Compensating errors

60. Nobel Saha gets CU 5000 from a student & debited Cash/ Bank but credited nothing.
It is an example of …
a) Transposition errors
b) Errors of omission
c) Errors of commission
d) Compensating errors

61. Revenue expenditure is recorded as capital expenditure is considered as …

a) Transposition errors
b) Error of principle
c) Errors of commission
d) Compensating errors

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62. Capital expenditure is recorded as revenue expenditure is considered as …

a) Transposition errors
b) Error of principle
c) Errors of commission
d) Compensating errors

63. Breaking the 'rules' of an accounting principle or concept is known as …

a) Transposition errors
b) Error of principle
c) Errors of commission
d) Compensating errors

64. Nobel Saha takes CU50000 cash out of the till for his personal use. The bookkeeper
incorrectly debits sales by CU50000. This is an example of …
a) Transposition errors
b) Error of principle
c) Errors of commission
d) Compensating errors

65. A mistake is made in recording transactions in the ledger accounts by recording a debit
entry or a credit entry in the wrong account is considered as …
a) Transposition errors
b) Error of principle
c) Errors of commission
d) Compensating errors

66. Increase of Nobel Professional Academy (Receivable) of CU5000 are debited to the
Nobel Professional Consultancy (Receivable) account is an example of …
a) Transposition errors
b) Error of principle
c) Errors of commission
d) Compensating errors

67. Errors which are, coincidentally, equal and opposite to one another is known as …

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a) Transposition errors
b) Error of principle
c) Errors of commission
d) Compensating errors

68. Nobel Saha gets CU 5000 from a student and records Cash/ Bank 5000 dr, Revenue
500 cr. On the other hand, Nobel Saha paid an expense of CU 5000 and records Expense
500 dr, Cash/ Bank 5000 cr.
The mentioned scenario is an example of …
a) Transposition errors
b) Error of principle
c) Errors of commission
d) Compensating errors

69. Nobel Saha gets CU 5000 from a student and records Cash/ Bank 5000 dr, Revenue
500 cr. On the other hand, Nobel Saha paid an expense of CU 5000 and records Expense
500 dr, Cash/ Bank 5000 cr.
To rectify this what will be the journal entry?
a) Cash/Bank dr 4500, Revenue cr 4500
b) Expense dr 4500, Cash/Bank cr 4500
c) Revenue dr 4500, Expense cr 4500
d) Expense dr 4500, Revenue cr 4500

70. Which of the following is used to correct error?

a) Journal
b) Ledger
c) Trial Balance
d) None of the above

71. The type of journal which is used to correct error is known as …

a) Primary journal
b) Secondary journal
c) Adjusting journal
d) Rectifying journal

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72. Errors which have broken the rules of double entry bookkeeping and result in the trial
balance failing to balance can be corrected by ...
a) setting up a suspense account
b) clearing suspense account with correcting journals
c) above all
d) none of the above

73. When the suspense account is used?

a) when a bookkeeper does not know where to put one side of an entry.
b) when the computerized accounting system cannot match a transaction on a bank
transaction report to the relevant nominal ledger account.
c) above all
d) none of the above

74. Suspense accounts are …

a) Always permanent
b) Sometimes permanent
c) Always temporary
d) Sometimes temporary

75. Suspense accounts …

a) appear in the asset section of the statement of financial position.
b) appear in the liability section of the statement of financial position.
c) appear in the owner’s equity section of the statement of financial position.
d) never appear in financial statements.

76. Nobel Saha got CU 50000 from a receivable named Nobel Professional Academy. He
made a journal entry of Cash/Bank dr 50000, Nobel Professional Consultancy (Receivable)
cr 50000 instead of Nobel Professional Academy. After a few days Nobel Saha realized
that no amount was received from Nobel Professional Consultancy but he do not
understand who paid the amount.
In this case which of the following journal will be applicable?
a) Nobel Professional Consultancy dr, Nobel Professional Academy cr

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b) Nobel Professional Consultancy dr, Suspense account cr

c) Suspense account dr, Nobel Professional Academy cr
d) Nobel Professional Academy dr, Nobel Professional Consultancy cr

77. Nobel Saha got CU 50000 from a receivable named Nobel Professional Academy. He
made a journal entry of Cash/Bank dr 50000, Nobel Professional Consultancy (Receivable)
cr 50000 instead of Nobel Professional Academy. After a few days Nobel Saha realized
that no amount was received from Nobel Professional Consultancy but he did not
understand who paid the amount. So, he made a suspense account on the credit side &
made necessary journal. A few days later he realized that the amount was paid by Nobel
Professional Academy.
In this case which of the following journal will be applicable?
a) Nobel Professional Consultancy dr, Nobel Professional Academy cr
b) Nobel Professional Consultancy dr, Suspense account cr
c) Suspense account dr, Nobel Professional Academy cr
d) Nobel Professional Academy dr, Nobel Professional Consultancy cr

78. Nobel Saha got CU 50000 from a receivable named Nobel Professional Academy. He
made a journal entry of Cash/Bank dr 50000, Nobel Professional Consultancy (Receivable)
cr 50000 instead of Nobel Professional Academy. After a few days Nobel Saha realized
that no amount was received from Nobel Professional Consultancy & the amount was paid
by Nobel Professional Academy.
In this case which of the following journal will be applicable?
a) Nobel Professional Consultancy dr, Nobel Professional Academy cr
b) Nobel Professional Consultancy dr, Suspense account cr
c) Suspense account dr, Nobel Professional Academy cr
d) Nobel Professional Academy dr, Nobel Professional Consultancy cr

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Alert! Alert! Alert!

Only the first chapter's

answers are included
in the book.

📖 To know the solutions

of the entire question bank,
all are requested to join
Nobel Professional
Academy. 👨‍🎓
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Chapter 10
Non-current assets and depreciation
***[Note: All of you who want to pass the Accounting at first attempt must read manual
of ICAB before practicing the MCQ and are requested to practice the MCQ attentively as
these MCQ can be presented in the exam in many ways. Every true/false given in this book
may be given in the exam containing 4 options.]***
1. Nobel Saha purchases a bike of CU 500000. Delivery cost for this bike is CU 10000,
taxes & duties CU 30000, irrecoverable VAT CU 20000, installation cost CU 10000,
assembly cost CU 10000, professional fee CU 10000, testing cost 10000.
How much will be the cost of this bike?
a) 600000
b) 590000
c) 580000
d) 560000

2. Nobel Saha purchased an old flat amounting CU 5000000. For this some testing cost
was needed amounting CU 100000. After this he made some enhancement expenditure
amounting CU 100000. The cost of the flat will be …
a) 5000000
b) 4900000
c) 5100000
d) 5200000

3. All assets have a finite useful life.

a) True
b) False

4. All assets will have a residual value at the end of their useful lives.
a) True
b) False

5. Depreciation allocates the asset's cost less it residual value over its useful life.
Under which of the following concept asset is depreciated?

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a) Business entity concept

b) Going Concern concept
c) Conservatism concept
d) Matching concept.

6. The objective of IAS 16 is to prescribe in relation to property, plant & equipment the
accounting treatment for …
a) The recognition of assets
b) The determination of their carrying amounts
c) The depreciation charged relating to them
Correct answers are …
a) a, b
b) a, c
c) b, c
d) above all

7. Which IFRS / IAS comprise Non-current Assets Held for Sale and Discontinued
Operations?
a) IAS 16
b) IFRS 5
c) Above all
d) None of the above

8. Which of the following is not included with the cost of car?

a) delivery costs
b) stamp duty and import duties
c) professional fees
d) irrecoverable VAT

9. Which of the following is not included with the cost of car?

a) general overhead costs
b) administration costs
c) training costs for staff
d) fuel in a vehicle on delivery
e) licence fees for operating the asset

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f) irrecoverable VAT
Correct answers are …
a) a, b, c, d
b) a, c, d, e
c) none of the above
d) above all

10. Which of the following is not capitalized with the cost of asset?
a) Cost of enhancing existing performance
b) Cost of maintaining existing performance
c) Costs of major improvements
d) Cost of major overhaul

11. Nobel Saha using Samsung Galaxy S 24 Ultra for a long time which was bought by CU
150000. Now he want to buy iPhone 17 Pro Max from a shop. The price of iPhone 17 Pro
Max is now CU 180000. If Nobel Saha provide S 24 Ultra he has to add CU 80000 to buy
iPhone 17 Pro Max. What is the part exchange value of Samsung Galaxy S 24 Ultra?
a) 150000
b) 70000
c) 100000
d) 80000

12. The total period over which an asset is expected to be economically usable by one or
more users is considered as …
a) Economic life
b) Useful life
c) Estimated economic life
d) above all

13. The estimated period for which an item of PPE is expected to be available for use to a
business is known as …
a) Economic life
b) Useful life
c) Estimated economic life
d) Potential physical life

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Correct answers are …

a) a, b
b) a, c
c) b, c
d) b, d

14. The useful life of an asset may be longer than its economic life.
a) True
b) False

15. Nobel Professional Academy has company cars. A well-maintained car may have
existence of ten years, but if an entity has a policy of replacing its cars every three years,
the useful life of the car to the Nobel Professional Academy will be …
a) 10 years
b) 7 years
c) 3 years
d) 13 years

16. The only tangible asset that is deemed to have an unlimited useful life is leasehold land.
c) True
d) False

17. The systematic allocation of the cost of an asset, less its residual value, over its useful
life is called …
a) Depreciation
b) Depreciable value
c) Residual value
d) a&b

18. In determining the expenses for a period, it is important to match the cost of the
consumption of non-current assets during that period. Which of the following is cost of the
non-current asset during the period?
a) Asset cost
b) Depreciable value

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c) Depreciation
d) Residual value

19. To calculate the depreciation charge for a reporting period, which of the following
factors are relevant?
a) asset cost
b) useful life
c) residual value
Correct answers are …
a) a, b
b) a, c
c) b, c
d) above all

20. Nobel Professional Academy bought a car of CU 7M. Economic life of the car is 10
years. Estimated useful life is 5 years. Residual value of the car is CU 2M. What is the
depreciable amount of the car of 5th year?
a) 6M
b) 5M
c) 1M
d) 0. 5 M

21. Nobel Professional Academy bought a car of CU 7M. Economic life of the car is 10
years. Estimated useful life is 5 years. Residual value of the car is CU 2M. What is the
depreciation amount of the car of 5th year as per straight line method?
a) 6M
b) 5M
c) 1M
d) 0. 5 M

22. Depreciation arises from the application of the …

a) Business entity concept
b) Going Concern concept
c) Conservatism concept
d) Matching concept.

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23. The depreciation basis or method selected should be changed consistently from period
to period unless altered circumstances justify a change.
a) True
b) False

24. The depreciation basis or method selected should be applied consistently to ensure
sustainability of the entity.
a) True
b) False

25. Nobel Professional Academy bought a car of CU 7M. Economic life of the car is 10
years. Estimated useful life is 5 years. Residual value of the car is CU 2M. What is the
accumulated depreciation amount of the car at the end of 5th year as per straight line
method?
a) 6M
b) 5M
c) 1M
d) 0. 5 M

26. Which of the following is the system of charging depreciation as per Straight-Line
Method?
a) (Cost – Residual Value) / Economic life
b) (Cost – Residual Value) / Useful life
c) (Cost – Residual Value) / Estimated economic life
d) (Cost – Residual Value) / Potential physical life
Correct answers are …
a) a, b
b) a, c
c) b, c
d) b, d

27. A change in method may cause an increased charge.

a) True

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b) False

28. If there is a change in the estimate of the asset’s economic life, this will cause a change
in the depreciation charge.
a) True
b) False

29. When an item of PPE is depreciated, two things must be accounted for. These are
charge for depreciation and cost in the statement of financial position must be reduced by
the amount of depreciation charged.
a) True
b) False

30. Nobel Professional Academy bought a smartphone named Huawei Mate XT of CU

500000 in 1st January 2021. The economic life of this phone is 10 years. The useful life of
this phone is 4 years. Salvage value of this device is CU 100000. After 1 year Nobel Saha
realized that has an impairment loss of CU 100000. What will be the carrying amount at
the end of 2021?
a) 200000
b) 260000
c) 300000
d) 360000

31. Nobel Professional Academy bought a smartphone named Huawei Mate XT of CU

500000 in 1st January 2021. The economic life of this phone is 10 years. The useful life of
this phone is 4 years. Salvage value of this device is CU 100000. After 2 years Nobel Saha
realized that has an impairment loss of CU 100000. What will be the carrying amount at
the end of 2022?
a) 200000
b) 220000
c) 300000
d) 320000

32. A change from one method to another is considered a change in accounting policy.

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a) True
b) False

33. Straight line depreciation is charged yearly.

a) True
b) False

34. In Reducing balance method of depreciation, The annual depreciation charge is a

variable percentage of the brought forward carrying amount of the asset.
a) True
b) False

35. The reducing balance method might be used to allocate a lower proportion of the total
depreciable amount to the asset’s earlier years and a greater proportion to its later years.
a) True
b) False

36. When calculating reducing balance depreciation anyone have to be concerned with the
asset’s residual value and how to calculate the percentage.
a) True
b) False

37. Nobel Professional Academy purchases a non-current asset at a cost of CU10,000 on 1

January 20X1, which it plans to keep for three years to 31 December 20X3. The economic
life of this phone is 10 years. Salvage value of this device is CU 100000. The business
wishes to use the reducing balance method to depreciate the asset, and calculates that the
rate of depreciation should be 40% of the reducing balance (carrying amount) of the asset.
Which of following will be the depreciation charged during 3rd year and the carrying
amount of the asset as at the end of 3rd year?
a) Depreciation 2400, Carrying amount 3600.
b) Depreciation 2160, Carrying amount 1440.
c) Depreciation 1440, Carrying amount 2160.
d) Depreciation 1296, Carrying amount 1944.

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38. Nobel Professional Academy bought a smartphone named Huawei Mate XT of CU

500000 in 1st January 2021. The economic life of this phone is 10 years. The useful life of
this phone is 4 years. Salvage value of this device is CU 100000. After 2 years Nobel Saha
realized that it has an impairment loss of CU 100000. What will be the carrying amount at
the end of 2022?
Considering Nobel Professional Academy uses Double declining method of depreciation.
a) 100000
b) 50000
c) 25000
d) None of the above

39. Nobel Professional Academy bought a smartphone named Huawei Mate XT of CU

500000 in 1st January 2021. The economic life of this phone is 10 years. The useful life of
this phone is 4 years. Salvage value of this device is CU 100000. During 2 nd year, Nobel
Saha realized that has an impairment loss of CU 100000. What will be the carrying amount
at the end of 2022?
Considering Nobel Professional Academy uses Sum of the year digit method of
depreciation.
a) 50000
b) 264819
c) 120000
d) None of the above

40. Nobel Professional Academy bought an photocopy machine amounting CU 500000

which has useful life of 5 years but economic life of 10 years. Salvage value of the machine
is CU 100000. The machine can be able to make copy of 5000000 units pages. Nobel
Professional Academy made 500000 units photocopy in 1st year. What will be the carrying
amount at the end of 1st year.
Considering Nobel Professional Academy uses unit of activity / unit of production method
of depreciation.
a) 50000
b) 40000
c) 450000
d) 460000

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41. Depreciation method should be changed consistently from reporting period to reporting
period.
a) True
b) False

42. Nobel Saha bought a building on 1.1.2020 for CU 200,000. On 1.1.2022 Nobel Saha
adds an extension that cost CU 50,000.
Calculate the annual depreciation charge (per annum) before and after the extension is
built, on the basis of straight-line depreciation considering useful life 10 years, economic
life 20 years with residual value of CU 50,000.
a) Before extension 20000, After extension 26250.
b) Before extension 10000, After extension 12777
c) Before extension 15000, After extension 21250
d) Before extension 7500, After extension 10277

43. Nobel Professional Academy purchased an asset for CU 100,000 on 1.1.2021. It had
an estimated useful life of 5 years and economic life of 10 years. It was depreciated using
the reducing balance method at a rate of 40%. On 1.1.2023 it was decided to change the
depreciation method to straight line. There was no change to the useful life, and CU 10000
residual value is anticipated. Which of the following the carrying amount at the end of
2024?
a) 18667
b) 29500
c) 12000
d) 28800

44. Nobel Saha bought a car on 1.1.2021 amounting CU 5000000 which has an estimated
useful life of 5 years and economic life of 10 years and residual value of . After using 1
year, an impairment review shows that the value of the car is worth CU 4000000. Which
of the following is the impairment loss?
a) 1000000
b) 500000
c) 0
d) None of the above

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45. How many aspects are there of accounting for depreciation?

a) 2
b) 3
c) 4
d) 5

46. By charging depreciation non-current asset cost accounts is reduced.

a) True
b) False

47. Nobel Professional Academy has CU 110,000 worth of machinery at cost. Its policy is
to depreciate at 20% per annum straight line. The economic life of the machine is 10 years.
The total accumulated depreciation now stands at CU 70,000. The business sells for CU
19,000 a machine which it purchased exactly two years ago for CU 30,000.
a) Cash dr 19000
Accumulated depreciation dr 12000
Machine cr 30000
Profit cr 1000

b) Disposal account (carrying amount) 18000

Cash with proceed 19000
Accumulated Depreciation 12000
Disposal account (carrying amount) 19000
Asset cost 30000

c) Above all

d) None of the above

48. Asset register contains a list of all non-current assets owned and leased by the
organisation, broken down by …
a) department
b) location
c) asset type

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Correct answers are …

a) a, b
b) a, c
c) b, c
d) a, b, c

49. Asset register contains which type of information?

a) Financial
b) Non-financial
c) Above all
d) None of the above

50. In an asset register, information about each non-current asset include …

a) internal reference number (for physical identification purposes)
b) manufacturer’s serial number (for maintenance purposes)
c) description of asset
d) location of asset
e) department which uses the asset
f) Purchase / lease commencement date (for calculation of depreciation)
g) cost, and any enhancement expenditure
h) depreciation method and estimated useful life (for calculation of depreciation)
i) carrying amount
Correct answers are …
a) a, b, d, f, g, h
b) a, c, e, f, h, i
c) b, c, d, f, g, i
d) above all

51. Purchased intangible assets such as brands and licences should be capitalised and
amortised over their economic life.
a) True
b) False

52. Internally generated intangible assets such as the costs associated with the development
of new ideas or products should never be capitalised if they meet specific criteria.

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a) True
b) False

53. Goodwill arising on disposal of a business may appear as an asset in a company’s

statement of financial position.
a) True
b) False

54. A popular platform named Nobel Professional Academy was sold to ICAB at CU 500
M. The asset and liability of the Nobel Professional Academy was respectively CU 100 M
and CU 50 M. How much Goodwill was stated at the financial statement of Nobel
Professional Academy?
a) 450 M
b) 400 M
c) 350 M
d) None of the above

55. Intangible non-current assets should be subject to reviews for impairment of their
acquisition amount.
a) True
b) False

56. It is impossible to purchase intangible asset from 3rd party.

a) True
b) False

57. Which of the following is not considered as intangible asset?

a) Licences
b) Patents
c) Brands
d) None of the above

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58. Which of the following are purchased by companies to allow them to operate in a
particular area?
a) Licences
b) Patents
c) Trademark
d) copyright

59. Licencse should be amortised over that finite life.

a) amortised
b) depreciated
c) depleted
d) extracted

60. The cost of developing internally generated brands can be capitalised as the cost cannot
be separated from the other general costs of developing the business.
a) True
b) False

61. The cost of purchased brands (those purchased from other businesses) can, however,
be capitalised.
a) True
b) False

62. Brands should be amortised and should instead be tested annually for impairment.
a) True
b) False

63. If a business has goodwill, it means that the carrying amount of its assets less its
liabilities in its accounting records of the business as a going concern is greater than the
market value of the business.
a) True
b) False

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64. Goodwill is created by good relationships between a business and its customers by …
a) building up a reputation for high quality products or high standards of service
b) building up a reputation for low quality products or high standards of service
c) responding promptly and helpfully to queries and complaints from customers
d) the personality of the staff, their attitudes to customers and their skills
Correct answers are …
a) a, b, c
b) a, b, d
c) a, c, d
d) above all

65. Goodwill is referred to as a …

a) premium on sale
b) premium on sharing
c) premium on equity
d) premium on acquisition

66. If the goodwill loses some or all of its value, it is deemed to have become …
a) depreciated
b) amortized
c) impaired
d) above all

67. Goodwill is kept at the lower of cost & net realize value in the statement of financial
position subject to an annual review for impairment.
a) True
b) False

68. Development expenditure is classified as …

a) an expense
b) an asset
c) above all
d) none of the above

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69. Considering development expenditure as an asset and included in the statement of

financial position is referred to as …
a) capitalizing the expenditure
b) carrying forward the expenditure
c) deferring the expenditure
d) above all

70. When development expenditure is classified as non-current asset, it will need to be

allocated to the income statement. This is called ….
a) depreciation
b) amortization
c) impairment
d) above all

71. Which of the following do not appear in the non-current assets note?
a) Disposal of non-current asset
b) Gains on disposal of non-current asset
c) Losses on disposal of non-current asset
d) Above all

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Alert! Alert! Alert!

Only the first chapter's

answers are included
in the book.

📖 To know the solutions

of the entire question bank,
all are requested to join
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