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Accounting Standards Notes and Practice Test

Accounting Standards are guidelines established by the ICAI to ensure uniformity and transparency in financial reporting across businesses in India, facilitating the comparison of financial statements. Currently, India follows Ind AS, which aligns with international IFRS standards, although these standards have limitations and are not always legally binding. The document includes multiple-choice questions, fill-in-the-blank exercises, and true or false statements to assess understanding of these standards.

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60 views3 pages

Accounting Standards Notes and Practice Test

Accounting Standards are guidelines established by the ICAI to ensure uniformity and transparency in financial reporting across businesses in India, facilitating the comparison of financial statements. Currently, India follows Ind AS, which aligns with international IFRS standards, although these standards have limitations and are not always legally binding. The document includes multiple-choice questions, fill-in-the-blank exercises, and true or false statements to assess understanding of these standards.

Uploaded by

mithubanthia93
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Accounting Standards – Summary and

Practice Test
Simple Summary
1. Accounting Standards are rules or guidelines made to make sure all businesses follow the
same method to record their accounts.
2. These are made by the ICAI (Institute of Chartered Accountants of India) to maintain
uniformity and transparency.
3. They help in comparing financial statements of different companies because the format
and method are the same.
4. They make accounts reliable and easy to understand.
5. In India, we now follow Ind AS (Indian Accounting Standards) which are made as per
IFRS (International rules).
6. Limitations – They can’t cover everything and sometimes laws may be more important
than standards.

Multiple Choice Questions (MCQs)


1. Who issues Accounting Standards in India?

 a) RBI
 b) SEBI
 c) ICAI
 d) Government of India

Answer: c)

2. What is the main purpose of Accounting Standards?

 a) To help in taxation
 b) To ensure consistency in accounting
 c) To confuse companies
 d) To reduce profit

Answer: b)

3. Which of the following is a limitation of Accounting Standards?

 a) Brings transparency
 b) Not legally binding in all cases
 c) Helps comparability
 d) Ensures reliability

Answer: b)

4. Accounting Standards help in:

 a) Making legal policies


 b) Reducing business profits
 c) Comparing financial statements of different firms
 d) Decreasing tax payments

Answer: c)

5. Indian Accounting Standards are also known as:

 a) Int AS
 b) Ind AS
 c) IFRS
 d) ASI

Answer: b)

Fill in the Blanks


1. Accounting Standards are issued by the __________ in India.

Answer: ICAI

2. The main objective of Accounting Standards is to bring __________ in financial statements.

Answer: uniformity

3. Indian Accounting Standards are also called __________.

Answer: Ind AS

4. Accounting Standards make financial reports more __________ and understandable.

Answer: reliable

5. The international body for accounting standards is called __________.

Answer: IFRS
True or False
1. Accounting Standards are not helpful in comparing the financial statements of two
companies.

Answer: False

2. ICAI is responsible for issuing Accounting Standards in India.

Answer: True

3. Ind AS is the Indian version of international accounting standards.

Answer: True

4. Accounting Standards are legally enforced in all situations.

Answer: False

5. Accounting Standards are useful only for large companies.

Answer: False

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