JAIIB Exam 2025 – AFM Important Questions MCQs Quiz-13

18/03/2025

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JAIIB Exam 2025 AFM Important Questions MCQs Quiz-13

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB AFM MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB AFM quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1 Which of the following statements is correct regarding the preparation of a trial balance?
A) A trial balance ensures that there are no accounting errors in the financial statements.
B) Modern accounting software has made the trial balance completely irrelevant.
C) The trial balance helps accountants and auditors analyze general ledger account balances before and after adjustments.
D) The trial balance is a financial statement that forms part of the final accounts.

Q.2 Which of the following best describes the purpose of adjustment entries in accounting?
A) To rectify mathematical errors in the ledger accounts
B) To reflect the actual financial transactions recorded during the accounting period
C) To convert the accounting records to the accrual basis and present a true financial picture
D) To prepare trial balances without any discrepancies

Q 3 YZ Ltd. prepares its financial statements on an accrual basis. The monthly office rent is ₹20,000. However, the rent for March 2024 was not paid by the year-end and will be paid in April 2024. What would be the correct adjustment entry for March 31, 2024, before preparing the financial statements?
A) Dr. Rent Expense ₹20,000 Cr. Cash/Bank ₹20,000
B) Dr. Rent Payable ₹20,000 Cr. Rent Expense ₹20,000
C) Dr. Rent Expense ₹20,000 Cr. Rent Payable ₹20,000
D) No entry required as the rent will be paid in the next month

Q.4 According to Indian Accounting Standards (IndAS-1), adjusting entries are necessary to:
A) Recognize only cash transactions made during the accounting period
B) Ensure that expenses and incomes are recorded on an accrual basis
C) Record closing stock at its purchase price
D) Transfer all balances to the Profit and Loss account automatically

Q.5 Which of the following is the correct adjusting entry for salary incurred in March but payable in April?
A) Dr. Salary Expense A/c, Cr. Cash/Bank A/c
B) Dr. Salary Payable A/c, Cr. Salary Expense A/c
C) Dr. Salary Expense A/c, Cr. Salary Payable A/c
D) No entry required as it will be paid in the next month

Q.6 If an expense has been paid in advance but does not relate to the current accounting period, how should it be treated?
A) It should be recognized as an expense in the current period
B) It should be recorded as an asset (prepaid expense)
C) It should be recorded as income
D) It should be ignored in the books of accounts

Q.7 A company has a fixed deposit in a bank, and interest has accrued but not been received. What is the correct adjusting entry?
A) Dr. Interest Receivable A/c, Cr. Interest Income A/c
B) Dr. Interest Income A/c, Cr. Interest Payable A/c
C) Dr. Bank A/c, Cr. Interest Income A/c
D) No entry required until the bank pays the interest

Q.8 A tenant pays rent in advance for the next six months. What is the correct adjusting entry for the landlord?
A) Dr. Rent Received A/c, Cr. Advance Rent Received A/c
B) Dr. Advance Rent Received A/c, Cr. Rent Received A/c
C) Dr. Cash/Bank A/c, Cr. Rent Received A/c
D) No entry required until the rent is due

Q.9 Why is it important to record depreciation in the financial statements?
A) To show an accurate cash position of the business
B) To allocate the cost of fixed assets over their useful life and reflect their actual value
C) To increase the profits by reducing taxable income
D) To ensure that business assets always appear at their purchase price

Q.10 Which of the following best explains why inventory valuation is important in financial accounting?
A) It ensures that the trial balance is balanced
B) It directly impacts the reported profit or loss of the firm
C) It helps in calculating the total sales made during the year
D) It determines the tax liability of the business

Q.11 If the closing stock is overvalued, what will be the impact on financial statements?
A) Profit will be overstated, and assets will be overstated
B) Profit will be understated, and liabilities will be overstated
C) Profit will remain unchanged, but assets will be understated
D) Profit will be understated, and assets will remain unchanged

Q.12 Which of the following correctly explains the impact of closing stock on profit calculation?
A) An increase in closing stock will decrease profit, while a decrease in closing stock will increase profit
B) An increase in closing stock will increase profit, while a decrease in closing stock will decrease profit
C) Closing stock has no impact on profit, as it is an asset and not an expense
D) Closing stock is only recorded in the balance sheet and does not affect profit calculation

Q.13 Which of the following statements about inventory valuation methods is correct according to Ind AS 2?
A) Both FIFO and LIFO methods are permitted for inventory valuation.
B) Only LIFO is permitted for inventory valuation.
C) Only FIFO and the Weighted Average Method are permitted for inventory valuation.
D) The entity can choose any inventory valuation method, including FIFO, LIFO, and Weighted

Q.14 In times of rising prices, which inventory valuation method results in the highest net profit?
A) FIFO (First In, First Out)
B) LIFO (Last In, First Out)
C) Weighted Average Cost
D) All methods result in the same profit

Q.15 What is the primary purpose of passing closing entries at the end of an accounting period?
A) To ensure that the trial balance is balanced before preparing financial statements
B) To transfer balances from income and expense accounts to the Profit & Loss (P&L) account
C) To adjust the balances of asset and liability accounts for the next period
D) To ensure that all ledger accounts carry forward their balances to the next accounting year

Q.16 Which of the following accounts is not closed at the end of the accounting period?
A) Salary Expense Account
B) Rent Received Account
C) Capital Account
D) Sales Revenue Account

Q.17 trader provides the following details for the financial year:
•Opening stock = ₹2,000
•Purchases = ₹30,000
•Carriage inward (direct expense) = ₹1,000
•Closing stock = ₹10,000
•Sales revenue = ₹25,000
What is the Cost of Goods Sold (COGS) for the year?
A) ₹21,000
B) ₹23,000
C) ₹25,000
D) ₹27,000