JAIIB Marathon May 2025 AFM Quiz-1

08/05/2025

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JAIIB Marathon May 2025 AFM Quiz-1

JAIIB CAIIB Course Quiz – May 2025: The JAIIB exam for May 2025, conducted by IIBF, is fast approaching. To support your preparation, we are providing regular MCQ-based quizzes specifically designed for the JAIIB CAIIB syllabus. These quizzes are structured module-wise and unit-wise to help you cover the entire syllabus systematically. Practicing these quizzes consistently will strengthen your concepts, improve accuracy, and increase your chances of clearing the exam on your first attempt.

Q.1. Which of the following statements best describes the significance of stewardship accounting in the evolution of modern financial reporting?
A. It introduced advanced financial instruments to facilitate global trade.
B. It laid the foundation for systematic recording of transactions and accountability in financial reporting.
C. It replaced the need for double-entry bookkeeping by simplifying accounting processes.
D. It was primarily focused on managing speculative financial assets for wealth creation

Q.2. What is the primary social purpose of financial accounting?
A. To ensure that company directors can avoid full disclosure of financial information.
B. To mobilize savings and channel them into profitable investments by providing reliable information to investors.
C. To limit the liability of shareholders in case of company failure or liquidation.
D. To focus on maintaining the confidentiality of company financial data from the public

Q.3. Which of the following best captures the primary role of management accounting?
A. To record and analyze past financial transactions based on generally accepted accounting principles (GAAP).
B. To ensure compliance with legal regulations and accounting standards in financial reporting.
C. To focus on preparing financial statements like the income statement and balance sheet for shareholders.
D. To assist management in policy formulation and decision-making by providing forward-looking, unconstrained accounting information.

Q.4. What is the primary focus of social responsibility accounting?
A. To maximize profitability by focusing solely on economic effects.
B. To ensure compliance with traditional financial accounting standards.
C. To evaluate and report the social and environmental effects of business decisions in addition to economic outcomes.
D. To measure growth and profit as presented in conventional balance sheets

Q.5. What is the primary objective of inflation accounting?
A. To adjust the value of assets and profits to reflect changes in the price level, correcting distortions in financial statements.
B. To replace historical cost accounting with cash-based accounting methods.
C. To enhance the accuracy of financial statements without addressing price level changes.
D. To simplify accounting practices by eliminating the concept of a stable monetary unit.

Q.6. What is the primary purpose of value accounting?
A. To track only the tangible contributions made by contributors in a business process.
B. To simplify revenue allocation by ignoring individual contributions.
C. To evaluate and capture individual contributions, both tangible and intangible, ensuring fair distribution of future revenue.
D. To replace traditional accounting practices with a focus solely on production metrics.

Q.7. What is a key challenge in the adoption of fair value accounting?
A. It only focuses on historical costs, ignoring current market conditions.
B. It depends on the holder’s intention to sell or retain the asset or liability.
C. It faces issues like increased costs, delays, and doubts about the accuracy and reliability of available information.
D. It uses a single approach for valuation, limiting its flexibility.

Q.8. Which of the following is incorrect:
a. AS 2 : Valuation of inventories
b. AS 3: Revenue recognition
c. AS 17 : Segment reporting
d. AS 10 : Property, Plant & equipments

Q.9. Which of the following is incorrect:
a. AS 9 : revenue recognition
b. AS 20: Earning per share
c. AS 21 : Consolidated Financial statement
d. AS 28 : Provisions, contingent liabilities, contingent assets

Q.10. Which of the following is a primary objective of Generally Accepted Accounting Principles (US GAAP)?
A. To guarantee that financial statements are free from errors or omissions.
B. To bring transparency and consistency in financial reporting across organizations.
C. To regulate the accounting standards set by the government.
D. To mandate the use of international financial reporting standards (IFRS) in the U.S.

Q.11. Which of the following is a key difference between GAAP and IFRS in terms of financial reporting?
A. GAAP requires minority interests to be included in equity, while IFRS includes them in liabilities.
B. GAAP and IFRS both require the same format for financial statements, with no differences.
C. GAAP is more rules-based, while IFRS is more principles-based in its approach.
D. IFRS requires financial statements to include a separate line item for deferred taxes, but GAAP does not.

Q.12. Which of the following best describes the primary purpose of transfer pricing in multinational corporations?
A. To set the pricing for goods and services sold to external customers.
B. To determine the pricing of goods and services exchanged between different divisions or entities within a multinational organization.
C. To calculate the income tax for each subsidiary in a multinational corporation.
D. To eliminate the need for segment reporting and performance measurement

Q.13. What does the term “arm’s length price” refer to in the context of transfer pricing?
A. The price at which two unrelated and non-desperate parties would agree to a transaction.
B. The price at which two related parties would agree to a transaction.
C. The price set by the government for cross-border transactions.
D. The price calculated by accounting systems without considering market conditions

Q.14. Why was the SEC (Securities and Exchange Commission) created, and what role does it play in setting accounting standards?
A. The SEC was created to set accounting standards directly, replacing the need for private sector involvement.
B. The SEC was created because of the Great Depression and works closely with private organizations like AICPA and FASB to establish GAAP, but does not set GAAP itself.
C. The SEC sets the GAAP for both public and private companies.
D. The SEC is responsible for developing accounting standards for local and state governments

Q.15. Which of the following statements about the Financial Accounting Standards Board (FASB) is correct?
A. FASB directly sets all accounting standards for governmental entities.
B. FASB was created to replace the Securities and Exchange Commission (SEC) in setting accounting standards.
C. The Emerging Issues Task Force (EITF) addresses long-term, pervasive financial issues, while FASB focuses on short-term issues
D. FASB’s codification is the authoritative source of GAAP for non-governmental entities, effective from September 15, 2009.

Q.16. Which of the following best describes accounting principles?
A) Arbitrary rules set by individual businesses
B) Scientifically laid down standards ensuring uniformity in accounting
C) Guidelines that vary based on managerial preferences
D) Informal methods used for internal reporting

Q.17. Which of the following statements best reflects the cost concept in accounting?
A) Business transactions are recorded at their historical cost, including purchase price and necessary expenses
B) Assets are recorded at their current market value to reflect real-time financial position.
C) The value of assets is periodically adjusted based on inflation and market trends.
D) Unrealized gains from asset appreciation are recognized in the financial statements

Q.18. Which of the following statements is true according to the money measurement concept?
A) Only transactions measurable in monetary terms are recorded in accounting.
B) Employee skills and brand reputation are recorded as assets in the books of accounts.
C) The effect of inflation is always considered while valuing assets.
D) Non-financial factors like managerial efficiency are included in financial statements.

Q.19. According to the business entity concept, how is the capital contributed by the owner treated in the books of accounts?
A) As an income for the business
B) As an asset of the business
C) As a liability of the business
D) As an expense of the business

Q.20. Which of the following best explains the importance of the business entity concept?
A) It ensures that the personal and business transactions of the owner are recorded together.
B) It treats the business as a separate legal entity, distinct from its owner.
C) It allows personal expenses of the owner to be included in business accounts.
D) It eliminates the need to differentiate between revenues and expenses

Answer:

Q1: B
Q2: B
Q3: D
Q4: C
Q5: A
Q6: C
Q7: C
Q8: B
Q9: D
Q10: B
Q11: C
Q12: B
Q13: A
Q14: B
Q15: D
Q16: B
Q17: A
Q18: A
Q19: C
Q20: B