Question 1

Which accounting standard deals with "The Effects of Changes in Foreign Exchange Rates"?

AS 3AS 9AS 11AS 10

View Explanation

AS 11 prescribes how to account for foreign currency transactions and foreign operations. AS 10 is Property, Plant & Equipment; AS 3 is Cash Flow; AS 9 is Revenue Recognition.

Question 2

According to AS 11, monetary items (like foreign currency loans or receivables) should be reported at the Balance Sheet date using the:

Average Rate of the year.Forward Rate.Rate at the date of transaction.Closing Rate (Spot Rate at Balance Sheet date).

View Explanation

Monetary items (money held and assets/liabilities to be received/paid in fixed money amounts) must be translated at the Closing Rate. Exchange differences are recognized in P&L.

Question 3

Which of the following is NOT an Officially Valid Document (OVD) for KYC?

Voter IDPassportNREGA Job CardPAN Card

View Explanation

While PAN is mandatory for many financial transactions (Income Tax purpose), it is technically NOT in the list of 6 OVDs for "Proof of Address" in KYC norms because it does not contain an address.

Question 4

When converting the Trial Balance of a "Non-Integral Foreign Operation" (NIFO), assets and liabilities are translated at:

Opening RateHistorical RateAverage RateClosing Rate

View Explanation

For NIFO, assets and liabilities (both monetary and non-monetary) are translated at the Closing Rate because the investment is treated as a net investment. For Integral Operations, non-monetary items use Historical Rate.

Question 5

A Forward Exchange Contract is recorded in the books:

Only if there is a loss.At the date of settlement only.Never recorded.At the inception of the contract.

View Explanation

As per AS 11, forward contracts should be recorded at inception. The premium/discount is amortized over the life of the contract.

Question 6

In banking, "Value Date" refers to:

The date of account opening.The date on which the transaction is entered in the system.The effective date from which the interest accrual begins.The date of the cheque.

View Explanation

Sometimes entry date and value date differ. For interest calculation, the Value Date is what matters.

Question 7

Unreconciled entries in "Inter-Office Adjustments" accounts are a major risk area for banks because:

They are required by RBI.They increase profit.They may hide frauds or misappropriations.They reduce taxes.

View Explanation

If branch A debits Branch B, and Branch B doesn't credit, the money might be siphoned off. Long outstanding entries suggest control failure.

JAIIB Quiz

Quiz Finished!