Islamic Accounting Theory & Practice Multiple Choice Questions
1. AAOIFI stands for…..
(a)Accounting and Auditing organization for Islamic Financial Institutions
(b) Auditing and Accounting organization for Islamic Financial Institutions
(c) Auditing and Accounting organization for Indian Financial Institutions
(d) Accounting and Auditing organization for Indian Financial Institutions
Answer: (a)
2. MASB stands for……
(a)Malaysian Accounting service Board
(b)Malaysian Accounting Standard Board
(c) Malaysian Auditing Service Board
(d)Malaysian Auditing Standard Board
Answer: (b)
3. The major underlying principle of current account is called……..
(a)Mudaraba
(b)Wakala
(c)Wadia
(d)Dhaman
Answer: (c)
4. The Investment accounts are normally based on …………principle.
(a)Musharaka
(b)Mudaraba
(c)Wakala
(d)Wadia
Answer: (b)
5. In Mudaraba, the person who contribute capital to the business is called………
(a)Contributor
(b)Rabbul maal
(c)Mudarib
(d)Client
Answer: (b)
6. Any loss in Mudaraba contract will be normally borne by……….
(a)Contributor
(b)Rabbul maal
(c)Mudarib
(d)Client
Answer: (b)
7. Mudaraba mutlaqa implies……….
(a)Restricted mudaraba
(b)Unrestricted mudaraba
(c) diminishing musharka
(d)Agency
Answer: (b)
8. Investor restricts the manner as to where, how and for what purpose the funds
are to be invested is come under………
(a) Restricted mudaraba
(b)Unrestricted mudaraba
(c) diminishing musharka
(d)Agency
Answer: (a)
9. Under pooling method, administrative expenses will be borne by ……
(a)Client
(b) bank
(c) Both bank and client
(d) Share holders
Answer: (c)
10. Mudaraba capital must be in the form of……….
(a)Cash
(b) Kind
(c) Assets
(d) Both in cash and kind
Answer: (a)
11. AAOIFI came into existence in the year……
(a) 1990
(b) 1980
(c) 1985
(d) 1996
Answer: (a)
12. Income and expenses relate to the statement of……….
(a)Financial position
(b) Income statement
(c) Cash flow
(d)Retained earnings
Answer: (b)
13. Assets, Liabilities and equity relate to the statement of……….
(a)Financial position
(b) Income statement
(c) Cash flow
(d)Retained earnings
Answer: (a)
14. …….concept denote ‘unity of God’
(a)Taklif
(b)Tawhid
(c)Falah
(d) Amanath
Answer: (b)
15. ………..relate to morals and treating of moral questions
(a)Accountability
(b)Fiqh
(c) Ethics
(d) Responsibility
Answer: (c)
16. ……implies that all professional duties must be according to sharia.
(a)Objectivity
(b) Legitimacy
(c) Diligence
(d) Faith- driven conduct
Answer: (b)
17. IASB stands for……….
(a)International Accounting Standard Board
(b)International Auditing Standard Board
(c)International Accounting Service Board
(d)International Auditing Service Board
Answer: (a)
18. FAS stand for…….
(a)Financial Accounting Service
(b) Financial Auditing Service
(c) Financial Accounting Standard
(d) Financial Auditing Standard
Answer: (c)
19. FAS 8 deals with……..
(a) Musharaka
(b)Mudaraba
(c) Ijara
(d) Salam
Answer: (c)
20. FAS………… deal with general presentation and disclosure in the financial
statement of Islamic Banks.
(a) FAS 1
(b)FAS 2
(c)FAS 3
(d) FAS 4
Answer: (a)
21.…………..involve lease over lease period and transfer of ownership at the end of the contract.
(a) Ijara Muntahia Bitamlek
(b)Ijara Thumma al buy
(c) operating lease
(d)Hire purchase
Answer: (a)
22. Al Ijara Thumma al Bay means……..
(a)Hire purchase
(b) Operating Lease
(c) operating lease
(d)Financial lease
Answer: (a)
23. AAOIFI registered in the state of ………
(a)Malaysia
(b)Saudi Arabia
(c)Bahrain
(d)Egypt
Answer: (c)
24.………..accounting system requires cash to be paid or received for the recording to take place.
(a)Accrual basis
(b)Cash basis
(c)Cost basis
(d)Value basis
Answer: (b)
25.……….accounting is based on the concept that every transaction affects and is recorded in at least two accounts on an organization’s books.
(a)Single entry
(b)Double entry
(c)Multiple entry
(d)Simple entry
Answer: (b)
26. Islam literally means………
(a)Path
(b)Promote
(c)Peace
(d)Goodness
Answer: (c)
27.………….deals with where the financial statements are prepared on the assumption that the business will continue for foreseeable future.
(a)Money measurement
(b) Going concern
(c) Accounting entity
(d) Cost principle
Answer: (b)
28.’To develop accounting and auditing thoughts relevant to Islamic financial institution’ is the basic objective of…….
(a)IAB
(b)ISDB
(c)MASB
(d)AAOIFI
Answer: (d)
29. Restricted investment is one in which the investment avenues are decided by……..
(a)Investor
(b)Bank
(c)Both investor and bank
(d) Government
Answer: (a)
30. AAOIFI came into existence in the year……
(a) 1990
(b) 1980
(c) 1985
(d) 1996
Answer: (a)
31. Accounting entity concept is acceptable in Islam as it resembles ……..
(a)Baithul maal
(b) Musharaka
(c) Zakat
(d) Wakala
Answer: (a)
32. Conventional accounting measurement is based on cost principle that considers ……….cost.
(a) Historical
(b) Current
(c) Market
(d)Fairvalue
Answer: (a)
33. In case of Zakat determination, majority of scholars recommended use of
…….prices.
(a)Current price
(b) Acquisition price
(c) Past price
(d)Any price
Answer: (a)
34.……….indicates a philosophical reflection on moral beliefs and practices.
(a) Values
(b) Ethics
(c) Fairness
(d) Accountability
Answer: (b)
35.………principle requires accountant to be competent and adequately qualified.
(a)Integrity
(b) Piety
(c) Righteousness
(d) Sincerity
Answer: (a)
36. Expand the term IAS.
(a)Indian Accounting Standards
(b)Indian Auditing Standard
(c)International Auditing Standard
(d)International Accounting Standards
Answer: (d)
37. Islamic Accounting includes:
(a)Recording
(b)Recognition
(c)Measurement
(d)All of these
Answer: (d)
38. The total number of Auditing standards issued by AAOIFI is…..
(a) 5
(b)26
(c)2
(d)10
Answer: (a)
39. Which one of the following is not a fund for islamic banks.
(a)Current a/c
(b)Saving a/c
(c)Investment a/c
(d) Account receivable
Answer: (d)
40. A bank is considered as a custodian and trustee of money is……….
(a)Wadia
(b)Hisbah
(c)Tawarruq
(d)Hibah
Answer: (a)
41. Mudaraba structure consisting three parties called……..
(a) Simple mudaraba
(b) Bilateral
(c) Multilateral
(d) Re-mudaraba
Answer: (d)
42. Mudaraba capital provided by the Islamic Bank in kind shall be measured at…….
(a)Fair value
(b) Market value
(c) Historical value
(d) at any value
Answer: (a)
43. Several parties of capital provider and one party of entrepreneur is called….
(a) Simple mudaraba
(b) Bilateral
(c) Multilateral
(d) Re-mudaraba
Answer: (d)
44. Musharaka financing included in the Financial Accounting Standard …..
(a) FAS 1
(b) FAS 2
(c) FAS 3
(d)FAS 4
Answer: (a)
45.…….implies that partner’s share in the Musharaka capital remain constant
through out the year.
(a) Constant musharaka
(b) Diminishing musharaka
(c)Simple musharaka
(d) Multi musharaka
Answer: (a)
46. In Musharaka financing,the Islamic Bank’s unpaid share of the proceeds shall be
recorded in……….
(a)Receivable a/c
(b)Reserve a/c
(c)Charity a/c
(d)Balance sheet
Answer: (b)
47.………refers to a sale against deferred payment.
(a)Murabaha
(b)Bai Muajjal
(c) Musawama
(d)Hire purchase
Answer: (d)
48. Ijara Muntahia Bitamlek implies…….
(a)Operating Lease
(b)Hire purchase
(c)Investment
(d)Financial lease
Answer: (d)
49. Ownership of property is not transferred in…………
(a)Operating Lease
(b)Hire purchase
(c)Levrag lease
(d)Financial lease
Answer: (a)
50. Assets acquired in ijara financing is recognized at ……..
(a)Fair value
(b)Market value
(c)Historical cost
(d) Past cost
Answer: (c)
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