300+ TOP Islamic Accounting Theory & Practice MCQs and Answers

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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