Question

7 20. In the _______ practice of accounting, the accounting concepts are required to guide the...

7
20. In the _______ practice of accounting, the accounting concepts are required to
guide the existing practice of accounting, prescribe future directions in
accounting, and identify certain fundamental accounting issues.
a) Islamic
b) conventional
c) contemporary
d) all of the above
21. Which one of the following countries does not require Islamic financial
institutions in their respective jurisdictions to abide by the AAOIFI reporting
standards?
a) Bahrain
b) Jordan
c) United Arab Emiratis
d) Sudan
22. The ____________ is based on the occurrence of a transaction regardless of the
fact whether there is exchange of cash or not.
a) cash flow accounting method
b) accrual accounting method
c) statement of financial position
d) comparative financial statement
23. The concept that indicates that life of the Islamic bank should be broken into
reporting periods to prepare financial reports that provide interested parties with
information or directions by which they can evaluate the performance of the
accounting unit is known as:
a) product life cycle
b) periodicity
c) quarterly reporting
d) first in first out
24. _______ is the formal record of the financial activities (transactions) of a
business entity.
a) bookkeeping
b) Statement of profit and loss
c) Financial statement d)
comparative Financial statement
25. According to the AAOIFI, FAS 1 paragraph 2, financial statements of an entity
of Islamic banks consists of:
a) a statement of financial position (balance sheet)
b) an income statement
c) a statement of cash flows
d) all of the above
26. The following statements about comparative financial statements of Islamic
financial products are true EXCEPT for:
a) comparative financial statements of a corporate entity give the direction of
change in the business in at least two financial periods

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b) comparative financial statements analysis involves the comparison of the figures
of the current year with those of the previous year(s) to determine the performance of
the business
c) comparative financial statements as the tool for analysis provide necessary
information about the sustained performance or poor performance of the entity
d) Islamic banks and financial institutions are not required to publish comparative
financial statements
27. The four basic financial statements are:
a) balance sheets, income statements, cash flow statements, and adjustment
statements
b) balance sheets, income statements, statement of retained earnings, and statements
of current assets
c) income statements, cash flow statements, statement of retained earnings, and
statements of financial position
d) income statements, cash flow statements, statements of current liabilities and
balance sheet
28. _________ is also known as the Statement of Financial Position
a) statement of retained earnings
b) balance sheet
c) cash flow statement
d) none of the above
29. Which of the following liabilities must be disclosed according to FAS 1 para 41?
a) deposits of other banks
b) declared but undisturbed profits
c) zakah, salam payables and taxes payable
d) all of the above
30. According to per para 44, the following items must be disclosed in the statement
of financial position EXCEPT:
a) authorized, subscribed and paid-in capital
b) other changes in owners’ equity during the period
c) profit and losses from investment
d) any restrictions imposed on the distribution of retained earnings to owners
31. The Income Statement may also be referred to as:
a) The Profit and Loss Statement
b) Statement of Operations
c) Statement of Income
d) All of the above
32. The following item(s) must be disclosed in the income statement according to
FAS 1 para 50:
a) current accounts, savings accounts, and other accounts
b) deposits of other banks’ revenues
c) expenses and losses from investments
d) gains from investments

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33. In a single proprietorship, the statement of retained earnings may also be called:
a) equity statement or statement of owner’s equity
b) statement of partners’ equity
c) statement of retained earnings and stockholders' equity
d) none of the above
34. Which of the following is a specific disclosure required in the statement of
changes in owners’ equity according to para 58 of FAS 1?
a) net income (loss) for the period
b) transfers to legal and discretionary reserves during the period
c) capital contribution by owners during the period
d) distribution to owners during the period
35. The Islamic bank’s share in income (loss) from investments must be disclosed in
the:
a) cash flow statement
b) income statement
c) statement of retained earnings
d) statement of changes in owners’ equity
36. AAOIFI proposed set of financial statements for Islamic banks include:
a) financial statements that reflect the Islamic bank’s function as an investor
and its rights and obligations
b) a financial statement reflecting changes in restricted investments managed
by the Islamic bank for the benefit of others whether based on a Mudaraba
contract or an agency contract.
c) financial statements reflecting the Islamic bank’s role as a fiduciary of
funds made available for social services when such services are provided
through separate funds
d) all of the above

Homework Answers

Answer #1
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20 b) conventional
21 c) United Arab Emiratis
22 b) accrual accounting method
23 b) periodicity
24 c) Financial statement
25 d) all of the above
26 d) Islamic banks and financial institutions are not required to publish comparative financial statements
27 c) income statements, cash flow statements, statement of retained earnings, and statements of financial position
28 b) balance sheet
29 d) all of the above
30 c) profit and losses from investment
31 d) All of the above
32 b) deposits of other banks’ revenues
33 a) equity statement or statement of owner’s equity
34 a) net income (loss) for the period
35 c) statement of retained earnings
36 d) all of the above
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