A. Possessed
B. Owned
C. Controlled
D. Used
Related Mcqs:
- Based on which of the following concepts, is Share Capital Account shown on the liabilities side of a Balance Sheet?
A. Business entity concept
B. Money measurement concept
C. Going concern concept
D. Matching concept
Read More Details about this Mcq - Which of the following accounts appear(s) in the Balance Sheet of a business?
i. Stock at the end of the financial year
ii. Stock at the beginning of the financial year
iii. Drawings
iv. Prepaid Rent
v. Interest received but not yet earnedA. Only (i) above
B. Only (iii) above
C. Both (i)and (iii) above
D. (i), (iii), (iv) and (v) above
Read More Details about this Mcq - Which of the following account with normal balance is shown at the debit side of a trial balance?
A. Rent income account
B. Creditors account
C. Unearned income account
D. Cash account - Which of the following account with normal balance is shown at the credit side of a trial balance?
A. Cash account
B. Bank account
C. Equipment account
D. Accrued expenses account - Debit balance = Credit balance in a trial balance indicates that:
A. No error in recording transactions
B. No error in posting entries to ledger accounts
C. Account balances are correct
D. Mathematically Capital+Liabilities=Assets - Which of the following statements is true with regard to written down value method of depreciation?
i. The rate at which the asset is written off reduces year after year
ii. The amount of depreciation provided reduces from year to year
iii. The rate of depreciation as well as the amount of depreciation reduce year after year
iv. The value of the asset gets reduced to zero over a period of timeA. Only (i) above
B. Only (ii) above
C. Both (i) and (ii) above
D. (i),(ii) and (iii) above - Property, Plant and Equipment are conventionally presented in the Balance Sheet at _________?
A. Replacement cost – Accumulated Depreciation
B. Historical cost – Salvage Value
C. Historical cost – Depreciation portion thereof
D. Original cost adjusted for general price-level changes - Tax deducted at source appears in the Balance Sheet
A. On the assets side under current assets
B. On the assets side under loans and advances
C. On the liabilities side under current liabilities
D. On the liabilities side under provisions - The Balance Sheet gives information regarding the____________?
A. Results of operations for a particular period
B. Financial position during a particular period
C. Profit earning capacity for a particular period
D. Financial position as on a particular date - Arrangement of Balance Sheet in a logical order is known as __________?
A. Dressing Balance Sheet
B. Marshalling Balance Sheet
C. Formatting Balance Sheet
D. Make up of Balance Sheet
Mcq Added by: admin
In order for an asset to be recognized in the financial statements, it must the following definition laid down in the IASB Framework:
Asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity (IASB Framework).
It is worth noting that the framework defines asset in terms of control rather than ownership. While control is generally evidenced through ownership, this may not always be the case. Therefore, an asset may be recognized in the financial statement of the entity even if ownership of the asset belongs to someone else. For instance, if a machine is leased to a company for the entire duration of its useful life, the machine may be recognized in its Statement of Financial Position (Balance Sheet) since the entity has control over the economic benefits that would be derived from the use of the asset. This illustrates the use of Substance Over Form whereby the economic substance of the transaction takes precedence over the legal aspects of a transaction in order to present a true and fair view.
Explanation
Since, by definition, an asset must be controlled by the entity in order for it to be recognized in the financial statements, certain ‘Assets’ would not qualify for recognition. Consider a highly dedicated workforce. Generally speaking, a hardworking and motivated workforce is the most valuable asset of any successful company. But does an entity has control over its workers? The answer is no, because an employee may quit an organization any day and seek employment in a rival firm much to the detriment of the company. Therefore, such ‘Assets’ may not be recognized in the financial statements of a company.