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

8 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

9 33. In a single proprietorship, the statement of retained earnings may also be called: a) equity statement or statement of owners 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 banks 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 banks 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 banks role as a fiduciary of funds made available for social services when such services are provided through separate funds d) all of the above