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JAIIB AFM Unit 2 — Basic Accountancy Procedures: Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 20 September 2026 · Paper 3 of the November 2026 cycle (28 November 2026)

This page is a free slice of our JAIIB AFM question bank for Unit 2 — Basic Accountancy Procedures (Module A — Basic Accounting and Finance). The Mock Centre holds 69 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

AFM · Module A69 MCQs in the Mock Centre5 free belowPaper on 28 November 2026

Key facts examiners test from this unit

  1. Recording-stage concepts: Cost, Money measurement, Business entity, Realisation, Dual aspect, Historical records; Reporting-stage: Going concern, Matching, Accounting period + 4 conventions.
  2. Cost of an asset = supplier price + expenses to bring it into working order; recorded figure = book value.
  3. Depreciation allocates cost over useful life — it has NO relationship with market value.

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
Under the Cost Concept, the gradual reduction of an asset's cost over its useful life is called:
Why (b): The cost of a long-but-limited-life asset is systematically reduced through DEPRECIATION — an allocation of cost, with no link to market value.
Question 2 of 5
'Anticipate no profit, provide for all possible losses' is the essence of which convention?
Why (b): 'Anticipate no profit, provide for all possible losses' = CONSERVATISM (prudence): lowest possible value for assets/revenues, highest for liabilities/expenses.
Question 3 of 5
Accounting Standards are statements prescribed by:
Why (b): Accounting Standards in India are prescribed by the ICAI (through its Accounting Standards Board, constituted 21 April 1977).
Question 4 of 5
The collective name for all the accounting rules, concepts and conventions taken together is:
Why (a): GAAP = Generally Accepted Accounting Principles = all these rules/ conventions taken together.
Question 5 of 5
Under the accounting period concept:
Why (a): Both period conventions (fiscal 1 Apr–31 Mar, calendar 1 Jan–31 Dec) and the benefits: period comparison, consistent treatment, periodic matching, tax calculation and dividend distribution.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
ConceptsConventionsRules/assumptions for recording vs customs guiding standards preparation
Recording stageReporting stageCost/Money/Entity/Realisation/Dual/Historical vs Going concern/ Matching/Period + 4 conventions
Practise all 69 questions on Unit 2. The free demo opens a slice of every subject with the same explanations; the AFM Online-only pass unlocks all 1,681 AFM questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
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← Unit 1: Definition, Scope and Accounting Standards · Unit 3: Depreciation and Its Accounting → · All AFM units · JAIIB 2026 guide

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Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. Regulatory figures verified as of September 2026; verify from official sources before relying on them in practice.