Solved by ABr & Chanda Rehman

Final MCQs
It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 10% of the sundry debtors are
doubtful. Actual bad debts are Rs. 1600. What amount of new provision for doubtful
debts will be credited in profit & loss account
► Rs. 3,600
► Rs. 4,000 correct
► Rs. 1,600
► Rs. 2, 400
Explanation:
40,000 x 10%= 4000
NOTE: 1600 are already declared as ACTUAL BAD DEBTS. only DOUBTFUL
debts are required

If Cost of asset=Rs. 100,000, Residual Value (RV) = Rs. 20,000 and Life = 3
years, what will be the rate of depreciation?
10%
22%
42%
52%

Rate = 1 n√ RV / C

Where:

RV = Residual Value

C = Cost

n = Life of Asset

Calculate the rate if:

Cost = 100,000

Residual Value (RV) = 20,000

Life = 3 years

Rate = 1 3 √20000/100000

= 42%

Question No: 46 ( Marks: 1 ) - Please choose one

 Mr. A & B entered into a partnership with an equal investment and equal share
in profit or loss. Markup on capital of Mr. A is Rs.2,500 and markup on drawings
of Mr. B is Rs.2,800. The net income for the year is Rs.95,000. What will be the
amount of distributable profit?
► Rs.89, 700
► Rs.94, 700
► Rs.95, 300
► Rs.100, 300
profit 95000

less capital interest 2500

add drawing interest 2800
95300

Question No: 27 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with an equal
share in profit or loss. Markup on drawings of Mr. A is Rs.1,500 and of Mr. B is
Rs.1,800. The net income for the year is Rs.85,000. What will be the profit share of Mr.
B?
► Rs.42,350
► Rs.44,150
► Rs.41,600
► Rs.40,850

Profit = 85000
Add markup on drawings = 1500 + 1800 = 3300
Total net profit = 88300
Profit share of B = 88300/2 = 44150

Question No: 28 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with an equal
share in profit or loss. Markup on capital of Mr. A is Rs.2,000 and markup on drawings
of Mr. B is Rs.3,000. The net income for the year is Rs.85,000. What will be the profit
share of Mr. B?
► Rs.40,000
► Rs.43,000
► Rs.130,000
► Rs.133,000

Net Profit = 85000

Add markup on Drawings = 3000
Less markup on Capital = 2000
Total Profit of the firm = 85000 + 3000 - 2000 = 86000
Profit of B = 86000 / 2 = 43000
Question No: 23 ( Marks: 1 ) - Please choose one
Accumulated depreciation is a ____________ account?
► Fixed asset
► Current asset
► Contra asset
► Liability

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following statement is not true regarding the objective of statement of cash
flows?
► It is helpful for decision making by management
► It is used for reporting the net profit of the period
► It can be used for estimations for cash flows in future
► It is used to determine the liquidity of the business

Question No: 30 ( Marks: 1 ) - Please choose one

Short term investments in marketable securities and treasury bills that will mature within
ninety days from the date of acquisition, must be classified as:
► Receivables
► Receipts from Capital
► Current and intangible assets
► Cash equivalents

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following is an example of cash outflow for a company?
► Cash collected from customers
► Cash paid for merchandise inventory
► Writing off an uncollectible accounts receivable
► Reclassifying accounts payable to notes payable

Question No: 10 ( Marks: 1 ) - Please choose one

When the capitals are fixed, which of the following account will be debited for drawings
made by a partner?
► Individual Partner’s Current Account
► Partner’s Cash Account
► Partner’s Bank Account
► Partners Capital Account

Question No: 42 ( Marks: 1 ) - Please choose one

In Income Statement, both beginning inventory and ending inventory appear in the
section of:
► Cost of goods sold
► Indirect cost
► Selling cost
► Factory over head cost
Question No: 41 ( Marks: 1 ) - Please choose one
XYZ Company has paid up capital of 20,000 shares of Rs. 100 each. The company
offers to existing shareholders the right to buy 3 shares of Rs. 100 each at Rs. 125 for
every 5 shares held. What would be the number of right shares?
► 120 right shares
► 12,000 right shares
► 15,000 right shares
► 25,000 right shares

Total shares = 20000

5 existing shares can buy = 3 new shares
1 existing share can buy = 3/5 new shares
20000 existing shares can buy = 20000 * 3/5 = 12000 new shares = right shares

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following is an example of Cash flow from operating activities?
► Cash payment to acquired fixed assets
► Issuing stock
► Cash collection as a result of machinery sold
► Cash payment to suppliers for goods and services

Question No: 9 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?
► Accounts receivable arises when a company buys goods or services from another
party on credit
► Accounts receivable is a miscellaneous category that may include loans to
employees
► Accounts receivable are more formal than notes receivable
► Accounts receivable are often called trade receivables

Question No: 11 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as a cash outflow?
► The payments for purchases made during the year
► A decrease in trade debtors over the course of an accounting period
► Money received as a result of issuing new shares
► Money received as result of selling fixed assets

Question No: 13 ( Marks: 1 ) - Please choose one

The beginning balance of retained earnings was Rs. 7,500. The dividends paid to
stockholders' were Rs.1, 500. The ending balance of retained earnings is Rs. 5,000. What
was the net income or net loss for the accounting period?
► Net loss of Rs.1, 000
► Net income of Rs. 1,000
► Net loss of Rs. 2,000
► Net income of Rs. 2,500
Question No: 35 ( Marks: 1 ) - Please choose one
Which one of the following cost is NOT attributable to the fixed assets?
► Costs of site preparation
► Administration and other general overhead cost
► Initial delivery and handling charges
► Installation and assembly costs

Question No: 44 ( Marks: 1 ) - Please choose one

A company is said to have been registered when:

► It gets certificate of incorporation from registrar of Companies

► It gets certificate of commencement of business from registrar of Companies
► It actually starts its business
► It filed with the Registrar of Companies certain documents, like memorandum and
articles of association

Question No: 10 ( Marks: 1 ) - Please choose one

Notes to the accounts explain which of the followings

Nature of business of the company

Accounting Policies of the company
Details and explanation of items given in the Profit and Loss Account and
Balance Sheet
All of the given options

Question No: 6 ( Marks: 1 ) - Please choose one

Cash flow from operating activities is generated from:
.
The cash receipts and payments that arise from Fixed and Long Term assets
of the organization.
.
Cash generated from daily operations of organization
The cash receipts and payments that arise from Owners of the business and
other long term liabilities of the organization
None of the given options

Question No: 47 ( Marks: 1 ) - Please choose one

Particulars Rs.
Debentures 1, 50,000
Equity Capital 2, 00,000
General Reserve 90, 000
Accumulated profit 60,000
What is debt equity ratio ?
15: 20 (or 3:4)
15:24 (or 5: 8)
15:29
15:35 (or 3: 7)

Total Debt = Debentures = 150000

Total Equity = Equity capital + General Reserve + Accumulated profit
= 200000 + 90000 + 60000 = 350000
Debt: Equity
150000: 350000
15: 35
3:7

Question No: 48 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?
In case of death of partner
At the admission of new partner
If any partner resigned from partnership
All of the given options
Depreciation arises because of:
► Fall in the market value of an asset
► Fall in the value of money
► Physical wear and tear
► All of the given options
Question No: 50 ( Marks: 1 ) - Please choose one
Which one of the following is equal to the carrying cost of an asset?
► Original cost minus Accumulated depreciation
► Original cost plus Accumulated depreciation
► Original cost minus Residual value
► Written down value minus Accumulated depreciation
\ Question No: 25 ( Marks: 1 ) - Please choose one
Which of the following is an example of operating expense?

► Purchasing operating equipment

► Purchasing cleaning services
► Purchasing an investment in another company
► Purchasing a computer for the accounting office

Question No: 45 ( Marks: 1 ) - Please choose one

The amount of share premium can be utilized EXCEPT:
► To write off preliminary expenses
► To meet the expenses of issue of shares
► To distribute among the shareholders
► To issue bonus shares
Question No: 46 ( Marks: 1 ) - Please choose one
A company pays cash to purchase the stock of another company in an unrelated
industry. The cash outflow can be considered as an:
 ► Operating activity that will appear on the statement of cash flows
► Operating activity that will not appear on the statement of cash flows due to the
fact of stock from a company in an unrelated industry
► Investing activity that will appear on the statement of cash flows
► Investing activity that will not appear on the statement of cash flows due to the
fact of stock from a company in an unrelated industry
Question No: 35 ( Marks: 1 ) - Please choose one
Which of the following is TRUE about capital receipt?
► It decreases value of property or increases value of liability
► It is shown in the income and expenditure account
► It is recurring in nature
► It is not shown in the statement of financial positions

A private limited company can commence its business:

► Immediately on receiving a certificate of incorporation

► Without receiving a certificate of incorporation
► Only when it receives certificate of commencement of business
► Only when it receives both, the certificate of incorporation as well as certificate of
commencement of business

The persons who sign articles and memorandum of the company and contribute in the
initial share capital of the company are called:

► Subscribers
► Shareholders
► Managers
► Directors
Question No: 38 ( Marks: 1 ) - Please choose one
Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs. 22,500

Debtors Rs. 500
Total Assets Rs. 80, 385
Accounts payable Rs. 1,000
Total liabilities Rs. 20,000

► Rs. 60,385 owner’s equity

► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity
Identify that which of the following particular(s) would NOT be shown in the format of a
Cash Book?
(1) Cheque number
(2) Date of transaction
(3) Amount of transaction
► (1) only
► (1) & (2) only
► (1) & (3) only
► (2) & (3) only
Question No: 50 ( Marks: 1 ) - Please choose one
Economic resources owned by a business and expected to benefit for the future
operations are called:
► Expenses
► Assets
► Capital
► LiabilitiesQuestion No: 45 ( Marks: 1 ) - Please choose one
If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs.
20,000 during the year, what would be the value of Gross Profit?

► Rs. 15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000
Question No: 41 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 85,000
Purchases of raw material during the 200, 000
period
Cost of Material Consumed ?

► Rs. 205,000
► Rs. 215,000
► Rs. 220,000
► Rs. 225,000
Question No: 43 ( Marks: 1 ) - Please choose one
What would be the value of total factory cost, if the cost of material consumed during the
month is Rs. 6,000, labor cost incurred is Rs. 2,000 and the factory over head cost is Rs.
2,500?

► Rs. 6,000
► Rs. 8,000
 ► Rs. 4,500
► Rs. 10,500
Question No: 40 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Date Item Quantity Cost/Unit Total

2007Jan. 2 Opening inventory 100 Rs.18.00 Rs.1,800
Mar. 4 Purchase 400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500
Four hundred units are unsold, Use the FIFO method of inventory costing and determine
the value assigned to the 400 units on hand at the end of the period.

► Rs.7, 500
► Rs.7, 978
► Rs.8, 000
► Rs.8, 400

Question No: 34 ( Marks: 1 ) - Please choose one

If Bad Debts written off are given in adjustment, then which of the following entry for
bad debts written off is CORRECT?
► Bad debts a/c (Dr) and Trading a/c (Cr)
► Provision for Bad and Doubtful debts a/c (Dr) and Bad debts a/c(Cr)
► Bad debts a/c (Dr) and debtors a/c (Cr)
► Trading a/c (Dr) and Bad debts a/c (Cr)
Question No: 35 ( Marks: 1 ) - Please choose one
Consider the following data:
Provision created in 2006 Rs. 2,500
Bad debts in 2007 Rs. 1,500
Sundry debtors on 31-12- 2007 were Rs. 40,000 and provision is created @ 5%.
Which journal entry is Correct for the provision for doubtful debts for the year 2007.

► Provision for doubtful debts a/c Rs. 1,000 (Dr) & Profit & Loss a/c Rs. 1,000 (Cr)
► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000 (Cr)
► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000 (Cr)
► Profit & Loss a/c Rs. 1,000 (Dr) & Provision for doubtful debts a/c Rs. 1,000 (Cr)

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is shown on credit side of creditors control account?

► Bills Receivable
► Return inwards
► Credit purchases
► Discount allowed
Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following is NOT correct about income tax?
► Different companies pay tax on different rates
► It is treated as an expense and debited in Profit & Loss account
► When financial statements are prepared, an estimate of expected tax liability is
made
► It is treated as an expense and credited in Profit & Loss account
Question No: 27 ( Marks: 1 ) - Please choose one
Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400
Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 10%
Identify the Total amount deducted from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 3,080
► Rs. 5,480
Question No: 25 ( Marks: 1 ) - Please choose one
A financial statement that indicates the success or failure of a business, over a period of
time is called:

► A cash flow statement

► A retained earnings statement
► An income statement
► A balance sheet

Question No: 20 ( Marks: 1 ) - Please choose one

When closing stock is given in trial balance, then it will effect:
► Trading account only
► Balance sheet only
► Owner's equity only
► Both Trading account and Balance sheet
Question No: 11 ( Marks: 1 ) - Please choose one
A firm may earn profit during an accounting period but have less money in the bank at
the end of the period then it had at the beginning. Which of the followings, on its own,
could explain this?

► Not paying invoices received from creditors

► The sale of fixed assets during the period
► An increase in trade debtors over the course of the period
► An increase in the depreciation charge relative to the previous accounting period
Question No: 54 ( Marks: 1 ) - Please choos
What is the reason that some short term creditors prefer quick ratio over current ratio as a
measure of short-term liquidity?
 ► Short operating cycle of the company
► Long operating cycle of the company
► Liquidity is not affected by operating cycle
► It is the creditor’s choice
Question No: 45 ( Marks: 1 ) - Please choose one
The amount of prepaid insurance that expired in the current accounting period should be
reported as _____________.
► Prepaid insurance
► Insurance expense
► Insurance payable
► Insurance paid
Question No: 41 ( Marks: 1 ) - Please choose one
Which of the following statement is correct? If a company fails to record estimated bad
debts expense,
► Net realizable value is understated
► Expenses are understated
► Revenues are understated
► Receivables are understated

Which of the following is not a cause of difference in balances as per pass book and cash
book?

► Error in cash book

► Error in pass book
► Direct deposit
► Un credited cheques

Question No: 31 ( Marks: 1 ) - Please choose one

Particulars
Nominal value of each share Rs.10
No of shares issued 10,000 shares
Net profit Rs. 20,000
Divined paid 10%
What is the EPS ?

► Rs. 1.00
► Rs. 2.00
► Rs. 3.00
► Rs. 4.00
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following is (are) NOT example(s) of distributable profit?
► None of the given options
► General reserve
► Accumulated profit and loss (credit balance)
► Revaluation reserves
Question No: 10 ( Marks: 1 ) - Please choose one
The Primary objective of providing depreciation is:

► To calculate true profit

► To show the asset on market value
► To reduce tax Burdon
► To provide funds for replacement
Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following summarizes the cash movements during a specified period?

► Trading account
► Profit & Loss account
► Receipts & Payments account
► Balance Sheet
Question No: 49 ( Marks: 1 ) - Please choose one
Sanders Construction sold a plant asset that originally cost Rs.80,000 for Rs.52,000 cash.
If Sanders correctly reports a Rs.5,000 gain on this sale, the accumulated depreciation on
the asset at the date of sale must have been:
► Rs.23,000
► Rs.28,000
► Rs.33,000
► Some other amount
Question No: 34 ( Marks: 1 ) - Please choose one
A company is said to have been registered when:

► It gets certificate of incorporation from registrar of Companies

► It gets certificate of commencement of business from registrar of Companies
► It actually starts its business
► It filed with the Registrar of Companies articles certain documents, like
memorandum and articles of association

In Income Statement, both beginning inventory and ending inventory appear in the
section of:
► Cost of good sold
► Indirect cost
► Selling cost
► Factory over head cost
Question No: 13 ( Marks: 1 ) - Please choose one
The Primary objective of providing depreciation is:

► To calculate true profit

► To show the asset on market value
► To reduce tax Burdon
► To provide funds for replacement
 Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following value of the share is authorized by the memorandum of
association?
► Par value
► Face value
► Nominal value
► All of the given options
Question No: 54 ( Marks: 1 ) - Please choose one
Which of the following is one of the major factors affecting the market value of a
company’s shares?
► Current ratio
► Earning per share
► Return on investment
► Return on asset

Question No: 47 ( Marks: 1 ) - Please choose one

Deferred revenues will become revenue when they are:
► Realized
► Earned
► Incurred
► Paid

Question No: 50 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal share in profit or loss. The agreement
provides that Mr. A will receive Rs.10,000 and Mr. B will receive Rs.8,000 as salary
allowance. The net income for the year is Rs.85,000. What will be the total share of Mr.
B?

► Rs.52,500

► Rs.42,500

► Rs.41,500

► Rs.50,500

Question No: 47 ( Marks: 1 ) - Please choose one

Adjusting costs are reported as:

► Revenues

► Expenses
 ► Assets

► Net Income

Question No: 48 ( Marks: 1 ) - Please choose one

Which of the following is also affected when an adjusting entry is passed to accrue an
incurred expense?

► Total assets

► Total liabilities

► Current assets

► Total income

Question No: 36 ( Marks: 1 ) - Please choose one

The statement of changes in equity basically shows the movement of:

► share capital during the year

► Capital reserves during the year

► Revenue Reserves during the year

► All of the given options

Question No: 54 ( Marks: 1 ) - Please choose one

In statement of cash flows, interest payment made on loan from bank is related
to:
► Investing activity
► Financing activity
► Operating activity
► Net changes in working capital

Question No: 52 ( Marks: 1 ) - Please choose one

Which of the following financial statement is helpful for the investors and
creditors to assess the cash and non cash aspects of operating, investing and
financing transactions on an entity’s financial position?
► Balance Sheet
► Income Statement
► Statement of cash flows
 ► Statement of changes in equity
Question No: 32 ( Marks: 1 ) - Please choose one
The primary purpose of preparing a cash flow statement for an entity is to
provide information about:
► Its financial position at the end of an accounting period
► Its cash receipts and cash payments during an accounting period
► Its financial position at the start of an accounting period
► None of the given options
Question No: 27 ( Marks: 1 ) - Please choose one
Capital account of sole proprietors is affected by which of the following items?
a. Profit & Loss account
b. Drawings account
c. Balances of capital account

► a,b
► b,c
► a,c
► a,b,c

Question No: 52 ( Marks: 1 ) - Please choose one

According to the statement of cash flows following are the examples of
investing activities except:
► Sales of machinery
► Capital invested by the owners
► Purchase of building for the business use
► Cash received from the disposal of equipment

Question No: 46 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal
share in profit or loss. Markup on capital of Mr. A is Rs.2,500 and markup
on drawings of Mr. B is Rs.2,800. The net income for the year is Rs.95,000.
What will be the amount of distributable profit?
► Rs.89,700
► Rs.94,700
► Rs.95,300
► Rs.100,300

Question No: 44 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal share in profit or loss.
The agreement provides that Mr. A will receive Rs.10,000 and Mr. B will
receive Rs.8,000 as salary allowance. The net income for the year is
Rs.85,000. What will be the total share of Mr. A?
► Rs.52,500
► Rs.42,500
► Rs.43,500
► Rs.50,500
Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following is an example of operating expense?

► Purchasing operating equipment

► Purchasing cleaning services
► Purchasing an investment in another company
► Purchasing a computer for the accounting office

Question No: 3 ( Marks: 1 ) - Please choose one

According to the double entry system of accounting, an account that obtains
benefit is:
► Debit
► Credit
► Income
► No need to show as accounting record

Question No: 54 ( Marks: 1 ) - Please choose one

Which of the following is a detailed record of an individual account in case of
large business?
Control Account
Subsidiary Ledger
Balance Sheet

Trial Balance Question No: 43 ( Marks: 1 ) - Please choose one

A firm may earn profit during an accounting period but have less money in
the bank at the end of the period then it had at the beginning. Which of the
followings, on its own, could explain this?
Not paying invoices received from creditors
The sale of fixed assets during the period
An increase in trade debtors over the course of the period
An increase in the depreciation charge relative to the previous accounting
Period

Question No: 2 ( Marks: 1 ) - Please choose one

What does a credit balance in a partner’s current account represent to a business?

► Current Assets
► Current Liability
► Long-term liability
► Share of profit

Question No: 3 ( Marks: 1 ) - Please choose one

Which of the following ratio tells about “How a company would repays its loans”

► Mark up cover ratio

► Acid test ratio
 ► Current ratio
► Debt Equity ratio

Question No: 54 ( Marks: 1 ) - Please choose one

Which of the following is NOT based on the concept of double entry book keeping
system?

► Subsidiary Ledgers
► Creditors Control Accounts
► Debtors Control Accounts
► All of the given options

Question No: 44 ( Marks: 1 ) - Please choose one

Deferred cost is classified as:
► Current liability
► Current asset
► Non-current asset
► Non-current liability
A deferred cost can be a liability or expenditure not recorded as a cost of operation
for the period in which it was incurred, but to be written off on a later date.
Deferred costs can also be prescribed to assets that cannot be reliably recognized as
such, but need to be deferred to be matched with future income in order to avoid a
distorted net income.

Question No: 4 ( Marks: 1 ) - Please choose one

When preparing cash flow statements, the repayments of a loan during the year
should be included under which of the following heading?
► Operating activities
► Financing activities
► Investing activities
► None of the given options

Question No: 44 ( Marks: 1 ) - Please choose one

The company ABC purchased an asset for Rs. 40,000, paying 30,000 in cash and
issuing a long term note payable for remaining balance. The amount will be
recorded in statement of cash flows as:
► Rs. 40,000 cash outflow as investing activity
► Rs. 30,000 cash outflow as investing activity
► Rs. 10,000 cash inflow as investing activity
► Rs. 70,000 cash inflow as investing activity

Question No: 38 ( Marks: 1 ) - Please choose one

What is the treatment of Accumulated Depreciation in Balance Sheet?
 ► It may treated as a deficit
► It may treated as a surplus
► It may treated as a revenue
► None of the given options

Question No: 32 ( Marks: 1 ) - Please choose one

An example of financing activities in the context of cash flow statement is:

► Capital expenditures on purchase of fixed assets

► Long-term deposit
► Financial charges paid
► Dividend paid

Question No: 36 ( Marks: 1 ) - Please choose one

What is the treatment of Accumulated Depreciation in Balance Sheet?

► It may treated as a deficit

► It may treated as a surplus
► It may treated as a revenue
► None of the given options

Question No: 47 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal
share in profit or loss. Markup on capital of Mr. A is Rs.2,000 and markup
on drawings of Mr. B is Rs.3,000. The net income for the year is Rs.50,000.
What will be the profit share of Mr. A?
► Rs.22, 500
► Rs.25, 500
► Rs.27, 500
► Rs.55, 000

Question No: 40 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as an inflow of cash?
► The repayments of a bank loan
► Dividend issue in the current year
► Money received as result of selling fixed assets
► The difference between the valuations of old and new fixed assets
Question No: 54 ( Marks: 1 ) - Please choose one
Which of the following ratio cannot be computed for a period in which the
company incurs a net loss?
► Acid-test ratio doubted
► Return on investment
► Price-earning ratio
► None of the given options
Question No: 45 ( Marks: 1 ) - Please choose one
Expenditures incurred annually on renewal of patent are known as:

► Revenue Expenditures
► Capital Expenditures
► Deferred Expenditures

► None of the given options

Question No: 38 ( Marks: 1 ) - Please choose one

How dividend declared is treated in the Balance Sheet of the company?

► Provision
► Current liability
► Reserves and surplus
► Current assets

Question No: 54 ( Marks: 1 ) - Please choose one

Short term investments in marketable securities and treasury bills that will mature
within ninety days from the date of acquisition, must be classified as:
► Receivables
► Receipts from Capital
► Current and intangible assets
► Cash equivalents

Question No: 49 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with an
equal share in profit or loss. Markup on drawings of Mr. A is Rs.1,500 and of Mr. B
is Rs.1,800. The net income for the year is Rs.85,000. What will be the amount of
distributable profit?
► Rs.81,700
► Rs.88,300
► Rs.131,700
► Rs.146,700
Question No: 36 ( Marks: 1 ) - Please choose one
Which of the following accounts would be increased with a debit?
Contributed Capital
Retained Purchases returns account and sales account
Sales account, purchase account and A s account
Both of Mr. P's & Mr.Q's Account
 Paper No:25
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION
Fall 2008
MGT101- Financial Accounting (Session - 1)
Marks: 85
Question No: 1 ( Marks: 1 ) - Please choose one
The area of accounting concerned with reporting financial information to the
interested parties is called:
Cost Accounting
Financial Accounting
Management Accounting
Tax Accounting

Question No: 2 ( Marks: 1 ) - Please choose one

when income exceeds expenses in a specific time period is known as:
Savings
Net profit
Gross profit
Operating profit

Question No: 3 ( Marks: 1 ) - Please choose one

Net Profit =? - Expenses
Liabilities
Assets
Capital
Income
Question No: 4 ( Marks: 1 ) - Please choose one
Economic resources owned by a business and expected to benefit for the future
operations are called:
Expenses
Assets
Capital
Liabilities
Question No: 5 ( Marks: 1 ) - Please choose one
Mr. A provided the following information from his books of accounts at the end of
the month.
Particulars Rs.Cash 100
Accounts Receivable 500
Accounts Payable 200
Bank Loans 1,000
Based on the information provided, what are Mr. A s total liabilities?
Rs.200
Rs. 900
Rs. 1200
Rs. 1700

Question No: 6 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 90,000 and operating expenses
are Rs. 25,000 during the year. What would be the Net Profit?
Rs. 5,000
Rs. 25,000
Rs. 55,000
Rs. 60,000

Question No: 7 ( Marks: 1 ) - Please choose one

If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating expenses are
Rs. 100,000. What will be the net result?
Rs. 5,000 Loss
Rs. 5, 000 Profit
Rs.1, 95,000 Profit

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Rs.1, 95,000 Loss

Question No: 8 ( Marks: 1 ) - Please choose one

If the Company ABC has current assets Rs. 100,000, current liabilities Rs.
75,000 and fixed assets Rs. 200,000, what would be the value of working
capital?
Rs. 25,000
Rs. 1, 00,000
Rs. 1, 75,000
Rs. 3, 00,000
Question No: 9 ( Marks: 1 ) - Please choose one
Which of the following is
NOT
a type of voucher?
Journal Voucher
Receipt Voucher
Payment Voucher
Drawings Voucher

Question No: 10 ( Marks: 1 ) - Please choose one

What would be the value of 'cost of goods manufactured' if the total factory cost
of the month is Rs. 6,000, opening work in process is Rs. 2,000 and the closing
work in process is Rs. 2,500?
Rs. 5,500
Rs. 8,000
Rs. 4,500
Rs. 8,500

Question No: 11 ( Marks: 1 ) - Please choose one

Which of the following asset is NOT depreciated?
Factory Buildings
Office Equipment
Plant & Machinery
Land

Question No: 12 ( Marks: 1 ) - Please choose one

Accounting is the language of:
Business
School
Proprietor
Management

Question No: 13 ( Marks: 1 ) - Please choose one

Increase in an asset is recorded on the:
Left or credit side of the account
Right or debit side of the account
Left or debit side of the account
Right or credit side of the account

Question No: 14 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine Rs. 2,00,000
Cost of new machine purchased during the year Rs. 50,000
Depreciation during the year Rs. 25,000
Closing written down value (WDV) of machines ?
Rs. 2, 25,000
Rs. 2, 50,000
Rs. 2, 75,000
Rs. 75,000
Question No: 15 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening written down value of machine 4,00,000

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Cost of machine purchased during the year 50,000
Depreciation during the year 20,000
closing written down value (WDV) of the Machines
?
Rs. 4, 30,000
Rs. 4, 50,000
Rs. 4, 70,000
Rs. 70,000

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following is NOT a function of bank reconciliation statement?

To reconcile the difference between the cash book and the bank statement
To check for errors in balance sheet
To update omitted entries into the cash book
To update omitted entries into the bank statement

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following account would be credited, when the bad debts are
recovered?

Allowance for bad debts a/c

Bad debts recovered a/c
Doubtful debts a/c
Cash a/c

Question No: 18 ( Marks: 1 ) - Please choose one

In which of the following condition(s) DEBT is regarded as BAD

.Bankruptcy of the debtor

Disappearance of debtor s business
Failure of repeated attempt to collect the debt
All of the given options

Question No: 19 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit
& loss account.

Particulars Rs.
Bad debts 3,600
Provision for doubtful debts (old) 6,000
Current year s provision (new) 1,500

Rs. (5,100)
Rs. 5,100
Rs. 900
Rs. (900)

Question No: 20 ( Marks: 1 ) - Please choose one

Bad debts written off (given in adjustment) always affect the:
Debtors account
Creditors account
Cash account
Capital account

Question No: 21 ( Marks: 1 ) - Please choose one

It is supposed that on 31December, 2007, the sundry debtors are amounted to
Rs. 40,000. On the basis of past experience, it is estimated that 5 % of the

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sundry debtors are doubtful. Actual bad debts are Rs. 1600. What amount of
new provision for doubtful debts will be credited in profit & loss account.
Rs. 3,600
Rs. 2,000
Rs. 1,600
Rs. 400

Question No: 22 ( Marks: 1 ) - Please choose one

Consider the following data:
Provision created in 2006
Rs. 2,500
Bad debts in 2007
Rs. 1,500
Sundry debtors on 31-12- 2007 were Rs. 40,000 and provision is created @
5%.
Which journal entry is Correct for the provision for doubtful debts for the year
2007.
Provision for doubtful debts a/c Rs. 1,000 (Dr) & Profit & Loss a/c Rs.
1,000 (Cr)
Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs.
2,000 (Cr)
Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs.
2,000 (Cr)
Profit & Loss a/c Rs. 1,000 (Dr) & Provision for doubtful debts a/c Rs.
1,000 (Cr)

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following is an item of a debtors control account?
Cash sale
Credit sales
Credit purchase
Cash purchases

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?
Cash sales
Credit sales
Bills receivable
Discount allowed

Question No: 25 ( Marks: 1 ) - Please choose one

If provision is created for doubtful debts, which of the following entry will be
passed to record bad debts in control account?
Bade debts (Dr) and Debtors Control A/c (Cr)
Provision for doubtful debts (Dr) and Debtors Control A/c (Cr)
Provision for doubtful debts (Dr) and Debtors A/c (Cr)
Debtors Control A/c (Dr) and Provision for doubtful debts (Cr)

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of
sales to Rahim Rs. 336 posted to his account as Rs. 363?
Sales account
Rahim s account
Cash account
Both sales and Rahim s Account

Question No: 27 ( Marks: 1 ) - Please choose one

When one or both aspects of a transaction are recorded in the wrong class or
category of account, this is called:
Error of principle

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Error of omission
Error of commission
Error of original entry

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following is the first phase of the typical operating cycle?
Receive cash from customers
Pay cash to suppliers
Sell goods and services to customers
Purchase goods and services

(In the first phase of the operating cycle a business, unless it is a service
business, buys inventory and materials which they will resell to customers.)

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following is normally treated as the last expense listed in the income
statement of a company?

General and administrative expenses

Salaries and wages expense
Income tax expense
Interest expense

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following would NOT be considered as a component of 'cost' of
stock?
Salaries of selling staff
Transportation inward costs
Import duties
Purchase price

Question No: 31 ( Marks: 1 ) - Please choose one

Regardless of how long it takes to produce and sell , inventory is always
considered to be a:
current liability
long-term asset
stockholders' equity
current asset

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following is/are NOT shown in balance sheet of sole proprietor?
Fixed assets
Current liabilities
Profit sharing ratio
Long term assets

Question No: 33 ( Marks: 1 ) - Please choose one

What will the effects on financial statements, if machinery is depreciated @ 10%?
It will be treated as an expense in income statement only
It will be subtracted from concerned asset only
It will be treated as a current asset only
It will be treated as an expense in income statement and subtracted from
concerned assets in Balance Sheet

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?
Accounts receivable arises when a company buys goods or services from
another party on credit
Accounts receivable is a miscellaneous category that may include loans to
employees
Accounts receivable are more formal than notes receivable
Accounts receivable are often called trade receivables

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Question No: 35 ( Marks: 1 ) - Please choose one
Which of the following statement is TRUE about the partnership form of
business?
Partners must have to share their profits in equal proportion
Partners are personally liable for the liabilities of the business
Partnerships must make their accounts available to the general public
Partnership agreement in writing is called Partnership deed

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have
agreed to share the profit of business carried on by all or any of them acting for
all?
Sole-ownership
Private limited company
Public limited company
Partnership

Question No: 37 ( Marks: 1 ) - Please choose one

When the capitals are fixed, which of the following account will be debited for
drawings made by a partner?
Individual Partner s Current Account
Partner s Cash Account
Partner s Bank Account
Partners Capital Account

Question No: 38 ( Marks: 1 ) - Please choose one

Which of the following clause/s are discussed in Memorandum of Association of
Companies?
Name of company
Place of registered office of company
Objective of the company
All of the given options

Question No: 39 ( Marks: 1 ) - Please choose one

Preliminary Expenses of the company may write off against:
Share premium account
Share holder account
Debtors control account
Creditor control account

Question No: 40 ( Marks: 1 ) - Please choose one

A _______________ business is one in which income is generated by the resale
of bought Products.
Manufacturing
Merchandising
Sole Proprietorship
Partnership
Question No: 41 ( Marks: 1 ) - Please choose one

Which of the following documents contains rules and regulations for internal
management of the company?
Memorandum of Association
Articles of Association
Prospectus
Statutory Declaration

Question No: 42 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if provision for Income Tax to be
made Rs. 12,000 is given in adjustment?
It will be deducted in Income Statement only

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It will be treated as current liability in balance sheet only
It will be treated as current asset in balance sheet only
Both it will be deducted in income statement and it will be treated as
current liability in balance sheet

Question No: 43 ( Marks: 1 ) - Please choose one

A firm may earn profit during an accounting period but have less money in the
bank at the end of the period then it had at the beginning. Which of the
followings, on its own, could explain this?
Not paying invoices received from creditors
The sale of fixed assets during the period
An increase in trade debtors over the course of the period
An increase in the depreciation charge relative to the previous accounting
Period doubted
Question No: 44 ( Marks: 1 ) - Please choose one
Which of the given Asset is
Not
included in the calculation acid test ratio?
Stock
Cash
Debtors
Bills Receivable

Question No: 45 ( Marks: 1 ) - Please choose one

When the current Ratio is 2: 5 and the amount of Current Liabilities is Rs. 25,000.
What will be the amount of Current Assets?
Rs. 62,500
Rs. 12,500
Rs. 10,000 (2 * 25000/5 = 10000)
Cannot be calculated with the help of given data

Question No: 46 ( Marks: 1 ) - Please choose one

If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of
Mr. A, Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. B
in distributable profit.
Rs. 98,000
Rs. 1, 47,000
Rs. 2, 45,000
Rs. 3, 43,000

Question No: 47 ( Marks: 1 ) - Please choose one

If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of
Mr. A, Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. C
in distributable profit.
Rs. 98,000
Rs. 1, 47,000
Rs. 2, 45,000
Rs. 3, 43,000

Question No: 48 ( Marks: 1 ) - Please choose one

The net income calculated in the income statement for the accounting period is
reported on:
Bank Statement
Statement of retained earnings
Statement of cash flows
None of the given options

Question No: 49 ( Marks: 1 ) - Please choose one

A company declares a cash dividend to be paid to its stockholders next month.
The effect of the transaction is to:
Decrease assets and liabilities.
Increase assets and stockholders' equity.

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Decrease assets and stockholders' equity.
Increase liabilities and decrease stockholders' equity.

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following item will be credited in capital account of sole proprietor?
Cash
Drawings
Debtors
Profit

Question No: 51 ( Marks: 5 )

Describe the following terms.
Error of principle
Error of omission
Error of commission
Error of original entry

Question No: 52 ( Marks: 10 )

The following discrepancies were noted on comparing Cash Book with Pass
Book.
1. Balance as per Cash Book (Cr) is Rs. 19,000.
2. Cheque for Rs. 5,000 paid into the bank for collection on 20
th
March, 2008
has not yet been collected.
3. Cheques for Rs. 15,000 Issued on 24
March, 2008, out of which
th
Cheques for Rs. 10,000 presented during March, 2008
4. An amount of Rs. 1,000 for interest on overdraft was debited in the Pass
Book but was intimated to Mr. David on 4
th
April, 2008.
5. Mr. David paid into his bank account an amount of Rs. 3,000 but it was
wrongly credited to Mr. Denial s Account.
6. On 20th March, 2008 the bank received dividend of Rs. 10,000 from a
company where Mr. David's has invested his money, the same had been
recorded in Cash Book on 31st March, 2008.
7. Cheque of Rs. 2,500 was shown in Pass Book as dishonored.
Required:
Prepare a Bank Reconciliation Statement as on 31
March, 2008
st
Question No: 53 ( Marks: 10 )
On 01-01-2007, the provision for doubtful debts a/c stood at Rs. 12,000 (credit
balance). In 2007, the bad debts during the year are amounted to Rs. 10,000.
The debtors on 31-12-2007 are amounted to Rs. 3, 20,000 and a provision for
doubtful debt to be maintained @ 5%.
Required:
Show Journal entries and necessary accounts. Also show how the items will
appear in Profit and Loss account and Balance sheet
Paper No:26
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION
Fall 2008
MGT101- Financial Accounting (Session - 1)
Marks: 85

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Question No: 1 ( Marks: 1 ) - Please choose one
An accounting system is used by a business to:
Analyze transactions
Handle routine book-keeping tasks
Structure information
All of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

We can say that the business is in profit, when:
Assets exceed Expenditure
Assets exceed Liabilities
Income exceeds Expenditure
Income exceeds Liabilities
Question No: 3 ( Marks: 1 ) - Please choose one
Accounts Receivable & Inventory are the examples of:
Liquid assets
Current assets
Fixed assets
Capital assets
Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following account will be credited in the books of ABC Co. Ltd., if
furniture is purchased on cash?
Furniture account
Cash account
Business account
Bank account
Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, if business sold goods for
Rs.10,000 on credit?
Cash account
Sales account
Accounts receivable account
Purchases account
Question No: 6 ( Marks: 1 ) - Please choose one
If Cost of asset=Rs. 100,000, Residual Value (RV) = Rs. 20,000 and Life = 3
years, what will be the rate of depreciation?
10%
22%
42%
52% (Rate = 1 – n√ RV / C
Where:

“RV” = Residual Value

“C” = Cost

“n” = Life of Asset

Calculate the rate if:

Cost = 100,000

Residual Value (RV) = 20,000

Life = 3 years

Rate = 1 – 3 √20000/100000

= 42%)
Question No: 7 ( Marks: 1 ) - Please choose one
Consider the following inventory record:
Date Item
Quantity
Cost/Unit
Total
2007Jan. 2
Opening

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100 Rs.18.00
Rs.1,800
inventory
Mar. 4
Purchase 400 19.00
7,600
May 8
Purchase 800 20.00
16,000
Nov. 3
Purchase 500 21.00
10,500
Four hundred units are unsold, Use the FIFO method of inventory costing and
determine the value assigned to the 400 units on hand at the end of the period.
Rs.7, 500
Rs.7, 978
Rs.8, 000
Rs.8, 400

Question No: 8 ( Marks: 1 ) - Please choose one

If you start with cash book favorable balance in Bank Reconciliation Statement,
which item will be added?

Cheque deposited but not credited by the bank

Cheques omitted to be deposited into bank
Any amount directly collected by bank on behalf of customer but not
recorded in cash book
Debit side of cash book was overcast

Question No: 9 ( Marks: 1 ) - Please choose one

Bank Reconciliation Statement is:
A memorandum statement
A ledger account
A part of cash book
A part of journal
Question No: 10 ( Marks: 1 ) - Please choose one
Accountancy covers which of the following area(s):
Book-keeping
Accounting
Auditing
All of the given options
Question No: 11 ( Marks: 1 ) - Please choose one
Find out the missing value of an Accounting Equation with the help of given data:
Cash at bank Rs. 22,500
Other assets Rs. 1,000
Creditors Rs. 8,385
Other liabilities Rs. 9,000
Rs. 6,115 owner s equity
Rs. 31,885
owner s equity
Rs. 17,385
owner s equity
Rs. 18,385
owner s equity

Question No: 12 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets 8,20,000
Owner's equity 3,80,000
Liabilities ?

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Rs. 1, 98,000
Rs. 49,000
Rs. 55,000
Rs. 4, 40,000
Question No: 13 ( Marks: 1 ) - Please choose one
Which of the following is
CORRECT
regarding depreciation?
It is a systematic allocation of depreciable amount of an asset over its
estimated useful life
It refers to the end life of an asset
It refers to the increase in value of asset
It is another name of Impairment
Question No: 14 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening written down value of machine 3,00,000
Cost of machine purchased during the year 50,000
Depreciation during the year 9,000
closing written down value (WDV) of the Machine ?
Rs. 3, 41,000
Rs. 3, 50,000
Rs. 3, 59,000
Rs. 59,000
Question No: 15 ( Marks: 1 ) - Please choose one
Which one of the following is
NOT
true for Profit & Loss Account?
It shows whether a business has made a profit or loss over a financial year
It shows the financial performance of a business for the period
It shows revenues and expenses for the period
It is used to calculate surplus/deficit for a particular period
Question No: 16 ( Marks: 1 ) - Please choose one
Which one of the following transactions will cause the balance in Mr. Terry's
Cash Book to be greater than his Bank Statement balance?
A cheque is drawn but not yet presented at the bank for payment
The bank has not yet notified to Mr. Terry about a dishonoured cheque
A credit transfer into Terry's Bank Account
A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110
Question No: 17 ( Marks: 1 ) - Please choose one
An overdraft will appear as:
a debit balance in the both the bank statement and the cash book.
a credit balance in the bank statement but as a debit balance in the cash
book.
a credit balance in the cash book but as a debit balance in the bank
statement.
a credit balance in both the bank statement and the cash book.
Question No: 18 ( Marks: 1 ) - Please choose one
Which of the following account would be credited, when the bad debts are
recovered?
Allowance for bad debts a/c
Bad debts recovered a/c
Doubtful debts a/c
Cash a/c
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following option is
TRUE
about the characteristic(s) of Bad Debt?
It is a definite loss to the business
It is not shown in Balance Sheet
No provision is necessary for it
All of the given options
Question No: 20 ( Marks: 1 ) - Please choose one

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If the
(New provision + Bad debts) > Amount of old provision
then resulting
figure will be shown at:
Debit side of Profit & Loss Account
Credit side of Profit & Loss Account
Asset side of Balance Sheet
Liability side of Balance Sheet
Question No: 21 ( Marks: 1 ) - Please choose one
Which of the following entry will be recorded when the Bad Debts are recovered?
Cash account (Dr.) & Bad Debts recovered account (Cr.)
Accounts Receivable account (Dr.) & Bad Debts recovered account (Cr.)
Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)
Provision for doubtful debts account (Dr.) & Cash account (Cr.)
Question No: 22 ( Marks: 1 ) - Please choose one
Which of the following subsidiary book(s) is (are) maintained for debtors control
account?
Sales Day Book
Sales Return
Debtors Ledger
All of the given options
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following is an item of a debtors control account?
Cash sale
Credit sales
Credit purchase
Cash purchases
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following is a detailed record of an individual account in case of
large business?
Control Account
Subsidiary Ledger doubted
Balance Sheet
Trial Balance
Question No: 25 ( Marks: 1 ) - Please choose one
Which of the following entry will be passed to record discount received in control
account?
Discount Received (Dr) and Creditors Control A/c (Cr)
Discount Received
(Dr) and Creditors A/c (Cr)
Creditors Control A/c (Dr) and Discount Received (Cr)
Creditors A/c (Dr) and Discount Received
(Cr)
Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following account(s) will be affected, while rectifying the error of
carriage charges, paid for a new plant purchased mistakenly debited to carriage
account?
Plant account
Carriage account
Both plant account and carriage account
Trading account
Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following account(s) will be affected, while rectifying the error of
sales Rs.100 to Mr. A recorded in the purchases book?
Sales account
Purchase account
A s account and Sales account
Sales account, purchase account and A s account
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following account(s) will be affected, while rectifying the error of an
amount Rs.200 received from Mr. P wrongly credited to Mr. Q s account?
Only Cash Account

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Only P s account
Only Q s account
Both of Mr. P's & Mr.Q's Account
Question No: 29 ( Marks: 1 ) - Please choose one
Which of the following entry will be recorded, if a cheque deposited is dishonored
by bank?
Bank Account (Dr.) and Debtor's Account (Cr.)
Debtor's Account (Dr.) and Bank Account (Cr.)
Dishonored Cheque Account (Dr.) and Bank Account (Cr.)
Creditor's Account (Dr.) and Bank Account (Cr.)
Question No: 30 ( Marks: 1 ) - Please choose one
It is supposed that on 31st December, 2007, the sundry debtors are amounted to
Rs. 40,000. On the basis of past experience, it is estimated that 10% of the
sundry debtors are doubtful. Actual bad debts are Rs. 1600. What amount of
new provision for doubtful debts will be deducted from Sundry debtors?
Rs. 3,600
Rs. 4,000
Rs. 1,600
Rs. 2, 400
Question No: 31 ( Marks: 1 ) - Please choose one
Following information are extracted from books of Mr. XYZ
Particulars Rs.
Closing value of stock 40,000
Bad Debts (Given in trial balance) 500
Old provisions (Given in trial balance) 700
Sundry Debtors (Given in trial balance) 44,500
Provision for doubtful debts be increases by 5%
What will be the amount of new provision
?
Rs. 2,225
Rs. 2,425
Rs. 1,925
Rs. 3,025
Question No: 32 ( Marks: 1 ) - Please choose one
The main objective of financial reporting is to provide:
Essential information to internal users of financial reports.
Useful economic information about the business to the external parties for
sound financial decisions.
Information to internal users about the cash position of the business.
Information to the Securities Exchange Commission (SEC).
Question No: 33 ( Marks: 1 ) - Please choose one
Which of the following is
NOT correct about income tax?

Different companies pay tax on different rates

It is treated as an expense and debited in Profit & Loss account
When financial statements are prepared, an estimate of expected tax
liability is made
It is treated as an expense and credited in Profit & Loss account
Question No: 34 ( Marks: 1 ) - Please choose one
An asset is considered to be a current asset if:
It has been bought recently and was bought new and not used
It can be realized in cash or sold or consumed in the business within one
year
It is a piece of new machinery that is expected to last for at least ten years
All of the given options
Question No: 35 ( Marks: 1 ) - Please choose one
Which of the following item will be shown on debit side of capital account of sole
proprietor?
Cash
Drawings
Debtors

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Profit
Question No: 36 ( Marks: 1 ) - Please choose one
In which type of a business, the owner and his business are considered same in
the eyes of law?
Sole proprietorship
Public companies
Limited companies
Listed companies

Question No: 37 ( Marks: 1 ) - Please choose one

When closing stock is given in trial balance, then it will effect:
Trading account only
Balance sheet only
Owner's equity only
Both Trading account and Balance sheet

Question No: 38 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?
Total assets employed
Total liabilities
Total assets
Current assets

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following statements is
NOT TRUE about the partnership form of business?

A partnership is a business run by two or more persons

A partnership business is easy to set up
Each partner is liable under the law for the actions of other partners
In the absence of agreement, partners will be paid salaries

Question No: 40 ( Marks: 1 ) - Please choose one

Which of the following statement is
TRUE
about the partnership form of
business?
Partners must have to share their profits in equal proportion
Partners are personally liable for the liabilities of the business
Partnerships must make their accounts available to the general public
Partnership agreement in writing is called Partnership deed
Question No: 41 ( Marks: 1 ) - Please choose one
Which of the following are the owners of a company?
Proprietors
Partners
Shareholders
Managers
Question No: 42 ( Marks: 1 ) - Please choose one
The persons who sign articles and memorandum of the company and contribute
in the initial share capital of the company are called:
Subscribers
Shareholders
Managers
Directors
Question No: 43 ( Marks: 1 ) - Please choose one
A _______________ business is one in which income is generated by the resale
of bought Products.
Manufacturing
Merchandising
Sole Proprietorship
Partnership
Question No: 44 ( Marks: 1 ) - Please choose one

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In which of the following auditor s remuneration payable is shown?

In balance sheet under the head of current liabilities only

In balance sheet under the head of current assets only
In income statement under the administrative expense only
In both balance sheet under the head of current liabilities and income
statement under the administrative expense

Question No: 45 ( Marks: 1 ) - Please choose one

Which of the following document(s) define the relation of company with outside
world?
Prospectus
Statutory Declaration
Memorandum of Association
Articles of Association
Question No: 46 ( Marks: 1 ) - Please choose one
Which of the following is the most important document of the company?
Memorandum of Association
Articles of Association
Prospectus
Annual Report
Question No: 47 ( Marks: 1 ) - Please choose one
What are the effects on financial statements, if Rs. 6,000 transfer to general
reserve is given in adjustment?
It will be treated in Income Statement only
It will be treated as current liability in balance sheet only
It will be treated in profit and loss appropriation account only
it will be treated in both profit and loss appropriation account and in the
balance sheet

Question No: 48 ( Marks: 1 ) - Please choose one

Which of the following ratio tells about How a company would repays its loans
Mark up cover ratio
Acid test ratio
Current ratio
Debt Equity ratio
Question No: 49 ( Marks: 1 ) - Please choose one
If company has distributable profit of Rs. 490,000, Profit sharing share ratio of
Mr. A, Mr. B and Mr. C is 2:3:5 respectively. What will be the share of profit for
Mr. A in distributable profit?
Rs. 98,000
Rs. 147,000
Rs. 245,000
Rs. 343,000
Question No: 50 ( Marks: 1 ) - Please choose one
A company declares a cash dividend to be paid to its stockholders next month.
The effect of the transaction is to:
Decrease assets and liabilities.
Increase assets and stockholders' equity.
Decrease assets and stockholders' equity.
Increase liabilities and decrease stockholders' equity.

Question No: 51 ( Marks: 5 )

You are required to pass rectifying entries of the following errors:
1. Received cash Rs. 500 from Mr. "B" entered as Rs. 300 in the cash book.
2. A cash sale of Rs. 600 has completely omitted to be recorded in the
books.
3. Goods worth Rs. 200 were returned to Mr. Kamran but no entry was
passed in the books.

Question No: 52 ( Marks: 10 )

Prepare profit & loss Appropriation account with the help of given data and show

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capital accounts and current account in balance sheet for XY Z & Sons
Particulars Rs.
Net profit for the year 600,000
Opening balance of Capital X:400,000
Y: 250,000
Z: 300,000
Drawings during the year X: 100,000
Y: 150,000
Z: 125,000
Salaries are to be paid X: 12,000
Y:20,000
Z:15,000
Opening Balance of current
X: 50,000
account
Y: 60,000
Z: 45,000
Mark up rate on capital 5%
Mark up rate on drawings 5%
Profit sharing ratio for X:Y:Z 30: 25:45
It is assumed that no capital introduced during the year

Question No: 53 ( Marks: 10 )

Following information is extracted from the books of Mr. Ali and Mr. Babar for the
year 2007.
Particulars Rs.
Fixed Asset at WDV 529,500
Material 31-12-2007 188,000
Work in process 31-12-2007 178,000
Finished Goods 31-12-2007 198,000
Debtors 160,000
Bank 7,000
Creditors 100,000
Expenses payable 15,000
Profit for the year A:80,000
B:70,000
Drawings for the year A:10,000
B:15,000
Capital A:400,000
B: 350,000
Current Account A: 13,000
B:10,000
Long term loans 2,27,500
You are required to prepare Balance Sheet as on 31
December 2007. Show
st
complete working.
Question No: 54 ( Marks: 10 )
The following errors have been discovered in the book of a Business Concern:
1. Wage of Rs. 500 paid for the installation of plant debited to Wages
Account.
2. Purchases of Office Equipment Rs. 2,000 were recorded as regular
purchases of business.
3. Credit sale of Rs. 600 to Kareem was wrongly debited to Kamran.
4. Rs. 200 drawn by the proprietor was treated as Trade Expenses.
5. Rs. 300 received as a Commission was wrongly credited to Sales
Account.
Required:
Pass the rectifying entries only.
Paper no 27
Solved by Chanda Rehman & ABr

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FINALTERM EXAMINATION
fall 2008
MGT101- Financial Accounting (Session - 2)
Marks: 85

Question No: 1 ( Marks: 1 ) - Please choose one

The basic accounting principle/concept according to which Business is
independent from its owner(s) is known as:
Separate Entity Concept
Matching Concept
Going Concern Concept
Materiality Concept

Question No: 2 ( Marks: 1 ) - Please choose one

What would be the affect on the components of the accounting equation, if goods
are purchased on cash?
Increase in cash and decrease in equity
Increase in cash and increase in goods
Increase in goods and decrease in cash
Increase in equipment and increase in equity

Question No: 3 ( Marks: 1 ) - Please choose one

Which of the following is an example of business liability?
Land
Building
Cash
Capital

Question No: 4 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if the goods are sold on
credit to Mr. 'B'?
Mr. B / Accounts Receivable account (Dr) and Sales account (Cr)
Cash account (Dr) and sales account (Cr)
Sales account (Dr) and Mr. B / Accounts Receivable account (Cr)
Goods Sold account (Dr) and Mr. B / Accounts Receivable account (Cr)

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if the goods are sold on credit to
Mr. Mahmood?
Cash account
Mr. Mahood account
Sales account
Purchases account

Question No: 6 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses
are Rs. 20,000 during the year, what would be the value of Gross Profit?
Rs. 15,000
Rs. 35,000
Rs. 55,000
Rs. 60,000

Question No: 7 ( Marks: 1 ) - Please choose one

Which one of the following is CORRECT about the closing stock?
It appears in the assets side of a balance sheet
It decreases the value of cost of goods sold
It becomes opening stock of next year
All of the given option

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Question No: 8 ( Marks: 1 ) - Please choose one
A decrease in value of a fixed asset due to age, wear and tear is known as:
Depreciation
Accumulated Depreciation
Appreciation
Written Down Value

Question No: 9 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for the each year Rs. 5,000
Sale price after 5 years Rs.15,000
Written Down Value of Asset on 5th year Rs. 75,000
Profit or loss on disposal of fixed asset?
Rs. 60,000 loss
Rs. 75,000 profit
Rs. 25,000 loss
Rs. 1, 00,000 profit

Question No: 10 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 80,000
Purchases of raw material during the 200, 000 period
Cost of Material Consumed
?
Rs. 205,000
Rs. 215,000
Rs. 220,000
Rs. 225,000

Question No: 11 ( Marks: 1 ) - Please choose one

If you start with cash book balance (Dr.), which of the following item will be
deducted in Bank Reconciliation Statement?
Any cheque drawn to creditor but not paid by bank
Interest credited by the bank in pass book
Cheque deposited but not credited by the bank
Dividend collected by bank on behalf of the customer

Question No: 12 ( Marks: 1 ) - Please choose one

Unfavorable Bank Balance means:
Credit balance in cash book
Credit balance in pass book
Debit balance in cash book
All of the given options

Question No: 13 ( Marks: 1 ) - Please choose one

Stock of Trading concern consists of:
Raw material
Work in process
Merchandise inventory
All of the given options

Question No: 14 ( Marks: 1 ) - Please choose one

The allocation of the cost of a tangible plant asset to expense in the periods, in
which services are received from the asset, is termed as:
Appreciation
Depreciation
Fluctuation
None of the given options

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Question No: 15 ( Marks: 1 ) - Please choose one
Depreciable value of an asset is equal to:
Cost + scrap value
Cost + market price
Cost scrap value
None of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following is NOT a function of bank reconciliation statement?
To reconcile the difference between the cash book and the bank statement
To check for errors in balance sheet
To update omitted entries into the cash book
To update omitted entries into the bank statement

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following would be deducted from Sundry Debtors in Balance
Sheet?
Bad debts (Trial balance item)
Old provision for doubtful debts
New provision for doubtful debts
Both Bad debts (given in adjustment) and new provision for doubtful debts

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for debtors control
account?
Sales Day Book
Sales Return
Debtors Ledger
All of the given options

Question No: 19 ( Marks: 1 ) - Please choose one

A sum of Rs. 200 written off as bad debt now received credited to the account of
debtor would:
Increase the net profit by Rs.200
Decrease the profit by Rs.200
Remains constant and no effect on net profit
There is no relation between debtor and profit

Question No: 20 ( Marks: 1 ) - Please choose one

Goods purchased from Mr. A for Rs. 2,000 passed through the sales book. The
rectification of error will result in:
Increase of gross profit
Decrease of gross profit
Remains constant and no effect on net profit
There is no relation between goods purchased and gross profit

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of
Carriage paid Rs.50 for the newly purchased machinery mistakenly debited to
carriage account?
Only machinery account
Only carriage account
Both carriage and machinery account
Only cash account

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. A of
Rs.336 have been debited to Mr. B account?
A s account (Dr.) and B s account (Cr.)
B s account (Dr.) and A s account (Cr.)
Sales account (Dr.) and B s account (cr.)
B s account (Dr.) and Sales account (Cr.)

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Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following account will be credited when a typewriter is sold that has
been used in the office?
Cash Account
Sales Account
Purchase Account
Office Equipment Account

Question No: 24 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be deducted from
Sundry Debtors in Balance Sheet.
Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year s provision (new) 1,000
Rs. 600
Rs. 1,000
Rs. 2,000
Rs. 2,600

Question No: 25 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit
& loss account.
Particulars Rs.
Bad debts 3,500
Provision for doubtful debts (old) 6,000
Current year s provision (new) 1,500
Rs. (1,000)
Rs. 1,000
Rs. (5,000)
Rs. 5,000

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is the first phase of the typical operating cycle?
Sell goods and services to customers
Purchase goods and services
Receive cash from customers
Pay cash to suppliers

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following is normally treated as the last expense listed in the income
statement of a company?
General and administrative expenses
Salaries and wages expense
Income tax expense
Interest expense

Question No: 28 ( Marks: 1 ) - Please choose one

Wages paid to laborers working in the manufacturing department is treated as an
expense of:
Cost of goods sold
Administrative expenses
Selling expenses
Marketing expenses

Question No: 29 ( Marks: 1 ) - Please choose one

The Balance Sheet item that represents the resources invested by the owner is
known as:
Accounts Receivable
Cash
Note Payable
Owner's Equity

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Question No: 30 ( Marks: 1 ) - Please choose one
Which of the following will be debited, if cash is drawn by Proprietor?
Proprietor s drawings
Proprietor s cash
Proprietor s capital
Proprietor s income

Question No: 31 ( Marks: 1 ) - Please choose one

When closing stock is given in trial balance, then it will effect:
Trading account only
Balance sheet only
Owner's equity only
Both Trading account and Balance sheet

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following account will be credited when interest on capital is
charged against the distribution of profit?
Interest account
Partner s capital account
Profit and Loss account
Profit and loss appropriation account

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is(are) type(s) of capital account in partnership?
Fixed Capital
Current Capital
Fluctuating Capital
Both Fixed Capital and Fluctuating Capital

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have
agreed to share the profit of business carried on by all or any of them acting for
all?
Sole-ownership
Private limited company
Public limited company
Partnership

Question No: 35 ( Marks: 1 ) - Please choose one

In case of fixed capital accounts, other transactions such as Drawings and Profit
etc. are recorded in a separate account that is called ___________.
Fixed Capital Account
Current Account
Fluctuating Capital Account
Floating Capital Account

Question No: 36 ( Marks: 1 ) - Please choose one

The Joint Stock Company is formed under the Companies Ordinance:
1984
I884
1948
1965

Question No: 37 ( Marks: 1 ) - Please choose one

The maximum amount with which the company is registered is called:
Authorized Share Capital
Issued Share Capital
Paid up capital
Called up capital

Question No: 38 ( Marks: 1 ) - Please choose one

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By which if the following Act/ Ordinance, a company is allowed to issue shares
at a higher price than their face value.
Companies ordinance 1984
Contract act 1872
Sales of Goods act 1930
None of the given options

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following account will be debited if shares issued against cash?
Share premium account
Cash account
Share capital account
Profit and loss account

( entry is :

Cash account Dr
Share premium (if any) Cr
Share capital account Cr )

Question No: 40 ( Marks: 1 ) - Please choose one

Which of the following option(s) is TRUE about the Sales returns?
Sales returns reduce the Gross sales of the firm
Sales returns affect the Net income of the firm
Sales returns affect the flow of cash
All of the given options

Question No: 41 ( Marks: 1 ) - Please choose one

Merchandise on hand at either the beginning or end of the reporting period is
called__________.
Raw material
Cost of good sold
Work in process
Inventory

Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following is (are) shown as notes to the accounts.
Nature of the business of the company
Accounting polices of the business
Details and explanations of items given in Balance Sheet
All of the given options

Question No: 43 ( Marks: 1 ) - Please choose one

If dividend is proposed by directors of the company @ 30% for the year, it will be
calculated on:
Capital Reserve
Authorized share capital
Paid up share capital
Share premium

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following documents contains rules and regulations for internal
management of the company?
Memorandum of Association
Articles of Association
Prospectus
Statutory Declaration

Question No: 45 ( Marks: 1 ) - Please choose one

Mark up cover ratio = operating profit before financial charges ÷?
Selling expenses
Administrative expenses

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Financial charges
Direct expenses

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following ratio tells about How a company would repays its loans
Mark up cover ratio
Acid test ratio
Current ratio
Debt Equity ratio

Question No: 47 ( Marks: 1 ) - Please choose one

Particulars Rs.
Debentures 1, 50, 000
Equity Capital 2, 00,000
General Reserve 90, 000
Accumulated profit 60,000
What is debt equity ratio ?
15: 20 (or 3:4)
15:24 (or 5: 8)
15:29
15:35 (or 3: 7)

Question No: 48 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?
In case of death of partner
At the admission of new partner
If any partner resigned from partnership
All of the given options

Question No: 49 ( Marks: 1 ) - Please choose one

If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of
Mr. A, Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. B
in distributable profit.
Rs. 98,000
Rs. 1, 47,000
Rs. 2, 45,000
Rs. 3, 43,000

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following item will be credited in capital account of sole proprietor?
Cash
Drawings
Debtors
Profit

Paper no 28
Solved by Chanda Rehman, Nomi chakwal ABr
FINALTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 1)
Ref No: 1195859
Time: 120 min
Marks: 87

Question No: 1 ( Marks: 1 ) - Please choose one

Liabilities of the members of the ________ is only limited to the capital introduce by
member/s.

► Partnership

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 ► Company

► Sole proprietorship

► None of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

Term "Credit" means_______ by the business.
► Receiving of benefits
► It has no effect on business
► Providing of benefits
► It depends upon items

Question No: 3 ( Marks: 1 ) - Please choose one

What would be the affect on the components of the accounting equation, if goods are
purchased on cash?

► Increase in cash and decrease in equity

► Increase in cash and increase in goods
► Increase in goods and decrease in cash
► Increase in equipment and increase in equity

Question No: 4 ( Marks: 1 ) - Please choose one

When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account

Question No: 5 ( Marks: 1 ) - Please choose one

Accounts Receivable & Inventory are the examples of:

► Liquid assets
► Current assets
► Fixed assets
► Capital assets

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following is NOT an example of Current Asset?
► Bank Overdraft
► Accounts Receivable
► Notes Receivable
► Prepaid Expenses

Question No: 7 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 90,000 and operating expenses are Rs.
25,000 during the year. What would be the Net Profit?

► Rs. 5,000
► Rs. 25,000
► Rs. 55,000
► Rs. 60,000

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following statement is NOT true about the Journal voucher?

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 ► Financial data is picked only from Journal vouchers to Journal
► These are used to record all transaction other than cash & bank
► These are used to make corrections or adjustments to previous Receipts
► Format of Journal voucher is different from other vouchers

Question No: 9 ( Marks: 1 ) - Please choose one

Which one of the following is CORRECT about the closing stock?

► It appears in the assets side of a balance sheet

► It decreases the value of cost of goods sold
► It becomes opening stock of next year
► All of the given option

Question No: 10 ( Marks: 1 ) - Please choose one

In the cost of goods sold statement, Cost of direct material consumed + Direct labor=?
► Conversion cost
► Prime cost
► Total factory cost
► Cost of goods manufactured

Question No: 11 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

85 units were sold, Use the FIFO method of inventory costing and determine the cost of
goods sold.

► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 992

Question No: 12 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit

First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty-five units were sold, what is the value of the ending inventory using the FIFO
method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
► Rs.268

Question No: 13 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?

► These are the running expenses of the business

► They improve the financial position of the business
► They reduce the profit of the concern

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 ► They do not appear in the balance sheet

Question No: 14 ( Marks: 1 ) - Please choose one

Bank Reconciliation Statement is:

► A memorandum statement
► A ledger account
► A part of cash book
► A part of journal

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following assets are shown at written down value in balance sheet?

► Current assets
► Liquid assets
► Floating assets
► Fixed assets

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following account balance is shown on credit side of Trial Balance? (It is
assumed that all account balances are shown on normal balance)

► Cash account
► Furniture account
► Vehicle account
► Capital account

Question No: 17 ( Marks: 1 ) - Please choose one

In which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business
► Failure of repeated attempt to collect the debt
► All of the given options

Question No: 18 ( Marks: 1 ) - Please choose one

If Bad Debts written off are given in adjustment, then which of the following entry for
bad debts written off is CORRECT?

► Bad debts a/c (Dr) and Trading a/c (Cr)

► Provision for Bad and Doubtful debts a/c (Dr) and Bad debts a/c(Cr)
► Bad debts a/c (Dr) and debtors a/c (Cr)
► Trading a/c (Dr) and Bad debts a/c (Cr)

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following is NOT based on the concept of double entry book keeping
system?

► Subsidiary Ledgers doubted

► Creditors Control Accounts
► Debtors Control Accounts
► All of the given options

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is (are) benefit/s of subsidiary ledger accounts to business?

► It tells about customer attitude of payments

► It can be checked against the control account to pick up recording errors
► It tells about the complete history of transactions of business client
► All of the given options

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Question No: 21 ( Marks: 1 ) - Please choose one
When one or both aspects of a transaction are recorded in the wrong class or category of
account, this is called:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

Question No: 22 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 10% of the sundry debtors are
doubtful. Actual bad debts are Rs. 1600. What amount of new provision for doubtful
debts will be credited in profit & loss account
► Rs. 3,600
► Rs. 4,000
► Rs. 1,600
► Rs. 2, 400

Question No: 23 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400
Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 10%
Identify the Total amount deducted from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 3,080
► Rs. 5,480

Question No: 24 ( Marks: 1 ) - Please choose one

The figure of cash received from debtors can be located either from cash book or:

► Debtor’s Control Account

► Balance Sheet
► Profit & Loss Account
► Bills Payable Account

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following is a selling expense?

► Interest on deposits
► Any tax/freight is paid on purchases
► General salaries paid to laborers
► Tax & freight paid on sale

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following item will be shown on debit side of capital account of sole
proprietor?

► Cash
► Drawings
► Debtors
► Profit

Question No: 27 ( Marks: 1 ) - Please choose one

Identify the selling expenses of manufacturing concern with the help of given data.
Particulars Rs.

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 Salesman’s salary 70,000
Commission on sales 28,000
Carriage outward 10,000
Carriage inward 5,000

► Rs. 80,000
► Rs. 60,000
► Rs. 38,000
► Rs. 1, 08,000

Question No: 28 ( Marks: 1 ) - Please choose one

The income statement of the Limited company is also known as:

► Manufacturing account
► Profit and Loss account
► Profit and Loss Appropriation account
► Current Account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Annual Report

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is (are) NOT example(s) of distributable profit?
► None of the given options
► General reserve
► Accumulated profit and loss (credit balance)
► Revaluation reserves

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is a common way to evaluate a company's performance?
► Compare this year's performance of the company to a prior year's performance of
the company.
► Compare the company's performance to the industry's performance.
► Compare the company's performance to the performance of a competing
company.
► All of the given options

Question No: 32 ( Marks: 1 ) - Please choose one

Current ratio may be increased by:

► Overstating current Assets

► Overstating current Liabilities
► Understating current Assets
► Understating current assets and overstating current liabilities

Question No: 33 ( Marks: 1 ) - Please choose one

If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A,
Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. B in
distributable profit.

► Rs. 98,000
► Rs. 1, 47,000
► Rs. 2, 45,000
► Rs. 3, 43,000

Question No: 34 ( Marks: 1 ) - Please choose one

Mr. B provided the following information at the end of the month:

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 Particulars Rs.
Cash 100
Accounts Receivable 500
Accounts Payable 200
Bank Loans 1,000

Based on the information provided, what are the total assets of Mr. B?

► Rs.200
► Rs. 600
► Rs. 800
► Rs. 1,700

Question No: 35 ( Marks: 1 ) - Please choose one

An overdraft will appear as:

► A debit balance in both the bank statement and the cash book
► A credit balance in the bank statement but as a debit balance in the cash book
► A credit balance in the cash book but as a debit balance in the bank
statement
► A credit balance in both the bank statement and the cash book

Question No: 36 ( Marks: 1 ) - Please choose one

When we close bad debt account, which of the following account is debited?

► Profit and loss account

► Bad debt account
► Debtor account
► Creditor account

Question No: 37 ( Marks: 1 ) - Please choose one

Payment is made of a company’s purchases on credit, which of the following is correct:
► Debit stock account and credit creditors account
► Debit creditors account and credit cash account
► Debit cash account and credit creditors account
► Debit stock account and credit cash account

Question No: 38 ( Marks: 1 ) - Please choose one

Suppose a firm has 200 debtors, and each of them owes exactly Rs. 150 at the start of
June. What is the total amount owed by all debtors?
► Rs. 2,000
► Rs. 3,000
► Rs. 30,000
► Rs. 150,000

Question No: 39 ( Marks: 1 ) - Please choose one

The amount owed by debtors at the end of a month appears on the_________ side of the
control account.
► Left side or debit
► Left side or credit
► Right side or debit
► Right side or credit

Question No: 40 ( Marks: 1 ) - Please choose one

We usually allow the customer to deduct a certain amount from the invoice value for
prompt payment. In doing so we are granting a:
► Commission
► Allowance
► Discount
► Rebate

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Question No: 41 ( Marks: 1 ) - Please choose one
Which of the following is decreased when an asset is converted into expense in
adjustment?
► Revenue
► Net income
► Expense
► Liability

Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following is increased when an asset is converted into expense in
adjustment?
► Revenue
► Net income
► Expense
► Liability

Question No: 43 ( Marks: 1 ) - Please choose one

Accumulated depreciation is a ____________ account?
► Fixed asset
► Current asset
► Contra asset
► Liability

Question No: 44 ( Marks: 1 ) - Please choose one

Prepaid insurance will become an expense as the prepaid amount _________.
► Expires
► Adjust
► Paid
► Regulate

Question No: 45 ( Marks: 1 ) - Please choose one

Adjusting costs are reported as:
► Revenues
► Expenses
► Assets
► Net Income

Question No: 46 ( Marks: 1 ) - Please choose one

Insurance premiums paid in advance but not yet expired are reported in which of the
following account?
► Insurance payable
► Prepaid insurance
► Advance payment account
► Insurance expense

Question No: 47 ( Marks: 1 ) - Please choose one

Profit and loss sharing in partnership must be based on which of the following:
► Service to the partnership
► Capital contribution
► Any profit-and-loss-sharing method partners desire
► A stated fraction

Question No: 48 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with an equal
share in profit or loss. Markup on drawings of Mr. A is Rs.1,500 and of Mr. B is
Rs.1,800. The net income for the year is Rs.85,000. What will be the profit share of Mr.
B?
► Rs.42,350
► Rs.44,150
► Rs.41,600
► Rs.40,850

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Net Profit = 85 000
Intrest on Drawings = 1500 + 1800 = 3300
Total Profit of the firm = 85 000 + 3300 = 88 300
Profit of B = 88 300 / 2 = 44150

Question No: 49 ( Marks: 1 ) - Please choose one

Which of the following is quoted company?
► Private Limited Company
► Public Limited Company
► Listed company
► Non Listed Company

Question No: 50 ( Marks: 1 ) - Please choose one

For which of the following share premium can be utilized?
► To write off preliminary expenses
► To meet the expenses of issue of shares
► To issue bonus shares
► All of the given options

Question No: 51 ( Marks: 1 ) - Please choose one

Which of the following can be utilized to meet the expenses of issue of shares?
► Reserves
► Debentures
► Share premium
► Term finance certificate

Question No: 52 ( Marks: 1 ) - Please choose one

Which of the following capital is required for the registration of the company?
► Issued capital
► Subscribed capital
► Authorized capital
► Reserve capital

Question No: 53 ( Marks: 1 ) - Please choose one

The financial statement that captures both the current operating result and the associated
changes in the balance sheet is:
► Statement of retained earnings
► Statement of financial position
► Statement of cash flows
► Statement of changes in equity

Question No: 54 ( Marks: 1 ) - Please choose one

Which of the following is measured by debt ratio?
► Short-term liquidity
► Creditors’ long term risk
► Short-term risk of the company
► All of the given options

Question No: 55 ( Marks: 3 )

What do you know about the Profit and loss appropriation account in case of
partnership?

Profit and loss appropriation account contains the information regarding the amount of
profit distributed to the partner’s current account.

Question No: 56 ( Marks: 5 )

Show the following assets at Written Down Value in Balance Sheet with complete
working.
Particulars Rs.
Plant & Machinery 53,000
Buildings 35,000

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 Tools & Equipment 8,650

Depreciation Rate:
v Plant & Machinery @ 10%
v Buildings @ 5%
v Tools& Equipment @ 15%

Plant & Buildings Tools & Total in

Machinery Equipment Rs.
Cost 53,000 35,000 8,650 96,650
Depreciation (5,300) (1,750) (1,297.5) 8,347.5
W.D.V 47,700 33,250 7,352.5 88,302.5

Question No: 57 ( Marks: 5 )

Briefly discuss the followings:
1. Issuance of shares at premium
Issuance of shares for an amount more than its face value is known issuance
of shares at premium.

2. Cash flow statement

Cash flow statement is a part of financial statements; it contains the
information regarding the cash generated by (used in) operating, investing
and financing activities.

3. Debentures
Debentures are issued by the companies to raise finance. Normally, the carry
a fixed rate of return.

4. Notes to the accounts

Notes to the accounts are a part of financial statements, which contains the
detail about the Company, accounting policies used, critical judgment areas
and detail of certain account heads of balance sheet and profit and loss
account along with the detail of contingencies and commitments, if any.

Question No: 58 ( Marks: 10 )

What is the effect of given adjustments on Trading & Profit & Loss account and
Balance Sheet?
a. Accrued Expenses or Outstanding Expenses

Accrued expenses or outstanding expenses are shown as a current

liability in the Balance Sheet second effect goes to the expenses in the
Trading & Profit and Loss account .

Double entry:

Expenses a/c
Accrued Expenses a/c

b. Prepaid Expenses or Unexpired Expenses

Prepaid expenses are shown as a current asset in the balance sheet and
second effect goes to cash and bank account in the Balance Sheet.

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 Double entry:

Prepaid expenses a/c

Cash and Bank a/c

c. Accrued Revenue or Revenue Receivable

Accrued revenue is shown as a current asset in the balance sheet and

second effect goes to revenue account in the Trading & Profit and Loss
account.

Double entry:

Accrued revenue a/c

Revenue a/c

d. Unearned Revenue or Revenue Received in Advance

Unearned revenue is shown as a current liability in the Balance Sheet

corresponding effect goes to cash and bank account in the balance Sheet.

Double entry:

Cash and Bank a/c

Unearned revenue a/c

e. Depreciation of Asset

Depreciation is shown as an expense in the Trading & Profit and Loss

account and the corresponding effect goes to provision of depreciation in
the balance sheet.

Double entry:

Depreciation expense a/c

Provision for depreciation a/c

Question No: 59 ( Marks: 10 )

Mr. A, Mr. B and Mr. C entered into partnership on 1st January 2007 contributing Rs.15,
000, Rs.10, 000 and Rs.18, 000. Mr. A invested Rs.6, 000 as additional capital on 1st
May, Mr. B brought additional capital of Rs.4, 000 on 1st October and Mr. C brought
additional capital of Rs.8, 000 on 1st October. They earned a profit of Rs.10, 500 during
the year. Profits are to be shared in their capital ratio. Calculate partners share of profit
and pass the necessary journal entry. Financial year ends on 31st December.

Contributed on Mr. A Mr. B Mr. C Total in Rs.

January 01, 07 15,000 10,000 18,000 43,000
May 01, 07 6,000 -- -- 6,000
October 01, 07 -- 4,000 -- 4,000
October 01, 07 -- -- 8,000 8,000
21,000 14,000 26,000 61,000

Sharing percentage 34.43% 22.95% 42.62% 100%

Share of profit 3,615 2,410 4,475 10,500

Dr (Rs.) Cr. (Rs.)

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Profit for the year 10,500

Partner’s account
Mr. A 3,615
Mr. B 2,410
Mr. C 4,475

10,500 10,500

Paper no 29
Solved by Chanda Rehman, Nomi chakwal ABr
FINALTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 3)
Time: 120 min
Marks: 87
Question No: 1 ( Marks: 1 ) - Please choose one
Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only
► Both cash and accrual accounting
► None of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

What will be the effect on accounting equation, when payment is made to the creditor of
the business?

► Increase in an asset, increase in owner's equity

► Increase in an asset, increase in a liability
► Decrease in an asset, decrease in owner's equity
► Decrease in an asset, decrease in a liability

Question No: 3 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit and

loss account—Balance Sheet

► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit and

loss account—Balance Sheet

► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and

loss account—Balance Sheet

► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and

loss account—Balance Sheet

Question No: 4 ( Marks: 1 ) - Please choose one

An informal accounting statement that lists the ledger account balances at a point in time
and compares the total of debit balances with the total of credit balances is known as:

► Income Statement
► Balance Sheet
► Trial Balance
► Cash Book

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Question No: 5 ( Marks: 1 ) - Please choose one
The unfavorable balance of Profit and Loss account should be:
► Added in liabilities
► Subtracted from current assets
► Subtracted from liabilities
► Subtracted from capital

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business purchased a vehicle on
cash?

► Vehicle account
► Cash account
► Business account
► Bank account

Question No: 7 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is known as:

► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost

Question No: 8 ( Marks: 1 ) - Please choose one

A decrease in value of a fixed asset due to age, wear and tear is known as:
► Depreciation
► Accumulated Depreciation
► Appreciation
► Written Down Value

Question No: 9 ( Marks: 1 ) - Please choose one

The cost of moving plant and machinery to a new site will be treated as:

► Revenue expense
► Capital expense
► Administrative expense
► Operating expense

Question No: 10 ( Marks: 1 ) - Please choose one

Depreciation arises because of:

► Fall in the market value of an asset

► Fall in the value of money
► Physical wear and tear
► All of the given options

Question No: 11 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revaluation of fixed assets?

► Revaluation should be made after regular intervals

► Change in value should be permanent
► Only relevant asset should be revalued in the whole class of asset
► The profit or loss will be transferred to revaluation account

Question No: 12 ( Marks: 1 ) - Please choose one

A Bank Reconciliation Statement is prepared to:

► Ascertain that the difference between the Cash Book balance and the Bank
Statement balance has been accounted for
► Correct errors in the Cash Book or errors in the Bank Statement

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 ► Amend the balance of the Bank Statement of the firm
► Amend the balance in the Cash Book of the firm

Question No: 13 ( Marks: 1 ) - Please choose one

Bank Statement is a record of transactions between the bank and the holder of:

► A foreign currency account

► A current account
► A saving account
► All of the given options

Question No: 14 ( Marks: 1 ) - Please choose one

Which one of the following transactions will cause the balance in Mr. Terry's Cash Book
to be greater than his Bank Statement balance?
► A cheque is drawn but not yet presented at the bank for payment
► The bank has not yet notified to Mr. Terry about a dishonoured cheque
► A credit transfer into Terry's Bank Account
► A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following option is TRUE about the characteristic(s) of Bad Debt?

► It is a definite loss to the business

► It is not shown in Balance Sheet
► No provision is necessary for it
► All of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following account will be debited, when the bad debts are recovered?

► Bad debt recovered a/c

► Cash a/c
► Doubtful debts a/c
► Bad debts a/c

Question No: 17 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit &
loss account.
Particulars Rs.
Bad debts 3,600
Provision for doubtful debts (old) 6,000
Current year’s provision (new) 1,500

► Rs. (5,100)
► Rs. 5,100
► Rs. (900)
► Rs. 900

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. “A” of Rs.336
have been debited to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)
► Sales account (Dr.) and B’s account (cr.)
► B’s account (Dr.) and Sales account (Cr.)

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following item must be recorded in the adjusted Cash Book in order to
bring it in line with the entries in the Bank Statement?

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 ► Bank charges
► An error on the Bank Statement
► An uncredited deposit
► An unpresented cheque

Question No: 20 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit &
loss account.
Particulars Rs.
Bad debts 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600
► Rs. 1,600
► Rs. 2,000
► Rs. 2,600

Question No: 21 ( Marks: 1 ) - Please choose one

Which one of the following is TRUE about provisions?

► It is necessary to prepare for showing true picture of balance sheet

► It is a reduction from assets
► It is prepared for specific purposes
► All of the given options

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is/are TRUE about the sole trader form of business?
► Sole traders do not need to consult accountants
► Sole traders must register the name of their business with the Registrar of
Companies
► All of the given options
► A sole trader is liable to pay income tax on his/her earnings

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following is TRUE about the treatment of insurance paid in advance Rs.
13,000?

► It will be treated as an other income in Profit & Loss Account

► It will be treated as a current asset in Balance Sheet
► It will be treated as a current liability in Balance Sheet
► It will be treated as an accrued expense in Balance Sheet

Question No: 24 ( Marks: 1 ) - Please choose one

Rent receivable (given in trial balance) is an item of_____________.

► Balance Sheet
► Profit & Loss Account
► Trading Account
► Both Balance Sheet and Profit & Loss Account

Question No: 25 ( Marks: 1 ) - Please choose one

What will the effects on financial statements, if machinery is depreciated @ 10%?

► It will be treated as an expense in income statement only

► It will be subtracted from concerned asset only
► It will be treated as a current asset only
► It will be treated as an expense in income statement and subtracted from
concerned assets in Balance Sheet

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Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following is TRUE about a merchandising company?
► A merchandising company's business is to buy and sell products
► A merchandising company must use the perpetual system to account for
merchandising inventory
► A merchandising company's business is to provide services
► A Sugar Mill is an example of a merchandising company

Question No: 27 ( Marks: 1 ) - Please choose one

Identify the selling expenses of manufacturing concern with the help of given data.
Particulars Rs.
Salesman’s salary 70,000
Commission on sales 28,000
Carriage outward 10,000
Carriage inward 5,000

► Rs. 80,000
► Rs. 60,000
► Rs. 38,000
► Rs. 1, 08,000

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following statements is NOT TRUE about the partnership form of
business?
► A partnership is a business run by two or more persons
► A partnership business is easy to set up
► Each partner is liable under the law for the actions of other partners
► In the absence of agreement, partners will be paid salaries

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following account will be credited when interest on capital is charged
against the distribution of profit?
► Interest account
► Partner’s capital account
► Profit and Loss account
► Profit and loss appropriation account

Question No: 30 ( Marks: 1 ) - Please choose one

When preparing a cash flow statement, which of the following would be classified as a
financing activity?

º A new long-term loan taken out to finance the purchase of fixed

assets
º Salaries paid
º Interest paid on a long-term bank loan
º The cost of purchasing a patent

Question No: 31 ( Marks: 1 ) - Please choose one

When preparing cash flow statements, the repayments of a loan during the year should
be included under which of the following heading?
► Operating activities doubted
► Financing activities
► Investing activities
► None of the given options

Question No: 32 ( Marks: 1 ) - Please choose one

An example of financing activities in the context of cash flow statement is:

► Capital expenditures on purchase of fixed assets

► Long-term deposit
► Financial charges paid
► Dividend paid no idea

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Question No: 33 ( Marks: 1 ) - Please choose one
Which of the following business publishes the Financial Statements?

► Sole-Proprietorship
► Partnership
► Trust
► Public Limited Company

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the given Asset is Not included in the calculation acid test ratio?

► Stock
► Cash
► Debtors
► Bills Receivable

Question No: 35 ( Marks: 1 ) - Please choose one

Which of the following ratio tells about “How a company would repays its loans”

► Mark up cover ratio not sure

► Acid test ratio
► Current ratio
► Debt Equity ratio

Question No: 36 ( Marks: 1 ) - Please choose one

Rs.
Gross profit 50,000
Operating profit 42,000
Sales 250, 000
What is the amount of operating expenses ?

► Rs. 8,000
► Rs. 92,000
► Rs. 62,500
► Rs. 300,000

Question No: 37 ( Marks: 1 ) - Please choose one

Debenture is also named as:
► Share
► Bond
► Equity
► Reserve

Question No: 38 ( Marks: 1 ) - Please choose one

What is the treatment of Accumulated Depreciation in Balance Sheet?

► It may treated as a deficit

► It may treated as a surplus
► It may treated as a revenue
► None of the given options not sure

Question No: 39 ( Marks: 1 ) - Please choose one

An accounting system is used by a business to:
► Analyze transactions
► Handle routine book-keeping tasks
► Classify and summarize financial information
► All of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

Which one of the following vouchers is used to record the non-cash transactions?

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 ► Journal Vouchers
► Receipt Vouchers
► Payment Vouchers
► Nominal Vouchers

Question No: 41 ( Marks: 1 ) - Please choose one

What would be the value of 'cost of goods manufactured' if the total factory cost of the
month is Rs. 6,000, opening work in process is Rs. 2,000 and the closing work in process
is Rs. 2,500?

► Rs. 5,500
► Rs. 8,000
► Rs. 4,500
► Rs. 8,500

Question No: 42 ( Marks: 1 ) - Please choose one

Particulars Rs.
Direct materials costs 80,000
Direct labor costs 50,000
Manufacturing overhead costs 60,000
Prime cost ?

► Rs.130, 000
► Rs.110, 000
► Rs.140, 000
► Rs.190, 000

Question No: 43 ( Marks: 1 ) - Please choose one

When we close bad debts account, which of the following account is credited?
► Profit and loss account
► Bad debt account
► Debtor account
► Provision for bad debt account

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following statement is correct? If a company fails to record estimated bad
debts expense,
► Net realizable value is understated
► Expenses are understated
► Revenues are understated
► Receivables are understated

Question No: 45 ( Marks: 1 ) - Please choose one

In a partnership of Mr. A and Mr. B, the share of profit of Mr. A is Rs.75,375 and the
share of profit of Mr. B is Rs. 25,125. What will be the ratio of their share?
► 1:2
► 2:3
► 3:2
► 3:1

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following is the major benefit of a partnership over a sole proprietorship?
► Unlimited liability
► Single tax filing
► Difficult ownership resale
► Raising capital

Question No: 47 ( Marks: 1 ) - Please choose one

Which of the following is used to convert accounting information from the cash basis of
accounting to the accrual basis of accounting?
► Ledger

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 ► Journal entries
► Adjusted entries
► Trial balance

Question No: 48 ( Marks: 1 ) - Please choose one

Unexpired costs are reported as:
► Revenues
► Expenses
► Assets
► Income

Question No: 49 ( Marks: 1 ) - Please choose one

The weekly or biweekly compensation received by hourly-paid employees is called:
► Salary
► Wages
► Income
► Profit

Question No: 50 ( Marks: 1 ) - Please choose one

Income tax expense of Eden Corporation shows a debit balance of Rs.7,000 in its
unadjusted trial balance and Rs.7,600 in adjusted trial balance. Which of the following
account will be debited in adjusting entry?
► Income tax payable
► Prepaid income tax
► Income tax expense
► Income tax paid

Question No: 51 ( Marks: 1 ) - Please choose one

Which of the following capital is offered to the general public?
► Issued capital
► Subscribed capital
► Authorized capital
► Reserve capital

Question No: 52 ( Marks: 1 ) - Please choose one

Which of the following capital is taken up by the general public?
► Issued capital
► Subscribed capital
► Authorized capital
► Reserve capital

Question No: 53 ( Marks: 1 ) - Please choose one

With reference to the statement of cash flows the transactions involving production and
delivering goods or providing services must be classified as:
► Business activities
► Operating activities
► Financing activities
► Investing activities

Question No: 54 ( Marks: 1 ) - Please choose one

According to the statement of cash flows following are the examples of investing
activities except:
► Sales of machinery
► Capital invested by the owners
► Purchase of building for the business use
► Cash received from the disposal of equipment

Question No: 55 ( Marks: 3 )

How bad debts & provision for doubtful debts (new and old) are treated in profit
and loss account.

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Question No: 56 ( Marks: 5 )
Differentiate the following terms and also mention how these are treated in
financial Statements.

v Carriage inwards and carriage outwards

v Returns inwards and returns outwards

Question No: 57 ( Marks: 5 )

Following information is extracted from the books of Abrar Ltd as on December 31st,
2007.
Particulars Rs
Carriage inwards 8,000
Legal charges 6,500
Financial charges 223,500
Tax payable 30,000
Advances from customer 10,000
General reserve 40,000
Accumulated profit brought forward(credit balance ) 95,000
Long term loans 100,000

Additional information
The authorized capital is Rs. 5,000,000 divided into 500,000 shares of Rs. 10 each. Issued
and paid up capital 2500,000.
You are required to calculate Share holders equity

Question No: 58 ( Marks: 10 )

Write down the at least ten distinguishing features of a limited company which
differentiate it from sole proprietor business

Question No: 59 ( Marks: 10 )

The following is the trial balance of Sikander’s Photo Studio, Inc., dated December 31,
2007. The net income for the period is Rs.36,000. You are required to prepare Balance
Sheet as on December 31, 2007.
Sikander’s Photo Studio, Inc.
Trial balance
December 31, 2007

Cash Rs.171,100
Accounts receivable 9,400
Prepaid studio rent 3,000
Unexpired insurance 7,200
Supplies 500
Equipment 18,000
Accumulated depreciation: equipment Rs.7,200
Notes payable 10,000
Accounts payable 3,200
Salaries payable 4,000
Income tax payable 6,000
Unearned revenue 8,800
Capital stock 100,000
Retained earnings 34,000
Revenue earned 165,000
Salary expense 85,000
Supply expense 3,900
Rent expense 12,000
Insurance expense 1,900
Advertising expense 500

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Depreciation expense: equipment 1,800
Interest expense 900
Income taxes expense 23,000
338,200 338,200

Paper no 30
Solved by Chanda Rehman, Nomi chakwal, ABr
FINALTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 4)
Ref No: 1195706
Time: 120 min
Marks: 87
Question No: 1 ( Marks: 1 ) - Please choose one
Word “Credit” is derived from ______ language.

► Latin
► English
► French
► Chinese

Question No: 2 ( Marks: 1 ) - Please choose one

What is the nature of an expense account?

► Debit
► Credit
► Revenue
► None of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

A summarized record of transactions related to individuals or things is called a/an
___________.

► Account
► Voucher
► Journal
► Trial balance

Question No: 4 ( Marks: 1 ) - Please choose one

In an account, if credit side < debit side then the balance is known as:
► Negative Balance
► Debit Balance
► Positive Balance
► Credit Balance

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following organizations do NOT prepare Income & Expenditure account?

► Public limited companies

► Private limited companies
► Partnership firms
► All of the given options

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following account will be credited in the books of XYZ Co. Ltd, if the
business purchased a vehicle though cheque?

► Vehicle account

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 ► Cash account
► Business account
► Bank account

Question No: 7 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 90,000 and operating expenses are Rs.
25,000 during the year. What would be the Net Profit?

► Rs. 5,000
► Rs. 25,000
► Rs. 55,000
► Rs. 60,000

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following financial statement DO NOT show the financial health of a
business at a specific date?

► Profit and loss account

► Balance sheet
► Statement of financial position
► All of the given options

Question No: 9 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is known as:

► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following particular is NOT included in the specimen of a Journal
Voucher?

► Name of organization
► Bank receipt
► Debit amount
► Credit amount

Question No: 11 ( Marks: 1 ) - Please choose one

Accountancy covers which of the following area(s):

► Book-keeping
► Accounting
► Auditing
► All of the given options

Question No: 12 ( Marks: 1 ) - Please choose one

Depreciation arises because of:

► Fall in the market value of an asset

► Fall in the value of money
► Physical wear and tear
► All of the given options

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following account will be debited, when the bad debts are recovered?

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 ► Bad debt recovered a/c
► Cash a/c
► Doubtful debts a/c
► Bad debts a/c

Question No: 14 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit &
loss account.
Particulars Rs.
Bad debts 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 800

► Rs. 400
► Rs. 800
► Rs. 2,000
► Rs. 2,400

Question No: 15 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit &
loss account.
Particulars Rs.
Bad debts 3,600
Provision for doubtful debts (old) 6,000
Current year’s provision (new) 1,500

► Rs. (5,100)
► Rs. 5,100
► Rs. (900)
► Rs. 900

Question No: 16 ( Marks: 1 ) - Please choose one

On which of the following system control accounts are based?

► Double entry book keeping system

► Single entry book keeping system
► Cash accounting system
► All of the given options

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following entry will be passed to record discount received in control
account?

► Discount Received (Dr) and Creditors Control A/c (Cr)

► Discount Received (Dr) and Creditors A/c (Cr)
► Creditors Control A/c (Dr) and Discount Received (Cr)
► Creditors A/c (Dr) and Discount Received (Cr)

Question No: 18 ( Marks: 1 ) - Please choose one

A receipt of cash Rs. 10,000 from Mr. Bilal is recorded as Rs. 1,000. What amount will
be adjusted in rectifying entry?

► Rs. 1,000
► Rs. 9,000
► Rs. 10,000
► Rs. 11,000

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. “A” of Rs.336
have been debited to Mr. “B” account?

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 ► A’s account (Dr.) and B’s account (Cr.)
► B’s account (Dr.) and A’s account (Cr.)
► Sales account (Dr.) and B’s account (cr.)
► B’s account (Dr.) and Sales account (Cr.)

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of Sale to
Mr.”A” Rs. 336 was not recorded at all?
► Only sales account
► Only A’s account
► Only cash account
► Both sales account and A’s account

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following item must be recorded in the adjusted Cash Book in order to
bring it in line with the entries in the Bank Statement?

► Bank charges
► An error on the Bank Statement
► An uncredited deposit
► An unpresented cheque

Question No: 22 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be deducted from
Sundry Debtors in Balance Sheet.
Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600
► Rs. 1,000
► Rs. 2,000
► Rs. 2,600

Question No: 23 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Bad Debts (Given in trial balance) 500
Old provisions (Given in trial balance) 700
Sundry Debtors (Given in trial balance) 44,800

If the Provision for doubtful debts has been increased by 5%, which amount of new
provision will be shown in Profit & Loss Account?
► Rs. 2,240
► Rs. 2,425
► Rs. 1,925
► Rs. 3,025

Question No: 24 ( Marks: 1 ) - Please choose one

The main objective of financial reporting is to provide:

► Essential information to internal users of financial reports.

► Useful economic information about the business to the external parties for sound
financial decisions.
► Information to internal users about the cash position of the business.
► Information to the Securities Exchange Commission (SEC).

Question No: 25 ( Marks: 1 ) - Please choose one

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 A financial statement that indicates the success or failure of a business, over a period of
time is called:

► A cash flow statement

► A retained earnings statement
► An income statement
► A balance sheet

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is/are NOT shown in balance sheet of sole proprietor?
► Fixed assets
► Current liabilities
► Profit sharing ratio
► Long term assets

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?
► Accounts receivable arises when a company buys goods or services from another
party on credit
► Accounts receivable is a miscellaneous category that may include loans to
employees
► Accounts receivable are more formal than notes receivable
► Accounts receivable are often called trade receivables

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account will be debited when the interest on drawings is
charged?

► Partner’s capital account

► Interest account
► Partner’s current account
► Profit & Loss account

Question No: 29 ( Marks: 1 ) - Please choose one

In case of fixed capital accounts, other transactions such as Drawings and Profit etc. are
recorded in a separate account that is called ___________.

► Fixed Capital Account

► Current Account
► Fluctuating Capital Account
► Floating Capital Account

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following clause/s are discussed in Memorandum of Association of
Companies?

► Name of company
► Place of registered office of company
► Objective of the company
► All of the given options

Question No: 31 ( Marks: 1 ) - Please choose one

Preliminary Expenses of the company may write off against:
► Share premium account
► Share holder account
► Debtors control account
► Creditor control account

Question No: 32 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if provision for Income Tax to be made Rs.
12,000 is given in adjustment?

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 ► It will be deducted in Income Statement only
► It will be treated as current liability in balance sheet only
► It will be treated as current asset in balance sheet only
► Both it will be deducted in income statement and it will be treated as current
liability in balance sheet

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is NOT a cash inflow?

► Sale of fixed asset

► Issue of debentures
► Cash from business operation
► Purchase of fixed asset

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form of
business?

► The limited company form of business allows ownership of the business to be

spread amongst many people
► Shareholders can appoint professionals
► Shareholders are personally liable for all the liabilities incurred by the business
► Regular filing of information about the affairs of the company is a legal
requirement

Question No: 35 ( Marks: 1 ) - Please choose one

If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A,
Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. C in
distributable profit.

► Rs. 98,000
► Rs. 1, 47,000
► Rs. 2, 45,000
► Rs. 3, 43,000

Question No: 36 ( Marks: 1 ) - Please choose one

What is the treatment of Accumulated Depreciation in Balance Sheet?

► It may treated as a deficit

► It may treated as a surplus
► It may treated as a revenue
► None of the given options doubted

Question No: 37 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in
the business made by the owner will effect:

► Cash Account & Capital Account

► Cash Account & Expense Account
► Capital Account & Revenue Account
► Capital Account & Expense Account

Question No: 38 ( Marks: 1 ) - Please choose one

The return of goods by a customer should be debited to:

► Customer’s account
► Sales return account
► Goods account
► Accounts receivable account

Question No: 39 ( Marks: 1 ) - Please choose one

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Expenditures incurred annually on renewal of patent are known as:

► Revenue Expenditures
► Capital Expenditures
► Deferred Expenditures doubted
► None of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

Debts that are not collectible and worthless to the creditor are known as:

► Doubtful debts
► Bad debts
► Provision for doubtful debts
► Loss

Question No: 41 ( Marks: 1 ) - Please choose one

ABC Company received discount on its credit purchases, which of the following will be
debited while entering in journal?
► Cash
► Discount received
► Creditors
► Bank

Question No: 42 ( Marks: 1 ) - Please choose one

The amount owed by debtors at the start of a month appears on the ___________ side of
the individual debtors account.
► Left side or credit
► Left side or debit
► Right side or debit
► Right side or credit

Question No: 43 ( Marks: 1 ) - Please choose one

Ahmad Industries want to make payment to its supplier in the form of a pay order. The
bank deducted Rs.160 as service charges without its knowledge. The error is known as:
► Error of commission
► Error of omission
► Error of original entry
► Error of principle

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following accounts would never be reported in the income statement as an
expense?
► Depreciation expense
► Income tax expense
► Interest expense
► Dividends expense

Question No: 45 ( Marks: 1 ) - Please choose one

In the heading of financial statement, ___________ is not required?
► Title of financial statement
► Name of the person who prepares financial statement
► Period for which financial statement is prepared
► Name of business entity

Question No: 46 ( Marks: 1 ) - Please choose one

In a partnership of Mr. A and Mr. B, the share of profit of Mr. A is Rs.75,375 and the
share of profit of Mr. B is Rs. 25,125. What will be the ratio of their share?
► 1:2
► 2:3
► 3:2

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 ► 3:1

Question No: 47 ( Marks: 1 ) - Please choose one

Which of the following is decreased when an asset is converted into expense in
adjustment?
► Revenue
► Net income
► Expense
► Liability

Question No: 48 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal share in profit
or loss. Markup on capital of Mr. A is Rs.2,500 and markup on drawings of Mr. B is
Rs.2,800. The net income for the year is Rs.95,000. What will be the amount of
distributable profit?
► Rs.89,700
► Rs.94,700
► Rs.95,300
► Rs.100,300

Question No: 49 ( Marks: 1 ) - Please choose one

How many members can subscribe their names in memorandum of association for
registration of public limited company?
►2
►3
►5
►7

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following is responsible to register the companies?
► State Bank of Pakistan
► Security and Exchange Commission of Pakistan
► Supreme Court
► Stock Exchange

Question No: 51 ( Marks: 1 ) - Please choose one

The amount of share premium can be utilized except:
► To write off preliminary expenses
► To meet the expenses of issue of shares
► To distribute among the share holders
► To issue bonus shares

Question No: 52 ( Marks: 1 ) - Please choose one

Which of the following capital is required for the registration of the company?
► Issued capital
► Subscribed capital
► Authorized capital
► Reserve capital

Question No: 53 ( Marks: 1 ) - Please choose one

Which of the following items of balance sheet are useful in evaluating a company’s
liquidity?
► Current assets and other assets
► Current liabilities and current assets
► Current liabilities and plant and equipment
► Non current liabilities and other assets

Question No: 54 ( Marks: 1 ) - Please choose one

The company ABC purchased an asset for Rs. 40,000, paying 30,000 in cash and issuing
a long term note payable for remaining balance. The amount will be recorded in
statement of cash flows as:
► Rs. 40,000 cash outflow as investing activity

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 ► Rs. 30,000 cash outflow as investing activity doubted
► Rs. 10,000 cash inflow as investing activity
► Rs. 70,000 cash inflow as investing activity

Question No: 55 ( Marks: 3 )

Why an organization is needed to prepare a cash flow statement.

Question No: 56 ( Marks: 5 )

Show the following assets at Written Down Value in Balance Sheet with complete
working.
Particulars Rs.
Plant & Machinery 53,000
Buildings 35,000
Tools & Equipment 8,650

Depreciation Rate:
v Plant & Machinery @ 10%
v Buildings @ 5%
v Tools& Equipment @ 15%

Question No: 57 ( Marks: 5 )

Financial year decided by partnership agreement is 1st July to 30th June. Mr. Ali is
partner and having a capital of Rs. 1,500,000 on July 1st 2007 and he introduced more
capital on August 1st 2007 Rs. 10,000 on April 1st 2008, Rs.500,000 and on June 1st
2008 , Rs. 5,000. Mark up rate is 10% p.a.
Calculate mark up on Mr. Ali’s capital for the year ending on 30th June 2008.

Question No: 58 ( Marks: 10 )

The following errors have been discovered in the book of a Business Concern:
1. Wage of Rs. 500 paid for the installation of plant debited to Wages Account.
2. Purchases of Office Equipment Rs. 2,000 were recorded as regular purchases of
business.
3. Credit sale of Rs. 600 to Kareem was wrongly debited to Kamran.
4. Rs. 200 drawn by the proprietor was treated as Trade Expenses.
5. Rs. 300 received as a Commission was wrongly credited to Sales Account.

Required:
Pass the rectifying entries only.

Question No: 59 ( Marks: 10 )

Prepare Balance Sheet for the manufacturing concern as on 31st December, 2007
with the help of given data.

Particulars Rs.
Capital 120,000
Trade Creditors 17,500
Bills payable 1,000
Sales 626,100
Raw material Stocks on 1-1-2007 30,000
Work in process on 1-1-2007 35,600
Finished Goods on 1-1-2007 35,400
Purchases 518,000
Carriage inwards 8,900
Discount Allowed 750
Debtors 16,000
Sales man commission 2,000
Office expenses 2,000
Carriage outwards 1,700

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 Bad debts 1,400
Salaries 13,000
Direct labor 1,800
FOH 1,100
Plant & Machinery 53,000
Buildings 35,000
Tools 8,650
Long term liability 4,902
Drawings 5,000

Stock as on 31st December, 2007

Ø Raw material Stocks Rs. 31,000
Ø Work in process Rs. 25,000
Ø Finished Goods Rs. 53,900
Depreciation Rate:
v Plant & Machinery is depreciated @ 10%
v Buildings is depreciated @ 5%
v Tools is depreciated @ 15%
Additional data
v Reserve and bad debts is to be created at 5% on debtors.
v Net Income for the year Rs. 75,000
Paper no 31
Solved by Chanda Rehman, Nomi chakwal ABr
FINALTERM EXAMINATION

Fall 2009
MGT101- Financial Accounting (Session - 3)
Ref No: 1195700
Time: 120 min
Marks: 87
Question No: 1 ( Marks: 1 ) - Please choose one
Shares for which amount is paid by public are called ________ shares.
► Paid up
► Authorized
► Bonus shares

► All are correct options

Question No: 2 ( Marks: 1 ) - Please choose one

Income of the business includes:

► Cash sales only

► Credit sales only
► Credit purchases only
► Both cash sales and credit sales

Question No: 3 ( Marks: 1 ) - Please choose one

Which of the following is used to record financial transactions in chronological (day-to-
day) order?

► Voucher
► General Journal
► General Ledger
► Trial balance

Question No: 4 ( Marks: 1 ) - Please choose one

The original book of entry, in which all vouchers are first recorded, is called:

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► General Journal
► General Ledger
► Trial Balance
► Balance Sheet

Question No: 5 ( Marks: 1 ) - Please choose one

A book, in which receipts and payments are recorded, is known as:

► Pass Book
► Cash Book
► Purchase Book
► Sales Book

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following period is known as a fiscal Year of the Government of Pakistan?

► 1st January to 31st December

► 1st June to 31st May
► 1st July to 30th June
► 1st October to 30th September

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is/are the END product of accounting cycle?

► Financial Statements
► General Journal
► General Ledger
► Voucher

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following is NOT considered a part of financial statements?

► General Ledger
► Balance Sheet
► Profit and Loss Account
► Cash Flow Statement

Question No: 9 ( Marks: 1 ) - Please choose one

The amount of salary paid to Mr. Sohail should be debited to:
► Mr. Sohail account
► Salaries account
► Cash account
► Drawings account

Question No: 10 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 90,000 and operating expenses are Rs.
25,000 during the year. What would be the Net Profit?

► Rs. 5,000
► Rs. 25,000
► Rs. 55,000
► Rs. 60,000

Question No: 11 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs.
20,000 during the year, what would be the value of Gross Profit?

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 ► Rs. 15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000

Question No: 12 ( Marks: 1 ) - Please choose one

If salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office building) is Rs.
300 during the year, what would be the total of "general & administrative expenses"?

► Rs. 300
► Rs. 2,500
► Rs. 2,800
► Rs.18, 800

Question No: 13 ( Marks: 1 ) - Please choose one

The Primary objective of providing depreciation is:

► To calculate true profit

► To show the asset on market value
► To reduce tax Burdon
► To provide funds for replacement

Question No: 14 ( Marks: 1 ) - Please choose one

Accounting is the language of:

► Business
► School
► Proprietor
► Management

Question No: 15 ( Marks: 1 ) - Please choose one

Depreciation arises because of:

► Fall in the market value of an asset

► Fall in the value of money
► Physical wear and tear
► All of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Owner’s equity Rs. 22,500

Total Liabilities Rs. 80, 385
Cash in hand Rs. 1,000
Cash at bank Rs. 2,000
Debtors Rs. 500

► Rs. 1, 02,885 other assets

► Rs. 1, 02,885 other liabilities
► Rs. 99,885 current liabilities
► Rs. 99,385 other assets

Question No: 17 ( Marks: 1 ) - Please choose one

When the Bank Statement balance is more than the Cash Book balance, it is because of:

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 ► Unpresented cheques
► Unrecorded bank charges
► Uncredited cheques
► None of the given options

Question No: 18 ( Marks: 1 ) - Please choose one

Upon checking the Bank Statement against the Cash Book by Mr. A, It was discovered
that an amount of Rs.120 for dividend from XYZ Co. had not been entered in the Cash
Book. Which of the following entry should be recorded to rectify the mistake?
► Bank Account(Dr.) and Dividend Account (Cr.)
► XYZ Co. Account (Dr.) and Bank Account (Cr.)
► Dividend Account (Dr.) and Bank Account (Cr.)
► Bank Account (Dr.) and XYZ Co. Account (Cr.)

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for debtors control
account?

► Sales Day Book

► Sales Return
► Debtors Ledger
► All of the given options

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is shown on credit side of creditors control account?

► Bills Receivable
► Return inwards
► Credit purchases
► Discount allowed

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of carriage
charges, paid for a new plant purchased mistakenly debited to carriage account?

► Plant account
► Carriage account
► Both plant account and carriage account
► Trading account

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. “A” of Rs.336
have been debited to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)
► Sales account (Dr.) and B’s account (cr.)
► B’s account (Dr.) and Sales account (Cr.)

Question No: 23 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Bad Debts (Given in trial balance) 500
Old provisions (Given in trial balance) 700
Sundry Debtors (Given in trial balance) 44,800

If the Provision for doubtful debts has been increased by 5%, which amount of new
provision will be shown in Profit & Loss Account?
► Rs. 2,240
► Rs. 2,425
► Rs. 1,925

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 ► Rs. 3,025

Question No: 24 ( Marks: 1 ) - Please choose one

An asset which is NOT easily convertible to cash or not expected to become cash within
a period of twelve months is called:

► Liquid asset
► Current asset
► Fixed asset
► Floating asset

Question No: 25 ( Marks: 1 ) - Please choose one

When closing stock is given in trial balance, then it will effect:
► Trading account only
► Balance sheet only
► Owner's equity only
► Both Trading account and Balance sheet

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT if depreciation is given in trial balance?
► All of the given options are correct
► It means depreciation has already been deducted from concerned asset account
► It will be shown as an expense in income statement only
► It will not be deducted from concerned asset in Balance Sheet

Question No: 27 ( Marks: 1 ) - Please choose one

Identify the selling expenses of manufacturing concern with the help of given data.
Particulars Rs.
Salesman’s salary 70,000
Commission on sales 28,000
Carriage outward 10,000
Carriage inward 5,000

► Rs. 80,000
► Rs. 60,000
► Rs. 38,000
► Rs. 1, 08,000

Question No: 28 ( Marks: 1 ) - Please choose one

In case of fixed capital accounts, other transactions such as Drawings and Profit etc. are
recorded in a separate account that is called ___________.

► Fixed Capital Account

► Current Account
► Fluctuating Capital Account
► Floating Capital Account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following clause/s are discussed in Memorandum of Association of
Companies?

► Name of company
► Place of registered office of company
► Objective of the company
► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

In Income Statement, both beginning inventory and ending inventory appear in the
section of:
► Cost of good sold
► Indirect cost
► Selling cost

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 ► Factory over head cost

Question No: 31 ( Marks: 1 ) - Please choose one

In which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only
► In income statement under the administrative expense only
► In both balance sheet under the head of current liabilities and income statement
under the administrative expense

Question No: 32 ( Marks: 1 ) - Please choose one

How dividend declared is treated in the Balance Sheet of the company?

► Provision
► Current liability
► Reserves and surplus
► Current assets

Question No: 33 ( Marks: 1 ) - Please choose one

The balance sheet reported a beginning balance of Rs. 20,000 in Accounts Receivable
and an ending balance of Rs. 15,000. Credit Sales of Rs. 200,000 were made during the
year. Using this information, compute cash collected from customers.

► Rs. 205,000
► Rs. 215,000
► Rs. 195,000
► Rs. 200,000

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form of
business?

► The limited company form of business allows ownership of the business to be

spread amongst many people
► Shareholders can appoint professionals
► Shareholders are personally liable for all the liabilities incurred by the business
► Regular filing of information about the affairs of the company is a legal
requirement

Question No: 35 ( Marks: 1 ) - Please choose one

In calculating earning per share (EPS), the net profit is divided by which of the
following?

► Number of ordinary shares

► Number of preference shares
► Paid up capital
► Authorized capital

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the given Asset is Not included in the calculation acid test ratio?

► Stock
► Cash
► Debtors
► Bills Receivable

Question No: 37 ( Marks: 1 ) - Please choose one

Particulars Rs.
Debentures 1, 50, 000
Equity Capital 2, 00,000
General Reserve 90, 000

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 Accumulated profit 60,000
What is debt equity ratio ?

► 15: 20 (or 3:4)

► 15:24 (or 5: 8)
► 15:29
► 15:35 (or 3: 7)

Question No: 38 ( Marks: 1 ) - Please choose one

Normally the practice of Book Keeping under Single Entry System is followed by:
► Small businesses only
► Governments only
► Large scale businesses only
► Both small businesses and governments

Question No: 39 ( Marks: 1 ) - Please choose one

In which of the following case the bank cannot refuse the payment?
► Stale cheque
► Bearer cheque
► Insolvency of the customer
► Post dated cheque

Question No: 40 ( Marks: 1 ) - Please choose one

Stock account is debited and creditors account is credited, which of the following is
reflecting the statement?

► Discount received
► Goods returned
► Purchase of goods on credit
► Payment of goods

Question No: 41 ( Marks: 1 ) - Please choose one

Payment is made of a company’s purchases on credit, which of the following is correct:
► Debit stock account and credit creditors account
► Debit creditors account and credit cash account
► Debit cash account and credit creditors account
► Debit stock account and credit cash account

Question No: 42 ( Marks: 1 ) - Please choose one

We usually allow the customer to deduct a certain amount from the invoice value for
prompt payment. In doing so we are granting a:
► Commission
► Allowance
► Discount
► Rebate

Question No: 43 ( Marks: 1 ) - Please choose one

What will be obtained from the Purchases Returns Book?
► Discount received
► Returns outward
► Credit purchases
► Discount allowed

Question No: 44 ( Marks: 1 ) - Please choose one

Deferred cost is classified as:
► Current liability
► Current asset
► Non-current asset
► Non-current liability

Question No: 45 ( Marks: 1 ) - Please choose one

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 Which of the following is increased when an asset is converted into expense in
adjustment?
► Revenue
► Net income
► Expense
► Liability

Question No: 46 ( Marks: 1 ) - Please choose one

Accumulated depreciation is a ____________ account?
► Fixed asset
► Current asset
► Contra asset
► Liability

Question No: 47 ( Marks: 1 ) - Please choose one

Failure to record ___________ will result in understates net income.
► Accrued expenses
► Expenses incurred
► Accrued revenues
► Accounts payable

Question No: 48 ( Marks: 1 ) - Please choose one

Puget Sound Co. sold marketable securities Costing Rs.80,000 for Rs.92,000 cash. In the
company’s income statement and statement of cash flows, respectively, this will appear
as:
► A Rs.12,000 gain and a Rs.92,000 cash receipt
► A Rs.92,000 gain and a Rs.8,000 cash receipt
► A Rs.12,000 gain and a Rs.80,000 cash receipt
► A Rs.92,000 sale and a Rs.92,000 cash receipt

Question No: 49 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with an equal
share in profit or loss. Markup on drawings of Mr. A is Rs.1,500 and of Mr. B is
Rs.1,800. The net income for the year is Rs.85,000. What will be the amount of
distributable profit?
► Rs.81,700
► Rs.88,300
► Rs.131,700
► Rs.146,700

Question No: 50 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal share in profit
or loss. Markup on capital of Mr. A is Rs.2,000 and markup on drawings of Mr. B is
Rs.3,000. The net income for the year is Rs.50,000. What will be the profit share of Mr.
A?
► Rs.22,500
► Rs.25,500
► Rs.27,500
► Rs.55,000

Question No: 51 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with an equal
share in profit or loss. Markup on capital of Mr. A is Rs.2,000 and markup on drawings
of Mr. B is Rs.3,000. The net income for the year is Rs.85,000. What will be the profit
share of Mr. B?
► Rs.40,000
► Rs.43,000
► Rs.130,000
► Rs.133,000
Net Profit = 85 000
Add Intrest on Drawings = 3000
Less intrest on capital = 2000

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Total Profit of the firm = 85 000 + 3000 - 2000 = 86 000
Profit of B = 86000 / 2 = 43000

Question No: 52 ( Marks: 1 ) - Please choose one

The value of a share as quoted on the stock exchange is known as:
► Book value
► Par value
► Market value
► Face value

Question No: 53 ( Marks: 1 ) - Please choose one

Which of the following is not a measure of short-term liquidity?
► Current ratio
► Quick ratio
► Acid-test ratio
► Debt ratio

Question No: 54 ( Marks: 1 ) - Please choose one

Short term investments in marketable securities and treasury bills that will mature within
ninety days from the date of acquisition, must be classified as:
► Receivables
► Receipts from Capital
► Current and intangible assets
► Cash equivalents

Question No: 55 ( Marks: 3 )

Show how the following items will appear in profit and loss account.

Particulars Rs.
Bad debts 3,600
Provision for doubtful debts (old) 8,500
Provision for doubtful debts (new) 1,500

Question No: 56 ( Marks: 5 )

What is the Purpose of Control Accounts?

Question No: 57 ( Marks: 5 )

Umer and Usman, both of whom are CPAs, form a partnership, with Umer investing
Rs.100,000 and Usman, Rs.80,000. They agree to share net income as follows:
1. Salary allowances of Rs.80,000 to Umer and Rs.50,000 to Usman.
2. Interest allowances at 15 percent of beginning capital account balances.
3. Any partnership earnings in excess of the amount required to cover the interest
and salary allowances to be divided 60 percent to Umer and 40 percent to Usman.
The partnership net income for the first year of operations amounted to Rs.247,000
before interest and salary allowances. Show how this amount should be divided between
the two partners.

Question No: 58 ( Marks: 10 )

Following information are extracted from the books of XY and Sons for the year 2007.

Particulars Rs.
Fixed Asset at WDV 529,500
Material 31-12-2007 188,000
Work in process on 31-12-2007 178,000
Finished Goods on 31-12-2007 198,000
Debtors 160,000

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 Bank 7,000
Creditors 100,000
Expenses payable 15,000
Profit for the year X:90,000
Y:80,000
Drawings for the year X:10,000
Y:15,000
Capital X:400,000
Y: 350,000
Current Account X: 13,000
Y:10,000
Long term loans 2,27,500

You are required to prepare Balance Sheet as on 31st December 2007. Show
complete working.

Question No: 59 ( Marks: 10 )

Prepare Bank Reconciliation Statement as on 31st March 2009 with the help of given
data.

Particulars Rs.
1 Balance as per Cash Book (Dr.) 180,000
2 Cheques paid into Bank in March 2009 but credited by the bank in April 2009 7,900
4,500
1,300
3 Cheques issued in March 2009 but cashed in April 2009 11,000
5,800
4 Cheques entered in the Cash Book in March 2009 but paid into bank in April 2009 1,000

5 Interest allowed by the bank 2,500

6 Interest charged by the bank 500

Paper no 32
Solved by Chanda Rehman, Nomi chakwal ABr FINALTERM
EXAMINATION

Fall 2009
MGT101- Financial Accounting (Session - 4)
Ref No: 1195876
Time: 120 min
Marks: 87
Question No: 1 ( Marks: 1 ) - Please choose one
Shares for which amount is paid by public are called ________ shares.
► Paid up
► Authorized
► Bonus shares

► All are correct options

Question No: 2 ( Marks: 1 ) - Please choose one

If a business purchases machinery for Rs. 30,000 on 31st January 2008 having life of 10
years, this expense will be realized ___________ under the concept of accrual
accounting.
► For the year 2008 only
► For the last day of 10th year only

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 ► Over 10 years
► Nothing can be said about it

Question No: 3 ( Marks: 1 ) - Please choose one

What is the nature of an expense account?

► Debit
► Credit
► Revenue
► None of the given options

Question No: 4 ( Marks: 1 ) - Please choose one

A summarized record of transactions related to individuals or things is called a/an
___________.

► Account
► Voucher
► Journal
► Trial balance

Question No: 5 ( Marks: 1 ) - Please choose one

Which one of the following is NOT prepared by Non profit organizations?

► Profit & Loss account

► Income & Expenditure account
► Receipts & Payments account
► Balance Sheet

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following organizations prepare Income & Expenditure account?

► Public libraries
► NGOs
► Labor unions
► All of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

The favorable balance of Profit and Loss account should be:
► Added in liabilities
► Subtracted from current assets
► Subtracted from liabilities
► Added in capital

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded in the books of accounts for the goods
returned to Mr. 'A'?

► Purchases return account (Dr) and Trading account (Cr)

► Mr.” A”/ creditor account (Dr) and purchases return account (Cr)
► Purchases return account (Dr) and Mr.” A” / creditor account (Cr)
► Mr.” A”/ creditor account (Dr) and Profit & Loss account (Cr)

Question No: 9 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business bought goods on credit from
Mr. Ali?

► Purchases account
► Mr. Ali account

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 ► Cash account
► Sales account

Question No: 10 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs.1,00,000, sales are Rs. 300,000 and operating expenses Rs.
200,000 during the year. What would be the Gross Profit?

► Rs. 5,000
► Rs. 1, 00,000
► Rs.1, 05,000
► Rs. 2, 00,000

Question No: 11 ( Marks: 1 ) - Please choose one

Partially completed products that are not yet ready for sale are known as:

► Raw material
► Work in process
► Finished goods
► Closing stock

Question No: 12 ( Marks: 1 ) - Please choose one

In the cost of goods sold statement, Cost of direct material consumed + Direct labor=?
► Conversion cost
► Prime cost
► Total factory cost
► Cost of goods manufactured

Question No: 13 ( Marks: 1 ) - Please choose one

The Primary objective of providing depreciation is:

► To calculate true profit

► To show the asset on market value
► To reduce tax Burdon
► To provide funds for replacement

Question No: 14 ( Marks: 1 ) - Please choose one

Under the reducing balance method of depreciation:

► Amount of depreciation increases every year

► Amount of depreciation remains constant for every year
► Amount of depreciation decreases every year
► None of the given options

Question No: 15 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine 1,00,000
Cost of new machine purchased during the year 50,000
Depreciation during the year 21,000
Closing written down value (WDV) ?

► Rs. 1, 29,000
► Rs. 1, 50,000
► Rs. 1, 21,000
► Rs. 71,000

Question No: 16 ( Marks: 1 ) - Please choose one

In which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business
► Failure of repeated attempt to collect the debt

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 ► All of the given options

Question No: 17 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit &
loss account.
Particulars Rs.
Bad debts 3,600
Provision for doubtful debts (old) 6,000
Current year’s provision (new) 1,500

► Rs. (5,100)
► Rs. 5,100
► Rs. (900)
► Rs. 900

Question No: 18 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400
Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 5%
Requirement: Identify the Total amount which will deduct from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 1,540
► Rs. 3,940

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of carriage
charges, paid for a new plant purchased mistakenly debited to carriage account?

► Plant account
► Carriage account
► Both plant account and carriage account
► Trading account

Question No: 20 ( Marks: 1 ) - Please choose one

_____ are committed in those cases where proper distinction between revenue and
capital items is not made.

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

Question No: 21 ( Marks: 1 ) - Please choose one

A receipt of cash Rs. 10,000 from Mr. Bilal is recorded as Rs. 1,000. What amount will
be adjusted in rectifying entry?

► Rs. 1,000
► Rs. 9,000
► Rs. 10,000
► Rs. 11,000

Question No: 22 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit &
loss account.
Particulars Rs.
Bad debts 1,600

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 Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600
► Rs. 1,600
► Rs. 2,000
► Rs. 2,600

Question No: 23 ( Marks: 1 ) - Please choose one

The main objective of financial reporting is to provide:

► Essential information to internal users of financial reports.

► Useful economic information about the business to the external parties for sound
financial decisions.
► Information to internal users about the cash position of the business.
► Information to the Securities Exchange Commission (SEC).

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if cash is drawn by a Proprietor?

► Proprietor’s drawings a/c (Dr.) and Cash a/c (Cr.)

► Cash a/c (Dr.) and Proprietor’s drawings a/c (Cr.)
► Proprietor’s Capital (Dr.) and Proprietor’s drawings a/c (Cr.)
► Proprietor’s drawings (Dr.) and Proprietor’s Capital a/c (Cr.)

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following item will be shown on debit side of capital account of sole
proprietor?

► Cash
► Drawings
► Debtors
► Profit

Question No: 26 ( Marks: 1 ) - Please choose one

When closing stock is given in trial balance, then it will effect:
► Trading account only
► Balance sheet only
► Owner's equity only
► Both Trading account and Balance sheet

Question No: 27 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?

► Total assets employed

► Total liabilities
► Total assets
► Current assets

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account will be credited when interest on capital is charged
against the distribution of profit?
► Interest account
► Partner’s capital account
► Profit and Loss account
► Profit and loss appropriation account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following is(are) type(s) of capital account in partnership?

º Fixed Capital

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 º Current Capital
º Fluctuating Capital
º Both Fixed Capital and Fluctuating Capital

Question No: 30 ( Marks: 1 ) - Please choose one

In case of fixed capital accounts, other transactions such as Drawings and Profit etc. are
recorded in a separate account that is called ___________.

► Fixed Capital Account

► Current Account
► Fluctuating Capital Account
► Floating Capital Account

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is (are) type(s) of Public Limited Companies?
► Listed company
► Non listed company
► Private limited company
► Both Listed Company and non listed company

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following clause/s are discussed in Memorandum of Association of
Companies?

► Name of company
► Place of registered office of company
► Objective of the company
► All of the given options

Question No: 33 ( Marks: 1 ) - Please choose one

The amount received; in excess of the face value of the shares is transferred to which of
the following?

► Share capital account

► Right share
► Share premium account
► Share holder account

Question No: 34 ( Marks: 1 ) - Please choose one

Preliminary Expenses of the company may write off against:
► Share premium account
► Share holder account
► Debtors control account
► Creditor control account

Question No: 35 ( Marks: 1 ) - Please choose one

Which of the following account will be debited if shares issued against cash?

► Share premium account

► Cash account
► Share capital account
► Profit and loss account

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Annual Report

Question No: 37 ( Marks: 1 ) - Please choose one

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Which of the following documents contains rules and regulations for internal
management of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Statutory Declaration

Question No: 38 ( Marks: 1 ) - Please choose one

How dividend declared is treated in the Balance Sheet of the company?

► Provision
► Current liability think this one
► Reserves and surplus
► Current assets

Question No: 39 ( Marks: 1 ) - Please choose one

The primary purpose of preparing a cash flow statement for an entity is to provide
information about:
► Its financial position at the end of an accounting period
► Its cash receipts and cash payments during an accounting period
► Its financial position at the start of an accounting period
► None of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as an inflow of cash?
► The repayments of a bank loan
► Dividend issue in the current year
► Money received as result of selling fixed assets
► The difference between the valuations of old and new fixed assets doubted

Question No: 41 ( Marks: 1 ) - Please choose one

Debenture is also named as:
► Share
► Bond
► Equity
► Reserve

Question No: 42 ( Marks: 1 ) - Please choose one

Prepaid interest given in the Trial Balance will be treated as a (an):

► Asset
► Liability
► Revenue
► Deferred expense

Question No: 43 ( Marks: 1 ) - Please choose one

Wages outstanding given in the trial balance will be treated as a (an):

► Asset
► Liability
► Revenue
► Deferred expense

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following fixed asset is normally appreciated with the passage of time?
► Land
► Vehicles
► Furniture
► Machinery

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Question No: 45 ( Marks: 1 ) - Please choose one
Expenditures incurred annually on renewal of patent are known as:

► Revenue Expenditures
► Capital Expenditures doubted
► Deferred Expenditures
► None of the given options

Question No: 46 ( Marks: 1 ) - Please choose one

Accounts receivables are shown in balance sheet at:

► Net realizable value

► Total collectible amount
► Current value
► Collected amount

Question No: 47 ( Marks: 1 ) - Please choose one

Stock account is credited and creditors account is debited, which of the following is
reflecting the statement?
► Discount received
► Goods returned
► Purchase of goods on credit
► Payment of goods

Question No: 48 ( Marks: 1 ) - Please choose one

Mr. Ali’s bank book shows a debit balance of Rs. 36,000. He deposited a cheque of
Rs.15,000 but not yet collected by the bank. What will be the balance of bank statement?

► Rs. 21,000
► Rs. 51,000
► Rs. 36,000
► Rs. 15,000

Question No: 49 ( Marks: 1 ) - Please choose one

We usually allow the customer to deduct a certain amount from the invoice value for
prompt payment. In doing so we are granting a:
► Commission
► Allowance
► Discount
► Rebate

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following is NOT a financial statement?
► Balance sheet
► Audit report
► Income statement
► Cash flow statement

Question No: 51 ( Marks: 1 ) - Please choose one

In a partnership of Mr. X and Mr. Y, the share of profit of Mr. X is Rs.3,840 and the
share of profit of Mr. Y is Rs. 5,760. What will be the ratio of their share?
► 1:2
► 2:3
► 3:2
► 2:1

Question No: 52 ( Marks: 1 ) - Please choose one

Interest expenses of Epler Corporation shows a debit balance of Rs.200 in its unadjusted
trial balance and Rs.250 in adjusted trial balance. Which of the following account will be
debited in adjusting entry?

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 ► Interest expense
► Interest payable
► Prepaid interest
► Interest paid

Question No: 53 ( Marks: 1 ) - Please choose one

The amount of share premium can be utilized except:
► To write off preliminary expenses
► To meet the expenses of issue of shares
► To distribute among the share holders
► To issue bonus shares

Question No: 54 ( Marks: 1 ) - Please choose one

Which of the following ratio cannot be computed for a period in which the company
incurs a net loss?
► Acid-test ratio doubted
► Return on investment
► Price-earning ratio
► None of the given options

Question No: 55 ( Marks: 3 )

What are the benefits of subsidiary ledgers?
Answer:
When business expands the number of accounts and entries are also increased so to
control the accounts in a better way subsidiary ledgers are used which give a good picture
and vision of the account study and accountablility.
Following are the subsidiary ledgers used:
1. Sales Journals
2. Sales Returns
3. Debtors Ledgers

Question No: 56 ( Marks: 5 )

What is bank overdraft? Mention an example for this. Why companies have to pay
mark up on it. Under which head mark up paid on overdraft is shown in financial
statement.
Answer:
Bank Overdraft is the form of loan taken from the bank when the amount is exceeding
from specific limit, and bank deduct this overdraft amount when company’s account
debited, As this is the type of Loan and so company have to pay mark up as interest on
the overdraft amount and depend upon the terms of agreement. In the financial statement
the mark up is shown in Financial Expenses.

Question No: 57 ( Marks: 5 )

What will be the effects of given adjustments on the income statement and balance
sheet?

Income statement Balance sheet

Adjustment Revenue Expense Net income Assets Liabilities Owner’s
equity
Converting assets to No effect Increase Decrease Decrease No effect Decrease
expenses
Converting liabilities to Increase No Effect NO Effect No effect Decrease No effect
revenue
Accruing unpaid No effect Decrease No effect No effect Decrease
expenses
Accruing uncollected Increase No effect increase No effect No effect
revenue

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Note: For better understanding an example is given above. Follow the format given in
example.

Question No: 58 ( Marks: 10 )

Prepare Debtors and Creditors control account from the following data. Also work out
their closing balances on June 30, 2009

June 1: Rs.
Opening balance of Debtors 58,500
Opening balance of Creditors 70,000
Details of June:
Total credit sales 44,700
Cheques and cash received 55,000
Purchase return 6,600
Total credit purchases 48,000
Discount received 2,200
Discount allowed 2,800
Cheques and cash paid 36,330

Creditors Control Account

Debit Side Credit Side
Date No. Narration Dr. Rs Date No. Narration Cr. Rs
Purchase Return 6,600 B/F 70,000
Discount
Received 2,200 Purchase 48,000
Cash/cheques
Paid 36,330
C/f 72,870
Total 1,18000 Total 118000
Debtors Control Account
Debit Side Credit Side
Date No. Narration Dr. Rs Date No. Narration Cr. Rs
B/f 58,500 Cash/Checque Rec 55,000
Total Sale 44,700 Discount 28,00

C/f 45,400
Total 10,3200 Total 10,3200

Question No: 59 ( Marks: 10 )

From the given information as at June 30, 2007, calculate fixed assets at WDV and cost
of goods sold as on June 30,2008.

Building at Cost 239,500

Equipment at Cost 22,000
Vehicles at Cost 45,000
Accumulated Dep. – Building 12,250
Equipment 7,000
Vehicles 13,900
Stock Opening Balance 58,725
Sales 247,500
Purchases 136,775
Carriage Inward 6,050
Vehicle Running Expenses 22,300

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Additional Information:
· Closing stock Rs. 70,050.
· Depreciation during the year
o Building 6,000
o Vehicles Rs 8,500
o Equipment 4,000

Solution:

Cost of Goods Sold:

Opening Stock Balance 58,725

Add: Purchase 136,775
Add: Carriage Inward 6,050
Less: Closing Stock (70,050)
Cost of Goods sold 131,500 Rs.
Fixed Assets:

Building (12,250) 227,250

Vehicle (13,900) 31,100
Equipment (7,000) 15,000
Total 273,350 Rs.
Paper no 33
Solved by Chanda Rehman, & ABr
Question No: 1 ( Marks: 1 ) - Please choose one
Prepaid interest given in the Trial Balance will be treated as a (an):

► Asset
► Liability
► Revenue
► Deferred expense

Question No: 2 ( Marks: 1 ) - Please choose one

The net income calculated in the income statement for the accounting
period is reported on:

► Bank Statement
► Statement of retained earnings
► Statement of cash flows
► None of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

If the Capitals of partners are fixed then, at the end of financial year a
partner’s drawings are transferred to the:

► Credit side of the partner’s capital account

► Credit side of the partner’s current account
► Debit side of partnership bank account
► Debit side of the partner’s current account

Question No: 4 ( Marks: 1 ) - Please choose one

If one partner receives a salary which is credited to him at the end of the
year, the share of profit available for distribution will be:

► Increased
► Decreased
► Unchanged
► Changed and become negative

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Question No: 5 ( Marks: 1 ) - Please choose one
In which situation(s) Partnership is dissolved?

► In case of death of partner

► At the admission of new partner
► If any partner resigned from partnership
► All of the given options

Question No: 6 ( Marks: 1 ) - Please choose one

Rs.
Gross profit 50,000
Operating profit 42,000
Sales 250, 000
What is the amount of operating expenses ?

► Rs. 8,000
► Rs. 92,000
► Rs. 62,500
► Rs. 300,000

Question No: 7 ( Marks: 1 ) - Please choose one

Current ratio may be increased by:

► Overstating current Assets

► Overstating current Liabilities
► Understating current Assets
► Understating current assets and overstating current liabilities

Question No: 8 ( Marks: 1 ) - Please choose one

In which of the following interim dividend is treated?

► In profit and Loss account

► In profit and Loss appropriation account
► On the asset side of the Balance Sheet
► In trading account

Question No: 9 ( Marks: 1 ) - Please choose one

The statement of changes in equity basically shows the movement of:

► share capital during the year

► Capital reserves during the year
► Revenue Reserves during the year
► All of the given options not sure

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following can offer its share to general public at large?

► A private limited company

► A listed company
► A partnership firm
► A trust

Question No: 11 ( Marks: 1 ) - Please choose one

The Joint Stock Company is formed under the Companies Ordinance:
► 1984
► I884
► 1948
► 1965

Question No: 12 ( Marks: 1 ) - Please choose one

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In case of fixed capital accounts, other transactions such as Drawings and
Profit etc. are recorded in a separate account that is called ___________.

► Fixed Capital Account

► Current Account
► Fluctuating Capital Account
► Floating Capital Account

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following account will be debited when the interest on
drawings is charged?

► Partner’s capital account correct

► Interest account
► Partner’s current account
► Profit & Loss account

Question No: 14 ( Marks: 1 ) - Please choose one

Which of the following account will be credited when interest on capital is
charged against the distribution of profit?
► Interest account
► Partner’s capital account
► Profit and Loss account
► Profit and loss appropriation account

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the partnership form of
business?
► Partners must have to share their profits in equal proportion
► Partners are personally liable for the liabilities of the business
► Partnerships must make their accounts available to the general
public
► Partnership agreement in writing is called Partnership deed

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following statements is NOT TRUE about the partnership
form of business?
► A partnership is a business run by two or more persons
► A partnership business is easy to set up
► Each partner is liable under the law for the actions of other partners
► In the absence of agreement, partners will be paid salaries

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following is TRUE about the treatment of insurance paid in
advance Rs. 13,000?

► It will be treated as an other income in Profit & Loss Account

► It will be treated as a current asset in Balance Sheet
► It will be treated as a current liability in Balance Sheet
► It will be treated as an accrued expense in Balance Sheet

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following is/are NOT shown in balance sheet of sole
proprietor?
► Fixed assets
► Current liabilities
► Profit sharing ratio
► Long term assets

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following appears in both the Income Statement debit column
and the Balance Sheet credit?

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 ► Net income
► Net loss
► Dividends
► Retained earnings

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is a selling expense?

► Any tax/freight is paid on purchases

► General salaries paid to laborers
► Tax & freight paid on sale
► Interest on deposits

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following is NOT an operating expense?

► Salaries and wages expense

► Rent expense correct
► Interest expense
► Depreciation expense

Question No: 22 ( Marks: 1 ) - Please choose one

Consider the following table:

Financial statement item Classification

A. Inventory Current asset
B. Tangible assets Non-current asset
C. Accrued expenses Current asset
D. Bonds payable Long-term liabilities

Identify the row above, showing an INCORRECT financial-statement

classification?
► Row A
► Row B
► Row C
► Row D

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following is the first phase of the typical operating cycle?

► Receive cash from customers

► Pay cash to suppliers
► Sell goods and services to customers
► Purchase goods and services

Question No: 24 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400
Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 10%

Identify the Total amount deducted from Sundry debtors.

► Rs. 460
► Rs. 2,400
► Rs. 3,080 ( wrong)
► Rs. 5,480 ( correct)

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Question No: 25 ( Marks: 1 ) - Please choose one
It is supposed that on 31st December, 2007, the sundry debtors are
amounted to Rs. 40,000. On the basis of past experience, it is estimated
that 10% of the sundry debtors are doubtful. Actual bad debts are Rs.
1600. What amount of new provision for doubtful debts will be credited in
profit & loss account
► Rs. 3,600
► Rs. 4,000
► Rs. 1,600
► Rs. 2, 400

Question No: 26 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be
deducted from Sundry Debtors in Balance Sheet.

Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600
► Rs. 1,000
► Rs. 2,000
► Rs. 2,600

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error
of a purchase return of Rs.200 to Mr. “A” entered in sales book instead of
purchase return book?

► A’s account only

► Sales account only
► Purchase returns account and sales account
► Purchases account only

Question No: 28 ( Marks: 1 ) - Please choose one

"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in
books of accounts", is an example of:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

Question No: 29 ( Marks: 1 ) - Please choose one

_____ are committed in those cases where proper distinction between
revenue and capital items is not made.

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error
of carriage charges, paid for a new plant purchased mistakenly debited to
carriage account?

► Plant account
► Carriage account
► Both plant account and carriage account
► Trading account

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Question No: 31 ( Marks: 1 ) - Please choose one
Which of the following entry will be passed to record discount received in
control account?

► Discount Received (Dr) and Creditors Control A/c (Cr)

► Discount Received (Dr) and Creditors A/c (Cr)
► Creditors Control A/c (Dr) and Discount Received (Cr)
► Creditors A/c (Dr) and Discount Received (Cr)

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following is shown on credit side of creditors control
account?

► Bills Receivable
► Return inwards
► Credit purchases
► Discount allowed

Question No: 33 ( Marks: 1 ) - Please choose one

It is supposed that on 31-12-2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 5 % of the
sundry debtors are doubtful. What entry will pass to transfer the bad debts
to provision for doubtful debts?

► Profit & Loss a/c Rs. 1,600 (Dr) & Provision for doubtful debts a/c Rs.
1,600 (Cr)
► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs.
2,000 (Cr)
► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs.
2,000 (Cr)
► Provision for doubtful debts a/c Rs. 1,600 (Dr) & Bad Debts a/c Rs.
1,600 (Cr)

Question No: 34 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Bad Debts (Given in trial balance) 500
Old provisions (Given in trial balance) 800
Sundry Debtors (Given in trial balance) 44,500
Provision for doubtful debts @ 5%
What will be the amount of new provision ?

► Rs. 2,225
► Rs. 2,525
► Rs. 1,925
► Rs. 3,025

Question No: 35 ( Marks: 1 ) - Please choose one

An overdraft will appear as:

► a debit balance in the both the bank statement and the cash book.
► a credit balance in the bank statement but as a debit balance in the
cash book.
► a credit balance in the cash book but as a debit balance in the bank
statement.
► a credit balance in both the bank statement and the cash book.

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Question No: 36 ( Marks: 1 ) - Please choose one
Which one of the following is NOT true for Profit & Loss Account?
► It shows whether a business has made a profit or loss over a
financial year
► It shows the financial performance of a business for the period
► It shows revenues and expenses for the period
► It is used to calculate surplus/deficit for a particular period

Question No: 37 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT regarding depreciation?

► It is a systematic allocation of depreciable amount of an asset over its

estimated useful life
► It refers to the end life of an asset
► It refers to the increase in value of asset
► It is another name of Impairment

Question No: 38 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods
is known as:

► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost

Question No: 39 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 90,000 and operating
expenses are Rs. 25,000 during the year. What would be the Net Profit?

► Rs. 5,000
► Rs. 25,000
► Rs. 55,000
► Rs. 60,000

Question No: 40 ( Marks: 1 ) - Please choose one

“Electricity bill for the month is paid by Mr. Imran Rs. 325”. What is the
journal entry to record this transaction?

► Cash a/c Rs. 325 (Dr.) , Utilities Expense a/c Rs. 325 (Cr.)
► Utilities Expense a/c Rs. 325 (Dr.), Cash a/c Rs. 325 (Cr.)
► Accounts Receivable a/c Rs. 325 (Dr.), Utilities Expense a/c Rs. 325
(Cr.)
► Utilities Expense a/c Rs. 325 (Dr.), Accounts Receivable a/c Rs. 325
(Cr.)

Question No: 41 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if the cash is
deposited in the bank?

► Bank account (Dr) and Cash account (Cr)

► Cash account (Dr) and Bank account (Cr)
► Bank account (Dr) and Profit & Loss account (Cr)
► Cost of goods Sold account (Dr) and Bank account (Cr)

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Question No: 42 ( Marks: 1 ) - Please choose one
Which one of the following statement is CORRECT about Long term
liabilities?

► These are due within one year

► These are consist of all debts, payable after 12 months
► In working capital, these are deducted from current assets
► All of the given options

Question No: 43 ( Marks: 1 ) - Please choose one

A summarized record of transactions related to individuals or things is
called a/an ___________.

► Account
► Voucher
► Journal
► Trial balance

Question No: 44 ( Marks: 1 ) - Please choose one

When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account

Question No: 45 ( Marks: 1 ) - Please choose one

Obligations to pay cash or un-earned incomes by the business are the:

► Assets
► Liabilities
► Equities
► Expenses

Question No: 46 ( Marks: 1 ) - Please choose one

Economic resources owned by a business and expected to benefit for the
future operations are called:
► Expenses
► Assets
► Capital
► Liabilities

Question No: 47 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of
Rs.10, 000 in the business made by the owner will effect:

► Cash & Capital Account

► Cash & Expense Account
► Capital & Revenue Account
► Capital & Expense Account

Question No: 48 ( Marks: 1 ) - Please choose one

Income of the business includes:

► Cash sales only

► Credit sales only
► Credit purchases only
► Both cash sales and credit sales

Question No: 49 ( Marks: 1 ) - Please choose one

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If a business purchases machinery for Rs. 30,000 on 31st January
2008 having life of 10 years, this expense will be realized ___________
under the concept of accrual accounting.
► For the year 2008 only
► For the last day of 10th year only
► Over 10 years
► Nothing can be said about it

Question No: 50 ( Marks: 1 ) - Please choose one

Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only
► Both cash and accrual accounting
► None of the given options

Question No: 51 ( Marks: 5 )

Following information is extracted from the books of Abrar Ltd as
on December 31st, 2007.

Particulars Rs
Carriage inwards 8,000
Legal charges 6,500
Financial charges 223,500
Tax payable 30,000
Advances from customer 10,000
General reserve 40,000
Accumulated profit brought forward(credit balance ) 95,000
Long term loans 1,00,000

Additional information
The authorized capital is Rs. 50, 00,000 divided into 500,000 shares of Rs.
10 each. Issued and paid up capital 2, 500,000.
You are required to prepare calculate Share holders equity

Share holder equity will have Authorized capital, Paid up capital, General
Reserves & Accumulated profit brought forward

Authorized capital = Rs. 50,00,000 divided into 500,000 shares of Rs. 10

each
Issued and paid up capital 2,500,000
General Reserve 40,000
Accumulated profit brought forward (Credit balance) 95,000

2500000 + 40000 + 95000 = 2635000

Question No: 52 ( Marks: 10 )

Write down the at least ten distinguishing features of a limited company which
differentiate it from sole proprietor business

The basic difference between a partnership and a limited company is the

concept of limited liability.

1. If a partnership business runs into losses and is unable to pay it’s liabilities, its

partners will have to pay the liabilities from their own wealth.

2. In case of limited company the shareholders don’t lose anything more than the

amount of capital they have contributed in the company. It points that personal wealth

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 is not at stake and their liability is limited to the amount of share capital they have

contributed.

3. The concept of limited company is to mobilize the resources of a large number of

people for a project, which they would not be able to afford independently and then

get it managed by experts.

4. Listed Company have more than twenty partners, so problem of extra capital is

reduced to minimum.

5. The liabilities of the members of a company is limited to the extent of capital

invested by them in the company

6. There are certain tax benefits to the company, which a partnership firm can not

enjoy

7. In Pakistan, affairs of limited companies are controlled by “Companies Ordinance”

issued in 1984

8. The formation of a company and other matters related to companies are governed

by “Securities and Exchange Commission of Pakistan (SECP)

,
Question No: 53 ( Marks: 10 )
The following Trail balance is taken out from the books of Rahman & Sons
as on 31st December, 2008.

Dr. Cr.
Rs. Rs.
Sales 204,000
Capital 120,000
Bank overdraft 103,560
Sundry Creditors 120,000
Opening Stock 60,400
Purchases 231,600
Sundry Debtors 109,660
Returns Inwards 3,640
General Expenses 6,980
Plant 22,620
Wages & Salaries 16,740
Building 50,000
Cash in Hand 680
Cash at bank 8,720
Drawings 16,960
Motive Power 2,300
Dock &clearing
Charges 1,300
Coal, Gas, Water 1,700
Salaries 9,820
Interest on O/D 4,440
Rent rates Taxes 1,400
Discount Allowed 2,000
Interest received 3,400
550,960 550,960

Requirement:

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Prepare The Trading and Profit & Loss account of the business for the year
ended. Closing Stock is valued at Rs.40, 000.

Trading & Profit & Loss Account

For the year ending 31st December 2008

Particulars Debit Balance/Rs Particulars Credit Balance/Rs

Opening Stock 60400 Sales 204000 200360
Purchases 231600 Less returns: 3640
Dock &clearing 1300 Closing Stock 40000
Charges
Wages 16740
Motive Power 2300
Coal gas Water 1700 Gross Loss 73680
314040 314040
Gross Loss 73680 Interest received 3400
Salaries 9820
Rent, Rate, Taxes 1400
General Expenses 6980
Interest on O/D 4440
Discount Allowed 2000
Net Loss 94920
98320 98320

Question No: 54 ( Marks: 10 )

Pass the rectifying entries to correct the following errors:

• Mr. “Ali” purchased goods of Rs. 1,500 on cash, but omitted to

enter in the books of accounts.
• An amount of Rs. 5,000 received from Mr. Amir, was credited
to the account of Mr. Ameer.
• Goods returned worth Rs. 500 to Mr. “B” wrongly debited to
sales Account.
• A purchase of goods from Mr. “B” of Rs. 400 has been wrongly
debited to Furniture Account.
• Furniture purchased on cash Rs. 8,000 posted as purchases.

Rectification of Errors

Error 1.
A purchase of goods of Rs. 1,500 on cash was omitted by mistake

Rectification Entry on the date of discovery:

Debit: Purchase Account 1,500
Credit: Cash Account
1,500

Error 2

Debit: Mr. Ameer 5,000

Credit: Mr. Amir 5,000

• Error 3 Goods returned worth Rs. 500 to Mr. “B” wrongly

debited to sales Account.

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 Debit: Goods Return Rs. 500
Credit: Sales Account Rs. 500

Error 4 A purchase of goods from Mr. “B” of Rs. 400 has been
wrongly debited to Furniture Account.

Debit: Purchases Rs. 400

Credit Furniture Account Rs. 400

Error 5 Furniture purchased on cash Rs. 8,000 posted as purchases.

Debit Furniture Account Rs. 8,000

Credit Purchase Post Account Rs. 8,000

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 Paper No:34
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 2)
Time: 120 min
Marks: 87
Question No: 1 ( Marks: 1 ) - Please choose one
We can say that the business is in profit, when:

► Assets exceed Expenditure

► Assets exceed Liabilities
► Income exceeds Expenditure
► Income exceeds Liabilities

Question No: 2 ( Marks: 1 ) - Please choose one

Term "Credit" means_______ by the business.
► Receiving of benefits
► It has no effect on business
► Providing of benefits correct
► It depends upon items

Question No: 3 ( Marks: 1 ) - Please choose one

According to the double entry system of accounting, an account that obtains
benefit is:
► Debit
► Credit
► Income
► No need to show as accounting record

Question No: 4 ( Marks: 1 ) - Please choose one

When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account

Question No: 5 ( Marks: 1 ) - Please choose one

When Capital is increased by an amount, it is recorded on the:

► Left or credit side of the account

► Right or debit side of the account
► Left or debit side of the account
► Right or credit side of the account

Question No: 6 ( Marks: 1 ) - Please choose one

Bank book is part of:

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 ► Voucher
► General Journal
► General Ledger
► Trial Balance

Question No: 7 ( Marks: 1 ) - Please choose one

What type of expenses are paid out of Gross Profit?

► Selling Expenses
► General Expenses
► Financial Expenses
► All of the given options

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following shows summary of a company's financial position at a
specific date?

► Profit & Loss Account

► Cash Flow Statement
► Balance Sheet
► Income & Expenditure Account

Question No: 9 ( Marks: 1 ) - Please choose one

Which of the following is NOT an example of intangible assets?

► Franchise rights
► Goodwill
► Patents
► Land

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following is an example of business liability?

► Land
► Building
► Cash
► Capital

Question No: 11 ( Marks: 1 ) - Please choose one

The unfavorable balance of Profit and Loss account should be:
► Added in liabilities
► Subtracted from current assets
► Subtracted from liabilities
► Subtracted from capital

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business bought goods on
credit from Mr. Ali?

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 ► Purchases account
► Mr. Ali account
► Cash account
► Sales account

Question No: 13 ( Marks: 1 ) - Please choose one

Interest on loan paid by business is an example of :
► Deferred expense
► Revenue expense
► Capital expense
► None of the given options

Question No: 14 ( Marks: 1 ) - Please choose one

The allocation of the cost of a tangible plant asset to expense in the periods,
in which services are received from the asset, is termed as:

► Appreciation
► Depreciation
► Fluctuation
► None of the given options

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following is NOT a function of bank reconciliation statement?
► To reconcile the difference between the cash book and the bank
statement
► To check for errors in balance sheet
► To update omitted entries into the cash book
► To update omitted entries into the bank statement

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded when the Bad Debts are
recovered?

► Cash account (Dr.) & Bad Debts recovered account (Cr.)

► Accounts Receivable account (Dr.) & Bad Debts recovered account
(Cr.)
► Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)
► Provision for doubtful debts account (Dr.) & Cash account (Cr.)

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for debtors
control account?

► Sales Day Book

► Sales Return
► Debtors Ledger
► All of the given options

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Question No: 18 ( Marks: 1 ) - Please choose one
Sales are calculated by adding:

► Cash sales and cash received from debtors

► Credit sales and cash received from debtors
► Cash sales and credit sales
► Cash ales and credit purchases

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following item will be shown on debit side of debtors account?

► Discount received
► Return inwards
► Discount allowed
► Credit sales

Question No: 20 ( Marks: 1 ) - Please choose one

Goods purchased from “Mr. A” for Rs. 2,000 passed through the sales book.
The rectification of error will result in:

► Increase of gross profit

► Decrease of gross profit
► Remains constant and no effect on net profit
► There is no relation between goods purchased and gross profit

Question No: 21 ( Marks: 1 ) - Please choose one

Goods of Rs.1,000 purchased from Mr. “A” were recorded in sales book, the
rectification of this error will:

► Increase the gross profit

► Reduce the gross profit
► Have no effect on gross Profit
► None of the given options

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following account will be credited when a typewriter is sold that
has been used in the office?

► Cash Account
► Sales Account
► Purchase Account
► Office Equipment Account

Question No: 23 ( Marks: 1 ) - Please choose one

When one or both aspects of a transaction are recorded in the wrong class or
category of account, this is called:

► Error of principle
► Error of omission
► Error of commission

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 ► Error of original entry

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following item must be recorded in the adjusted Cash Book in
order to bring it in line with the entries in the Bank Statement?

► Bank charges
► An error on the Bank Statement
► An uncredited deposit
► An unpresented cheque

Question No: 25 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are
amounted to Rs. 40,000. On the basis of past experience, it is estimated that
10% of the sundry debtors are doubtful. Actual bad debts are Rs. 1600. What
amount of new provision for doubtful debts will be credited in profit & loss
account
► Rs. 3,600
► Rs. 4,000 correct
► Rs. 1,600
► Rs. 2, 400

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is an example of operating expense?

► Purchasing operating equipment

► Purchasing cleaning services
► Purchasing an investment in another company
► Purchasing a computer for the accounting office

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following would NOT be considered as a component of 'cost' of
stock?

► Salaries of selling staff

► Transportation inward costs
► Import duties
► Purchase price

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following will be debited, if cash is drawn by Proprietor?

► Proprietor’s drawings
► Proprietor’s cash
► Proprietor’s capital
► Proprietor’s income

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following is TRUE about the treatment of insurance paid in
advance Rs. 13,000?

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 ► It will be treated as an other income in Profit & Loss Account
► It will be treated as a current asset in Balance Sheet
► It will be treated as a current liability in Balance Sheet
► It will be treated as an accrued expense in Balance Sheet

Question No: 30 ( Marks: 1 ) - Please choose one

When closing stock is given in trial balance, then it will effect:
► Trading account only
► Balance sheet only correct
► Owner's equity only
► Both Trading account and Balance sheet

Question No: 31 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?

► Total assets employed

► Total liabilities
► Total assets
► Current assets

Question No: 32 ( Marks: 1 ) - Please choose one

Current accounts of the partners should be opened when the capitals are:
► Fixed
► Fluctuating
► Floating
► Normal

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is (are) type(s) of Public Limited Companies?
► Listed company
► Non listed company
► Private limited company
► Both Listed Company and non listed company

Question No: 34 ( Marks: 1 ) - Please choose one

The charter of a company which defines the limitations and powers of the
company is called:
► The memorandum of association correct
► Articles of association
► Statutory report
► Certificate of commencement

Question No: 35 ( Marks: 1 ) - Please choose one

Merchandise on hand at either the beginning or end of the reporting period is
called__________.
► Raw material
► Cost of good sold
► Work in process
► Inventory

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Question No: 36 ( Marks: 1 ) - Please choose one
The balance sheet reported a beginning balance of Rs. 20,000 in Accounts
Receivable and an ending balance of Rs. 15,000. Credit Sales of Rs.
200,000 were made during the year. Using this information, compute cash
collected from customers.

► Rs. 205,000
► Rs. 215,000
► Rs. 195,000
► Rs. 200,000

Question No: 37 ( Marks: 1 ) - Please choose one

Rs.
Gross profit 50,000
Operating profit 42,000
Sales 250, 000
What is the amount of operating expenses ?

► Rs. 8,000
► Rs. 92,000
► Rs. 62,500
► Rs. 300,000

Question No: 38 ( Marks: 1 ) - Please choose one

Particulars Rs.
Debentures 1, 50, 000
Equity Capital 2, 00,000
General Reserve 90, 000
Accumulated profit 60,000
What is debt equity ratio ?

► 15: 20 (or 3:4)

► 15:24 (or 5: 8)
► 15:29
► 15:35 (or 3: 7)

Question No: 39 ( Marks: 1 ) - Please choose one

A company declares a cash dividend to be paid to its stockholders next
month. The effect of the transaction is to:

► Decrease assets and liabilities.

► Increase assets and stockholders' equity.
► Decrease assets and stockholders' equity.
► Increase liabilities and decrease stockholders' equity.

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Question No: 40 ( Marks: 1 ) - Please choose one

Particulars Rs.
Direct materials costs 80,000
Direct labor costs 50,000
Manufacturing overhead costs 60,000
Prime cost ?

► Rs.130, 000
► Rs.110, 000
► Rs.140, 000
► Rs.190, 000

Question No: 41 ( Marks: 1 ) - Please choose one

What would be the value of conversion cost, if the cost of material consumed
during the month is Rs. 5,000, labor cost incurred is Rs. 2,000 and the factory
over head cost is Rs. 1,000?
► Rs. 3,000
► Rs. 5,000
► Rs. 7,000
► Rs. 8,000

Question No: 42 ( Marks: 1 ) - Please choose one

The amount owed by debtors at the end of a month appears on
the_________ side of the control account.
► Left side or debit
► Left side or credit
► Right side or debit
► Right side or credit correct

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following is correct for an account has debit balance?
► The amount of the debits exceeds the amount of the credits
► There are more entries on the debit side than on the credit side
► Its normal balance is debit without regard to the amounts on the debit
side
► The last entry of the accounting period was posted on the debit side

Question No: 44 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal share in profit or loss. The
agreement provides that Mr. A will receive Rs.10,000 and Mr. B will receive
Rs.8,000 as salary allowance. The net income for the year is Rs.85,000. What
will be the total share of Mr. A?
► Rs.52,500
► Rs.42,500
► Rs.43,500
► Rs.50,500

Question No: 45 ( Marks: 1 ) - Please choose one

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 Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with
an equal share in profit or loss. Markup on drawings of Mr. A is Rs.1,500 and
of Mr. B is Rs.1,800. The net income for the year is Rs.85,000. What will be
the profit share of Mr. B?
► Rs.42,350
► Rs.44,150
► Rs.41,600
► Rs.40,850
Profit = 85000
Add markup on drawings = 1500 + 1800 = 3300
Total net profit = 88300
Profit share of B = 88300/2 = 44150

Question No: 46 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal
share in profit or loss. Markup on capital of Mr. A is Rs.2,500 and markup on
drawings of Mr. B is Rs.2,800. The net income for the year is Rs.95,000. What
will be the amount of distributable profit?
► Rs.89,700
► Rs.94,700
► Rs.95,300
► Rs.100,300

Question No: 47 ( Marks: 1 ) - Please choose one

Which of the following can be distributed among the share holders?
► Capital reserve
► General reserve
► Revaluation reserve
► All of the given options

Question No: 48 ( Marks: 1 ) - Please choose one

Which of the following capital is taken up by the general public?
► Issued capital
► Subscribed capital
► Authorized capital
► Reserve capital

Question No: 49 ( Marks: 1 ) - Please choose one

All of the following have an effect on ‘operating activities’ while preparing the
statement of cash flows except:
► Provision for doubtful debts
► Gain or loss on currency exchange rate
► Depreciation charged on fixed asset
► Amount received for disposal of a fixed asset

Question No: 50 ( Marks: 1 ) - Please choose one

Primary purpose of the cash flows statement is to provide the information
about:
► Errors or discrepancies between cash book and income statement

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 ► Receipt and payment of cash in the period
► Non cash adjustment that effect the income statement
► Cash paid to the customers and creditors of the business

Question No: 51 ( Marks: 1 ) - Please choose one

Which of the following financial statement is helpful for the investors and
creditors to assess the cash and non cash aspects of operating, investing and
financing transactions on an entity’s financial position?
► Balance Sheet
► Income Statement
► Statement of cash flows
► Statement of changes in equity

Question No: 52 ( Marks: 1 ) - Please choose one

According to the statement of cash flows following are the examples of
investing activities except:
► Sales of machinery
► Capital invested by the owners
► Purchase of building for the business use
► Cash received from the disposal of equipment

Question No: 53 ( Marks: 1 ) - Please choose one

Which of the following items of balance sheet are useful in evaluating a
company’s liquidity?
► Current assets and other assets
► Current liabilities and current assets correct
► Current liabilities and plant and equipment
► Non current liabilities and other assets

Question No: 54 ( Marks: 1 ) - Please choose one

Which of the following is measured by debt ratio?
► Short-term liquidity
► Creditors’ long term risk correct
► Short-term risk of the company
► All of the given options

Question No: 55 ( Marks: 3 )

If the capitals of the partners are fixed, Pass Journal Entries for the following:
v Drawings made by partner
v Excess drawn amount is returned by partner
v Profit distribution among partner

Partner’s Current A/c Dr.

Cash/Bank A/c Cr.

Cash/Bank Dr.
Partner’s Current A/c Cr.

Profit & Loss A/c Dr.

Partner’s Current A/c Cr.

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Question No: 56 ( Marks: 5 )
ABC Company purchased goods of Rs.150,000 on credit from which goods
of Rs.20,000 were defected and returned. Company received 2% discount at
the time of payment from the supplier.

Required:
· What will be the amount of discount received by the company?
· Also show the journal entries

Purchases A/c 150,000

Creditor A/c 150,000
Goods are being purchased

Creditor A/c 20,000

Purchases A/c 20,000
Goods returned to supplier
Creditor A/c 130,000
Discount Received A/c 2600
Cash/Bank A/c 127400
Payment is being made to creditor and 2% discount is received.

Question No: 57 ( Marks: 5 )

Why are receipts and payment of interest classified as operating activities?

Question No: 58 ( Marks: 10 )

On 01-01-2007, the provision for doubtful debts a/c stood at Rs. 12,000
(credit balance). In 2007, the bad debts are amounted to Rs. 10,000. The
debtors on 31-12-2007 are amounted to Rs. 3, 20,000 and a provision for
doubtful debt to be maintained @ 5%.

Required:
Show Journal entries and also show how the items will appear in Profit and
Loss account and Balance sheet. (Show complete working where it is
necessary)
Question No: 59 ( Marks: 10 )
The accounting staff of ABC, Inc., has assembled the following information
for the year ended December 31, 2007:

Cash and cash equivalents, Jan. 1 Rs.35,800

Cash and cash equivalents, Dec. 31 74,800
Cash paid to acquire plant assets 21,000
Proceeds from short-term borrowings 10,000
Loan made to borrowers 5,000
Collection on loans (excluding interest) 4,000
Interest and dividends received 27,000
Cash received from customers 795,000
Proceeds from sale of plant assets 9,000
Dividends paid 55,000

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Cash paid to suppliers and employees 635,000
Interest paid 19,000
Income taxes paid 71,000

Using this information, prepare a statement of cash flows. Include a proper

heading for the financial statement, and classify the given information into the
categories of operating, investing and financing activities.

Paper No:35
Solved by Chanda Rehman & Abr
FINALTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 3)

Question No: 1 ( Marks: 1 ) - Please choose one

Which of the following is correct according to the double entry system of
book-keeping?

► Debit = Credit
► Debit > Credit
► Debit < Credit
► All of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

What is the nature of an expense account?

► Debit
► Credit
► Revenue
► None of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

Which of the following are the components of General Ledger?
1) Title of account
2) Amount of transaction
3) Date of transaction
► (1) & (2) only
► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)

Question No: 4 ( Marks: 1 ) - Please choose one

Which of the following organizations prepare Income & Expenditure account?

► Public libraries
► NGOs
► Labor unions
► All of the given options

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Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following item will appear on the Balance Sheet as current
assets?

► Prepaid expenses
► Accrued expenses
► Furniture and Equipment
►Unearned revenue

Question No: 6 ( Marks: 1 ) - Please choose one

Accounts Receivable & Inventory are the examples of:

► Liquid assets
► Current assets
► Fixed assets
► Capital assets

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following statement is NOT TRUE about Current liabilities?

► These are due within one year

► These are short-term loans
► These are consist of all debts, payable after 12 months
► In working capital, these are deducted from current assets

Question No: 8 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating
expenses are Rs. 20,000 during the year, what would be the value of Gross
Profit?

► Rs. 15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000

Question No: 9 ( Marks: 1 ) - Please choose one

Which of the following is an alternate term which can be used for “Capital”?

► Liability
►Owner’s net worth
► Working capital
► Asset

Question No: 10 ( Marks: 1 ) - Please choose one

In the cost of goods sold statement, Cost of direct material consumed +
Direct labor=?
► Conversion cost

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 ► Prime cost
► Total factory cost
► Cost of goods manufactured

Question No: 11 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is
known as:

► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost

Question No: 12 ( Marks: 1 ) - Please choose one

In cost of goods sold statement the ‘total factory cost’ is equal to:

► Cost of material consumed + Labor cost

► Cost of material consumed + Conversion cost
► Cost of material consumed + Total factory cost
► Cost of material consumed + Factory overhead

Question No: 13 ( Marks: 1 ) - Please choose one

All the costs incurred on the incomplete assets up to the balance sheet date
must be transferred to:

► Capital account
► Capital work in progress account
► Relevant asset account
► Owner's equity account

Question No: 14 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?

► These are the running expenses of the business

► They improve the financial position of the business
► They reduce the profit of the concern
► They do not appear in the balance sheet

Question No: 15 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true for Profit & Loss Account?
► It shows whether a business has made a profit or loss over a financial
year
► It shows the financial performance of a business for the period
► It shows revenues and expenses for the period
► It is used to calculate surplus/deficit for a particular period

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following best describes unpresented cheques?

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 ► Cheques received on behalf of the business by the bank
► Cheques drawn but yet to be recorded in the bank records
► Cheques issued by the bank not recorded in business records
► Cheques received but yet to be recorded in the bank records

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following option is TRUE about the characteristic(s) of Bad
Debt?

► It is a definite loss to the business

► It is not shown in Balance Sheet
► No provision is necessary for it
► All of the given options

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following is (are) included in Creditors Control Account?

► Discount received from supplier

► Credit purchases
► Bills payable
► All of the given options

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following is shown on credit side of creditors control account?

► Bills Receivable
► Return inwards
► Credit purchases
► Discount allowed

Question No: 20 ( Marks: 1 ) - Please choose one

Which one of the following is CORRECT about subsidiary ledger?

► It is a special Ledger
► It is a supporting ledger
► It provides detailed information about individual accounts
► All of the given options

Question No: 21 ( Marks: 1 ) - Please choose one

Amount by which the purchaser (buyer) receives a reduction in price from the
seller is known as:

► Expense
► Discount Allowed
► Discount Received
► Liability

Question No: 22 ( Marks: 1 ) - Please choose one

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 Which of the following entry will be passed to record discount received in
control account?

► Discount Received (Dr) and Creditors Control A/c (Cr)

► Discount Received (Dr) and Creditors A/c (Cr)
► Creditors Control A/c (Dr) and Discount Received (Cr)
► Creditors A/c (Dr) and Discount Received (Cr)

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of
sales to Rahim of Rs. 500 were omitted to record in books of accounts?

Sales account
► Rahim’s account
► Cash account
► Both sales and Rahim’s Account

Question No: 24 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are
amounted to Rs. 40,000. On the basis of past experience, it is estimated that
10% of the sundry debtors are doubtful. Actual bad debts are Rs. 1600. What
amount of new provision for doubtful debts will be credited in profit & loss
account
► Rs. 3,600
► Rs. 4,000
► Rs. 1,600
► Rs. 2, 400

Question No: 25 ( Marks: 1 ) - Please choose one

The figure of cash received from debtors can be located either from cash
book or:

► Debtor’s Control Account

► Balance Sheet
► Profit & Loss Account
► Bills Payable Account

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following would NOT be considered as a component of 'cost' of
stock?

► Salaries of selling staff

► Transportation inward costs
► Import duties
► Purchase price
Question No: 27 ( Marks: 1 ) - Please choose one
Capital account of sole proprietors is affected by which of the following
items?
a. Profit & Loss account
b. Drawings account

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 c. Balances of capital account

► a,b
► b,c
► a,c
► a,b,c

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the partnership form of
business?
► Partners must have to share their profits in equal proportion
► Partners are personally liable for the liabilities of the business
► Partnerships must make their accounts available to the general public
► Partnership agreement in writing is called Partnership deed

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have
agreed to share the profit of business carried on by all or any of them acting
for all?
► Sole-ownership
► Private limited company
► Public limited company
► Partnership

Question No: 30 ( Marks: 1 ) - Please choose one

The Joint Stock Company is formed under the Companies Ordinance:
► 1984
► I884
► 1948
► 1965

Question No: 31 ( Marks: 1 ) - Please choose one

In which of the following, the Interest paid on debenture will be shown?

► Profit and loss account

► Profit and loss appropriation account
► Balance sheet asset side under the heading of “current assets”
► Trading Account

Question No: 32 ( Marks: 1 ) - Please choose one

The primary purpose of preparing a cash flow statement for an entity is to
provide information about:
► Its financial position at the end of an accounting period
► Its cash receipts and cash payments during an accounting period
► Its financial position at the start of an accounting period
► None of the given options

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following business publishes the Financial Statements?

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 ► Sole-Proprietorship
► Partnership
► Trust
► Public Limited Company

Question No: 34 ( Marks: 1 ) - Please choose one

If the Capitals of partners are fixed then, at the end of financial year a
partner’s drawings are transferred to the:

► Credit side of the partner’s capital account

► Credit side of the partner’s current account
► Debit side of partnership bank account
► Debit side of the partner’s current account

Question No: 35 ( Marks: 1 ) - Please choose one

Wages outstanding given in the trial balance will be treated as a (an):

► Asset
► Liability
► Revenue
► Deferred expense

Question No: 36 ( Marks: 1 ) - Please choose one

In balance sheet fixed assets are shown at:

► Residual value
► Market value
► Fair value
► Written down value (WDV)

Question No: 37 ( Marks: 1 ) - Please choose one

Suppose a firm has 200 debtors, and each of them owes exactly Rs. 150 at
the start of June. What is the total amount owed by all debtors?
► Rs. 2,000
► Rs. 3,000
► Rs. 30,000
► Rs. 150,000

Question No: 38 ( Marks: 1 ) - Please choose one

What will be obtained from the Purchases Returns Book?
► Discount received
► Returns outward
► Credit purchases
► Discount allowed

Question No: 39 ( Marks: 1 ) - Please choose one

In the heading of financial statement, ___________ is not required?
► Title of financial statement
► Name of the person who prepares financial statement

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 ► Period for which financial statement is prepared
► Name of business entity

Question No: 40 ( Marks: 1 ) - Please choose one

Which of the following justifies when profit is earned?
► Assets exceed Expenditure
► Income exceeds Expenditure
► Cash Inflow exceeds Cash Outflow
► Income exceeds Liabilities

Question No: 41 ( Marks: 1 ) - Please choose one

A and B entered in partnership in capital ratio of 2:3. They earned a profit of
Rs.6,600 during the year. What will be the share of profit of Mr. A?
► Rs.1,320
► Rs.2,640
► Rs.3,960
► Rs.6,600

Question No: 42 ( Marks: 1 ) - Please choose one

In a partnership of Mr. X and Mr. Y, the share of profit of Mr. X is Rs.3,840
and the share of profit of Mr. Y is Rs. 5,760. What will be the ratio of their
share?
► 1:2
► 2:3
► 3:2
► 2:1

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following is decreased when an asset is converted into expense
in adjustment?
► Revenue
► Net income
► Expense
► Liability

Question No: 44 ( Marks: 1 ) - Please choose one

Accumulated depreciation is a ____________ account?
► Fixed asset
► Current asset
► Contra asset
► Liability

Question No: 45 ( Marks: 1 ) - Please choose one

Adjusting entries are recorded in which of the following?
► Voucher
► General journal
► Ledger
► Trial balance

Question No: 46 ( Marks: 1 ) - Please choose one

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 Expired costs in an accounting period should be reported on ____________
statement for that time period.
► Cash in flow
► Cash out flow
► Income
► Expense

Question No: 47 ( Marks: 1 ) - Please choose one

Interest expenses of Epler Corporation shows a debit balance of Rs.200 in its
unadjusted trial balance and Rs.250 in adjusted trial balance. Which of the
following account will be debited in adjusting entry?
► Interest expense
► Interest payable
► Prepaid interest
► Interest paid

Question No: 48 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal
share in profit or loss. Markup on capital of Mr. A is Rs.2,500 and markup on
drawings of Mr. B is Rs.2,800. The net income for the year is Rs.95,000. What
will be the amount of distributable profit?
► Rs.89,700
► Rs.94,700
► Rs.95,300
► Rs.100,300

Question No: 49 ( Marks: 1 ) - Please choose one

Which of the following can be distributed among the share holders?
► Capital reserve
► General reserve
► Revaluation reserve
► All of the given options

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following capital is offered to the general public?
► Issued capital
► Subscribed capital
► Authorized capital
► Reserve capital

Question No: 51 ( Marks: 1 ) - Please choose one

Which of the following value of the share is authorized by the memorandum
of association?
► Par value
► Face value
► Nominal value
► All of the given options

Question No: 52 ( Marks: 1 ) - Please choose one

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 Which of the following financial statement is helpful for the investors and
creditors to assess the cash and non cash aspects of operating, investing and
financing transactions on an entity’s financial position?
► Balance Sheet
► Income Statement
► Statement of cash flows
► Statement of changes in equity

Question No: 53 ( Marks: 1 ) - Please choose one

The financial statement that captures both the current operating result and
the associated changes in the balance sheet is:
► Statement of retained earnings
► Statement of financial position
► Statement of cash flows
► Statement of changes in equity

Question No: 54 ( Marks: 1 ) - Please choose one

In statement of cash flows, interest payment made on loan from bank is
related to:
► Investing activity
► Financing activity
► Operating activity
► Net changes in working capital

Question No: 55 ( Marks: 3 )

Mr. Hassan is a partner in a partnership firm. His capital on July 1, 2001 was
Rs. 400,000. He invested further capital of Rs. 150,000 on March 01, 2002.
Markup rate is @6%p.a. The financial year of such a business is from 1st July
to 30th June.
Required: You are required to calculate his markup on Capital at the end of
30th June 2002.

a) Capital invested on july 1 2001 = 400,000

Markup rate on 400,000 = 6% of 40,000 = 24,000

b) Further capital introduced / invested = 150000 on March 1, 2002

Markup rate = 6% of 150000 = 9000 x 4/12 = 3000

Total mark up rate = a + b = 24000 + 3000 = 27000

Question No: 56 ( Marks: 5 )

Calculate cost of goods sold with he help of given data.

Particulars Rs.
Purchases 418,000
Carriage inwards 7,900
Discount Allowed 750
debtors 16,000
Sales man commission 2,000

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Office expenses 2,000
Carriage outwards 1,700
Salaries 13,000
Direct labor 3,825
FOH 2,100
Plant & Machinery 53,000
Buildings 35,000
Tools 8,650

Helping data:
d. Plant & Machinery depreciate @ 10% and charged to FOH
e. Buildings depreciate @ 5% and 40% charged to Administrative
expenses and balance to FOH
f. 40% of salaries will be charge to office and balance to Selling
expenses

Question No: 57 ( Marks: 5 )

X and Y were partners in a business sharing profits in the ratio of 3:1. Their
capital were Rs.30,000 and Rs.10,000 respectively. They earned a net profit
of Rs. 160,000. Mr. Y was entitled to a salary of Rs.200 p.m. Prepare Profit
Distribution Account of X & Y Partnership.

X AND Y ARE SHARED WITH the ratio 3:1

X capital = 30000
Y capital = 10000
Net profit = 160,000
Mr. Y salary is = 200 p.m entitled
Total investment = X + Y capital = 30000 +10000 = 40000

X profit distribution = 30,000/40000 x 160000 = 120,000

Y profit distrubtion = 10,000/40000 x 160000 x 40000 = 40000

Question No: 58 ( Marks: 10 )

Mention the effects of following on financial statements.
g. Markup on debentures

Markupdebture – Dr. while Debenture Cr

h. Creation of reserves
i. Payments of dividend
j. Carriage inwards

k. Current Assets are less than Current Liabilities

Question No: 59 ( Marks: 10 )

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 The following is the trial balance of Sikander’s Photo Studio, Inc., dated
December 31, 2007. The net income for the period isRs.36,000. You are
required to prepare Balance Sheet as on December 31, 2007.
Sikander’s Photo Studio, Inc.
Trial balance
December 31, 2007

Cash Rs.171,100
Accounts receivable 9,400
Prepaid studio rent 3,000
Unexpired insurance 7,200
Supplies 500
Equipment 18,000
Accumulated depreciation: equipment Rs.7,200
Notes payable 10,000
Accounts payable 3,200
Salaries payable 4,000
Income tax payable 6,000
Unearned revenue 8,800
Capital stock 100,000
Retained earnings 34,000
Revenue earned 165,000
Salary expense 85,000
Supply expense 3,900
Rent expense 12,000
Insurance expense 1,900
Advertising expense 500
Depreciation expense: equipment 1,800
Interest expense 900
Income taxes expense 23,000
338,200 338,200

Paper No:36
Solved by Chanda Rehman & Abr
Fall 2009
MGT101- Financial Accounting (Session - 2)
Time: 120 min Marks: 87
Question No: 1 ( Marks: 1 ) - Please choose one
Which of the following is/are the END product of accounting cycle?
► Financial Statements
► General Journal
► General Ledger
► Voucher
Question No: 2 ( Marks: 1 ) - Please choose one
An asset on the balance sheet which is expected to be sold or used within
one year is known as:
► Tangible asset

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 ► Current asset
► Fixed asset
► Long term asset
Question No: 3 ( Marks: 1 ) - Please choose one
Accounts Receivable & Inventory are the examples of:
► Liquid assets
► Current assets
► Fixed assets
► Capital assets
Question No: 4 ( Marks: 1 ) - Please choose one
Identify the business transaction for given entry below.
Vehicle Account XXX (Dr.)
Bank Account XXX (Cr.)
► Paid for vehicle through cheque
► Paid for vehicle through cash
► Purchased vehicle on credit
► None of the given options

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if the goods are sold on
credit to Mr. Mahmood?
► Cash account
► Mr. Mahood account
► Sales account
► Purchases account
Question No: 6 ( Marks: 1 ) - Please choose one
If salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office
building) is Rs. 300 during the year, what would be the total of "general
& administrative expenses"?
► Rs. 300
► Rs. 2,500
► Rs. 2,800
► Rs.18, 800
Question No: 7 ( Marks: 1 ) - Please choose one
Which of the following statement is TRUE about the positive working
capital of a company?
► It shows sound position of a company
► It shows that company has sufficient current assets to meet current
liabilities
► It shows that current assets are greater than current liabilities
► All of the given options
Question No: 8 ( Marks: 1 ) - Please choose one
Cost of Goods Sold = ?

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 ► Beginning inventory + Purchases – Work in Process
► Beginning inventory + Purchases - Sales
► Beginning inventory + Purchases - Ending inventory
► Ending inventory + Purchases - Beginning Inventory
Question No: 9 ( Marks: 1 ) - Please choose one
Under the straight line method of depreciation:
► Amount of depreciation increases every year
► Amount of depreciation remains constant for every year
► Amount of depreciation decreases every year
► None of the given options
Question No: 10 ( Marks: 1 ) - Please choose one
Consider the following inventory record:
Date Item Quantity Cost/Unit Total
2007Jan. 2 Opening 100 Rs.18.00 Rs.1,800
inventory
Mar. 4 Purchase 400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500
Four hundred units are unsold, Use the FIFO method of inventory costing
and determine the value assigned to the 400 units on hand at the end of
the period.
► Rs.7, 500
► Rs.7, 978
► Rs.8, 000
► Rs.8, 400
Question No: 11 ( Marks: 1 ) - Please choose one
While adjusting the cash balance of cash book, which of the following is
NOT taken into account.
► Mistakes in the cash book
► Mistakes in the pass book
► Interest credited in the pass book but not entered in cash book
► Interest debited in the pass book but not entered in cash book

Question No: 12 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets ?
Owner's equity 1,50,000
Liabilities 1,00,000
► Rs. 49,000
► Rs. 55,000

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 ► Rs. 50,000
► Rs. 2, 50,000 Assets = Liabilities + Owner’s Equity
Question No: 13 ( Marks: 1 ) - Please choose one
In accounting accumulated depreciation is:
► Treated as a reserve
► Treated as a contra asset
► Treated as a surplus
► Treated as an expense
Question No: 14 ( Marks: 1 ) - Please choose one
When the Bank Statement balance is more than the Cash Book balance,
it is because of:
► Unpresented cheques
► Unrecorded bank charges
► Uncredited cheques
► None of the given options
Question No: 15 ( Marks: 1 ) - Please choose one
Which of the following is an item of a debtors control account?
► Cash sale
► Credit sales
► Credit purchase
► Cash purchases
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following is shown on credit side of creditors control
account?
► Bills Receivable
► Return inwards
► Credit purchases
► Discount allowed
Question No: 17 ( Marks: 1 ) - Please choose one
A sum of Rs. 200 written off as bad debt now received credited to the
account of debtor would:
► Increase the net profit by Rs.200
► Decrease the profit by Rs.200
► Remains constant and no effect on net profit
► There is no relation between debtor and profit
Question No: 18 ( Marks: 1 ) - Please choose one
Which of the following account(s) will be affected, while rectifying the
error of an amount Rs.200 received from Mr.”P” wrongly credited to
Mr.”Q’s” account?
► Only Cash Account
► Only P’s account
► Only Q’s account
► Both of Mr. P's & Mr.Q's Account

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Question No: 19 ( Marks: 1 ) - Please choose one
When one or both aspects of a transaction are recorded in the wrong
class or category of account, this is called:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry
(Then there are errors in which an entry is recorded in the wrong class of
account. For example a purchase of fixed asset, say, a vehicle is recorded
in an expense account. These errors are called ERRORS OF
PRINCIPLE.)
Question No: 20 ( Marks: 1 ) - Please choose one
Consider the following data and identify the amount which will be
shown in profit & loss account.
Particulars Rs.
Bad debts 1,600
Provision for doubtful debts 2,000
(old)
Current year’s provision (new) 1,000
► Rs. 600
► Rs. 1,600
► Rs. 2,000
► Rs. 2,600
Question No: 21 ( Marks: 1 ) - Please choose one
Consider the following data and identify the amount which will be
deducted from Sundry Debtors in Balance Sheet.
Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts 2,000
(old)
Current year’s provision (new) 1,000
► Rs. 600
► Rs. 1,000
► Rs. 2,000
► Rs. 2,600

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is NOT an item of cost of goods sold statement?
► Purchase of raw material
► Any tax/freight paid on purchases

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 ► Salaries paid to accountant
► Any expense incurred on carriage/transportation of raw material
purchased items
Question No: 23 ( Marks: 1 ) - Please choose one
Wages paid to laborers working in the manufacturing department is
treated as an expense of:
► Administrative expenses
► Selling expenses
► Marketing expenses
► Cost of goods sold
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following would NOT be considered as a component of
'cost' of stock?
► Salaries of selling staff
► Transportation inward costs
► Import duties
► Purchase price
Question No: 25 ( Marks: 1 ) - Please choose one
Consider the following table:
Financial statement item Classification
A. Inventory Current asset
B. Tangible assets Non-current asset
C. Accrued expenses Current asset
D. Bonds payable Long-term
liabilities
Identify the row above, showing an INCORRECT financial-statement
classification?
► Row A
► Row B
► Row C
► Row D
Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following is NOT an operating expense?
► Salaries and wages expense
► Rent expense
► Interest expense
► Depreciation expense
Question No: 27 ( Marks: 1 ) - Please choose one
The Balance Sheet item that represents the resources invested by the
owner is known as:
► Accounts Receivable
► Cash

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 ► Note Payable
► Owner's Equity
Question No: 28 ( Marks: 1 ) - Please choose one
Which account is increased with a debit and decreased with a credit?
► Cash
► Accounts Payable
► Contributed Capital
► Retained Earnings
Question No: 29 ( Marks: 1 ) - Please choose one
Which of the following is/are TRUE about the sole trader form of
business?
► Sole traders do not need to consult accountants
► Sole traders must register the name of their business with the
Registrar of Companies
► All of the given options
► A sole trader is liable to pay income tax on his/her earnings

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following account is affected from the Drawings of cash in
sole-proprietorship business?
► Capital account
► Shareholder account
► Liability account
► Expense account

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT if depreciation is given in trial
balance?
► All of the given options are correct
► It means depreciation has already been deducted from concerned
asset account
► It will be shown as an expense in income statement only
► It will not be deducted from concerned asset in Balance Sheet

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts
receivable?
► Accounts receivable arises when a company buys goods or
services from another party on credit
► Accounts receivable is a miscellaneous category that may include
loans to employees
► Accounts receivable are more formal than notes receivable
► Accounts receivable are often called trade receivables

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Question No: 33 ( Marks: 1 ) - Please choose one
The Joint Stock Company is formed under the Companies Ordinance:
► 1984
► I884
► 1948
► 1965

Question No: 34 ( Marks: 1 ) - Please choose one

The amount received; in excess of the face value of the shares is
transferred to which of the following?
► Share capital account
► Right share
► Share premium account
► Share holder account
Question No: 35 ( Marks: 1 ) - Please choose one
Preliminary Expenses of the company may write off against:
► Share premium account
► Share holder account
► Debtors control account
► Creditor control account

Question No: 36 ( Marks: 1 ) - Please choose one

The statement of changes in equity basically shows the movement of:
► share capital during the year
► Capital reserves during the year
► Revenue Reserves during the year
► All of the given options

Question No: 37 ( Marks: 1 ) - Please choose one

Rs.
Gross profit 50,000
Operating profit 42,000
Sales 250, 000
What is the amount of operating expenses ?

► Rs. 8,000
► Rs. 92,000
► Rs. 62,500
► Rs. 300,000

Question No: 38 ( Marks: 1 ) - Please choose one

If company has distributable profit is Rs. 4, 90,000. Profit sharing share

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ratio of Mr. A, Mr. B and Mr. C is 2:3:5 respectively what will be the
Profit share for Mr. C in distributable profit.

► Rs. 98,000
► Rs. 1, 47,000
► Rs. 2, 45,000
► Rs. 3, 43,000
Question No: 39 ( Marks: 1 ) - Please choose one
Mr.” A” sold goods for Rs. 300,000 to Mr. “B”, Rs. 300,000 will be
treated as _____________ for business of Mr. "A".
► Revenue
► Net profit
► Gross profit
► Operating profit

Question No: 40 ( Marks: 1 ) - Please choose one

What would be the value of conversion cost, if the cost of material
consumed during the month is Rs. 5,000, labor cost incurred is Rs. 2,000
and the factory over head cost is Rs. 1,000?
► Rs. 3,000
► Rs. 8,000
► Rs. 7,000
► Rs. 5,000

Question No: 41 ( Marks: 1 ) - Please choose one

Mr. A provided the following information from his books of accounts at
the end of the month.

Particulars Rs.
Cash 100
Accounts Receivable 500
Accounts
Payable 200
Bank
Loans 1,000
Based on the information provided, what are Mr. A’s total
liabilities?
► Rs.200
► Rs. 900
► Rs. 1,200
► Rs. 1,700

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Question No: 42 ( Marks: 1 ) - Please choose one
When we close bad debt account, which of the following account is
debited?
► Profit and loss account
► Bad debt account
► Debtor account
► Creditor account

Question No: 43 ( Marks: 1 ) - Please choose one

Mr. Ali’s bank book shows a debit balance of Rs. 36,000. He deposited a
cheque of Rs.15,000 but not yet collected by the bank. What will be the
balance of bank statement?

► Rs. 21,000
► Rs. 51,000
► Rs. 36,000
► Rs. 15,000
Question No: 44 ( Marks: 1 ) - Please choose one
Suppose a firm has 100 debtors, and each of them owes exactly Rs.150 at
the start of June. During June each debtor has paid-off exactly Rs.100 on
their account, either by cash or by cheque. What should be the revised
total debtors figure?
► Rs. 5,000
► Rs. 9,850
► Rs. 25,000
► Rs. 14,900

Question No: 45 ( Marks: 1 ) - Please choose one

We usually allow the customer to deduct a certain amount from the
invoice value for prompt payment. In doing so we are granting a:
► Commission
► Allowance
► Discount
► Rebate

Question No: 46 ( Marks: 1 ) - Please choose one

The valuation of closing stock is at:
► Cost price
► Market price
► Cost or market price, whichever is lower
► Cost or market price, whichever is higher

Question No: 47 ( Marks: 1 ) - Please choose one

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Adjusting costs are reported as:
► Revenues
► Expenses
► Assets
► Net Income

Question No: 48 ( Marks: 1 ) - Please choose one

Which of the following is also affected when an adjusting entry is passed
to accrue an incurred expense?
► Total assets
► Total liabilities
► Current assets
► Total income

Question No: 49 ( Marks: 1 ) - Please choose one

Which of the following is known as an asset account?
► Gains
► Prepaid insurance
► Unearned revenue
► Accounts payable

Question No: 50 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal share in profit or
loss. The agreement provides that Mr. A will receive Rs.10,000 and Mr.
B will receive Rs.8,000 as salary allowance. The net income for the year
is Rs.85,000. What will be the total share of Mr. B?
► Rs.52,500
► Rs.42,500
► Rs.41,500
► Rs.50,500

Question No: 51 ( Marks: 1 ) - Please choose one

For which of the following share premium can not be utilized?
► To write off preliminary expenses
► To meet the expenses of issue of shares
► To issue bonus shares
► None of the given options
Question No: 52 ( Marks: 1 ) - Please choose one
Which of the following capital is offered to the general public?
► Issued capital
► Subscribed capital
► Authorized capital
► Reserve capital

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Question No: 53 ( Marks: 1 ) - Please choose one
Which of the following is known as the charter of the company?
► Prospectus
► Articles of association
► Memorandum of association
► None of the given options

Question No: 54 ( Marks: 1 ) - Please choose one

Statement of cash flows helps the stakeholders to assess:
► Ability to pay cash dividends in the future
► All of the given options
► The ability to generate future cash flows
► The liquidity of the business

Question No: 55 ( Marks: 3 )

How bad debts & provision for doubtful debts (new and old) are
treated in profit and loss account.

Question No: 56 ( Marks: 5 )

You are required to pass rectifying entries of the following errors:
1. Received cash Rs. 500 from Mr. "B" entered as Rs. 300 in the
cash book.
2. A cash sale of Rs. 600 has completely omitted to be recorded
in the books.
3. Goods worth Rs. 200 were returned to Mr. Kamran but no
entry was passed in the books.
Question No: 57 ( Marks: 5 )
The face value of the share of ABC public limited company is Rs.10. the
share is sold at Rs.15. total shares traded in the market are 50,000. What
will be the amount of share premium received and discuss for what it will
be utilized?
Question No: 58 ( Marks: 10 )
On 31st December, 2006, a merchant has to receive Rs. 50,000 from
sundry debtors and creates provision of 5 percent on this amount for
doubtful debts. Actual bad debts during the year 2007 were Rs.1, 400.
The debtors on 31st December, 2007, are Rs. 40,000 on which he again
creates provision of 5 % for doubtful debts. During 2008 actual bad debts
are Rs. 600 and the debtors at the end of 2008 totalled Rs. 25,000, on
which a reserve a reserve of 5 % for doubtful debts is required to be
maintained.
Required: Prepare provision for doubtful debts account with the help of

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given data.
Question No: 59 ( Marks: 10 )
The following Trial balance is taken out from the books of Rahman &
Sons as on 31st December, 2008.
Dr. Cr.
Rs. Rs.
Sales 204,000
Capital 120,000
Bank overdraft 103,560
Sundry Creditors 120,000
Opening Stock 60,400
Purchases 231,600
Sundry Debtors 109,660
Returns Inwards 3,640
General Expenses 6,980
Plant 22,620
Wages & Salaries 16,740
Building 50,000
Cash in Hand 680
Cash at bank 8,720
Drawings 16,960
Motive Power 2,300
Dock &clearing
Charges 1,300
Coal, Gas, Water 1,700
Salaries 9,820
Interest on O/D 4,440
Rent rates Taxes 1,400
Discount Allowed 2,000
Interest received 3,400
550,960 550,960
Requirement:

Prepare The Trading and Profit & Loss account of the business for the
year ended. Closing Stock is valued at Rs.40, 000.

Paper No:37
Solved by Chanda Rehman & Abr & nomi chawal
FINALTERM EXAMINATION
Fall 2009

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 MGT101- Financial Accounting (Session - 1)
Ref No: 1195799
Time: 120 min
Marks: 87
Question No: 1 ( Marks: 1 ) - Please choose one
Shares for which amount is paid by public are called ________ shares.
► Paid up
► Authorized
► Bonus shares

► All are correct options

Question No: 2 ( Marks: 1 ) - Please choose one

Term "Credit" means_______ by the business.
► Receiving of benefits
► It has no effect on business
► Providing of benefits
► It depends upon items

Question No: 3 ( Marks: 1 ) - Please choose one

Which of the following is used to record financial transactions in chronological (day-
to-day) order?

► Voucher
► General Journal
► General Ledger
► Trial balance

Question No: 4 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit and

loss account—Balance Sheet

► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit

and loss account—Balance Sheet

► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and

loss account—Balance Sheet

► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and

loss account—Balance Sheet

Question No: 5 ( Marks: 1 ) - Please choose one

In an account, if credit side < debit side then the balance is known as:
► Negative Balance
► Debit Balance

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 ► Positive Balance
► Credit Balance

Question No: 6 ( Marks: 1 ) - Please choose one

Which one of the following is a type of General Ledger?

► Book of original entry

► ‘T’ Account
► Source document
► Day book

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is NOT considered a part of financial statements?

► General Ledger
► Balance Sheet
► Profit and Loss Account
► Cash Flow Statement

Question No: 8 ( Marks: 1 ) - Please choose one

The difference between current Assets and current liabilities is known as:

► Working capital
► Opening stock
► Closing stock
► Owner’s equity

Question No: 9 ( Marks: 1 ) - Please choose one

If the Company ABC has current assets Rs. 100,000, current liabilities Rs. 75,000
and fixed assets Rs. 200,000, what would be the value of working capital?

► Rs. 25,000
► Rs. 1, 00,000
► Rs. 1, 75,000
► Rs. 3, 00,000

Question No: 10 ( Marks: 1 ) - Please choose one

If, Cost of machine = Rs.400, 000
Useful life = 5 years
Residual value = Rs.25, 000
The depreciation of machine per year using straight line method is?

► Rs. 160,000
► Rs. 96,000
► Rs. 75,000
► Rs. 57,600

Question No: 11 ( Marks: 1 ) - Please choose one

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The cost of moving plant and machinery to a new site will be treated as:

► Revenue expense
► Capital expense
► Administrative expense
► Operating expense

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following account balance is shown on credit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance)

► Cash account
► Furniture account
► Vehicle account
► Capital account

Question No: 13 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Total Assets Rs. 34,500

Accounts payable Rs. 1, 000
Other liabilities Rs. 11,500

► Rs. 22,000 owner’s equity

► Rs. 23, 000 owner’s equity
► Rs. 24,000 owner’s equity
► Rs. 46,000 owner’s equity

Question No: 14 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets ?
Owner's equity 1,50,000
Liabilities 1,00,000

► Rs. 49,000
► Rs. 55,000
► Rs. 50,000
► Rs. 2, 50,000

Question No: 15 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine Rs. 2,00,000
Cost of new machine purchased during the year Rs. 50,000
Depreciation during the year Rs. 25,000
Closing written down value (WDV) of machines ?

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 ► Rs. 2, 25,000
► Rs. 2, 50,000
► Rs. 2, 75,000
► Rs. 75,000

Question No: 16 ( Marks: 1 ) - Please choose one

A debit balance in the Bank Statement indicates:

► Cash at bank
► Bank overdraft
► Overpayment to creditors
► Cash in hand

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following best describes unpresented cheques?

► Cheques received on behalf of the business by the bank

► Cheques drawn but yet to be recorded in the bank records
► Cheques issued by the bank not recorded in business records
► Cheques received but yet to be recorded in the bank records

Question No: 18 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit &
loss account.
Particulars Rs.
Bad debts 3,600
Provision for doubtful debts (old) 6,000
Current year’s provision (new) 1,500

► Rs. (5,100)
► Rs. 5,100
► Rs. (900)
► Rs. 900

Question No: 19 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 5 % of the sundry debtors
are doubtful. Actual bad debts are Rs. 1600. What amount of new provision for
doubtful debts will be credited in profit & loss account.

► Rs. 3,600
► Rs. 2,000
► Rs. 1,600
► Rs. 400

Question No: 20 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

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 Closing value of stock 40,000
Bad Debts (Given in trial balance) 500
Old provisions (Given in trial balance) 800
Sundry Debtors (Given in trial balance) 44,500
Provision for doubtful debts @ 5%
Which amount of new provision will be deducted from Sundry Debtors ?

► Rs. 2,225
► Rs. 2,525
► Rs. 1,925
► Rs. 3,025

Question No: 21 ( Marks: 1 ) - Please choose one

It is supposed that on 31-12-2007, the sundry debtors are amounted to Rs. 40,000. On
the basis of past experience, it is estimated that 5 % of the sundry debtors are
doubtful. It is also suppose that during the year 2008 actual bad debts were Rs. 1,600.
What entry will pass to create provision for doubtful debts?

► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000
(Cr)
► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000
(Cr)
► Provision for doubtful debts a/c Rs. 1,600 (Dr) & Profit & Loss a/c Rs. 1,600
(Cr)
► Profit & Loss a/c Rs. 1,600 (Dr) & Provision for doubtful debts a/c Rs. 1,600
(Cr)

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following is an item of a debtors control account?

► Cash sale
► Credit sales
► Credit purchase
► Cash purchases

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following entry is passed to record discount allowed in control account?

► Discount Allowed (Dr) and Debtors Control A/c (Cr)

► Discount Allowed (Dr) and Debtors A/c (Cr)
► Debtors Control A/c (Dr) and Discount Allowed (Cr)
► Debtors A/c (Dr) and Discount Allowed (Cr)

Question No: 25 ( Marks: 1 ) - Please choose one

Transaction that has been completely forgotten to enter is called:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

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Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following account will be credited when a typewriter is sold that has
been used in the office?

► Cash Account
► Sales Account
► Purchase Account
► Office Equipment Account

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following item must be recorded in the adjusted Cash Book in order to
bring it in line with the entries in the Bank Statement?

► Bank charges
► An error on the Bank Statement
► An uncredited deposit
► An unpresented cheque

Question No: 28 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 10% of the sundry debtors
are doubtful. Actual bad debts are Rs. 1600. What amount of new provision for
doubtful debts will be deducted from Sundry debtors?

► Rs. 3,600
► Rs. 4,000
► Rs. 1,600
► Rs. 2, 400

Question No: 29 ( Marks: 1 ) - Please choose one

Consider the following table:

Financial statement item Classification

A. Inventory Current asset
B. Tangible assets Non-current asset
C. Accrued expenses Current asset
D. Bonds payable Long-term liabilities

Identify the row above, showing an INCORRECT financial-statement classification?

► Row A
► Row B
► Row C
► Row D

Question No: 30 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business

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 ► A balance sheet
► A statement of retained earnings

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following account is affected from the Drawings of cash in sole-
proprietorship business?
► Capital account
► Shareholder account
► Liability account
► Expense account

Question No: 32 ( Marks: 1 ) - Please choose one

Capital account of sole proprietors is affected by which of the following items?
a. Profit & Loss account
b. Drawings account
c. Balances of capital account

► a,b
► b,c
► a,c
► a,b,c

Question No: 33 ( Marks: 1 ) - Please choose one

When closing stock is given in trial balance, then it will effect:
► Trading account only
► Balance sheet only
► Owner's equity only
► Both Trading account and Balance sheet

Question No: 34 ( Marks: 1 ) - Please choose one

Fixed Asset (WDV) + ___________ = Total assets Employed

► Working capital
► Total liabilities
► Total assets
► Current assets

Question No: 35 ( Marks: 1 ) - Please choose one

A, B, C are partners. Their profit sharing ratio is equal. Capital balance on July 1st of
Partner A --- Rs. 40,000 Partner B --- Rs. 30,000 and Partner C--- Rs. 20,000.Their
private property of Partner A is Rs.15,000, Partner B is Rs. 7,000 and Partner C is Rs.
1,500. What is the level of their liabilities under the partnership firm?
► Partner A—Rs. 40,000, Partner B---- Rs. 30,000, Partner C – 20,000
► Partner A—Rs. 40,000, Partner B---- Rs. 30,000, Partner C – 21,500
► Partner A—Rs. 40,000, Partner B---- Rs. 37,000, Partner C – 20,000
► Partner A—Rs. 55,000, Partner B---- Rs. 37,000, Partner C – 21,500

Question No: 36 ( Marks: 1 ) - Please choose one

Share premium account is used for what?
► Write off Preliminary Expenses of the company.

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 ► Write off the balance amount, in issuing shares on discount.
► Issue fully paid Bonus Shares.
► All of the given options

Question No: 37 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Annual Report

Question No: 38 ( Marks: 1 ) - Please choose one

Which of the following documents contains rules and regulations for internal
management of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Statutory Declaration

Question No: 39 ( Marks: 1 ) - Please choose one

A firm may earn profit during an accounting period but have less money in the bank
at the end of the period then it had at the beginning. Which of the followings, on its
own, could explain this?

► Not paying invoices received from creditors

► The sale of fixed assets during the period
► An increase in trade debtors over the course of the period
► An increase in the depreciation charge relative to the previous accounting
period

Question No: 40 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form of
business?

► The limited company form of business allows ownership of the business to be

spread amongst many people
► Shareholders can appoint professionals
► Shareholders are personally liable for all the liabilities incurred by the
business
► Regular filing of information about the affairs of the company is a legal
requirement

Question No: 41 ( Marks: 1 ) - Please choose one

Which of the following ratio tells about “How a company would repays its loans”

► Mark up cover ratio

► Acid test ratio
► Current ratio

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 ► Debt Equity ratio

Question No: 42 ( Marks: 1 ) - Please choose one

If Cost of asset=Rs. 100,000, Residual Value (RV) = Rs. 20,000 and Life = 3 years,
what is the depreciation rate under reducing balance method?
► 10%
► 22%
► 42%
► 52%

Question No: 43 ( Marks: 1 ) - Please choose one

Mr.” A” sold goods for Rs. 300,000 to Mr. “B”, Rs. 300,000 will be treated as
_____________ for business of Mr. "A".
► Revenue
► Net profit
► Gross profit
► Operating profit

Question No: 44 ( Marks: 1 ) - Please choose one

An uncollectible account receivable is also termed as:
► Asset
► Uncollectible asset
► Uncollectible accounts expense
► None of the given options

Question No: 45 ( Marks: 1 ) - Please choose one

Payment is made of a company’s purchases on credit, which of the following is
correct:
► Debit stock account and credit creditors account
► Debit creditors account and credit cash account
► Debit cash account and credit creditors account
► Debit stock account and credit cash account

Question No: 46 ( Marks: 1 ) - Please choose one

ABC company makes payment of Rs.50,000 to Mr. Ali Zafar, who is a debtor, is
wrongly recorded in the account of Zafar Ali. The error is classified as:
► Error of commission
► Error of omission
► Error of original entry
► Error of principle

Question No: 47 ( Marks: 1 ) - Please choose one

Deferred revenues will become revenue when they are:
► Realized
► Earned
► Incurred
► Paid

Question No: 48 ( Marks: 1 ) - Please choose one

The weekly or biweekly compensation received by hourly-paid employees is called:

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 ► Salary
► Wages
► Income
► Profit

Question No: 49 ( Marks: 1 ) - Please choose one

Interest expenses of Epler Corporation shows a debit balance of Rs.200 in its
unadjusted trial balance and Rs.250 in adjusted trial balance. Which of the following
account will be credited in adjusting entry?
► Interest expense
► Interest payable
► Prepaid interest
► Interest paid

Question No: 50 ( Marks: 1 ) - Please choose one

Insurance premiums paid in advance but not yet expired are reported in which of the
following account?
► Insurance payable
► Prepaid insurance
► Advance payment account
► Insurance expense

Question No: 51 ( Marks: 1 ) - Please choose one

Dillon Company sold marketable securities Costing Rs.60,000 for Rs.72,000 cash. In
the company’s income statement and statement of cash flows, respectively, this will
appear as:
► A Rs.72,000 gain and a Rs.6,000 cash receipt
► A Rs.12,000 gain and a Rs.72,000 cash receipt
► A Rs.12,000 gain and a Rs.60,000 cash receipt
► A Rs.72,000 sale and a Rs.72,000 cash receipt

Question No: 52 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal share in profit or loss. The
agreement provides that Mr. A will receive Rs.10,000 and Mr. B will receive
Rs.8,000 as salary allowance. The net income for the year is Rs.85,000. What will be
the total share of Mr. B?
► Rs.52,500
► Rs.42,500
► Rs.41,500
► Rs.50,500

Question No: 53 ( Marks: 1 ) - Please choose one

Which of the following is quoted company?
► Private Limited Company
► Public Limited Company
► Listed company
► Non Listed Company

Question No: 54 ( Marks: 1 ) - Please choose one

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 Which of the following is one of the major factors affecting the market value of a
company’s shares?
► Current ratio
► Earning per share
► Return on investment
► Return on asset

Question No: 55 ( Marks: 3 )

You are required to pass rectifying entries of the following errors:
1. Sales of old furniture has been credited to sales account for Rs. 200.
2. Salaries paid Rs. 20,000 were wrongly debited to rent a/c.

Question No: 56 ( Marks: 5 )

3.
Discuss share premium with an example.
4. If dividend is announced in percentage by the directors of the company
how it will be calculated.

Question No: 57 ( Marks: 5 )

ABC Company purchased goods of Rs.150,000 on credit from which goods of
Rs.20,000 were defected and returned. Company received 2% discount at the time of
payment from the supplier.

Required:
5. What will be the amount
of discount received by the company?
6. Also show the journal
entries

Question No: 58 ( Marks: 10 )

The following Trial balance is taken out from the books of Rahman & Sons as on
31st December, 2008.
Dr. Cr.
Rs. Rs.
Sales 204,000
Capital 120,000
Bank overdraft 103,560
Sundry Creditors 120,000
Opening Stock 60,400
Purchases 231,600
Sundry Debtors 109,660
Returns Inwards 3,640
General Expenses 6,980
Plant 22,620
Wages & Salaries 16,740
Building 50,000

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 Cash in Hand 680
Cash at bank 8,720
Drawings 16,960
Motive Power 2,300
Dock &clearing
Charges 1,300
Coal, Gas, Water 1,700
Salaries 9,820
Interest on O/D 4,440
Rent rates Taxes 1,400
Discount Allowed 2,000
Interest received 3,400
550,960 550,960
Requirement:
Prepare The Trading and Profit & Loss account of the business for the year ended.
Closing Stock is valued at Rs.40, 000.

Question No: 59 ( Marks: 10 )

Adil and Bilal make up their accounts annually to 31st December and have been in
partnership for some years. Interest is charged on drawings at the rate of 10% per
annum and is allowed on capitals also at 10% per annum. Bilal receives salary Rs.
4,000 per annum. The balance of profits or losses is to be shared: Adil 2/3, Bilal 1/3.
At 1st January, 2007, the following balances appeared in the firm’s books:

Capital account: Adil Rs. 10,000

Bilal Rs. 6,000
Current Account: Adil Rs. 5,000 (Cr)
Bilal Rs. 3,000 (Cr)
The net profit for that year was amounted to Rs. 15,000. At that date the balances on
partners’ drawings accounts were: Adil Rs. 6,000 and Bilal Rs. 5,000. It is assumed
that no capital introduced during the year
Required:
(1) The profit & Loss Appropriation account of the partnership for the year ended 31st
December, 2007.
(2) Show Partners’ current accounts and capital accounts in Balance sheet of Adil and
Bilal as on 31st December 2007
Paper No:38
Solved by Chanda Rehman & ABr & Anjum
FINALTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 2)

Question No: 1 ( Marks: 1 ) - Please choose one

Shares for which amount is paid by public are called ________ shares.
► Paid up
► Authorized

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 ► Bonus shares

► All are correct options

Question No: 2 ( Marks: 1 ) - Please choose one

Which of the following account/s will be affected under the rule of accrual
accounting, when furniture is purchased on cash?

► Only Cash Account

► Only Furniture Account
► Cash & Furniture Account
► Only Purchases Account

Question No: 3 ( Marks: 1 ) - Please choose one

A book, in which receipts and payments are recorded, is known as:

► Pass Book
► Cash Book
► Purchase Book
► Sales Book

Question No: 4 ( Marks: 1 ) - Please choose one

Which of the following shows summary of a company's financial position at a

specific date?

► Profit & Loss Account

► Cash Flow Statement
► Balance Sheet
► Income & Expenditure Account

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following is NOT an example of intangible assets?

► Franchise rights
► Goodwill
► Patents
► Land

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following account will be credited in the books of ABC Co. Ltd., if
furniture is purchased on cash?
► Furniture account
► Cash account
► Business account
► Bank account

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 Question No: 7 ( Marks: 1 ) - Please choose one
If the working capital and the current assets of company XYZ are Rs. 5,000 and
Rs.15,000 respectively, calculate the current liabilities.

► Rs. 5,000
► Rs. 10,000
► Rs. 15,000
► Rs. 20,000

Question No: 8 ( Marks: 1 ) - Please choose one

Cost of Goods Sold = ?

► Beginning inventory + Purchases – Work in Process

► Beginning inventory + Purchases - Sales
► Beginning inventory + Purchases - Ending inventory
► Ending inventory + Purchases - Beginning Inventory

Question No: 9 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is known
as:

► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost

Question No: 10 ( Marks: 1 ) - Please choose one

In cost of goods sold statement the ‘cost of goods manufactured’ is equal to:

► Total factory cost + Opening work in process + Ending work in process

► Total factory cost + Opening work in process – Ending work in process
► Total factory cost - Opening work in process + Ending work in process
► Ending work in process +Total factory cost – Opening work in process

Question No: 11 ( Marks: 1 ) - Please choose one

Fixed assets are also called:

► Depreciable assets
► Current assets
► Liquid assets
► Floating assets

Question No: 12 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Date Item Quantity Cost/Unit Total

2007Jan. 2 Opening inventory 100 Rs.18.00 Rs.1,800

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 Mar. 4 Purchase 400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500
Four hundred units are unsold, Use the FIFO method of inventory costing and
determine the value assigned to the 400 units on hand at the end of the period.

► Rs.7, 500
► Rs.7, 978
► Rs.8, 000
► Rs.8, 400

Question No: 13 ( Marks: 1 ) - Please choose one

Increase in an asset is recorded on the:

► Left or credit side of the account

► Right or debit side of the account
► Left or debit side of the account
► Right or credit side of the account

Question No: 14 ( Marks: 1 ) - Please choose one

The allocation of the cost of a tangible plant asset to expense in the periods, in which
services are received from the asset, is termed as:

► Appreciation
► Depreciation
► Fluctuation
► None of the given options

Question No: 15 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets ?
Owner's equity 1,50,000
Liabilities 1,00,000

► Rs. 49,000
► Rs. 55,000
► Rs. 50,000
► Rs. 2, 50,000

Question No: 16 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets 8,20,000
Owner's equity 3,80,000
Liabilities ?

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 ► Rs. 1, 98,000
► Rs. 49,000
► Rs. 55,000
► Rs. 4, 40,000

Question No: 17 ( Marks: 1 ) - Please choose one

A debit balance in the Bank Statement indicates:

► Cash at bank
► Bank overdraft
► Overpayment to creditors
► Cash in hand

Question No: 18 ( Marks: 1 ) - Please choose one

Bank Statement is a record of transactions between the bank and the holder of:

► A foreign currency account

► A current account
► A saving account
► All of the given options

Question No: 19 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be deducted from
Sundry Debtors in Balance Sheet.
Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 800

► Rs. 400
► Rs. 800
► Rs. 2,000
► Rs. 2,400

Question No: 20 ( Marks: 1 ) - Please choose one

It is supposed that on 31-12-2007, the sundry debtors are amounted to Rs. 40,000. On
the basis of past experience, it is estimated that 5 % of the sundry debtors are
doubtful. It is also suppose that during the year 2008 actual bad debts were Rs. 1,600.
What entry will pass to create provision for doubtful debts?

► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000
(Cr)
► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000
(Cr)

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 ► Provision for doubtful debts a/c Rs. 1,600 (Dr) & Profit & Loss a/c Rs. 1,600
(Cr)
► Profit & Loss a/c Rs. 1,600 (Dr) & Provision for doubtful debts a/c Rs. 1,600
(Cr)

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following is/are the item/s of a Control Account?
► Credit sale only
► Cash sale only
► Credit purchase only
► Both Credit sales and Credit purchase

Question No: 22 ( Marks: 1 ) - Please choose one

Control account tells about:

► Details of loyal clients

► Customer attitude of payments
► Complete history of transactions of business clients
► Picture collectively instead of individually

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of
purchases return of Rs. 200 to “Mr.P” mistakenly entered in sales book?

► P’s account
► Purchases return account
► Sales account
► Purchases returns account and sales account

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of a
purchase return of Rs.200 to Mr. “A” entered in sales book instead of purchase return
book?

► A’s account only

► Sales account only
► Purchase returns account and sales account
► Purchases account only

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of an
amount Rs.200 received from Mr.”P” wrongly credited to Mr.”Q’s” account?
► Only Cash Account
► Only P’s account
► Only Q’s account
► Both of Mr. P's & Mr.Q's Account

Question No: 26 ( Marks: 1 ) - Please choose one

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 Which of the following entry will be recorded, if a cheque deposited is dishonored by
bank?

► Bank Account (Dr.) and Debtor's Account (Cr.)

► Debtor's Account (Dr.) and Bank Account (Cr.)
► Dishonored Cheque Account (Dr.) and Bank Account (Cr.)
► Creditor's Account (Dr.) and Bank Account (Cr.)

Question No: 27 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400
Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 10%
Identify the Total amount deducted from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 3,080
► Rs. 5,480

Question No: 28 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Bad Debts (Given in trial balance) 500
Old provisions (Given in trial balance) 700
Sundry Debtors (Given in trial balance) 44,500
Provision for doubtful debts be increases by 5%
What will be the amount of new provision ?

► Rs. 2,225
► Rs. 2,425
► Rs. 1,925
► Rs. 3,025

Question No: 29 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Bad Debts (Given in trial balance) 500
Old provisions (Given in trial balance) 700
Sundry Debtors (Given in trial balance) 44,800

If the Provision for doubtful debts has been increased by 5%, which amount of new
provision will be shown in Profit & Loss Account?

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 ► Rs. 2,240
► Rs. 2,425
► Rs. 1,925
► Rs. 3,025

Question No: 30 ( Marks: 1 ) - Please choose one

Wages paid to laborers working in the manufacturing department is treated as an
expense of:

► Administrative expenses
► Selling expenses
► Marketing expenses
► Cost of goods sold

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have agreed
to share the profit of business carried on by all or any of them acting for all?
► Sole-ownership
► Private limited company
► Public limited company
► Partnership

Question No: 32 ( Marks: 1 ) - Please choose one

In Income Statement, both beginning inventory and ending inventory appear in the
section of:
► Cost of good sold
► Indirect cost
► Selling cost
► Factory over head cost

Question No: 33 ( Marks: 1 ) - Please choose one

If dividend is proposed by directors of the company @ 30% for the year, it will be
calculated on:

► Capital Reserve
► Authorized share capital
► Paid up share capital
► Share premium

Question No: 34 ( Marks: 1 ) - Please choose one

A company is said to have been registered when:

► It gets certificate of incorporation from registrar of Companies

► It gets certificate of commencement of business from registrar of Companies
► It actually starts its business
► It filed with the Registrar of Companies articles certain documents, like
memorandum and articles of association

Question No: 35 ( Marks: 1 ) - Please choose one

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 6% Debentures Account Rs. 3, 00,000. What amount of interest on debentures should
be shown in profit and loss account?

► Rs. 6,000
► Rs. 3, 00,000
► Rs. 18,000
► Rs. 3, 18,000

Question No: 36 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if provision for Income Tax to be made
Rs. 12,000 is given in adjustment?

► It will be deducted in Income Statement only

► It will be treated as current liability in balance sheet only
► It will be treated as current asset in balance sheet only
► Both it will be deducted in income statement and it will be treated as
current liability in balance sheet

Question No: 37 ( Marks: 1 ) - Please choose one

When the current Ratio is 2: 5 and the amount of Current Liabilities is Rs. 25,000.
What will be the amount of Current Assets?

► Rs. 62,500
► Rs. 12,500
► Rs. 10,000 (25000*2/5 = 10000)
► Cannot be calculated with the help of given data

Question No: 38 ( Marks: 1 ) - Please choose one

Prepaid interest given in the Trial Balance will be treated as a (an):

► Asset
► Liability
► Revenue
► Deferred expense

Question No: 39 ( Marks: 1 ) - Please choose one

Which one of the following is another name of carrying cost of an asset?
► Book Value
► Residual Value
► Fair Value
► Break up Value

Question No: 40 ( Marks: 1 ) - Please choose one

An overdraft will appear as:

► A debit balance in both the bank statement and the cash book
► A credit balance in the bank statement but as a debit balance in the cash book
► A credit balance in the cash book but as a debit balance in the bank
statement
► A credit balance in both the bank statement and the cash book

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Question No: 41 ( Marks: 1 ) - Please choose one
Recovery of bad debts is treated as:

► Profit
► Revenue
► Expense
► Asset

Question No: 42 ( Marks: 1 ) - Please choose one

The amount owed by debtors at the end of a month appears on the_________ side of
the control account.
► Left side or debit
► Left side or credit
► Right side or debit
► Right side or credit

Question No: 43 ( Marks: 1 ) - Please choose one

The amount owed by debtors at the start of a month appears on the ___________ side
of the individual debtors account.
► Left side or credit
► Left side or debit
► Right side or debit
► Right side or credit

Question No: 44 ( Marks: 1 ) - Please choose one

Ahmad Industries want to make payment to its supplier in the form of a pay order.
The bank deducted Rs.160 as service charges without its knowledge. The error is
known as:
► Error of commission
► Error of omission
► Error of original entry
► Error of principle

Question No: 45 ( Marks: 1 ) - Please choose one

Which of the given statement is CORRECT if both sides of trial balance are equal?

► It is proof that no transaction was completely omitted from the ledger during
the posting process
► It is proof that the correct debit or credit balance has been computed for
each account
► It is proof that the ledger is in balance
► It is proof that transactions have been correctly analyzed and recorded in the
proper accounts

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following justifies when profit is earned?
► Assets exceed Expenditure
► Income exceeds Expenditure
► Cash Inflow exceeds Cash Outflow

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 ► Income exceeds Liabilities

Question No: 47 ( Marks: 1 ) - Please choose one

In a partnership of Mr. A and Mr. B, the share of profit of Mr. A is Rs.75,375 and the
share of profit of Mr. B is Rs. 25,125. What will be the ratio of their share?
► 1:2
► 2:3
► 3:2
► 3:1

Question No: 48 ( Marks: 1 ) - Please choose one

Income tax expense of Eden Corporation shows a debit balance of Rs.7,000 in its
unadjusted trial balance and Rs.7,600 in adjusted trial balance. Which of the
following account will be credited in adjusting entry?
► Income tax payable
► Prepaid income tax
► Income tax expense
► Income tax paid

Question No: 49 ( Marks: 1 ) - Please choose one

Sanders Construction sold a plant asset that originally cost Rs.80,000 for Rs.52,000
cash. If Sanders correctly reports a Rs.5,000 gain on this sale, the accumulated
depreciation on the asset at the date of sale must have been:
► Rs.23,000
► Rs.28,000
► Rs.33,000
► Some other amount

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following is responsible to register the companies?
► State Bank of Pakistan
► Security and Exchange Commission of Pakistan
► Supreme Court
► Stock Exchange

Question No: 51 ( Marks: 1 ) - Please choose one

Which of the following can be utilized to set off any loss on revaluation?
► Capital reserve
► General reserve
► Revaluation reserve
► None of the given options

Question No: 52 ( Marks: 1 ) - Please choose one

Which of the following is known as the charter of the company?
► Prospectus
► Articles of association
► Memorandum of association
► None of the given options

Question No: 53 ( Marks: 1 ) - Please choose one

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Statement of cash flows helps the stakeholders to assess:
► Ability to pay cash dividends in the future
► All of the given options
► The ability to generate future cash flows
► The liquidity of the business

Question No: 54 ( Marks: 1 ) - Please choose one

Short term investments in marketable securities and treasury bills that will mature
within ninety days from the date of acquisition, must be classified as:
► Receivables
► Receipts from Capital
► Current and intangible assets
► Cash equivalents

Question No: 55 ( Marks: 3 )

Give four reasons, why capital might change.

1. The entrance or exit of some (new) partner

2. Withdraw by partner(s)
3. Additional Investment by the partner(s)
4. Profit/Loss

Question No: 56 ( Marks: 5 )

Write down the five advantages of Limited Company.

1. It is a legal entity created by law and hence has its own recognition, good will
and brand equity etc.
2. It is a wide form of business and hence a formal approach for various
partners/investors to come and work for the same objectives in an organized
form.
3. Liability limited to company assets only. Investors/partners do not personally
liable for any loss or in state of bankrupty.
4. Being a legal entity, easy to get loans or gather funds from public (for public
limited companies only) or financial institutes.
5. Being a legal entity, it can enjoy more opportunities for mega projects and
trade/operations opportunities in international markets on its on behalf.

Question No: 57 ( Marks: 5 )

ABC Company purchased goods of Rs.150,000 on credit from which goods of
Rs.20,000 were defected and returned. Company received 2% discount at the time of
payment from the supplier.

Required:
What will be the amount of discount received by the company?
Also show the journal entries

Solution:
(A)
Discount Received= (150,000-20,000) x (2/100) = 2600

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 (B)
Particulars Dr. Cr.
Entry for Purchase
Goods 150,000
A/P 150,000

Entry for Return

A/P 20,000
Goods 20,000

While making Payment (@ 2% discount = 2600)

A/P 130,000
Discount income 2,600
Cash 127,400

Question No: 58 ( Marks: 10 )

State clearly how you will deal with Bad Debts Account, Provision for Bad Debts
Account, Profit & Loss account and Balance Sheet in the following case:

The items appearing in the trial balance are bad debts Rs. 300, provision for bad debts
Rs. 350 and sundry debtors Rs. 12,000. It is required to increase the provision for bad
debts to 5% on sundry debtors.

Question No: 59 ( Marks: 10 )

The unadjusted and adjusted trial balances for Tinker Corporation on December 31,
2007, are shown below:

Tinker Corporation
Trial Balances
December 31, 2007
Unadjusted Adjusted
Debit Credit Debit Credit
Rs. Rs. Rs. Rs.
Cash 35,200 35,200
Accounts receivable 29,120 29,120
Unexpired insurance 1,200 600
Prepaid rent 5,400 5,400
Office supplies 680 380
Equipment 60,000 60,000
Accumulated depreciation: equipment 49,000 50,000
Accounts payable 900 900
Notes payable 5,000 5,000
Interest payable 200 200
Salaries payable - 2,100
Income taxes payable 1,570 1,570

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Unearned revenue 6,800 3,800
Capital stock 25,000 25,000
Retained earnings 30,000 30,000
Fees earned 91,530 94,530
Advertising expense 1,500 1,500
Insurance expense 6,600 7,200
Rent expense 19,800 19,800
Office supplies expense 1,200 1,500
Repairs expense 4,800 4,800
Depreciation expense: equipment 11,000 12,000
Salaries expense 26,300 28,400
Interest expense 200 200
Income taxes expense 7,000 7,000
210,000 210,000 213,100 213,100

Journalize the five adjusting entries that the company made on December 31, 2007.

Solution:

Date Particular Dr. Cr.

Dec 31 Insurance expense 600
to Unexpired insurance 600

Dec 31 Office Supplies Expense 300

to Office Supplies 300

Dec 31 Depreciation Expense-Equip. 1000

to Accumulated depreciation-Equip. 1000

Dec 31 Salaries Expense 2100

to Salaries Payable 2100

Dec 31 Unearned revenue 3000

to Fee Earned 3000

Paper no 39
Solved by Abr,Nomi & Chanda Rehman
FINALTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 4)
Ref No: 1195888
Time: 120 min
Marks: 8
Question No: 1 ( Marks: 1 ) - Please choose one
Shares for which amount is paid by public are called ________ shares.
► Paid up
► Authorized

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 ► Bonus shares

► All are correct options

Question No: 2 ( Marks: 1 ) - Please choose one

The area of accounting concerned with reporting financial information to the
interested parties is called:
► Cost Accounting
► Financial Accounting
► Management Accounting
► Tax Accounting

Question No: 3 ( Marks: 1 ) - Please choose one

An organization operating with the objective of making profit from the sale of goods
or services is called:

► Transaction
► Business
► Society
► Trust

Question No: 4 ( Marks: 1 ) - Please choose one

Which of the following essentials are shown in Bank Book?
(1) Date of transaction
(2) Narration of transaction
(3) Cheque number

► (1) & (2) only

► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following summarizes the cash movements during a specified period?

► Trading account
► Profit & Loss account
► Receipts & Payments account
► Balance Sheet

Question No: 6 ( Marks: 1 ) - Please choose one

What type of expenses are paid out of Gross Profit?

► Selling Expenses
► General Expenses
► Financial Expenses
► All of the given options

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 Question No: 7 ( Marks: 1 ) - Please choose one
Following are the inventories of Manufacturing Concern EXCEPT:

► Raw material
► Work in process
► Finished goods
► Merchandise inventory

Question No: 8 ( Marks: 1 ) - Please choose one

In cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw material inventory

► Opening raw material inventory - Purchases + Ending raw material inventory
► Ending raw material inventory + Opening raw material inventory - Purchases
► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 9 ( Marks: 1 ) - Please choose one

If, Cost of machine = Rs.400, 000
Useful life = 5 years
Residual value = Rs.25, 000
The depreciation of machine per year using straight line method is?

► Rs. 160,000
► Rs. 96,000
► Rs. 75,000
► Rs. 57,600

Question No: 10 ( Marks: 1 ) - Please choose one

The Primary objective of providing depreciation is:

► To calculate true profit

► To show the asset on market value
► To reduce tax Burdon
► To provide funds for replacement

Question No: 11 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit

First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty-five units were sold, what is the value of the ending inventory using the FIFO
method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
► Rs.268

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Question No: 12 ( Marks: 1 ) - Please choose one
Accounting is the language of:

► Business
► School
► Proprietor
► Management

Question No: 13 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Owner’s equity Rs. 22,500

Total Liabilities Rs. 80, 385
Cash in hand Rs. 1,000
Cash at bank Rs. 2,000
Debtors Rs. 500

► Rs. 1, 02,885 other assets

► Rs. 1, 02,885 other liabilities
► Rs. 99,885 current liabilities
► Rs. 99,385 other assets

Question No: 14 ( Marks: 1 ) - Please choose one

A Bank Reconciliation Statement is prepared to:

► Ascertain that the difference between the Cash Book balance and the Bank
Statement balance has been accounted for
► Correct errors in the Cash Book or errors in the Bank Statement
► Amend the balance of the Bank Statement of the firm
► Amend the balance in the Cash Book of the firm

Question No: 15 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be deducted from
Sundry Debtors in Balance Sheet.
Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 800

► Rs. 400
► Rs. 800
► Rs. 2,000
► Rs. 2,400

Question No: 16 ( Marks: 1 ) - Please choose one

It is supposed that on 31-12-2007, the sundry debtors are amounted to Rs. 40,000. On
the basis of past experience, it is estimated that 5 % of the sundry debtors are

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doubtful. It is also suppose that during the year 2008 actual bad debts were Rs. 1,600.
What entry will pass to create provision for doubtful debts?

► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000
(Cr)
► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000
(Cr)
► Provision for doubtful debts a/c Rs. 1,600 (Dr) & Profit & Loss a/c Rs. 1,600
(Cr)
► Profit & Loss a/c Rs. 1,600 (Dr) & Provision for doubtful debts a/c Rs. 1,600
(Cr)

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following is an item of a debtors control account?

► Cash sale
► Credit sales
► Credit purchase
► Cash purchases

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following is an item of a creditors control account?
► Cash purchases
► Cash sales
► Credit sales
► Credit purchase

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is (are) benefit/s of subsidiary ledger accounts to business?

► It tells about customer attitude of payments

► It can be checked against the control account to pick up recording errors
► It tells about the complete history of transactions of business client
► All of the given options

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. “A” of
Rs.336 have been debited to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)
► Sales account (Dr.) and B’s account (cr.)
► B’s account (Dr.) and Sales account (Cr.)

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following item must be recorded in the adjusted Cash Book in order to
bring it in line with the entries in the Bank Statement?

► Bank charges

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 ► An error on the Bank Statement
► An uncredited deposit
► An unpresented cheque

Question No: 23 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 10% of the sundry debtors
are doubtful. Actual bad debts are Rs. 1600. What amount of new provision for
doubtful debts will be credited in profit & loss account
► Rs. 3,600
► Rs. 4,000
► Rs. 1,600
► Rs. 2, 400

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following is the first phase of the typical operating cycle?

► Sell goods and services to customers

► Purchase goods and services
► Receive cash from customers
► Pay cash to suppliers

Question No: 25 ( Marks: 1 ) - Please choose one

Which one of the following is TRUE about provisions?

► It is necessary to prepare for showing true picture of balance sheet

► It is a reduction from assets
► It is prepared for specific purposes
► All of the given options

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is/are NOT shown in balance sheet of sole proprietor?
► Fixed assets
► Current liabilities
► Profit sharing ratio
► Long term assets

Question No: 27 ( Marks: 1 ) - Please choose one

When closing stock is given in trial balance, then it will effect:
► Trading account only
► Balance sheet only
► Owner's equity only
► Both Trading account and Balance sheet

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following is (are) NOT example(s) of distributable profit?
► None of the given options
► General reserve
► Accumulated profit and loss (credit balance)
► Revaluation reserves

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Question No: 29 ( Marks: 1 ) - Please choose one
Which of the following is NOT a cash inflow?

► Sale of fixed asset

► Issue of debentures
► Cash from business operation
► Purchase of fixed asset

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following business publishes the Financial Statements?

► Sole-Proprietorship
► Partnership
► Trust
► Public Limited Company

Question No: 31 ( Marks: 1 ) - Please choose one

Particulars
Nominal value of each share Rs.10
No of shares issued 10,000 shares
Net profit Rs. 20,000
Divined paid 10%
What is the EPS ?

► Rs. 1.00
► Rs. 2.00
► Rs. 3.00
► Rs. 4.00

Question No: 32 ( Marks: 1 ) - Please choose one

When income exceeds expenses in a specific time period is known as:
► Savings
► Net profit
► Gross profit
► Operating profit

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following transaction have NO affect on stockholders' equity?

► Purchase of building on credit

► Dividends to stockholders
► Net loss
► Investment in cash by stockholders

Question No: 34 ( Marks: 1 ) - Please choose one

In balance sheet fixed assets are shown at:

► Residual value

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 ► Market value
► Fair value
► Written down value (WDV)

Question No: 35 ( Marks: 1 ) - Please choose one

Firms charge depreciation each year:

► To ensure that there is enough money in the firm to replace the asset
► To spread the cost of the asset over its working life
► To reduce the profit and thus reduce the dividends they can pay to share
holders
► Because the law states they must be reduced

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is(are) CORRECT for Doubtful Debt?

► It is shown in balance sheet

► It is a definite loss to the business
► No provision is necessary for it
► All of the given option

Question No: 37 ( Marks: 1 ) - Please choose one

Which of the following is not a cause of difference in balances as per pass book and
cash book?

► Error in cash book

► Error in pass book
► Direct deposit
► Un credited cheques

Question No: 38 ( Marks: 1 ) - Please choose one

Stock account is debited and creditors account is credited, which of the following is
reflecting the statement?

► Discount received
► Goods returned
► Purchase of goods on credit
► Payment of goods

Question No: 39 ( Marks: 1 ) - Please choose one

A bad debt affects the Balance Sheet because it is a (an):

► Liability
► Asset
► Expense
► Income

Question No: 40 ( Marks: 1 ) - Please choose one

The financial year of Atif Brothers & Co. is closed on June 30, 2009. Total cash sales

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are Rs. 150,000, credit sales are Rs. 180,000 and total receipts are Rs. 250,000. Credit
receipts will be:
► Rs. 150,000
► Rs. 100,000
► Rs. 220,000
► Rs. 280,000

Question No: 41 ( Marks: 1 ) - Please choose one

Which of the following statement is correct? If a company fails to record estimated
bad debts expense,
► Net realizable value is understated
► Expenses are understated
► Revenues are understated
► Receivables are understated

Question No: 42 ( Marks: 1 ) - Please choose one

In the heading of financial statement, ___________ is not required?
► Title of financial statement
► Name of the person who prepares financial statement
► Period for which financial statement is prepared
► Name of business entity

Question No: 43 ( Marks: 1 ) - Please choose one

Sunset tours has Rs.3,500 account receivable from the Del Mar Rotary. On January
20, the Rotary makes a partial payment of Rs.2,100 to Sunset Tours. The journal entry
made on January 20 by Sunset Tours to record this transaction includes:
► A debit to the Cash Received account of Rs. 3,500
► A credit to the Accounts Receivable account of Rs.2,100
► A debit to the Cash account of Rs.1,400
► A debit to the Accounts Receivables account of Rs.1,400

Question No: 44 ( Marks: 1 ) - Please choose one

A and B entered in partnership in capital ratio of 2:3. They earned a profit of
Rs.6,600 during the year. What will be the share of profit of Mr. B?
► Rs.1,320
► Rs.2,640
► Rs.3,960
► Rs.6,600

Question No: 45 ( Marks: 1 ) - Please choose one

The amount of prepaid insurance that expired in the current accounting period should
be reported as _____________.
► Prepaid insurance
► Insurance expense
► Insurance payable
► Insurance paid

Question No: 46 ( Marks: 1 ) - Please choose one

Unexpired costs are reported as:
► Revenues

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 ► Expenses
► Assets
► Income

Question No: 47 ( Marks: 1 ) - Please choose one

Insurance premiums paid in advance but not yet expired are reported in which of the
following account?
► Insurance payable
► Prepaid insurance
► Advance payment account
► Insurance expense

Question No: 48 ( Marks: 1 ) - Please choose one

Profits earned by partnerships compensate the owners for which of the following?
► Personal services rendered to the business
► Capital invested in the business
► Assuming the risks of ownership
► All of the given options

Question No: 49 ( Marks: 1 ) - Please choose one

Which of the following can be utilized to issue bonus shares?
► Reserves
► Debentures
► Share premium
► Term finance certificate

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following value of the share is authorized by the memorandum of
association?
► Par value
► Face value
► Nominal value
► All of the given options

Question No: 51 ( Marks: 1 ) - Please choose one

All of the following have an effect on ‘operating activities’ while preparing the
statement of cash flows except:
► Provision for doubtful debts
► Gain or loss on currency exchange rate
► Depreciation charged on fixed asset
► Amount received for disposal of a fixed asset

Question No: 52 ( Marks: 1 ) - Please choose one

According to the statement of cash flows following are the examples of investing
activities except:
► Sales of machinery
► Capital invested by the owners
► Purchase of building for the business use
► Cash received from the disposal of equipment

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 Question No: 53 ( Marks: 1 ) - Please choose one
The financial statement that captures both the current operating result and the
associated changes in the balance sheet is:
► Statement of retained earnings
► Statement of financial position
► Statement of cash flows
► Statement of changes in equity

Question No: 54 ( Marks: 1 ) - Please choose one

What is the reason that some short term creditors prefer quick ratio over current ratio
as a measure of short-term liquidity?
► Short operating cycle of the company
► Long operating cycle of the company
► Liquidity is not affected by operating cycle
► It is the creditor’s choice

Question No: 55 ( Marks: 3 )

Differentiate between salaries & wages and wages & salaries? Also mention in
which financial statements are treated

Question No: 56 ( Marks: 5 )

What is bank overdraft? Mention an example for this. Why companies have to
pay mark up on it. Under which head mark up paid on overdraft is shown in
financial statement.

Question No: 57 ( Marks: 5 )

Prepare Bank Reconciliation Statement with the help of given data

Particulars Rs.
Balance as per Bank statement (Cr) 600
Unpresented cheques 1,440
Uncredited cheques 260

Question No: 58 ( Marks: 10 )

The following is the trial balance of Sikander’s Photo Studio, Inc., dated December
31, 2007. You are required to prepare the Profit and Loss account.

Sikander’s Photo Studio, Inc.

Trial balance
December 31, 2007

Cash Rs.171,100
Accounts receivable 9,400
Prepaid studio rent 3,000

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Unexpired insurance 7,200
Supplies 500
Equipment 18,000
Accumulated depreciation: equipment Rs.7,200
Notes payable 10,000
Accounts payable 3,200
Salaries payable 4,000
Income tax payable 6,000
Unearned revenue 8,800
Capital stock 100,000
Retained earnings 34,000
Revenue earned 165,000
Salary expense 85,000
Supply expense 3,900
Rent expense 12,000
Insurance expense 1,900
Advertising expense 500
Depreciation expense: equipment 1,800
Interest expense 900
Income taxes expense 23,000
338,200 338,200

Question No: 59 ( Marks: 10 )

Internet Consulting Service, Inc., adjusts its accounts every month. Following is the
company’s year end unadjusted trial balance dated December 31, 2007. (Bear in mind
that adjusting entries already have been made for the first 11 months of 2007, but not
for December.)

Internet Consulting Service, Inc.

Unadjusted Trial balance
December 31, 2007

Cash Rs. 49,100 Rs.

Consulting fees receivable 23,400
Prepaid office rent 6,300
Prepaid dues and subscriptions 300
Supplies 600
Equipment 36,000
Accumulated depreciation: equipment 10,200
Notes payable 5,000
Income tax payable 12,000
Unearned consulting fees 5,950
Capital stock 30,000
Retained earnings 32,700
Dividends 60,000
Consulting fees earned 257,180
Salary expense 88,820
Telephone expense 2,550

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Rent expense 22,000
Income taxes expense 51,000
Dues and subscriptions expense 560
Supplies expense 1,600
Depreciation expense: equipment 6,600
Miscellaneous expenses 4,200
353,030 353,030

Other Data:
1. The useful life of the equipment has been estimated at five years (60 months)
from date of acquisition.
2. Consulting services valued at Rs.2,850 were rendered during December to
clients who had made payment in advance.
3. Salaries earned by employees but not paid as of December 31 amounted
Rs.1,700.
4. An estimate of supplies on hand was made at December 31; the estimated cost
of the unused supplies was Rs.450.

Instructions:
Determine the amounts to be reported in the company’s year end adjusted trial
balance for each of the following accounts:

Consulting fees earned

Salaries expense
Depreciation expense: equipment
Supplies expense
Income tax expense
Paper no 40
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION

Spring 2010

MGT101- Financial Accounting (Session - 2)

Time: 90 min

Marks: 69
Question No: 1 ( Marks: 1 ) - Please choose one
Which of the following is correct according to the double entry system of book-
keeping?
► Debit = Credit
► Debit > Credit
► Debit < Credit
► All of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

An Asset that is NOT physical in nature is called _________.
► Intangible Asset

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 ► Liquid Asset
► Current Asset
► Fixed Asset

Question No: 3 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial
Balance? (It is assumed that all account balances are shown on normal balance)
► Cash account
► Furniture account
► Vehicle account
► All of the given options

Question No: 4 ( Marks: 1 ) - Please choose one

Bank Reconciliation Statement is:
► A memorandum statement
► A ledger account
► A part of cash book
► A part of journal

Question No: 5 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine Rs. 2,00,000
Cost of new machine purchased during the year Rs. 50,000
Depreciation during the year Rs. 25,000
Closing written down value (WDV) of machines ?

► Rs. 2, 25,000
► Rs. 2, 50,000
► Rs. 2, 75,000
► Rs. 75,000

Question No: 6 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars
Rs.
Closing value of stock 40,000
Bad Debts (Given in trial balance) 500
Old provisions (Given in trial balance) 700
Sundry Debtors (Given in trial balance) 44,500
Provision for doubtful debts be increases by 5%

What will be the amount of new provision

?

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 ► Rs. 2,225
► Rs. 2,425
► Rs. 1,925
► Rs. 3,025

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is a selling expense?
► Interest on deposits
► Any tax/freight is paid on purchases
► General salaries paid to laborers
► Tax & freight paid on sale PG26

Question No: 8 ( Marks: 1 ) - Please choose one

Which account is increased with a debit and decreased with a credit?
► Cash
► Accounts Payable
► Contributed Capital
► Retained Earnings

Question No: 9 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if cash is drawn by a
Proprietor?
► Proprietor’s drawings a/c (Dr.) and Cash a/c (Cr.)
► Cash a/c (Dr.) and Proprietor’s drawings a/c (Cr.)
► Proprietor’s Capital (Dr.) and Proprietor’s drawings a/c (Cr.)
► Proprietor’s drawings (Dr.) and Proprietor’s Capital a/c (Cr.)

Question No: 10 ( Marks: 1 ) - Please choose one

When the capitals are fixed, which of the following account will be debited for
drawings made by a partner?
► Individual Partner’s Current Account
► Partner’s Cash Account
► Partner’s Bank Account
► Partners Capital Account

Question No: 11 ( Marks: 1 ) - Please choose one

Authorized share capital is also known as:
► Registered capital
► Issued capital
► Paid up capital
► Called up capital

Question No: 12 ( Marks: 1 ) - Please choose one

When goods are acquired from the supplier the gross cost of such goods is
recorded in:
► Debtor Account
► Purchases Account
► Factory overhead account
► Sales Account

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Question No: 13 ( Marks: 1 ) - Please choose one
Which of the following is NOT a cash inflow?
► Sale of fixed asset
► Issue of debentures
► Cash from business operation
► Purchase of fixed asset

Question No: 14 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as an inflow of
cash?
► The repayments of a bank loan
► Dividend issue in the current year
► Money received as result of selling fixed assets
► The difference between the valuations of old and new fixed assets

Question No: 15 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as a cash outflow?
► The payments for purchases made during the year
► A decrease in trade debtors over the course of an accounting period
► Money received as a result of issuing new shares
► Money received as result of selling fixed assets

Question No: 16 ( Marks: 1 ) - Please choose one

When we close bad debt account, which of the following account is debited?
► Profit and loss account
► Bad debt account
► Debtor account
► Creditor account

Question No: 17 ( Marks: 1 ) - Please choose one

Subsidiary ledgers are maintained for:
► Debtors
► Creditors
► Stock
► All of the given options

Question No: 18 ( Marks: 1 ) - Please choose one

ABC Company received discount on its credit purchases, which of the following
will be credited while entering in journal?
► Cash
► Discount received
► Creditors
► Bank

Question No: 19 ( Marks: 1 ) - Please choose one

Mr. Ali’s bank book shows a debit balance of Rs. 36,000. He deposited a cheque
of Rs.15,000 but not yet collected by the bank. What will be the balance of bank
statement?

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 ► Rs. 21,000
► Rs. 51,000
► Rs. 36,000
► Rs. 15,000

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following indicates cash discount received?
► Discount in paying debt earlier
► Discount in receiving debt earlier
► Discount in purchasing huge goods
► Discount in selling huge goods

Question No: 21 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with an
equal share in profit or loss. Markup on drawings of Mr. A is Rs.1,500 and of
Mr. B is Rs.1,800. The net income for the year is Rs.85,000. What will be the
profit share of Mr. B?
► Rs.42,350
► Rs.44,150
► Rs.41,600
► Rs.40,850

Question No: 22 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with an
equal share in profit or loss. Markup on drawings of Mr. A is Rs.1,500 and of
Mr. B is Rs.1,800. The net income for the year is Rs.85,000. What will be the
amount of distributable profit?
► Rs.81,700
► Rs.88,300
► Rs.131,700
► Rs.146,700

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following value of the share is authorized by the memorandum of
association?
► Par value
► Face value
► Nominal value
► All of the given options

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following statement is not true regarding the objective of statement
of cash flows?
► It is helpful for decision making by management
► It is used for reporting the net profit of the period
► It can be used for estimations for cash flows in future
► It is used to determine the liquidity of the business

Question No: 25 ( Marks: 1 ) - Please choose one

Statement of cash flows helps the stakeholders to assess:

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 ► Ability to pay cash dividends in the future
► All of the given options
► The ability to generate future cash flows
► The liquidity of the business

Question No: 26 ( Marks: 1 ) - Please choose one

According to the statement of cash flows following are the examples of investing
activities except:
► Sales of machinery
► Capital invested by the owners
► Purchase of building for the business use
► Cash received from the disposal of equipment

Question No: 27 ( Marks: 1 ) - Please choose one

The cash book in book-keeping records:
► All cash and credit purchase of goods
► Only cash payments
► All receipts and payments in cash
► All cash and credit sale of goods

Question No: 28 ( Marks: 1 ) - Please choose one

What will be the effect of decrease in closing stock on gross profit?
► Gross profit increased
► Gross profit decreased
► No effect on Gross profit
► Gross profit will become positive

Question No: 29 ( Marks: 1 ) - Please choose one

If:
· Direct Material Cost is Rs. 20,000
· Direct labour cost is Rs. 10,000
· Manufacturing Cost is Rs. 45,000
Then:
What is the amount of Factory Overhead?
► Rs. 15,000
► Rs. 30,000
► Rs. 35,000
► Rs. 25,000

Question No: 30 ( Marks: 1 ) - Please choose one

Which one of the following methods for inventory valuation may overstate the
income during the periods of rising prices?
► Specific Identification Method
► FIFO Method
► LIFO Method
► Weighted Average Method

Question No: 31 ( Marks: 1 ) - Please choose one

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Which of the following is NOT a method of calculating depreciation?
► Straight Line Method
► Written Down Value Method
► Diminishing Balance Method
► Specific Identification Method

Question No: 32 ( Marks: 1 ) - Please choose one

What is the treatment of Depreciation in accounting?
► Written in balance sheet under the head of fixed assets
► Charged to profit and loss account
► Written in balance sheet under the head of current assets
► Written in balance sheet under the head of liabilities

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is TRUE?
► Gain on revaluation is credited to Revaluation Reserve Account.
► Gain on revaluation is debited to Revaluation Reserve Account.
► Gain on revaluation is credited to Profit & Loss Account.
► Gain on revaluation is debited to Profit & Loss Account.

Question No: 34 ( Marks: 1 ) - Please choose one

The loss on the sale of fixed assets is a:
► Normal loss
► Ordinary loss
► Capital loss
► Revenue loss

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?
► Cash sale
► Credit sale
► Bills receivable
► Discount allowed

Question No: 37 ( Marks: 1 ) - Please choose one

If cash sale is the missing figure, it can be ascertained by the construction of:
► Creditors Control Accounts
► Debtors Control Accounts
► Cash Account
► None of the given options

Question No: 38 ( Marks: 1 ) - Please choose one

Which of the following is/are the Classification of Current Assets?
► Cash Balance
► Loans and Advances
► Bank Balance
► All of the given options

Question No: 39 ( Marks: 1 ) - Please choose one

Depreciation expense is charged to which of the following head?

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 ► Administrative expenses
► Selling expenses
► Cost of sales
► It depends on the nature of expense

Question No: 40 ( Marks: 1 ) - Please choose one

Inventory is always considered as:
► Current asset
► Current liability
► Long-term asset
► Stockholders' equity
Question No: 41 ( Marks: 1 ) - Please choose one
If:
Ø Capital at the start Rs. 100,000
Ø Profit during the year Rs. 50,000
Ø Withdrawal during the year Rs. 25,000
What would be the closing balance of capital?
► Rs. 175,000
► Rs. 150,000
► Rs. 125,000
► Rs. 75,000

Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following Legal Documents of a company contain(s) the rules and
regulations framed for the internal management of the company?
► Memorandum of Association
► Articles of Association
► Both Memorandum of Association and Articles of Association
► Prospectus

Question No: 43 ( Marks: 1 ) - Please choose one

Which one of the following refers to the allotment of shares to the existing
shareholders by capitalizing the reserves into additional capital?
► Reserve funds
► Accumulated profit
► Right issue
► Bonus issue

Question No: 44 ( Marks: 1 ) - Please choose one

When a share having a face value of Rs.100 issued at Rs.90 then which one of
the following options is correct under this situation?
► Share issued at premium
► Share issued at discount
► Share issued at nominal value
► Share issued at market value

Question No: 47 ( Marks: 1 ) - Please choose one

Which of the following would be a suitable head for short term advances from
customers in Balance Sheet?
► Current asset

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 ► Intangible asset
► Tangible asset
► Current liability

Question No: 48 ( Marks: 1 ) - Please choose one

If there is a portion of long term loan of Rs. 30,000 payable in the current
accounting period. Where it will be shown in financial statement?
► Current liability
► Long term liability
► Current asset
► Owner’s equity

Question No: 49 ( Marks: 3 )

Ø Rent expenses Rs. 20,000
Ø Insurance expenses Rs. 30,000
Ø Bad debts Rs. 35,000
In addition rent payable is Rs. 5,000; calculate the amount of operating expenses
to be shown in profit and loss account.

Question No: 50 ( Marks: 3 )

If:
Ø Retain earning at the beginning Rs. 1,000
Ø Dividend paid 500
Ø Retain earning at the end 2,500
Then:
You are required to prepare statement of Retain earnings to find the
amount of Net income

Question No: 51 ( Marks: 5 )

Given the following data:
Purchases Rs. 4,500, Returns outwards Rs.300, Returns inwards Rs.150,
Carriage outwards Rs.830, Carriage inwards Rs.260, Opening stock Rs.935, and
closing stock Rs. 1,100.
What would be the value of the cost of goods sold?

Question No: 52 ( Marks: 5 )

Mr. Bilal is a member of partnership firm. He drew some amounts from the
business on following dates.
Ø July Rs. 2,500
Ø November 1,500
Ø December 3,000
Ø March 5,000
All drawings were made on the 1st day of the month @ rate of 10 %. It is
assumed that financial year starts at July 1st and ends on 30th June.
Required:
Calculate mark up on drawing.

Question No: 53 ( Marks: 5 )

Particulars Rs.
Raw Material - Opening Stock 10,000

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 Raw Material – Purchases 2,000
Raw Material - Closing Stock 3,000
Packing Material - Opening Stock 4,000
Packing Material – Purchases 5,000
Packing Material - Closing Stock 6,000

Based on the above information you are required to calculate the following:
Ø Cost of Raw Material Consumed
Ø Cost of Packing Material Consumed

Paper no 41
Solved by Chanda Rehman& ABr
FINALTERM EXAMINATION
Spring 2009
MGT101- Financial Accounting (Session - 4)
Time: 120 min
Marks: 85
Question No: 1 ( Marks: 1 ) - Please choose one
What will be the effect on accounting equation, when payment is made to the creditor
of the business?

► Increase in an asset, increase in owner's equity

► Increase in an asset, increase in a liability
► Decrease in an asset, decrease in owner's equity
► Decrease in an asset, decrease in a liability Correct

Question No: 2 ( Marks: 1 ) - Please choose one

Which one of the following is a type of General Ledger?

► Book of original entry

► ‘T’ Account Correct
► Source document
► Day book

Question No: 3 ( Marks: 1 ) - Please choose one

Which of the following summarizes the cash movements during a specified period?

► Trading account
► Profit & Loss account
► Receipts & Payments account
► Balance Sheet

Question No: 4 ( Marks: 1 ) - Please choose one

Which of the following is/are the END product of accounting cycle?

► Financial Statements
► General Journal
► General Ledger

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 ► Voucher

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following shows summary of a company's financial position at a

specific date?

► Profit & Loss Account

► Cash Flow Statement
► Balance Sheet
► Income & Expenditure Account

Question No: 6 ( Marks: 1 ) - Please choose one

Accounts Receivable & Inventory are the examples of:

► Liquid assets
► Current assets
► Fixed assets
► Capital assets

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is an alternate term which can be used for “Capital”?

► Liability
► Owner’s net worth
► Working capital
► Asset

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following particular is NOT included in the specimen of a payment
voucher?

► Name of organization
► Cash payment amount
► Date of transaction
► Bank receipt

Question No: 9 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is known
as:

► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost

Question No: 10 ( Marks: 1 ) - Please choose one

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 All the costs incurred on the incomplete assets up to the balance sheet date must be
transferred to:

► Capital account
► Capital work in progress account
► Relevant asset account
► Owner's equity account

Question No: 11 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 80,000
Purchases of raw material during the 200, 000
period
Cost of Material Consumed ?

► Rs. 205,000
► Rs. 215,000
► Rs. 220,000
► Rs. 225,000

Question No: 12 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about Capital Expenditure?
► Creates future benefits
► Incurred to acquire fixed assets
► Incurred to increase the economic life of existing fixed assets
► Reduce the profit of the concern

Question No: 13 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Total Assets Rs. 34,500

Accounts payable Rs. 1, 000
Other liabilities Rs. 11,500

► Rs. 22,000 owner’s equity

► Rs. 23, 000 owner’s equity
► Rs. 24,000 owner’s equity
► Rs. 46,000 owner’s equity

Question No: 14 ( Marks: 1 ) - Please choose one

Depreciation arises because of:

► Fall in the market value of an asset

► Fall in the value of money
► Physical wear and tear
► All of the given options

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Question No: 15 ( Marks: 1 ) - Please choose one
When the Bank Statement balance is more than the Cash Book balance, it is because
of:

► Unpresented cheques
► Unrecorded bank charges
► Uncredited cheques
► None of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following account would be credited, when the bad debts are
recovered?

► Allowance for bad debts a/c

► Bad debts recovered a/c
► Doubtful debts a/c
► Cash a/c

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following is/are the item/s of a Control Account?
► Credit sale only
► Cash sale only
► Credit purchase only
► Both Credit sales and Credit purchase

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?

► Cash sales
► Credit sales
► Bills receivable
► Discount allowed

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following is (are) included in Creditors Control Account?

► Discount received from supplier

► Credit purchases
► Bills payable
► All of the given options

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of Sale
to Mr.”A” Rs. 336 was not recorded at all?
► Only sales account
► Only A’s account
► Only cash account
► Both sales account and A’s account

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Question No: 21 ( Marks: 1 ) - Please choose one
Which of the following account(s) will be affected, while rectifying the error of an
amount Rs.200 received from Mr.”P” wrongly credited to Mr.”Q’s” account?
► Only Cash Account
► Only P’s account
► Only Q’s account
► Both of Mr. P's & Mr.Q's Account

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following item must be recorded in the adjusted Cash Book in order to
bring it in line with the entries in the Bank Statement?

► Bank charges
► An error on the Bank Statement
► An uncredited deposit
► An unpresented cheque

Question No: 23 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be deducted from
Sundry Debtors in Balance Sheet.
Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600
► Rs. 1,000
► Rs. 2,000
► Rs. 2,600

Question No: 24 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 10% of the sundry debtors
are doubtful. Actual bad debts are Rs. 1600. What amount of new provision for
doubtful debts will be deducted from Sundry debtors?

► Rs. 3,600
► Rs. 4,000
► Rs. 1,600
► Rs. 2, 400

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is normally treated as the last expense listed in the income
statement of a company?

► Interest expense
► General and administrative expenses
► Salaries and wages expense
► Income tax expense

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Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following accounts would be increased with a debit?

► Contributed Capital
► Retained Earnings
► Revenues
► Expenses

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following is NOT an operating expense?

► Salaries and wages expense

► Rent expense
► Interest expense
► Depreciation expense

Question No: 29 ( Marks: 1 ) - Please choose one

An asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used
► It can be realized in cash or sold or consumed in the business within one
year
► It is a piece of new machinery that is expected to last for at least ten years
► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following item will be shown on debit side of capital account of sole
proprietor?

► Cash
► Drawings
► Debtors
► Profit

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is/are NOT shown in balance sheet of sole proprietor?
► Fixed assets
► Current liabilities
► Profit sharing ratio
► Long term assets

Question No: 32 ( Marks: 1 ) - Please choose one

When closing stock is given in trial balance, then it will effect:
► Trading account only
► Balance sheet only
► Owner's equity only
► Both Trading account and Balance sheet

Question No: 33 ( Marks: 1 ) - Please choose one

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What will the effects on financial statements, if machinery is depreciated @ 10%?

► It will be treated as an expense in income statement only

► It will be subtracted from concerned asset only
► It will be treated as a current asset only
► It will be treated as an expense in income statement and subtracted from
concerned assets in Balance Sheet

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?
► Accounts receivable arises when a company buys goods or services from
another party on credit
► Accounts receivable is a miscellaneous category that may include loans to
employees
► Accounts receivable are more formal than notes receivable
► Accounts receivable are often called trade receivables

Question No: 35 ( Marks: 1 ) - Please choose one

Fixed Asset (WDV) + ___________ = Total assets Employed

► Working capital
► Total liabilities
► Total assets
► Current assets

Question No: 36 ( Marks: 1 ) - Please choose one

Identify the selling expenses of manufacturing concern with the help of given data.
Particulars Rs.
Salesman’s salary 70,000
Commission on sales 28,000
Carriage outward 10,000
Carriage inward 5,000

► Rs. 80,000
► Rs. 60,000
► Rs. 38,000
► Rs. 1, 08,000

Question No: 37 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the partnership form of business?
► Partners must have to share their profits in equal proportion
► Partners are personally liable for the liabilities of the business
► Partnerships must make their accounts available to the general public
► Partnership agreement in writing is called Partnership deed

Question No: 38 ( Marks: 1 ) - Please choose one

By which if the following Act/ Ordinance, a company is allowed to issue shares at a
higher price than their face value.
► Companies ordinance 1984
► Contract act 1872

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 ► Sales of Goods act 1930
► None of the given options

Question No: 39 ( Marks: 1 ) - Please choose one

Preliminary Expenses of the company may write off against:
► Share premium account
► Share holder account
► Debtors control account
► Creditor control account

Question No: 40 ( Marks: 1 ) - Please choose one

Which of the following document(s) define the relation of company with outside
world?

► Prospectus
► Statutory Declaration
► Memorandum of Association
► Articles of Association

Question No: 41 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if provision for Income Tax to be made
Rs. 12,000 is given in adjustment?

► It will be deducted in Income Statement only

► It will be treated as current liability in balance sheet only
► It will be treated as current asset in balance sheet only
► Both it will be deducted in income statement and it will be treated as
current liability in balance sheet

Question No: 42 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if Rs. 6,000 transfer to general reserve is
given in adjustment?

► it will be treated in both profit and loss appropriation account and in the
balance sheet
► It will be treated in Income Statement only
► It will be treated as current liability in balance sheet only
► It will be treated in profit and loss appropriation account only

Question No: 43 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as a cash outflow?
► The payments for purchases made during the year
► A decrease in trade debtors over the course of an accounting period
► Money received as a result of issuing new shares
► Money received as result of selling fixed assets

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT?
► A cash inflow means increase total cash only
► A cash inflow means increase in cash equivalent only

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 ► A cash inflow means increase in cash and decrease in cash equivalent
► A cash inflow means increase in both cash and cash equivalent

Question No: 45 ( Marks: 1 ) - Please choose one

When opening stock is Rs. 50,000, closing stock Rs. 60,000 and cost of goods sold
Rs. 220,000. What will be stock turnover ratio?

► 2 times
► 3 times
► 4 times
► 5 times

Question No: 46 ( Marks: 1 ) - Please choose one

Rs.
Gross profit 50,000
Operating profit 42,000
Sales 250, 000
What is the amount of operating expenses ?

► Rs. 8,000
► Rs. 92,000
► Rs. 62,500
► Rs. 300,000

Question No: 47 ( Marks: 1 ) - Please choose one

What types of changes (is) are made at the admission of partner in partnership?
► Assets of old business will be revalued
► Liabilities of old business will be revalued
► Good will of business will be revalued
► All of the given options

Question No: 48 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?

► In case of death of partner

► At the admission of new partner
► If any partner resigned from partnership
► All of the given options

Question No: 49 ( Marks: 1 ) - Please choose one

If one partner receives a salary which is credited to him at the end of the year, the
share of profit available for distribution will be:

► Increased
► Decreased
► Unchanged
► Changed and become negative

Question No: 51 ( Marks: 5 )

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What is the Purpose of Control Accounts?

A business needs to have accounts created for individual creditors and debtors in
its general ledger. Creditors are people/entity to whom company owes money
and debtors are entities/people who owe money to the business. But when a
business grows then the number of creditors and debtors also grows. We know
that trial balance can give us the mathematical accuracy of accounts and if there
is any difference in trial balance we can know it from the general ledger by
actually checking each and every transaction for the year. But it is a very time
consuming job to check each and every transaction if the business of the
company is huge because it will have many many transaction to check. So in this
control accounts are maintained in general one for total creditors and one for
total debtors. Debtor’s account is called debtor’s control account and creditor’s
account is called creditor’s control account. These accounts will not get hit by
individual purchase, purchase returns, payments to creditor in case of creditor’s
control account and by sales, sales return, receipts in case of debtor’s control
account. Periodically this summarized data will be posted from individual
ledgers which will be created for each type of transaction e.g a sales subsidiary
ledger, purchase subsidiary ledger etc which will contain actual details of
transactions with invoice number and periodically the amounts will be
summarized from these subsidiary ledgers and posted to the control accounts at
a single time. This way the transactions in general ledger will decrease and will
become easy to manage and can be easily checked against creditor’s or debtor’s
details in total creditor’s ledger and total debtor’s ledger for accuracy.

Question No: 52 ( Marks: 10 )

What is the effect of given adjustments on Trading & Profit & Loss account and
Balance Sheet?
1. Accrued Expenses or Outstanding Expenses
2. Prepaid Expenses or Unexpired Expenses
3. Accrued Revenue or Revenue Receivable
4. Unearned Revenue or Revenue Received in Advance
5. Depreciation of Asset

1. Accrued Expenses or Outstanding Expenses

Trading and profit and loss account effect

These expenses will be shown in profit and loss account under administrative
expenses and will and be deducted from gross profit. They will be used to calculate
net profit

Balance sheet effect

These expenses will be shown as expense payable or accrued expenses in balance

sheet as current liabilities and will be shown under current liabilities section of
liabilities as they have to be paid by business..

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2. Prepaid Expenses or Unexpired Expenses

Trading and profit and loss account effect

These will be deducted from relevant expense account to get the actual expenses
for the period and that actual amount of expense will be deducted from gross
profit to arrive at net profit. This amount of prepaid expenses will not be included
in profit and loss account as an expense itself but its effect will be on current
expenses for the period for which profit and loss is being calculated.

Balance sheet effect

These prepaid expenses will be show and current assets in balance sheet and will
be shown under the section of current assets in balance sheet.

3. Accrued Revenue or Revenue Receivable

Trading and profit and loss account effect

These will be added to sales in trading account in profit and loss statement and
will be treated as a revenue in the calculation of gross profit by subtracting cost of
goods sold from net sales. This will affect gross profit in trading account.

Balance sheet effect

In balance sheet this revenue will be shown under current assets as receivables
from debtors and will be shown under the section of current assets of the business.

4. Unearned Revenue or Revenue Received in Advance

Trading and profit and loss account effect

This will not be added to the sales as sales is recognized when the actual services
have been provided or when goods have been shipped irrespective of whether
payment has been received or not. So this will not affect profit and loss account as
it is still not recognized as sales/revenue.

Balance sheet effect

This is a liability for the company because the company has to give goods or
services to the buyer for the advance payment done by the buyer and will be
shown as a liability in the balance sheet under the current liability section of
balance sheet. Also the same amount will be shown in the bank or cash as current

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 asset to offset the liability because the cash or cheque has been received for goods
not given or services not rendered yet.

5. Depreciation of Asset

Trading and profit and loss account effect

The depreciation of asset is an operating expense for the business and will affect
profit and loss account. It will be added to the administrative expense and will be
appear in the administrative expense section of profit and loss account and will be
deducted from gross profits to arrive at net profits along with other expenses.

Balance sheet effect

In balance sheet it will appear as deduction from the fixed asset as the fixed assets
in balance sheet will be shown at written down value. So this will be added to
previous balance of accumulated depreciation and will be deducted from the total
cost of the fixed assets and will appear in the assets section under the heading of
fixed asset. It might appear in notes as sometimes in balance sheet summarized
figure of fixed asset at WDV will be shown. In any case it is deducted from fixed
asset in balance sheet and affects the total assets side

Question No: 53 ( Marks: 10 )

Prepare profit & loss Appropriation account with the help of given data and show
capital accounts and current account in balance sheet for XY Z & Sons

Particulars Rs.
Net profit for the year 600,000
Opening balance of Capital X:400,000
Y: 250,000
Z: 300,000
Drawings during the year X: 100,000
Y: 150,000
Z: 125,000
Salaries are to be paid X: 12,000
Y:20,000
Z:15,000
Opening Balance of current account X: 50,000
Y: 60,000
Z: 45,000
Mark up rate on capital 5%
Mark up rate on drawings 5%
Profit sharing ratio for X:Y:Z 30: 25:45
It is assumed that no capital introduced during the year.

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ANSWER

XYZ Sons
Profit and Loss Appropriation account for the period ending ----

Amount
Particulars Amount Rs Rs

Net Rrofit for the year 600,000

Less Salaries for partners Partner X (12,000)
Partner Y (20,000)
Partner Z (15,000) (47,000)

5 % on 400,000 for partner

Less Interest on Capital(5%) X (20,000)
5 % on 250,000 for partner
Y (12,500)
5 % on 300,000 for partner
Z (15,000) (47,500)

Partner X's drawing

Add : Markup on drawings(5%) 100,000 5,000
Partner Y's drawing
150,000 7,500
Partner Z's drawing
125,000 6,250 18,750

Net Profit avaialble for distribution 524,250

Profit distributed to partners X's share 30% (157,275)

Y's share 25% (131,063)
Z's share 45% (235,913) (524,250)

Total 0

ANSWER PART 2
CURRENT ACCOUNTS OF PARTNERS

XYZ LTD Partner's X Current Account Account Code --

DEBIT SIDE CREDIT SIDE
Date Narration / Date Narration /
2002 Vr.# Particulars Dr. Rs 2002 Vr.# Particulars Cr. Rs
Drawing 100,000 Opening balance 50,000

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 Markup on drawing 5,000 Salary 12,000
Interest on
capital 20,000
Profit paid 157,275
Balance c/d 134,275

TOTAL 239,275 TOTAL 239,275

XYZ LTD Partner's Y Current Account Account Code --

DEBIT SIDE CREDIT SIDE
Date Narration / Date Narration /
2002 Vr.# Particulars Dr. Rs 2002 Vr.# Particulars Cr. Rs
Opening
Drawing 150,000 balance 60,000
Markup on drawing 7,500 Salary 20,000
Interest on
capital 12,500
Profit paid 131,063
Balance c/d 66,063

TOTAL 223,563 TOTAL 223,563

Partner
XYZ LTD Z Current Account Account Code --
DEBIT SIDE CREDIT SIDE
Date Narration / Date Narration /
2002 Vr.# Particulars Dr. Rs 2002 Vr.# Particulars Cr. Rs
Opening
Drawing 125,000 balance 45,000
Markup on drawing 6,250 Salary 15,000
Interest on
capital 15,000
Profit paid 235,913
Balance c/d 179,663

TOTAL 310,913 TOTAL 310,913

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Question No: 54 ( Marks: 10 )
Following is information of Shumile Ltd for the year ended December 31st, 2006

Particular Rs.
Current Asset 160,850
Current Liability 72,500
Plant & Machinery 171,000
Furniture 30,000
Land 100,000
Accumulated profit & Loss c/f (credit balance ) on 31st 7,250
December,2006
Gross Profit on 31st December,2006 125,000
Issued capital 150,000
General Reserve 12,000
Authorized Capital Rs. 10/each 500,000
Long term investment 200,000

Other information:
Depreciation is charged on all Fixed Assets (except Land) @ 10%.
Prepare Balance Sheet as on 31st December, 2006.

Answer :

Shumile Lts
Balance sheet as on date Dec 31st 2006
Amount
Particulars Amount Rs Rs
Assets
Fixed Assets
Fixed Assets at WDV Note 1 280,900

Current Assets
Cuurent Assets 160,850

Current Liability
Current Liability 72,500

Working Captial 88,350

Net Assets employed Note 2 369,250

Financed by

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Authorized share
capital (50,000 shares
at Rs 10 each) 500,000

Share Holder's Equity

Issued Capital 150,000
General Reserve 12,000
Accumulated profit ansd loss 7,250

Net Shareholder's Equity 169,250

Long Term Liability

Long Term Investment 200,000

Total 369,250

NOTES TO BALANCE SHEET

Depreciaito
Note 1 n
Depreciation
Total
Accumulate
Openin Depreciatio d Written
Rat g n for the Depreciatio Down
Pariculars Cost of Item e Balance year n Value
Land 100,000 0 0 0 0 100,000
Plant and machinery 171,000 0.10 0 17,100 17,100 153,900
Furniture 30,000 0.10 0 3,000 3,000 27,000
TOTAL 20,100 20,100 280,900

Net assets
Note 2 employed
Partiucular Amount
Working Capital 883,850
Fixed assets 280,900
Net Assets employed =
Working Capital +
Fixed assets 1,164,750

Paper no 42
Solved by Chanda Rehman
FINALTERM EXAMINATION

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 Fall 2008
MGT101- Financial Accounting (Session - 1)

Question No: 1 ( Marks: 1 ) - Please choose one

Wages outstanding given in the trial balance will be treated as a (an):

► Asset
► Liability Correct
► Revenue
► Deferred expense

Question No: 2 ( Marks: 1 ) - Please choose one

Prepaid interest given in the Trial Balance will be treated as a (an):

► Asset
► Liability
► Revenue
► Deferred expense

Question No: 3 ( Marks: 1 ) - Please choose one

If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr.
A, Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. C in
distributable profit.

► Rs. 98,000
► Rs. 1, 47,000
► Rs. 2, 45,000
► Rs. 3, 43,000
2+3+5 = 10
Mr. A
490000*2/10
Mr. A = 98000
Mr. B
490000*3/10
Mr. B = 147000

Question No: 4 ( Marks: 1 ) - Please choose one

If the Capitals of partners are fixed then, at the end of financial year a partner’s
drawings are transferred to the:

► Credit side of the partner’s capital account

► Credit side of the partner’s current account
► Debit side of partnership bank account
► Debit side of the partner’s current account

Question No: 5 ( Marks: 1 ) - Please choose one

If company has distributable profit of Rs. 490,000, Profit sharing share ratio of Mr.
A, Mr. B and Mr. C is 2:3:5 respectively. What will be the share of profit for Mr. A in
distributable profit?

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 ► Rs. 98,000
► Rs. 147,000
► Rs. 245,000
► Rs. 343,000

Question No: 6 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?

► In case of death of partner

► At the admission of new partner
► If any partner resigned from partnership
► All of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

In calculating earning per share (EPS), the net profit is divided by which of the
following?

► Number of ordinary shares

► Number of preference shares
► Paid up capital
► Authorized capital

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form of
business?

► The limited company form of business allows ownership of the business to be

spread amongst many people
► Shareholders can appoint professionals
► Shareholders are personally liable for all the liabilities incurred by the
business Correct
► Regular filing of information about the affairs of the company is a legal
requirement

Question No: 9 ( Marks: 1 ) - Please choose one

A private limited company can commence its business:

► Immediately on receiving a certificate of incorporation

► Without receiving a certificate of incorporation
► Only when it receives certificate of commencement of business
► Only when it receives both, the certificate of incorporation as well as
certificate of commencement of business

Question No: 10 ( Marks: 1 ) - Please choose one

An example of financing activities in the context of cash flow statement is:

► Capital expenditures on purchase of fixed assets

► Long-term deposit
► Financial charges paid

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 ► Dividend paid

Question No: 11 ( Marks: 1 ) - Please choose one

A firm may earn profit during an accounting period but have less money in the bank
at the end of the period then it had at the beginning. Which of the followings, on its
own, could explain this?

► Not paying invoices received from creditors

► The sale of fixed assets during the period
► An increase in trade debtors over the course of the period
► An increase in the depreciation charge relative to the previous accounting
period

Question No: 12 ( Marks: 1 ) - Please choose one

The primary purpose of preparing a cash flow statement for an entity is to provide
information about:
► Its financial position at the end of an accounting period
► Its cash receipts and cash payments during an accounting period
► Its financial position at the start of an accounting period
► None of the given options

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following option(s) is TRUE about the Sales returns?

► Sales returns reduce the Gross sales of the firm

► Sales returns affect the Net income of the firm
► Sales returns affect the flow of cash
► All of the given options

Question No: 14 ( Marks: 1 ) - Please choose one

The persons who sign articles and memorandum of the company and contribute in the
initial share capital of the company are called:

► Subscribers
► Shareholders
► Managers
► Directors

Question No: 15 ( Marks: 1 ) - Please choose one

The charter of a company which defines the limitations and powers of the company is
called:
► The memorandum of association
► Articles of association
► Statutory report
► Certificate of commencement

Question No: 16 ( Marks: 1 ) - Please choose one

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Which of the following can offer its share to general public at large?

► A private limited company

► A listed company
► A partnership firm
► A trust

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following are the owners of a company?
► Proprietors
► Partners
► Shareholders
► Managers

Question No: 18 ( Marks: 1 ) - Please choose one

Current accounts of the partners should be opened when the capitals are:
► Normal
► Floating
► Fixed
► Fluctuating

Question No: 19 ( Marks: 1 ) - Please choose one

Rent receivable (given in trial balance) is an item of_____________.

► Balance Sheet
► Profit & Loss Account
► Trading Account
► Both Balance Sheet and Profit & Loss Account

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following account is affected from the Drawings of cash in sole-
proprietorship business?
► Capital account
► Shareholder account
► Liability account
► Expense account

Question No: 22 ( Marks: 1 ) - Please choose one

An asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used
► It can be realized in cash or sold or consumed in the business within one
year
► It is a piece of new machinery that is expected to last for at least ten years
► All of the given options

Question No: 23 ( Marks: 1 ) - Please choose one

General office expenses are charged to which of the following head:

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 ► Administrative expenses
► Marketing expenses
► Selling expenses
► Financial expenses

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following would NOT be considered as a component of 'cost' of stock?

► Salaries of selling staff

► Transportation inward costs
► Import duties
► Purchase price

Question No: 27 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400
Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 10%
Identify the Total amount deducted from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 3,080
► Rs. 5,480

Question No: 28 ( Marks: 1 ) - Please choose one

If (Amount of new provision + Amount of bad debts) < Amount of old provision then
amount will be shown on:

► Debit side of P & L account

► Credit side of P & L account
► Asset side of Balance Sheet
► Liability side of Balance Sheet

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. “A” of
Rs.336 have been debited to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)
► Sales account (Dr.) and B’s account (cr.)
► B’s account (Dr.) and Sales account (Cr.)

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales
Rs.100 to Mr. “A” recorded in the purchases book?

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 ► Sales account
► Purchase account
► A’s account and Sales account
► Sales account, purchase account and A’s account

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is shown on credit side of creditors control account?

► Bills Receivable
► Return inwards
► Credit purchases
► Discount allowed

Question No: 32 ( Marks: 1 ) - Please choose one

Sales are calculated by adding:

► Cash sales and cash received from debtors

► Credit sales and cash received from debtors
► Cash sales and credit sales
► Cash ales and credit purchases

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is NOT based on the concept of double entry book keeping
system?

► Subsidiary Ledgers
► Creditors Control Accounts
► Debtors Control Accounts
► All of the given options

Question No: 34 ( Marks: 1 ) - Please choose one

If Bad Debts written off are given in adjustment, then which of the following entry
for bad debts written off is CORRECT?

► Bad debts a/c (Dr) and Trading a/c (Cr)

► Provision for Bad and Doubtful debts a/c (Dr) and Bad debts a/c(Cr)
► Bad debts a/c (Dr) and debtors a/c (Cr)
► Trading a/c (Dr) and Bad debts a/c (Cr)

Question No: 35 ( Marks: 1 ) - Please choose one

Consider the following data:
Provision created in 2006 Rs. 2,500
Bad debts in 2007 Rs. 1,500
Sundry debtors on 31-12- 2007 were Rs. 40,000 and provision is created @ 5%.
Which journal entry is Correct for the provision for doubtful debts for the year 2007.

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 ► Provision for doubtful debts a/c Rs. 1,000 (Dr) & Profit & Loss a/c Rs. 1,000
(Cr)
► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs.
2,000 (Cr)
► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000
(Cr)
► Profit & Loss a/c Rs. 1,000 (Dr) & Provision for doubtful debts a/c Rs. 1,000
(Cr)

Question No: 36 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine 4,00,000
Cost of machine purchased during the year 50,000
Depreciation during the year 20,000
closing written down value (WDV) of the Machines ?

► Rs. 4, 30,000
► Rs. 4, 50,000
► Rs. 4, 70,000
► Rs. 70,000

Question No: 37 ( Marks: 1 ) - Please choose one

In accounting accumulated depreciation is:

► Treated as a reserve
► Treated as a contra asset
► Treated as a surplus
► Treated as an expense

Question No: 38 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs. 22,500

Debtors Rs. 500
Total Assets Rs. 80, 385
Accounts payable Rs. 1,000
Total liabilities Rs. 20,000

► Rs. 60,385 owner’s equity

► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity

Question No: 39 ( Marks: 1 ) - Please choose one

Stock of Trading concern consists of:

► Raw material
► Work in process
► Merchandise inventory

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 ► All of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Date Item Quantity Cost/Unit Total

2007Jan. 2 Opening inventory 100 Rs.18.00 Rs.1,800
Mar. 4 Purchase 400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500
Four hundred units are unsold, Use the FIFO method of inventory costing and
determine the value assigned to the 400 units on hand at the end of the period.

► Rs.7, 500
► Rs.7, 978
► Rs.8, 000
► Rs.8, 400

Question No: 41 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 85,000
Purchases of raw material during the 200, 000
period
Cost of Material Consumed ?

► Rs. 205,000
► Rs. 215,000
► Rs. 220,000
► Rs. 225,000

Question No: 42 ( Marks: 1 ) - Please choose one

In cost of goods sold statement the ‘cost of goods manufactured’ is equal to:

► Total factory cost + Opening work in process + Ending work in process

► Total factory cost + Opening work in process – Ending work in process
► Total factory cost - Opening work in process + Ending work in process
► Ending work in process +Total factory cost – Opening work in process

Question No: 43 ( Marks: 1 ) - Please choose one

What would be the value of total factory cost, if the cost of material consumed during
the month is Rs. 6,000, labor cost incurred is Rs. 2,000 and the factory over head cost
is Rs. 2,500?

► Rs. 6,000
► Rs. 8,000

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 ► Rs. 4,500
► Rs. 10,500

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following item appears in Trading Account of a business?

► Interest expenses
► Wages and salaries
► Depreciation expenses
► Discount Allowed

Question No: 45 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs.
20,000 during the year, what would be the value of Gross Profit?

► Rs. 15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000

Question No: 46 ( Marks: 1 ) - Please choose one

Identify that which of the following particular(s) would NOT be shown in the format
of a Cash Book?
(1) Cheque number
(2) Date of transaction
(3) Amount of transaction
► (1) only
► (1) & (2) only
► (1) & (3) only
► (2) & (3) only

Question No: 47 ( Marks: 1 ) - Please choose one

The process of transferring journal entry information to the ledger is called:

► Journalizing
► Posting
► Balancing
► Analyzing

Question No: 48 ( Marks: 1 ) - Please choose one

Which one of the following is a type of General Ledger?

► Book of original entry

► ‘T’ Account
► Source document
► Day book

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Question No: 49 ( Marks: 1 ) - Please choose one
Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—

profit and loss account—Balance Sheet

► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit

and loss account—Balance Sheet

► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and

loss account—Balance Sheet

► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and

loss account—Balance Sheet

Question No: 50 ( Marks: 1 ) - Please choose one

Economic resources owned by a business and expected to benefit for the future
operations are called:
► Expenses
► Assets
► Capital
► Liabilities

Question No: 51 ( Marks: 5 )

With the help of given data prepare Capital account of a sole trader and
calculate closing balance of capital.
Rs.
Balance b/f 550,000
Drawings 50,000
Profit & Loss (debit balance) 45,000

CAPITAL ACCOUNT
DEBIT SIDE CREDIT SIDE
PARTICULARS AMOUNT PARTICULARS AMOUNT
Profit and loss 45000 Balance b/f 550,000
Drawings 50,000
Balance c/f 455,000
TOTAL 550,000 TOTAL 550,000

Question No: 52 ( Marks: 10 )

Briefly explain the financial statements prepared by the organization. Why
these are important for manufacturing concern?

ANSWER: The financial statements prepared by any organization are as follows:

1. Profit and loss account: It shows the performance of the business in a given
period. It shows the profitability of business which shows the success or
failure of the business.

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 2. Balance sheet: Balance sheet shows the position of business at a given point.
It shows the resources available by the business and the resources invested by
the owner and other loans.
3. Cash flow statements: Cash flow statements show the generation of cash and
its usage over a given period.
IMPORTANCE OF FINANCIAL STATEMENTS FOR
MANUFACTURING CONCERN: These financial statements are important for
manufacturing concern organization as they provide information related to
financial affairs of the organization. The profitability and liquidity, the resources
available to the company and the generation of cash and its usage over a given
period which provides reasonable information to the management to take
decisions.

Question No: 53 ( Marks: 10 )

The comparative financial statement data for XYZ Company is given below:

December 31
Assets: 2007 2006
Rs. Rs.
Cash 4,000 7,000

Accounts receivable 36,000 29,000

Inventory 75,000 61,000
Plant and equipment 210,000 180,000
Accumulated depreciation (40,000) (30,000)
Total Assets 285,000 247,000
Liabilities & Stockholder’s equity:
Accounts payable 45,000 39,000
Common stock 90,000 70,000
Retain earnings 150,000 138,000
Total liabilities & Stockholder’s equity 285,000 247,000

For 2007, the company reported net income as follows:

XYZ Company
Income Statement
For the year ended 31st December, 2007

Rs.
Sales 500,000
Less: Cost of goods sold 300,000

Gross margin 200,000

Less Operating expenses 180,000
Net Income 20,000
Required:

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Prepare a Statement of Cash Flows if dividend of Rs. 8,000 was declared and paid
during the year 2007. There were no sales of plant and equipment during the year.

ANSWER:

Starting balance:
Net income 20,000
Add: adjustment for non cash items
Depreciation 38,000
Operating profit before working capital changes: 58,000

Working capital changes:

Add: cash 3,000
Less: accounts receivable (7,000)
Add: accounts payable 7,000
Cash generated from operations 61,000
Cash flow from investing activities

Cash flow from financing activities:

Common Stock 20,000

Net decrease in cash 3,000

Net cash flow 78,000

Question No: 54 ( Marks: 10 )

Write a note on legal documents required for the formation of company.

ANSWER:
LEGAL DOCUMENTS REQUIRED FOR FORMATION OF COMPANY:

MEMORENDUM OF ASSOCIATION: It contains the following information

1. Name of company.
2. Place of registered office
3. Objective
4. Amount of share capital with which company registers.

ARTICLES OF ASSOCIATION: It contains the following information

A document that contains all the policies and other matters necessary to run the
business of the company. It is signed by all the members of the company.

Best of Luck

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 Paper N0:15
Solved by Chanda Rehman, Nomi chakwal ABr
FINALTERM EXAMINATION

Fall 2009

MGT101- Financial Accounting (Session - 4)

Time: 120 min

Marks: 87

Question No: 1 ( Marks: 1 ) - Please choose one

Shares for which amount is paid by public are called ________ shares.

► Paid up

► Authorized

► Bonus shares

► All are correct options

Question No: 2 ( Marks: 1 ) - Please choose one

Which of the following is non- profit organization?

► Sole proprietorship

► Partnership

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 ► Limited company

► Trust

Question No: 3 ( Marks: 1 ) - Please choose one

Commercial Accounting is based on:

► Single entry book keeping

► Double entry book keeping

► Both single and double entry book keeping

► Cash basis of book keeping

Question No: 4 ( Marks: 1 ) - Please choose one

An Asset that is NOT physical in nature is called _________.

► Intangible Asset

► Liquid Asset

► Current Asset

► Fixed Asset

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit and loss

account—Balance Sheet

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 ► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit and loss
account—Balance Sheet

► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and loss

account—Balance Sheet

► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and loss

account—Balance Sheet

Question No: 6 ( Marks: 1 ) - Please choose one

Accounts Receivable & Inventory are the examples of:

► Liquid assets

► Current assets

► Fixed assets

► Capital assets

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following account will be credited in the books of XYZ Co. Ltd, if the business
purchased a vehicle though cheque?

► Vehicle account

► Cash account

► Business account

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 ► Bank account

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business bought goods on credit from Mr.
Ali?

► Purchases account

► Mr. Ali account

► Cash account

► Sales account

Question No: 9 ( Marks: 1 ) - Please choose one

In which of the following condition a company will have positive working capital?

► If current assets > current liabilities

► If current Assets < current Liabilities

► If current assets = current liabilities

► If current assets < current liabilities

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following is an example of direct materials cost?

► Polish and finishing material for chair

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 ► A piece of wood for the production of chair

► Production worker’s wages

► Depreciation expenses

Question No: 11 ( Marks: 1 ) - Please choose one

In cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw material inventory

► Opening raw material inventory - Purchases + Ending raw material inventory

► Ending raw material inventory + Opening raw material inventory - Purchases

► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 12 ( Marks: 1 ) - Please choose one

What would be the value of total factory cost, if the cost of material consumed during the month
is Rs. 6,000, labor cost incurred is Rs. 2,000 and the factory over head cost is Rs. 2,500?

► Rs. 6,000

► Rs. 8,000

► Rs. 4,500

► Rs. 10,500

Question No: 13 ( Marks: 1 ) - Please choose one

In cost of goods sold statement the ‘cost of goods manufactured’ is equal to:

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 ► Total factory cost + Opening work in process + Ending work in process

► Total factory cost + Opening work in process – Ending work in process

► Total factory cost - Opening work in process + Ending work in process

► Ending work in process +Total factory cost – Opening work in process

Question No: 14 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000

Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

► Rs.25, 000

► Rs. 75,000

► Rs. 15,000

► Rs. 1, 00,000

Question No: 15 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 85,000
Purchases of raw material during the period 200, 000

Cost of Material Consumed ?

► Rs. 205,000

► Rs. 215,000

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 ► Rs. 220,000

► Rs. 225,000

Question No: 16 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit

First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit

Eighty units were sold, what is the value of the ending inventory using the FIFO method of
inventory costing?

► Rs.260

► Rs.232

► Rs.284

► Rs.320

[100+385+480+260=1225-905= (10*10=100, 35*11=385, 35*12=420)]

Question No: 17 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs.1, 00, 000

Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 1, 000

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 ► Rs. 12,000 liabilities

► Rs. 11,000 liabilities

► Rs. 1, 10,000 liabilities

► Rs. 1, 11,000 liabilities

Question No: 18 ( Marks: 1 ) - Please choose one

Bank Statement is a record of transactions between the bank and the holder of:

► A foreign currency account

► A current account

► A saving account

► All of the given options

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following option is TRUE about the characteristic(s) of Bad Debt?

► It is a definite loss to the business

► It is not shown in Balance Sheet

► No provision is necessary for it

► All of the given options

Question No: 20 ( Marks: 1 ) - Please choose one

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Consider the following data and identify the amount which will be deducted from Sundry
Debtors in Balance Sheet.

Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 800

► Rs. 400

► Rs. 800

► Rs. 2,000

► Rs. 2,400

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following entry is passed to record discount allowed in control account?

► Discount Allowed (Dr) and Debtors Control A/c (Cr)

► Discount Allowed (Dr) and Debtors A/c (Cr)

► Debtors Control A/c (Dr) and Discount Allowed (Cr)

► Debtors A/c (Dr) and Discount Allowed (Cr)

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded, if a cheque deposited is dishonored by bank?

► Bank Account (Dr.) and Debtor's Account (Cr.)

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 ► Debtor's Account (Dr.) and Bank Account (Cr.)

► Dishonored Cheque Account (Dr.) and Bank Account (Cr.)

► Creditor's Account (Dr.) and Bank Account (Cr.)

Question No: 23 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs. 40,000. On
the basis of past experience, it is estimated that 10% of the sundry debtors are doubtful. Actual
bad debts are Rs. 1600. What amount of new provision for doubtful debts will be deducted from
Sundry debtors?

► Rs. 3,600

► Rs. 4,000

► Rs. 1,600

► Rs. 2, 400

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT if depreciation is given in trial balance?

► All of the given options are correct

► It means depreciation has already been deducted from concerned asset account

► It will be shown as an expense in income statement only

► It will not be deducted from concerned asset in Balance Sheet

Question No: 25 ( Marks: 1 ) - Please choose one

The persons who sign articles and memorandum of the company and contribute in the initial
share capital of the company are called:

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 ► Subscribers

► Shareholders

► Managers

► Directors

Question No: 26 ( Marks: 1 ) - Please choose one

Merchandise on hand at either the beginning or end of the reporting period is called_________.

► Raw material

► Cost of good sold

► Work in process

► Inventory

Question No: 27 ( Marks: 1 ) - Please choose one

In which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only

► In income statement under the administrative expense only

► In both balance sheet under the head of current liabilities and income statement under the
administrative expense

Question No: 28 ( Marks: 1 ) - Please choose one

In which of the following interim dividend is treated?

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 ► In profit and Loss account

► In profit and Loss appropriation account

► On the asset side of the Balance Sheet

► In trading account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following documents contains rules and regulations for internal management of the
company?

► Memorandum of Association

► Articles of Association

► Prospectus

► Statutory Declaration

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT a cash inflow?

► Sale of fixed asset

► Issue of debentures

► Cash from business operation

► Purchase of fixed asset

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Question No: 31 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as a cash outflow?

► The payments for purchases made during the year

► A decrease in trade debtors over the course of an accounting period

► Money received as a result of issuing new shares

► Money received as result of selling fixed assets

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form of business?

► The limited company form of business allows ownership of the business to be spread
amongst many people

► Shareholders can appoint professionals

► Shareholders are personally liable for all the liabilities incurred by the business

► Regular filing of information about the affairs of the company is a legal requirement

Question No: 33 ( Marks: 1 ) - Please choose one

What does a credit balance in a partner’s current account represent to a business?

► Current Assets

► Current Liability

► Long-term liability

► Share of profit

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Question No: 34 ( Marks: 1 ) - Please choose one

A company declares a cash dividend to be paid to its stockholders next month. The effect of the
transaction is to:

► Decrease assets and liabilities.

► Increase assets and stockholders' equity.

► Decrease assets and stockholders' equity.

► Increase liabilities and decrease stockholders' equity.

Question No: 35 ( Marks: 1 ) - Please choose one

An uncollectible account receivable is also termed as:

► Asset

► Uncollectible asset

► Uncollectible accounts expense

► None of the given options

Question No: 36 ( Marks: 1 ) - Please choose one

Suppose a firm has 100 debtors, and each of them owes exactly Rs.150 at the start of June.
During June each debtor has paid-off exactly Rs.100 on their account, either by cash or by
cheque. What should be the revised total debtors figure?

► Rs. 5,000

► Rs. 9,850

► Rs. 25,000

► Rs. 14,900

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Question No: 37 ( Marks: 1 ) - Please choose one

Credit sales appear on the __ __________ side of the Debtors control account.

► Left side or credit

► Left side or debit

► Right side or debit

► Right side or credit

Question No: 38 ( Marks: 1 ) - Please choose one

The financial year of Atif Brothers & Co. is closed on June 30, 2009. Total cash sales are Rs.
150,000, credit sales are Rs. 180,000 and total receipts are Rs. 250,000. Credit receipts will be:

► Rs. 150,000

► Rs. 100,000

► Rs. 220,000

► Rs. 280,000

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following is usually not an accrued expense?

► Interest payable

► Wages payable

► Taxes payable

► Notes payable ( its liability not an expense)

Question No: 40 ( Marks: 1 ) - Please choose one

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Which of the following is NOT a financial statement?

► Balance sheet

► Audit report

► Income statement

► Cash flow statement

Question No: 41 ( Marks: 1 ) - Please choose one

Sunset tours has Rs.3,500 account receivable from the Del Mar Rotary. On January 20, the
Rotary makes a partial payment of Rs.2,100 to Sunset Tours. The journal entry made on January
20 by Sunset Tours to record this transaction includes:

► A debit to the Cash Received account of Rs. 3,500

► A credit to the Accounts Receivable account of Rs.2,100

► A debit to the Cash account of Rs.1,400

► A debit to the Accounts Receivables account of Rs.1,400

Question No: 42 ( Marks: 1 ) - Please choose one

A and B entered in partnership in capital ratio of 2:3. They earned a profit of Rs.6,600 during
the year. What will be the share of profit of Mr. A? ► Rs.2,640

► Rs.1,320

► Rs.2,640

► Rs.3,960

► Rs.6,600

Question No: 43 ( Marks: 1 ) - Please choose one

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 Income tax expense of Eden Corporation shows a debit balance of Rs.7,000 in its unadjusted
trial balance and Rs.7,600 in adjusted trial balance. Which of the following account will be
debited in adjusting entry? ► Income tax expense

► Income tax payable

► Prepaid income tax

► Income tax expense

► Income tax paid

Question No: 44 ( Marks: 1 ) - Please choose one

Sanders Construction sold a plant asset that originally cost Rs.80,000 for Rs.52,000 cash. If
Sanders correctly reports a Rs.5,000 gain on this sale, the accumulated depreciation on the asset
at the date of sale must have been:

► Rs.23,000

► Rs.28,000

► Rs.33,000

► Some other amount

Question No: 45 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.65,000 and Rs.50,000 with an equal share in
profit or loss. Markup on drawings of Mr. A is Rs.1,000 and of Mr. B is Rs.1,500. The net
income for the year is Rs.55,000. What will be the amount of distributable profit? ► Rs.57,500

► Rs.52,500

► Rs.56,000

► Rs.56,500

► Rs.57,500

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Question No: 46 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal share in profit or loss.
Markup on capital of Mr. A is Rs.2,000 and markup on drawings of Mr. B is Rs.3,000. The net
income for the year is Rs.50,000. What will be the profit share of Mr. A? ► Rs.22,500

► Rs.22,500

► Rs.25,500

► Rs.27,500

► Rs.55,000

Question No: 47 ( Marks: 1 ) - Please choose one

Which of the following is quoted company?

► Private Limited Company

► Public Limited Company

► Listed company

► Non Listed Company

Question No: 48 ( Marks: 1 ) - Please choose one

Which of the following can be utilized to issue bonus shares?

► Reserves

► Debentures

► Share premium

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 ► Term finance certificate

Question No: 49 ( Marks: 1 ) - Please choose one

Which of the following can be utilized to set off any loss on revaluation?

► Capital reserve

► General reserve

► Revaluation reserve

► None of the given options

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following capital is required for the registration of the company?

► Issued capital

► Subscribed capital

► Authorized capital

► Reserve capital

Question No: 51 ( Marks: 1 ) - Please choose one

Which of the following capital is taken up by the general public?

► Issued capital

► Subscribed capital

► Authorized capital

► Reserve capital

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Question No: 52 ( Marks: 1 ) - Please choose one

According to the statement of cash flows following are the examples of investing activities
except:

► Sales of machinery

► Capital invested by the owners

► Purchase of building for the business use

► Cash received from the disposal of equipment

Question No: 53 ( Marks: 1 ) - Please choose one

The financial statement that captures both the current operating result and the associated
changes in the balance sheet is:

► Statement of retained earnings

► Statement of financial position

► Statement of cash flows

► Statement of changes in equity

Question No: 54 ( Marks: 1 ) - Please choose one

In statement of cash flows, all of the following items are considered as financing activity,
except:

► Cash received from issuance of shares

► Cash received from issuance of bonds

► Payment made for short term debts

► Collections on loans

Question No: 55 ( Marks: 3 )

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 Mr. Hassan is a partner in a partnership firm. His capital on July 1, 2001 was Rs. 400,000. He
invested further capital of Rs. 150,000 on March 01, 2002. Markup rate is @6%p.a. The
financial year of such a business is from 1st July to 30th June.

Required: You are required to calculate his markup on Capital at the end of 30th June 2002.

400000x6/100=2400

400000

Question No: 56 ( Marks: 5 )

What do you mean by “Bad Debts” and “Doubtful Debts”? Distinguish between these.

Ans: Bad Debts

when we are going to sell the products on credit so our business take risk that there are some
customer in market that they will never pay for stock sold to them.So,such situation in which the
amount which is due to the debetor are call bad debts

This is a loss sustained loss for business due to risk. It is recorded in Profit and Loss Account in
the period in which it is happen.

Doubtful Debts

A doubtful debt is a debt, which the business considers may not be paid

Question No: 57 ( Marks: 5 )

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 a. In trial balance at June 30, 2007 10% debentures are shown at Rs.75,000 and mark
up on debentures are shown at Rs.3,750. Six months debenture mark up is to be accrued.
What will be the amount of total mark up on debentures show in profit and loss account?

b. From the following information calculate cost of goods sold.

Stock opening balance Rs.56,950

Purchases 175,750
Stock closing balance 65,020
Carriage inward 5,200
Sales 245,500

Opening stock : Rs.56,950

Add bpurchase: 175,750

Add Carriage inward : 5,200

Less Stock closing balance: (65020)

Cost of goods sold = Rs 172,880

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Question No: 58 ( Marks: 10 )

Prepare Bank Reconciliation Statement as on 31st March 2009 with the help of given data.

Particulars Rs.
1 Balance as per Cash Book (Dr.) 180,000
2 Cheques paid into Bank in March 2009 but credited by the bank in April 2009 7,900

4,500

1,300
3 Cheques issued in March 2009 but cashed in April 2009 11,000

5,800
4 Cheques entered in the Cash Book in March 2009 but paid into bank in April 2009 1,000

5 Interest allowed by the bank 2,500

6 Interest charged by the bank 500

S.No Narration / Withdrawals Deposits Balance

Particulars Amountnt Amount Dr/(Cr)

Balance as per Cash Book (Dr.) 180,000

7900
4500

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 1300

Question No: 59 ( Marks: 10 )

Listed below are selected items from the financial statements of ABC Mfg. Co. for the year
ended December 31, 2007.

Note payable to Bank Al-Falah Rs.500,000

Income taxes payable 40,000
Mortgage note payable 750,000
Accrued interest on mortgage note payable 5,000
Trade accounts payable 250,000
Unearned revenue 15,000
Accrued expenses and payroll taxes 60,000
Debenture 500,000

Other information:

1. The note payable owed to Bank Al-Falah is due in 60 days. ABC Mfg. Co. has
arranged with this bank to renew the note for an additional 24 months.

2. The mortgage requires payment of Rs.6,000 per month. An amortization table

shows that its balance will be paid down to Rs.739,000 by December 31, 2008.

3. Debenture of Rs.150,000 is due in 180 days.

Instructions:

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Using the information, prepare the current liabilities and long-term liabilities sections of a
classified balance sheet at December 31, 2007.

Solved by Chanda Rehman, Nomi chakwal and ABr

Paper N0:16

FINALTERM EXAMINATION

Fall 2009

MGT101- Financial Accounting (Session - 2)

Time: 120 min

Marks: 87

Question No: 1 ( Marks: 1 ) - Please choose one

Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only

► Both cash and accrual accounting

► None of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

If a business purchases machinery for Rs. 30,000 on 31st January 2008 having life of 10 years,
this expense will be realized ___________ under the concept of accrual accounting.

► For the year 2008 only

► For the last day of 10th year only

► Over 10 years

► Nothing can be said about it

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Question No: 3 ( Marks: 1 ) - Please choose one

According to the double entry system of accounting, an account that obtains benefit is:

► Debit (Handouts Page 11, 12)

► Credit

► Income

► No need to show as accounting record

Question No: 4 ( Marks: 1 ) - Please choose one

What will be the effect on accounting equation, when payment is made to the creditor of the
business?

► Increase in an asset, increase in owner's equity

► Increase in an asset, increase in a liability

► Decrease in an asset, decrease in owner's equity

► Decrease in an asset, decrease in a liability

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT for Trading account?

► It inculdes cost of goods sold and all the direct expenses related to sales

► It inculdes cost of goods sold and all the indirect expenses related to sales

► It inculdes cost of goods sold and all the direct and indirect expenses

► It inculdes cost of goods sold and all the direct and selling, administrative expenses

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following organizations do NOT prepare Income & Expenditure account?

► Public limited companies

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 ► Private limited companies

► Partnership firms

► All of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

An asset on the balance sheet which is expected to be sold or used within one year is known
as:

► Tangible asset

► Current asset

► Fixed asset

► Long term asset

Question No: 8 ( Marks: 1 ) - Please choose one

In which of the following condition a company will have positive working capital?

► If current assets > current liabilities

► If current Assets < current Liabilities

► If current assets = current liabilities

► If current assets < current liabilities

Question No: 9 ( Marks: 1 ) - Please choose one

If the Company ABC has current assets Rs. 100,000, current liabilities Rs. 75,000 and fixed
assets Rs. 200,000, what would be the value of working capital?

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 ► Rs. 25,000

► Rs. 1, 00,000

► Rs. 1, 75,000

► Rs. 3, 00,000

Question No: 10 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is known as:

► Prime cost (Handouts Page 121)

► Conversion cost

► Sunk cost

► Opportunity cost

Question No: 11 ( Marks: 1 ) - Please choose one

Particulars Rs.

Opening stock of raw material 100,000

Closing stock of raw material 80,000

Purchases of raw material during the 200, 000

period

Cost of Material Consumed ?

► Rs. 205,000

► Rs. 215,000

► Rs. 220,000

► Rs. 225,000

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Question No: 12 ( Marks: 1 ) - Please choose one

Accounting is the language of:

► Business

► School

► Proprietor

► Management

Question No: 13 ( Marks: 1 ) - Please choose one

Bank Statement is a record of transactions between the bank and the holder of:

► A foreign currency account

► A current account

► A saving account

► All of the given options

Question No: 14 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss
account.

Particulars Rs.

Bad debts 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 800

► Rs. 400

► Rs. 800

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 ► Rs. 2,000

► Rs. 2,400

Question No: 15 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

Closing value of stock 40,000

Bad Debts (Given in trial balance) 500

Old provisions (Given in trial balance) 800

Sundry Debtors (Given in trial balance) 44,500

Provision for doubtful debts @ 5%

Which amount of new provision will be deducted from Sundry Debtors ?

► Rs. 2,225

► Rs. 2,525

► Rs. 1,925

► Rs. 3,025

Question No: 16 ( Marks: 1 ) - Please choose one

It is supposed that on 31-12-2007, the sundry debtors are amounted to Rs. 40,000. On the
basis of past experience, it is estimated that 5 % of the sundry debtors are doubtful. What entry
will pass to transfer the bad debts to provision for doubtful debts?

► Profit & Loss a/c Rs. 1,600 (Dr) & Provision for doubtful debts a/c Rs. 1,600 (Cr)

► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000 (Cr)

► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000 (Cr)

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 ► Provision for doubtful debts a/c Rs. 1,600 (Dr) & Bad Debts a/c Rs. 1,600 (Cr)

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following is/are the item/s of a Control Account?

► Credit sale only

► Cash sale only

► Credit purchase only

► Both Credit sales and Credit purchase

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following is a detailed record of an individual account in case of large business?

► Control Account

► Subsidiary Ledger

► Balance Sheet

► Trial Balance

Question No: 19 ( Marks: 1 ) - Please choose one

If the provision for doubtful debts is not created, which of the following entry is passed to record
the bad debts in control account?

► Debtors Control A/c (Dr) and Allowance for doubtful debts (Cr)

► Bade debts (Dr) and Debtors Control A/c (Cr)

► Allowance for doubtful debts (Dr) and Debtors Control A/c (Cr)

► Allowance for doubtful debts (Dr) and Debtors A/c (Cr)

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of carriage charges,
paid for a new plant purchased mistakenly debited to carriage account?

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 ► Plant account

► Carriage account

► Both plant account and carriage account

► Trading account

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following item must be recorded in the adjusted Cash Book in order to bring it in
line with the entries in the Bank Statement?

► Bank charges

► An error on the Bank Statement

► An uncredited deposit

► An unpresented cheque

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is normally treated as the last expense listed in the income statement of
a company?

► Interest expense

► General and administrative expenses

► Salaries and wages expense

► Income tax expense

Question No: 23 ( Marks: 1 ) - Please choose one

The Balance Sheet item that represents the resources invested by the owner is known as:

► Accounts Receivable

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 ► Cash

► Note Payable

► Owner's Equity (Handouts Lesson 12, Page 83)

Question No: 24 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business

► A balance sheet

► A statement of retained earnings

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following account is affected from the Drawings of cash in sole-proprietorship
business?

► Capital account

► Shareholder account

► Liability account

► Expense account

Question No: 26 ( Marks: 1 ) - Please choose one

In which type of a business, the owner and his business are considered same in the eyes of
law?

► Sole proprietorship

► Public companies

► Limited companies

► Listed companies

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Question No: 27 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?

► Total assets employed

► Total liabilities

► Total assets

► Current assets

Question No: 28 ( Marks: 1 ) - Please choose one

When the capitals are fixed, which of the following account will be debited for drawings made
by a partner?

► Individual Partner’s Current Account

► Partner’s Cash Account

► Partner’s Bank Account

► Partners Capital Account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following documents contains rules and regulations for internal management of
the company?

► Memorandum of Association

► Articles of Association

► Prospectus

► Statutory Declaration

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Question No: 30 ( Marks: 1 ) - Please choose one

When preparing a cash flow statement, which of the following would be classified as a financing
activity?

► A new long-term loan taken out to finance the purchase of fixed assets

► Salaries paid

► Interest paid on a long-term bank loan

► The cost of purchasing a patent

CASH FLOW FROM FINANCING ACTIVITIES (Handouts Page 266)

Cash flow from financing activities includes cash receipts and payments that arise from Owners
of the business and other long term liabilities of the organization.

• Cash receipts and payments for other long term loans and borrowings.

Question No: 31 ( Marks: 1 ) - Please choose one

Current ratio may be increased by:

► Overstating current Assets (Handouts Page 311)

► Overstating current Liabilities

► Understating current Assets

► Understating current assets and overstating current liabilities

Question No: 32 ( Marks: 1 ) - Please choose one

Mark up cover ratio = operating profit before financial charges ÷ ?

► Selling expenses

► Administrative expenses

► Financial charges (Handouts Page 311)

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 ► Direct expenses

Question No: 33 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?

► In case of death of partner

► At the admission of new partner

► If any partner resigned from partnership

► All of the given options

Question No: 34 ( Marks: 1 ) - Please choose one

If company has distributable profit of Rs. 490,000, Profit sharing share ratio of Mr. A, Mr. B and
Mr. C is 2:3:5 respectively. What will be the share of profit for Mr. A in distributable profit?

► Rs. 98,000

► Rs. 147,000

► Rs. 245,000

► Rs. 343,000

Question No: 35 ( Marks: 1 ) - Please choose one

The beginning balance of retained earnings was Rs. 7,500. The dividends paid to stockholders'
were Rs.1, 500. The ending balance of retained earnings is Rs. 5,000. What was the net income
or net loss for the accounting period?

► Net loss of Rs.1, 000

► Net income of Rs. 1,000

► Net loss of Rs. 2,000

► Net income of Rs. 2,500

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Question No: 36 ( Marks: 1 ) - Please choose one

A company declares a cash dividend to be paid to its stockholders next month. The effect of the
transaction is to:

► Decrease assets and liabilities.

► Increase assets and stockholders' equity.

► Decrease assets and stockholders' equity.

► Increase liabilities and decrease stockholders' equity.

Question No: 37 ( Marks: 1 ) - Please choose one

Which of the following statement is the detail of transaction in one’s account provided by the
bank?

► Bank statement

► Bank reconciliation statement

► Income statement

► Financial statement

Question No: 38 ( Marks: 1 ) - Please choose one

An asset cost Rs. 50,000, has an estimated residual value of Rs.1, 500, and an estimated
useful life of 8 years. What is the depreciation rate under reducing balance method?

► 11.5%

► 20.0%

► 25.0%

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 ► 35.5%

(Handouts Page 135)

In reducing balance method, a formula is used for calculation of depreciation rate. i e.

Rate =1– n
RV / C = 1 - 8 1500 / 50000 = 1 - 8
0.03 = 1 – 0.645 = 0.355 × 100 = 35.5%

1/ n
Or = 1 – (RV / C ) = 1 – (1500/50000) 1 / 8 = 1- (0.03) 1 / 8 = 1- 0.645=0.355 × 100= 35.5%

Question No: 39 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in the
business made by the owner will effect:

► Cash Account & Capital Account

► Cash Account & Expense Account

► Capital Account & Revenue Account

► Capital Account & Expense Account

Question No: 40 ( Marks: 1 ) - Please choose one

Which of the following transaction have NO affect on stockholders' equity?

► Purchase of building on credit

► Dividends to stockholders

► Net loss

► Investment in cash by stockholders

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Question No: 41 ( Marks: 1 ) - Please choose one

Receipts from debtors appear on the ___________ side of the individual debtors account.

► Left side or credit

► Left side or debit

► Right side or debit

► Right side or credit

Question No: 42 ( Marks: 1 ) - Please choose one

We usually allow the customer to deduct a certain amount from the invoice value for prompt
payment. In doing so we are granting a:

► Commission

► Allowance

► Discount

► Rebate

Question No: 43 ( Marks: 1 ) - Please choose one

The financial year of Atif Brothers & Co. is closed on June 30, 2009. Total cash sales are Rs.
150,000, credit sales are Rs. 180,000 and total receipts are Rs. 250,000. Credit receipts will be:

► Rs. 150,000

► Rs. 100,000

► Rs. 220,000

► Rs. 280,000

Question No: 44 ( Marks: 1 ) - Please choose one

Capital and drawings are reported in which of the following section of balance sheet?

► Assets

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 ► Other assets

► Non current liabilities

► Owner’s equity

Question No: 45 ( Marks: 1 ) - Please choose one

Insurance premiums paid in advance but not yet expired are reported in which of the following
account?

► Insurance payable

► Prepaid insurance

► Advance payment account

► Insurance expense

Question No: 46 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal share in profit or loss.
Markup on capital of Mr. A is Rs.2,500 and markup on drawings of Mr. B is Rs.2,800. The net
income for the year is Rs.95,000. What will be the amount of distributable profit?

► Rs.89, 700

► Rs.94, 700

► Rs.95, 300

► Rs.100, 300 (Not 100 % sure)

Question No: 47 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal share in profit or loss.
Markup on capital of Mr. A is Rs.2,000 and markup on drawings of Mr. B is Rs.3,000. The net
income for the year is Rs.50,000. What will be the profit share of Mr. A?

► Rs.22, 500

► Rs.25, 500

► Rs.27, 500

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 ► Rs.55, 000

Question No: 48 ( Marks: 1 ) - Please choose one

How many members can subscribe their names in memorandum of association for registration
of public limited company?

►2

►3

►5

►7

Question No: 49 ( Marks: 1 ) - Please choose one

Which of the following can be utilized to set off any loss on revaluation?

► Capital reserve

► General reserve

► Revaluation reserve

► None of the given options

Question No: 50 ( Marks: 1 ) - Please choose one

According to the statement of cash flows following are the examples of investing activities
except:

► Sales of machinery

► Capital invested by the owners

► Purchase of building for the business use

► Cash received from the disposal of equipment

No: 51 ( Marks: 1 ) - Please choose one

Which of the following ratio is widely used to measure the short-term debt-paying ability
of a company? (Correct Answer is Creditors Turnover Ratio)

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 ► Acid-test ratio

► Debt ratio

► Current ratio

► None of the given options

Creditors Turnover Ratio (Handouts Page 309)

Creditors turnover means how many times or in how many days a company pay to its creditors.
The formulae for this ratio are as follows:

Creditor Turnover (Number of days) = (Average Creditors / Credit Purchases) x 365

Creditor Turnover (Number of times) = Credit Purchases / Average Creditors

Acid Test Ratio (Handouts Page 311)

Acid test ratio is the proportion of current assets which are convertible into cash and current
liabilities. The formula for calculating this ratio is as follows:

Acid Test Ratio = (Current Assets – Stock) / Current Liabilities

Debt Equity Ratio (Handouts Page 310)

This ratio shows the composition of finance that have funded the asset of the company.
This ratio varies for different projects. In Pakistan, maximum advised ratio is 60: 40. i-e.
40% of the assets should be bought with company, s investment and 60% should be bought
with the loan taken by the company. The formula for calculating this ratio is as follows:

Debt Equity Ratio = Long term Liabilities / Equity

Current Ratio (Handouts Page 310,311)

Current ratio shows the proportion of current assets and current liabilities. This ratio should be
1:1. i-e. For every liability of one rupee, there should be an asset of one rupee to pay it. The
formula for calculating this ratio is as follows:

Current Ratio = Current Assets / Current Liabilities

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Question No: 52 ( Marks: 1 ) - Please choose one

Which of the following usually is least important as a measure of short-term liquidity?

► Quick ratio

► Debt ratio

► Current ratio

► Cash flows from operating activities

Question No: 53 ( Marks: 1 ) - Please choose one

In statement of cash flows, a payment of cash dividends is related to:

► Investing activity

► Financing activity

► Operating activity

► Cash flows from operations

CASH FLOW FROM INVESTING ACTIVITIES (Handouts Page 265)

Cash flow from investing activities includes cash receipts and payments that arise from Fixed
and Long Term assets of the organization.

• Cash payments and receipts from acquisition and disposal of other than long term assets
e.g. Shares, debentures, TFC, long term loans given etc.

CASH FLOW FROM FINANCING ACTIVITIES (Handouts Page 266)

Cash flow from financing activities includes cash receipts and payments that arise from Owners
of the business and other long term liabilities of the organization.

• Cash receipts and payments for other long term loans and borrowings.

Question No: 54 ( Marks: 1 ) - Please choose one

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 In statement of cash flows, all of the following items are considered as financing activity,
except:

► Cash received from issuance of shares

► Cash received from issuance of bonds

► Payment made for short term debts

► Collections on loans

Question No: 55 ( Marks: 3 )

Show how the following items will appear in profit and loss account.

Particulars Rs.

Bad debts 3,600

Provision for doubtful debts (old) 2,500

Provision for doubtful debts (new) 800

Question No: 56 ( Marks: 5 )

Pass the Journal Entries in proper format of JOURNAL for the following:

v To create provision for doubtful debts

v To reduce the provision

v To increase the provision

Solution:

To create provision for doubtful debts

Debit: Provision for Bad Debts (P&L)

Credit: Provision for Bad Debts

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The debit account is charged against current years profit and the credit head is shown as a
deduction from debtors in the balance sheet.

When the bad debt for which provision is already made is confirmed, following entry is passed:

Debit: Provision for Bad Debts

Credit: Debtors

As expense has already been charged, therefore, no affect is given to P&L at this point.

To reduce the provision

Debit: Provision for Bad Debts (Balance Sheet)

Credit: Provision for Bad Debts (P&L)

To increase the provision

Debit: Provision for Bad Debts (P&L)

Credit: Provision for bad debts

Question No: 57 ( Marks: 5 )

Briefly discuss the followings:

1. Issuance of shares at premium

When a company has a good reputation and earns huge profits, the demand of
its shares increases in the market. In that case, the company is allowed by the
Companies Ordinance 1984, to issue shares at a higher price than their face
value. Such an issue is called Shares Issued at Premium. The amount received;
in excess of the face value of the shares is transferred to an account called
“Share Premium Account”. This account is used to:

• Write off Preliminary Expenses of the company.

• Write off the balance amount, in issuing shares on discount.
• Issue fully paid Bonus Shares.

2. Cash flow statement

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 Cash Flow Statement shows the movement of cash resources during the year. It
gives information about sources of income and account heads on which this
amount is spent. It is an integral part of financial statements.

3. Debentures

Debentures are issued under the common seal (Stamp) of the company, as
acknowledgement of debt, owed by the company to the public at large for a
defined period of time for obtaining loan from general public and has a mark up
(profit) rate attached to it, generally equal to the market rate.

4. Notes to the accounts

Notes to the accounts are explanatory notes on financial statements of the

company. These include all the information, from formation of company to the
calculation of figures, arrived at, during the preparation of financial statements.

Question No: 58 ( Marks: 10 )

On 31st December, 2006, a merchant has to receive Rs. 50,000 from sundry debtors and
creates provision of 5 percent on this amount for doubtful debts. Actual bad debts during the
year 2007 were Rs.1, 400. The debtors on 31st December, 2007, are Rs. 40,000 on which he
again creates provision of 5 % for doubtful debts. During 2008 actual bad debts are Rs. 600 and
the debtors at the end of 2008 totalled Rs. 25,000, on which a reserve a reserve of 5 % for
doubtful debts is required to be maintained.

Required: Prepare provision for doubtful debts account with the help of given data.

Question No: 59 ( Marks: 10 )

The following Trial Balance was extracted from the books of Naeem & Sons
on 31st December, 2007. From this you are required to prepare an Income Statement for
the year ended 31st December, 2007.

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 Debit Credit
Particulars
Rs. Rs.

Cash 5,000

Accounts Receivable 9,000

Merchandise Inventory on 1.1.2007 6,000

Plant and Machinery 24,000

Land and Building 82,000

Furniture and Fixtures 2,600

Capital 136,000

Accounts Payable 3800

Purchases 60,000

Purchases returns and allowances 2,800

Sales 70,000

Sales returns and allowances 4,600

Insurance 3,400

Advertisement expenses 4,000

Salaries expenses 12,000

Total 212,600 212,600

ADDITIONAL INFORMATION:

5. Prepaid insurance on 31st December, 2007 is Rs. 1,400

6. Outstanding salaries Rs. 1,000

7. Depreciation on Plant and Machinery @ 10% p.a.

8. Merchandise inventory on 31st December, 2007 was valued at Rs. 6,000

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 Paper No:17
Solved by Chanda Rehman, Nomi chakwal ABr
FINALTERM EXAMINATION

Fall 2009

MGT101- Financial Accounting (Session - 4)

Ref No: 1195706

Time: 120 min

Marks: 87

Question No: 1 ( Marks: 1 ) - Please choose one

Word “Credit” is derived from ______ language.

► Latin

► English

► French

► Chinese

Question No: 2 ( Marks: 1 ) - Please choose one

What is the nature of an expense account?

► Debit

► Credit

► Revenue

► None of the given options

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Question No: 3 ( Marks: 1 ) - Please choose one

A
summarized record of transactions related to individuals or things is called a/an ___________.

► Account

► Voucher

► Journal

► Trial balance

Question No: 4 ( Marks: 1 ) - Please choose one

In an
account, if credit side < debit side then the balance is known as:

► Negative Balance

► Debit Balance

► Positive Balance

► Credit Balance

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following organizations do NOT prepare Income & Expenditure account?

► Public limited companies

► Private limited companies

► Partnership firms

► All of the given options

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Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following account will be credited in the books of XYZ Co. Ltd, if the business purchased a
vehicle though cheque?

► Vehicle account

► Cash account

► Business account

► Bank account

Question No: 7 ( Marks: 1 ) - Please choose one

If the
cost of sales is Rs. 60,000, sales are Rs. 90,000 and operating expenses are Rs. 25,000 during the year.
What would be the Net Profit?

► Rs. 5,000

► Rs. 25,000

► Rs. 55,000

► Rs. 60,000

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following financial statement DO NOT show the financial health of a business

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 ► Profit and loss account

► Balance sheet

► Statement of financial position

► All of the given options

at a specific date?

Question No: 9 ( Marks: 1 ) - Please choose one

The
total of all costs incurred to convert raw material into finished goods is known as:

► Prime cost

► Conversion cost

► Sunk cost

► Opportunity cost

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following particular is NOT included in the specimen of a Journal Voucher?

► Name of organization

► Bank receipt

► Debit amount

► Credit amount

Question No: 11 ( Marks: 1 ) - Please choose one

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Accountancy covers which of the following area(s):

► Book-keeping

► Accounting

► Auditing

► All of the given options

Question No: 12 ( Marks: 1 ) - Please choose one

Depreciation arises because of:

► Fall in the market value of an asset

► Fall in the value of money

► Physical wear and tear

► All of the given options

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following account will be debited, when the bad debts are recovered?

► Bad debt recovered a/c

► Cash a/c

► Doubtful debts a/c

► Bad debts a/c

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Question No: 14 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss account.

Particulars Rs.

Bad debts 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 800

► Rs. 400

► Rs. 800

► Rs. 2,000

► Rs. 2,400

Question No: 15 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss account.

Particulars Rs.

Bad debts 3,600

Provision for doubtful debts (old) 6,000

Current year’s provision (new) 1,500

► Rs. (5,100)

► Rs. 5,100

► Rs. (900) (Minus main answer hai tabi Credit side par show hoga)

► Rs. 900

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Question No: 16 ( Marks: 1 ) - Please choose one

On
which of the following system control accounts are based?

► Double entry book keeping system

► Single entry book keeping system

► Cash accounting system

► All of the given options

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following entry will be passed to record discount received in control account?

► Discount Received (Dr) and Creditors Control A/c (Cr)

► Discount Received (Dr) and Creditors A/c (Cr)

► Creditors Control A/c (Dr) and Discount Received (Cr)

► Creditors A/c (Dr) and Discount Received (Cr)

Question No: 18 ( Marks: 1 ) - Please choose one

A
receipt of cash Rs. 10,000 from Mr. Bilal is recorded as Rs. 1,000. What amount will be adjusted in
rectifying entry?

► Rs. 1,000

► Rs. 9,000

► Rs. 10,000

► Rs. 11,000

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Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. “A” of Rs.336 have been debited
to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)

► Sales account (Dr.) and B’s account (cr.)

► B’s account (Dr.) and Sales account (Cr.)

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of Sale to Mr.”A” Rs. 336
was not recorded at all?

► Only sales account

► Only A’s account

► Only cash account

► Both sales account and A’s account

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following item must be recorded in the adjusted Cash Book in order to bring it in line with
the entries in the Bank Statement?

► Bank charges

► An error on the Bank Statement

► An uncredited deposit

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 ► An unpresented cheque

Question No: 22 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be deducted from Sundry Debtors in
Balance Sheet.

Particulars Rs.

Bad debts (from trial balance) 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 1,000

► Rs. 600

► Rs. 1,000

► Rs. 2,000

► Rs. 2,600

Question No: 23 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

Bad Debts (Given in trial balance) 500

Old provisions (Given in trial balance) 700

Sundry Debtors (Given in trial balance) 44,800

If the Provision for doubtful debts has been increased by 5%, which amount of new provision will be
shown in Profit & Loss Account?

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 ► Rs. 2,240

► Rs. 2,425

► Rs. 1,925

► Rs. 3,025

Question No: 24 ( Marks: 1 ) - Please choose one

The
main objective of financial reporting is to provide:

► Essential information to internal users of financial reports.

► Useful economic information about the business to the external parties for sound financial
decisions.

► Information to internal users about the cash position of the business.

► Information to the Securities Exchange Commission (SEC).

Question No: 25 ( Marks: 1 ) - Please choose one

A
financial statement that indicates the success or failure of a business, over a period of time is called:

► A cash flow statement

► A retained earnings statement

► An income statement

► A balance sheet

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is/are NOT shown in balance sheet of sole proprietor?

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 ► Fixed assets

► Current liabilities

► Profit sharing ratio

► Long term assets

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?

► Accounts receivable arises when a company buys goods or services from another party on credit

► Accounts receivable is a miscellaneous category that may include loans to employees

► Accounts receivable are more formal than notes receivable

► Accounts receivable are often called trade receivables

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account will be debited when the interest on drawings is charged?

► Partner’s capital account

► Interest account

► Partner’s current account

► Profit & Loss account

Question No: 29 ( Marks: 1 ) - Please choose one

In
case of fixed capital accounts, other transactions such as Drawings and Profit etc. are recorded in a
separate account that is called ___________.

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 ► Fixed Capital Account

► Current Account

► Fluctuating Capital Account

► Floating Capital Account

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following clause/s are discussed in Memorandum of Association of Companies?

► Name of company

► Place of registered office of company

► Objective of the company

► All of the given options

Question No: 31 ( Marks: 1 ) - Please choose one

Preliminary Expenses of the company may write off against:

► Share premium account

► Share holder account

► Debtors control account

► Creditor control account

Question No: 32 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if provision for Income Tax to be made Rs. 12,000 is given
in adjustment?

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 ► It will be deducted in Income Statement only

► It will be treated as current liability in balance sheet only

► It will be treated as current asset in balance sheet only

► Both it will be deducted in income statement and it will be treated as current liability in balance
sheet

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is NOT a cash inflow?

► Sale of fixed asset

► Issue of debentures

► Cash from business operation

► Purchase of fixed asset

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form of business?

► The limited company form of business allows ownership of the business to be spread amongst
many people

► Shareholders can appoint professionals

► Shareholders are personally liable for all the liabilities incurred by the business

► Regular filing of information about the affairs of the company is a legal requirement

Question No: 35 ( Marks: 1 ) - Please choose one

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 If
company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A, Mr. B and Mr. C is
2:3:5 respectively what will be the Profit share for Mr. C in distributable profit.

► Rs. 98,000

► Rs. 1, 47,000

► Rs. 2, 45,000

► Rs. 3, 43,000

Question No: 36 ( Marks: 1 ) - Please choose one

What is the treatment of Accumulated Depreciation in Balance Sheet?

► It may treated as a deficit not sure

► It may treated as a surplus

► It may treated as a revenue

► None of the given options I think this one

Question No: 37 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in the business
made by the owner will effect:

► Cash Account & Capital Account

► Cash Account & Expense Account

► Capital Account & Revenue Account

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 ► Capital Account & Expense Account

Question No: 38 ( Marks: 1 ) - Please choose one

The
return of goods by a customer should be debited to:

► Customer’s account

► Sales return account

► Goods account

► Accounts receivable account

Question No: 39 ( Marks: 1 ) - Please choose one

Expenditures incurred annually on renewal of patent are known as:

► Revenue Expenditures

► Capital Expenditures

► Deferred Expenditures

► None of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

Debts that are not collectible and worthless to the creditor are known as:

► Doubtful debts

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 ► Bad debts

► Provision for doubtful debts

► Loss

Question No: 41 ( Marks: 1 ) - Please choose one

ABC
Company received discount on its credit purchases, which of the following will be debited while entering
in journal?

► Cash

► Discount received

► Creditors

► Bank

Question No: 42 ( Marks: 1 ) - Please choose one

The
amount owed by debtors at the start of a month appears on the ___________ side of the individual
debtors account.

► Left side or credit

► Left side or debit

► Right side or debit

► Right side or credit

Question No: 43 ( Marks: 1 ) - Please choose one

Ahmad Industries want to make payment to its supplier in the form of a pay order. The bank deducted
Rs.160 as service charges without its knowledge. The error is known as:

► Error of commission

► Error of omission

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 ► Error of original entry

► Error of principle

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following accounts would never be reported in the income statement as an expense?

► Depreciation expense

► Income tax expense

► Interest expense

► Dividends expense

Question No: 45 ( Marks: 1 ) - Please choose one

In
the heading of financial statement, ___________ is not required?

► Title of financial statement

► Name of the person who prepares financial statement

► Period for which financial statement is prepared

► Name of business entity

Question No: 46 ( Marks: 1 ) - Please choose one

In a
partnership of Mr. A and Mr. B, the share of profit of Mr. A is Rs.75,375 and the share of profit of Mr. B
is Rs. 25,125. What will be the ratio of their share?

► 1:2

► 2:3

► 3:2

► 3:1

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Question No: 47 ( Marks: 1 ) - Please choose one

Which of the following is decreased when an asset is converted into expense in adjustment?

► Revenue

► Net income

► Expense

► Liability

Question No: 48 ( Marks: 1 ) - Please choose one

Mr.
A & B entered into a partnership with an equal investment and equal share in profit or loss. Markup on
capital of Mr. A is Rs.2,500 and markup on drawings of Mr. B is Rs.2,800. The net income for the year is
Rs.95,000. What will be the amount of distributable profit?

► Rs.89,700

► Rs.94,700

► Rs.95,300

► Rs.100,300

Question No: 49 ( Marks: 1 ) - Please choose one

How
many members can subscribe their names in memorandum of association for registration of public
limited company?

►2

►3

►5

►7

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Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following is responsible to register the companies?

► State Bank of Pakistan

► Security and Exchange Commission of Pakistan

► Supreme Court

► Stock Exchange

Question No: 51 ( Marks: 1 ) - Please choose one

The
amount of share premium can be utilized except:

► To write off preliminary expenses

► To meet the expenses of issue of shares

► To distribute among the share holders

► To issue bonus shares

Question No: 52 ( Marks: 1 ) - Please choose one

Which of the following capital is required for the registration of the company?

► Issued capital

► Subscribed capital

► Authorized capital

► Reserve capital

Question No: 53 ( Marks: 1 ) - Please choose one

Which of the following items of balance sheet are useful in evaluating a company’s liquidity?

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 ► Current assets and other assets

► Current liabilities and current assets

► Current liabilities and plant and equipment

► Non current liabilities and other assets

Question No: 54 ( Marks: 1 ) - Please choose one

The
company ABC purchased an asset for Rs. 40,000, paying 30,000 in cash and issuing a long term note
payable for remaining balance. The amount will be recorded in statement of cash flows as:

► Rs. 40,000 cash outflow as investing activity

► Rs. 30,000 cash outflow as investing activity

► Rs. 10,000 cash inflow as investing activity

► Rs. 70,000 cash inflow as investing activity

Question No: 55 ( Marks: 3 )

Why
an organization is needed to prepare a cash flow statement.

Question No: 56 ( Marks: 5 )

Show the following assets at Written Down Value in Balance Sheet with complete working.

Particulars Rs.

Plant & Machinery 53,000

Buildings 35,000

Tools & Equipment 8,650

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Depreciation Rate:

v Plant & Machinery @ 10%

v Buildings @ 5%
v Tools& Equipment @ 15%

Question No: 57 ( Marks: 5 )

Financial year decided by partnership agreement is 1st July to 30th June. Mr. Ali is partner and having a
capital of Rs. 1,500,000 on July 1st 2007 and he introduced more capital on August 1st 2007 Rs. 10,000
on April 1st 2008, Rs.500,000 and on June 1st 2008 , Rs. 5,000. Mark up rate is 10% p.a.

Calculate mark up on Mr. Ali’s capital for the year ending on 30th June 2008.

Question No: 58 ( Marks: 10 )

The
following errors have been discovered in the book of a Business Concern:

1. Wage of Rs. 500 paid for the installation of plant debited to Wages Account.
2. Purchases of Office Equipment Rs. 2,000 were recorded as regular purchases of business.
3. Credit sale of Rs. 600 to Kareem was wrongly debited to Kamran.
4. Rs. 200 drawn by the proprietor was treated as Trade Expenses.
5. Rs. 300 received as a Commission was wrongly credited to Sales Account.

Required:

Pass the rectifying entries only.

Question No: 59 ( Marks: 10 )

Prepare Balance Sheet for the manufacturing concern as on 31st December, 2007 with the help of
given data.

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 Particulars Rs.

Capital 120,000

Trade Creditors 17,500

Bills payable 1,000

Sales 626,100

Raw material Stocks on 1-1-2007 30,000

Work in process on 1-1-2007 35,600

Finished Goods on 1-1-2007 35,400

Purchases 518,000

Carriage inwards 8,900

Discount Allowed 750

Debtors 16,000

Sales man commission 2,000

Office expenses 2,000

Carriage outwards 1,700

Bad debts 1,400

Salaries 13,000

Direct labor 1,800

FOH 1,100

Plant & Machinery 53,000

Buildings 35,000

Tools 8,650

Long term liability 4,902

Drawings 5,000

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Stock as on 31st December, 2007

Ø Raw material Stocks Rs. 31,000

Ø Work in process Rs. 25,000
Ø Finished Goods Rs. 53,900
Depreciation Rate:

v Plant & Machinery is depreciated @ 10%

v Buildings is depreciated @ 5%
v Tools is depreciated @ 15%
Additional data

v Reserve and bad debts is to be created at 5% on debtors.

v Net Income for the year Rs. 75,000
Paper no 18
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION,

Fall 2008

MGT101- Financial Accounting (Session - 1)

Time: 120 min

Marks: 85

Question No: 1 ( Marks: 1 ) - Please choose one

Which of the following item will be credited in capital account of sole proprietor?

► Cash

► Drawings

► Debtors

► Profit

Question No: 2 ( Marks: 1 ) - Please choose one

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Debenture is also named as:

► Share

► Bond

► Equity

► Reserve

Question No: 3 ( Marks: 1 ) - Please choose one

A
firm may earn profit during an accounting period but have less money in the bank at the end of the period
then it had at the beginning. Which of the followings, on its own, could explain this?

► Not paying invoices received from creditors

► The sale of fixed assets during the period

► An increase in trade debtors over the course of the period

► An increase in the depreciation charge relative to the previous accounting period doubted

Question No: 4 ( Marks: 1 ) - Please choose one

In
cash flow statements, which of the following would appear as a cash outflow?

► The payments for purchases made during the year

► A decrease in trade debtors over the course of an accounting period

► Money received as a result of issuing new shares

► Money received as result of selling fixed assets

Question No: 5 ( Marks: 1 ) - Please choose one

In
cash flow statements, which of the following would appear as an inflow of cash?

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 ► The repayments of a bank loan

► Dividend issue in the current year

► Money received as result of selling fixed assets

► The difference between the valuations of old and new fixed assets

Question No: 6 ( Marks: 1 ) - Please choose one

A
company is said to have been registered when:

► It filed with the Registrar of Companies articles certain documents, like memorandum and articles
of association

► It gets certificate of incorporation from registrar of Companies doubted

► It gets certificate of commencement of business from registrar of Companies

► It actually starts its business

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following option(s) is TRUE about the Sales returns?

► Sales returns reduce the Gross sales of the firm

► Sales returns affect the Net income of the firm

► Sales returns affect the flow of cash

► All of the given options

Question No: 8 ( Marks: 1 ) - Please choose one

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Share premium account is used for what?

► Write off Preliminary Expenses of the company.

► Write off the balance amount, in issuing shares on discount.

► Issue fully paid Bonus Shares.

► All of the given options

Question No: 9 ( Marks: 1 ) - Please choose one

The
maximum amount with which the company is registered is called:

► Authorized Share Capital

► Issued Share Capital

► Paid up capital

► Called up capital

Question No: 10 ( Marks: 1 ) - Please choose one

The
Joint Stock Company is formed under the Companies Ordinance:

► 1984

► I884

► 1948

► 1965

Question No: 11 ( Marks: 1 ) - Please choose one

In
case of fixed capital accounts, other transactions such as Drawings and Profit etc. are recorded in a
separate account that is called ___________.

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 ► Fixed Capital Account

► Current Account

► Fluctuating Capital Account

► Floating Capital Account

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have agreed to share the profit of
business carried on by all or any of them acting for all?

► Sole-ownership

► Private limited company

► Public limited company

► Partnership

Question No: 13 ( Marks: 1 ) - Please choose one

Current accounts of the partners should be opened when the capitals are:

► Normal

► Floating

► Fixed

► Fluctuating

Question No: 14 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?

► Total assets employed

► Total liabilities

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 ► Total assets

► Current assets

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if cash is drawn by a Proprietor?

► Proprietor’s drawings a/c (Dr.) and Cash a/c (Cr.)

► Cash a/c (Dr.) and Proprietor’s drawings a/c (Cr.)

► Proprietor’s Capital (Dr.) and Proprietor’s drawings a/c (Cr.)

► Proprietor’s drawings (Dr.) and Proprietor’s Capital a/c (Cr.)

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following will be debited, if cash is drawn by Proprietor?

► Proprietor’s drawings

► Proprietor’s cash

► Proprietor’s capital

► Proprietor’s income

Question No: 17 ( Marks: 1 ) - Please choose one

An
asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used

► It can be realized in cash or sold or consumed in the business within one year

► It is a piece of new machinery that is expected to last for at least ten years

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 ► All of the given options

Question No: 18 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business

► A balance sheet

► A statement of retained earnings

Question No: 19 ( Marks: 1 ) - Please choose one

The
Balance Sheet item that represents the resources invested by the owner is known as:

► Accounts Receivable

► Cash

► Note Payable

► Owner's Equity

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is NOT an operating expense?

► Salaries and wages expense

► Rent expense

► Interest expense

► Depreciation expense

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Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following accounts would be increased with a debit?

► Contributed Capital

► Retained Earnings

► Revenues

► Expenses

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for creditors control account?

► Purchase Day Book

► Purchase Return

► Creditors Ledger

► All of the given options

Question No: 23 ( Marks: 1 ) - Please choose one

It is
st
supposed that on 31 December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of
past experience, it is estimated that 10% of the sundry debtors are doubtful. Actual bad debts are Rs.
1600. What amount of new provision for doubtful debts will be credited in profit & loss account

► Rs. 3,600

► Rs. 4,000

► Rs. 1,600

► Rs. 2, 400

Question No: 24 ( Marks: 1 ) - Please choose one

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Consider the following data and identify the amount which will be shown in profit & loss account.

Particulars Rs.

Bad debts 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 1,000

► Rs. 600

► Rs. 1,600

► Rs. 2,000

► Rs. 2,600

Question No: 25 ( Marks: 1 ) - Please choose one

Sale
of goods to Mr. Amir is wrongly debited to Umair A/c(debtor) instead of Amir A/c(debtor), this is an
example of:

► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 26 ( Marks: 1 ) - Please choose one

"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in books of accounts", is an
example of:

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 ► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 27 ( Marks: 1 ) - Please choose one

Transaction that has been completely forgotten to enter is called:

► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales to Rahim Rs. 336
posted to his account as Rs. 363?

► Sales account

► Rahim’s account

► Cash account

► Both sales and Rahim’s Account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following is a detailed record of an individual account in case of large business?

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 ► Control Account

► Subsidiary Ledger

► Balance Sheet

► Trial Balance

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?

► Cash sales

► Credit sales

► Bills receivable

► Discount allowed

Question No: 31 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

Closing value of stock 40,000

Write off Bad debts (given in adjustments) 2,400

Sundry Debtors (given in trial balance) 33,200

Provision is created on Debtors at 5%

Requirement: Identify the Total amount which will deduct from Sundry debtors.

► Rs. 460

► Rs. 2,400

► Rs. 1,540

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 ► Rs. 3,940

Question No: 32 ( Marks: 1 ) - Please choose one

Bad
debts written off (given in adjustment) always affect the:

► Debtors account

► Creditors account

► Cash account

► Capital account

Question No: 33 ( Marks: 1 ) - Please choose one

debts
that are not collectible and worthless to the creditor are known as:

► Bad debts

► Good debts

► Doubtful debts

► Provision for doubtful debts

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following is NOT a function of bank reconciliation statement?

► To reconcile the difference between the cash book and the bank statement

► To check for errors in balance sheet

► To update omitted entries into the cash book

► To update omitted entries into the bank statement

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Question No: 35 ( Marks: 1 ) - Please choose one

The
following balance and discrepancies were found on 31 March 2008:

Particulars Rs.

Cash book balance (Dr) 5 000

Unpresented cheques 1 000

Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)

► Rs. 5 500 (Cr)

► Rs. 4 500 (Dr)

► Rs. 4 500 (Cr)

Question No: 36 ( Marks: 1 ) - Please choose one

In
accounting accumulated depreciation is:

► Treated as a reserve

► Treated as a contra asset

► Treated as a surplus

► Treated as an expense

Question No: 37 ( Marks: 1 ) - Please choose one

Find
out the missing value of an Accounting Equation with the help of given data:

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 Cash at bank Rs. 22,500

Other assets Rs. 1,000

Creditors Rs. 8,385

Other liabilities Rs. 9,000

► Rs. 6,115 owner’s equity

► Rs. 31,885 owner’s equity

► Rs. 17,385 owner’s equity

► Rs. 18,385 owner’s equity

Question No: 38 ( Marks: 1 ) - Please choose one

Find
out the missing value of an Accounting Equation with the help of given data:

Total Assets Rs. 34,500

Accounts payable Rs. 1, 000

Other liabilities Rs. 11,500

► Rs. 22,000 owner’s equity

► Rs. 23, 000 owner’s equity

► Rs. 24,000 owner’s equity

► Rs. 46,000 owner’s equity

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following particular is NOT included in the specimen of a Journal Voucher?

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 ► Name of organization

► Bank receipt

► Debit amount

► Credit amount

Question No: 40 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000

Life of asset 5 years

Depreciation for each year Rs. 15,000

Sale price after 5 years Rs.50,000

Book value of Asset after 5 years ?

► Rs.25, 000

► Rs. 75,000

► Rs. 15,000

► Rs. 1, 00,000

Question No: 41 ( Marks: 1 ) - Please choose one

Which of the following account will be debited, when the labor cost is charged to production?

► Finished goods account

► Labor cost account

► Work in process account doubted

► COGFactor over head account

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Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following organization converts raw material into finished goods?

► Trading concern

► Manufacturing concern

► Merchandising concern

► Service concern

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following particular is NOT included in the specimen of a payment voucher?

► Name of organization

► Cash payment amount

► Date of transaction

► Bank receipt

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following particulars are included in the specimen of a bank receipt voucher?

1) Name of the organization

2) Bank code
3) Date of transaction

► (1) & (2) only

► (1) & (3) only

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 ► (2) & (3) only

► (1), (2) & (3)

Question No: 45 ( Marks: 1 ) - Please choose one

If
the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs. 20,000 during the year,
what would be the value of Gross Profit?

► Rs. 15,000

► Rs. 35,000

► Rs. 55,000

► Rs. 60,000

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following statement is NOT TRUE about Current liabilities?

► These are due within one year

► These are short-term loans

► These are consist of all debts, payable after 12 months

► In working capital, these are deducted from current assets

Question No: 47 ( Marks: 1 ) - Please choose one

Accrued expenses are the example of:

► Current liabilities

► Long term liabilities

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 ► Deferred costs

► Capital expenses

Question No: 48 ( Marks: 1 ) - Please choose one

Which of the following item will appear on the Balance Sheet as current assets?

► Prepaid expenses

► Accrued expenses

► Furniture and Equipment

► Unearned revenue

Question No: 49 ( Marks: 1 ) - Please choose one

When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account

► Left or credit side of the account

► Right or credit side of the account

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following is non- profit organization?

► Sole proprietorship

► Partnership

► Limited company

► Trust

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 Question No: 51 ( Marks: 5 )

The
following errors have been discovered in the book of a Business Concern:

1. A credit purchase of Rs. 10,000 from Rizwan was wrongly passed through the sales book.
2. The casting of the sales book Rs. 1, 15,594 was carried to the sales account as Rs. 1, 51,954.

Required:

Pass the rectifying entries only.

1.Debit Creditor’s account

Credit Sales book account

2.Debit Cash account Rs 36360

Credit Sales account Rs (36360)

Question No: 52 ( Marks: 10 )

Following information is extracted from the books of Arfan Ltd as on December 31st, 2007.

Particulars Cost Depreciation Accumulated Depreciation

rate On 01-01-2007

Vehicles 01-01-2007 1,90,000 10% 10,000

Building 01-01-2007 4,00,000 20% 12,500

Furniture & Fixture 01-01-2007 4,15,000 15% 34,500

Land 01-01-2007 1,58,000 -- ---

You are required to calculate Written down value of each asset and show working of complete
depreciation for the year ending on December 2007.

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Question No: 53 ( Marks: 10 )

Write a note on legal documents required for the formation of company.

Question No: 54 ( Marks: 10 )

The
following discrepancies were noted on comparing Cash Book with Pass Book.

3. Balance as per Cash Book (Cr) is Rs. 19,000.

4. Cheque for Rs. 5,000 paid into the bank for collection on 20th March, 2008 has not yet been
collected.
5. Cheques for Rs. 15,000 Issued on 24th March, 2008, out of which Cheques for Rs. 10,000
presented during March, 2008
6. An amount of Rs. 1,000 for interest on overdraft was debited in the Pass Book but was intimated
to Mr. David on 4th April, 2008.
7. Mr. David paid into his bank account an amount of Rs. 3,000 but it was wrongly credited to Mr.
Denial’s Account.
8. On 20th March, 2008 the bank received dividend of Rs. 10,000 from a company where Mr.
David's has invested his money, the same had been recorded in Cash Book on 31st March, 2008.
9. Cheque of Rs. 2,500 was shown in Pass Book as dishonored.

Required: Prepare a Bank Reconciliation Statement as on 31st March, 2008

Paper No:19
Solved By Chanda Rehman n ABr
FINALTERM EXAMINATION

Fall 2008

MGT101- Financial Accounting (Session - 3)

Time: 120 min

Marks: 85

Question No: 1 ( Marks: 1 ) - Please choose one

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Debenture is also named as:

► Share

► Bond

► Equity

► Reserve

Question No: 2 ( Marks: 1 ) - Please choose one

What types of changes (is) are made at the admission of partner in partnership?

► Assets of old business will be revalued

► Liabilities of old business will be revalued

► Good will of business will be revalued

► All of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

The
balance sheet reported a beginning balance of Rs. 20,000 in Accounts Receivable and an ending balance
of Rs. 15,000. Credit Sales of Rs. 200,000 were made during the year. Using this information, compute
cash collected from customers.

► Rs. 215,000

► Rs. 195,000

► Rs. 200,000

► Rs. 205,000

Beginning – ending + credit sales

20,000 – 15,000 + 200,000

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Question No: 4 ( Marks: 1 ) - Please choose one

In
cash flow statements, which of the following would appear as an inflow of cash?

► The repayments of a bank loan

► Dividend issue in the current year

► Money received as result of selling fixed assets

► The difference between the valuations of old and new fixed assets

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following is NOT a cash inflow?

► Purchase of fixed asset

► Sale of fixed asset

► Issue of debentures

► Cash from business operation

Question No: 6 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if Rs. 6,000 transfer to general reserve is given in
adjustment?

► It will be treated in Income Statement only

► It will be treated as current liability in balance sheet only

► It will be treated in profit and loss appropriation account only

► it will be treated in both profit and loss appropriation account and in the balance sheet

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Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association

► Articles of Association

► Prospectus

► Annual Report

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following document(s) define the relation of company with outside world?

► Memorandum of Association

► Articles of Association

► Prospectus

► Statutory Declaration doubted

Question No: 9 ( Marks: 1 ) - Please choose one

The
income statement of the Limited company is also known as:

► Manufacturing account

► Profit and Loss account

► Profit and Loss Appropriation account

► Current Account

Question No: 10 ( Marks: 1 ) - Please choose one

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 In
which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only

► In income statement under the administrative expense only

► In both balance sheet under the head of current liabilities and income statement under the
administrative expense

Question No: 11 ( Marks: 1 ) - Please choose one

The
charter of a company which defines the limitations and powers of the company is called:

► The memorandum of association

► Articles of association

► Statutory report

► Certificate of commencement

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following represents the partnership agreement in writing?

► Partnership registration

► Partnership-at-will

► Partnership deed

► Partnership certification

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have agreed to share the profit of
business carried on by all or any of them acting for all?

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 ► Sole-ownership

► Private limited company

► Public limited company

► Partnership

Question No: 14 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?

► Accounts receivable arises when a company buys goods or services from another party on credit

► Accounts receivable is a miscellaneous category that may include loans to employees

► Accounts receivable are more formal than notes receivable

► Accounts receivable are often called trade receivables

Question No: 15 ( Marks: 1 ) - Please choose one

Which one of the following is TRUE about provisions?

► It is necessary to prepare for showing true picture of balance sheet

► It is a reduction from assets

► It is prepared for specific purposes

► All of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business

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 ► A balance sheet

► A statement of retained earnings

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following is an example of operating expense?

► Purchasing operating equipment

► Purchasing cleaning services doubted

► Purchasing an investment in another company

► Purchasing a computer for the accounting office

Question No: 18 ( Marks: 1 ) - Please choose one

Short-term investments include all of the following EXCEPT:

► A bond receivable intended to be sold within one year

► Frequently traded securities

► A stock investment in the General Electric Company intended to be sold within one year

► A shares investment in the Coca-Cola Company intended to be held for several years

Question No: 19 ( Marks: 1 ) - Please choose one

The
figure of cash received from debtors can be located either from cash book or:

► Debtor’s Control Account

► Balance Sheet

► Profit & Loss Account

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 ► Bills Payable Account

Question No: 20 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

Closing value of stock 40,000

Write off Bad debts (given in adjustments) 2,400

Sundry Debtors (given in trial balance) 33,200

Provision is created on Debtors at 10%

Identify the Total amount deducted from Sundry debtors.

► Rs. 460

► Rs. 2,400

► Rs. 3,080

► Rs. 5,480

Question No: 21 ( Marks: 1 ) - Please choose one

Consi
der the following data and identify the amount which will be deducted from Sundry Debtors in Balance
Sheet.

Particulars Rs.

Bad debts (from trial balance) 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 1,000

► Rs. 600

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 ► Rs. 1,000

► Rs. 2,000

► Rs. 2,600

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded, if a cheque deposited is dishonored by bank?

► Bank Account (Dr.) and Debtor's Account (Cr.)

► Debtor's Account (Dr.) and Bank Account (Cr.)

► Dishonored Cheque Account (Dr.) and Bank Account (Cr.)

► Creditor's Account (Dr.) and Bank Account (Cr.)

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of an amount Rs.200
received from Mr.”P” wrongly credited to Mr.”Q’s” account?

► Both of Mr. P's & Mr.Q's Account

► Only Cash Account

► Only P’s account

► Only Q’s account

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales Rs.100 to Mr. “A”
recorded in the purchases book?

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 ► Sales account

► Purchase account

► A’s account and Sales account

► Sales account, purchase account and A’s account

Question No: 25 ( Marks: 1 ) - Please choose one

"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in books of accounts", is an
example of:

► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 26 ( Marks: 1 ) - Please choose one

Transaction that has been completely forgotten to enter is called:

► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following is (are) included in Creditors Control Account?

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 ► Discount received from supplier

► Credit purchases

► Bills payable

► All of the given options

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?

► Cash sales

► Credit sales

► Bills receivable

► Discount allowed

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for debtors control account?

► Sales Day Book

► Sales Return

► Debtors Ledger

► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT based on the concept of double entry book keeping system?

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 ► Subsidiary Ledgers

► Creditors Control Accounts

► Debtors Control Accounts

► All of the given options doubted

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded when the Bad Debts are recovered?

► Cash account (Dr.) & Bad Debts recovered account (Cr.)

► Accounts Receivable account (Dr.) & Bad Debts recovered account (Cr.)

► Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)

► Provision for doubtful debts account (Dr.) & Cash account (Cr.)

Question No: 32 ( Marks: 1 ) - Please choose one

In
which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business

► Failure of repeated attempt to collect the debt

► All of the given options

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT for Doubtful Debt?

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 ► It is shown in balance sheet

► It is a definite loss to the business

► It is not shown in balance sheet

► No provision is necessary for it

Question No: 34 ( Marks: 1 ) - Please choose one

The
following balance and discrepancies were found on 31 March 2008:

Particulars Rs.

Cash book balance (Dr) 5 000

Unpresented cheques 1 000

Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)

► Rs. 5 500 (Cr)

► Rs. 4 500 (Dr)

► Rs. 4 500 (Cr)

Question No: 35 ( Marks: 1 ) - Please choose one

A
Bank Reconciliation Statement is prepared to:

► Ascertain that the difference between the Cash Book balance and the Bank

Statement balance has been accounted for

► Correct errors in the Cash Book or errors in the Bank Statement

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 ► Amend the balance of the Bank Statement of the firm

► Amend the balance in the Cash Book of the firm

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT regarding depreciation?

► It is a systematic allocation of depreciable amount of an asset over its estimated useful life

► It refers to the end life of an asset

► It refers to the increase in value of asset

► It is another name of Impairment

Question No: 37 ( Marks: 1 ) - Please choose one

Find
out the missing value of an Accounting Equation with the help of given data:

Cash Rs.1, 00, 000

Debtors Rs.10, 000

Other Assets Rs. 1,000

Owner’s equity Rs. 1, 000

► Rs. 12,000 liabilities

► Rs. 11,000 liabilities

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 ► Rs. 1, 10,000 liabilities

► Rs. 1, 11,000 liabilities

Question No: 38 ( Marks: 1 ) - Please choose one

Which of the following essentials will be shown in the format of Cash Book?

(1) Ledger code

(2) Amount of Receipt

(3) Amount of payment

► (1) only

► (1) & (2) only

► (1) & (3) only

► (1), (2) & (3)

Question No: 39 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit

First purchase 35 units @ Rs. 11 per unit

Second purchase 40 units @ Rs. 12 per unit

Third purchase 20 units @ Rs. 13 per unit

Eighty units were sold, what is the value of the ending inventory using the FIFO method of inventory
costing?

► Rs.260

► Rs.232

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 ► Rs.284

► Rs.320

Question No: 40 ( Marks: 1 ) - Please choose one

In
cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw material inventory

► Opening raw material inventory - Purchases + Ending raw material inventory

► Ending raw material inventory + Opening raw material inventory - Purchases

► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 41 ( Marks: 1 ) - Please choose one

Following are the inventories of Manufacturing Concern EXCEPT:

► Raw material

► Work in process

► Finished goods

► Merchandise inventory

Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following is an alternate term which can be used for “Capital”?

► Liability

► Owner’s net worth

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 ► Working capital

► Asset

Question No: 43 ( Marks: 1 ) - Please choose one

In
which of the following condition a company will have positive working capital?

► If current assets > current liabilities

► If current Assets < current Liabilities

► If current assets = current liabilities

► If current assets < current liabilities

Question No: 44 ( Marks: 1 ) - Please choose one

If
salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office building) is Rs. 300 during the
year, what would be the total of "general & administrative expenses"?

► Rs. 300

► Rs. 2,500

► Rs. 2,800

► Rs.18, 800

Question No: 45 ( Marks: 1 ) - Please choose one

The
amount brought by the proprietor in the business should be credited to:

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 ► Cash account

► Capital account

► Drawings account

► Proprietor account

Question No: 46 ( Marks: 1 ) - Please choose one

An
asset on the balance sheet which is expected to be sold or used within one year is known as:

► Tangible asset

► Current asset

► Fixed asset

► Long term asset

Question No: 47 ( Marks: 1 ) - Please choose one

Which one of the following is a type of General Ledger?

► Book of original entry

► ‘T’ Account

► Source document

► Day book

Question No: 48 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in the business made
by the owner will effect:

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 ► Cash & Capital Account

► Cash & Expense Account

► Capital & Revenue Account

► Capital & Expense Account

Question No: 49 ( Marks: 1 ) - Please choose one

Mr.”
A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated as _____________ for
business.

► Revenue

► Net profit

► Gross profit

► Operating profit

Question No: 50 ( Marks: 1 ) - Please choose one

when income exceeds expenses in a specific time period is known as:

► Savings

► Net profit

► Gross profit

► Operating profit

Question No: 51 ( Marks: 5 )

Financial year decided by partnership agreement is 1st July to 30th June. Mr. Ali is partner and having a
capital of Rs. 1,500,000 on July 1st 2007 and he introduced more capital on August 1st 2007 Rs. 10,000
on April 1st 2008, Rs.500,000 and on June 1st 2008 , Rs. 5,000. Mark up rate is 10% p.a.

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Capital = 1500000 mark up= 1500000

2nd capital= 10000 markup= 1000

3rd capital= 500000 markup= 50000

4th capital= 5000 markup= 500

Total markup= Rs. 201500

Calculate mark up on Mr. Ali’s capital for the year ending on 31th June 2008.

Question No: 52 ( Marks: 10 )

Write a note on legal documents required for the formation of company.

In Pakistan when someone wants to form a company. He will contact with SECP, its abbreviation
for Securities and Exchange Commission of Pakistan. it came in 1984 in law of Pakistan which is
called companies ordinance. It controls all affairs of limited companies. For making of private
limited company 2 members can submit their names in memorandum and articles of association
along with other requirements of company ordinance 1984. while for public limited company seven
members will sent their names. By this way they can apply and make registration of the company.

Question No: 53 ( Marks: 10 )

What is the difference between public and private company?

The main difference between public and private company is that in public limited companies there
is no restriction on number of persons to be its members. There is one restriction. That there should
be a minimum of three members to form a public limited company. Public limited company can
offer its shares to general public.

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While in private company two to fifty persons can form a company. Minimum two members are
elected to form a board of directors. This board is given the responsibility to run day to day
business of the company. Private limited company cannot offer its share to general public.

Question No: 54 ( Marks: 10 )

The
following discrepancies were noted on comparing Cash Book with Pass Book.

1. Balance as per Cash Book (Cr) is Rs. 19,000.

2. Cheque for Rs. 5,000 paid into the bank for collection on 20th March, 2008 has not yet been
collected.
3. Cheques for Rs. 15,000 Issued on 24th March, 2008, out of which Cheques for Rs. 10,000
presented during March, 2008
4. An amount of Rs. 1,000 for interest on overdraft was debited in the Pass Book but was
intimated to Mr. David on 4th April, 2008.
5. Mr. David paid into his bank account an amount of Rs. 3,000 but it was wrongly credited to
Mr. Denial’s Account.
6. On 20th March, 2008 the bank received dividend of Rs. 10,000 from a company where Mr.
David's has invested his money, the same had been recorded in Cash Book on 31st March,
2008.
7. Cheque of Rs. 2,500 was shown in Pass Book as dishonored.

Required: Prepare a Bank Reconciliation Statement as on 31st March, 2008

Balance as per Cash Book Cr 19000

Unpresented cheques Dr 5000

Uncredited cheque Dr 10000

Interest by bank Dr. 1000

Paper No:20
Solved byABr & Chanda Rehman
FINALTERM EXAMINATION
Fall 2008

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 MGT101- Financial Accounting (Session - 3)

Question No: 1 ( Marks: 1 ) - Please choose one

Debenture is also named as:
► Share
► Bond
► Equity
► Reserve

Question No: 2 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?

► In case of death of partner

► At the admission of new partner
► If any partner resigned from partnership
► All of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

Particulars Rs.
Debentures 1, 50, 000
Equity Capital 2, 00,000
General Reserve 90, 000
Accumulated profit 60,000
What is debt equity ratio ?

► 15:24 (or 5: 8)
► 15:29
► 15:35 (or 3: 7)
15 : 20

Question No: 4 ( Marks: 1 ) - Please choose one

Particulars Rs.
Share capital of Rs. 10 each 1,000,000
Profit before tax 150,000
Taxes 10,000
Earning per share =?

► Rs. 1.50 per share

► Rs. 1.40 per share
► Rs. 1.15 per share
► Rs. 1.25 per share

Question No: 5 ( Marks: 1 ) - Please choose one

In calculating earning per share (EPS), the net profit is divided by which of the
following?

► Number of ordinary shares

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 ► Number of preference shares
► Paid up capital
► Authorized capital

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form of
business?

► The limited company form of business allows ownership of the business to be

spread amongst many people
► Shareholders can appoint professionals
► Shareholders are personally liable for all the liabilities incurred by the business
correct
► Regular filing of information about the affairs of the company is a legal
requirement

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Annual Report

Question No: 8 ( Marks: 1 ) - Please choose one

In which of the following interim dividend is treated?

► In profit and Loss account

► In profit and Loss appropriation account
► On the asset side of the Balance Sheet
► In trading account

Question No: 9 ( Marks: 1 ) - Please choose one

The income statement of the Limited company is also known as:

► Manufacturing account
► Profit and Loss account
► Profit and Loss Appropriation account
► Current Account

Question No: 10 ( Marks: 1 ) - Please choose one

In which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only
► In income statement under the administrative expense only
► In both balance sheet under the head of current liabilities and income statement
under the administrative expense

Question No: 11 ( Marks: 1 ) - Please choose one

Preliminary Expenses of the company may write off against:

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 ► Share premium account
► Share holder account
► Debtors control account
► Creditor control account

Question No: 12 ( Marks: 1 ) - Please choose one

The amount received; in excess of the face value of the shares is transferred to which of
the following?

► Share premium account

► Share holder account
► Share capital account
► Right share

Question No: 13 ( Marks: 1 ) - Please choose one

The maximum amount with which the company is registered is called:
► Authorized Share Capital
► Issued Share Capital
► Paid up capital
► Called up capital

Question No: 14 ( Marks: 1 ) - Please choose one

When the capitals are fixed, which of the following account will be debited for drawings
made by a partner?

► Individual Partner’s Current Account

► Partner’s Cash Account
► Partner’s Bank Account
► Partners Capital Account

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following is(are) type(s) of capital account in partnership?

► Fixed Capital
► Current Capital
► Fluctuating Capital
► Both Fixed Capital and Fluctuating Capital

Question No: 16 ( Marks: 1 ) - Please choose one

Current accounts of the partners should be opened when the capitals are:
► Normal
► Floating
► Fixed
► Fluctuating

Question No: 17 ( Marks: 1 ) - Please choose one

Identify the selling expenses of manufacturing concern with the help of given data.

Particulars Rs.
Salesman’s salary 70,000

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Commission on sales 28,000
Carriage outward 10,000
Carriage inward 5,000

► Rs. 80,000
► Rs. 60,000
► Rs. 38,000
► Rs. 1, 08,000

Question No: 18 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?

► Total assets employed

► Total liabilities
► Total assets
► Current assets

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT if depreciation is given in trial balance?
► It means depreciation has already been deducted from concerned asset account
► It will be shown as an expense in income statement only
► It will not be deducted from concerned asset in Balance Sheet
► All of the given options are correct

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if cash is drawn by a Proprietor?

► Proprietor’s drawings a/c (Dr.) and Cash a/c (Cr.)

► Cash a/c (Dr.) and Proprietor’s drawings a/c (Cr.)
► Proprietor’s Capital (Dr.) and Proprietor’s drawings a/c (Cr.)
► Proprietor’s drawings (Dr.) and Proprietor’s Capital a/c (Cr.)

Question No: 21 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business
► A balance sheet
► A statement of retained earnings

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is a selling expense?

► Any tax/freight is paid on purchases

► General salaries paid to laborers
► Tax & freight paid on sale
► Interest on deposits

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following would NOT be considered as a component of 'cost' of stock?

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 ► Salaries of selling staff
► Transportation inward costs
► Import duties
► Purchase price

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following accounts would be increased with a debit?

► Contributed Capital
► Retained Earnings
► Revenues
► Expenses

Question No: 25 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss
account.

Particulars Rs.
Bad debts 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600
► Rs. 1,600
► Rs. 2,000
► Rs. 2,600

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following account will be credited when a typewriter is sold that has been
used in the office?

► Cash Account
► Sales Account
► Purchase Account
► Office Equipment Account

Question No: 27 ( Marks: 1 ) - Please choose one

A sum of Rs. 200 written off as bad debt now received credited to the account of debtor
would:

► Increase the net profit by Rs.200

► Decrease the profit by Rs.200
► Remains constant and no effect on net profit
► There is no relation between debtor and profit

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales to
Rahim of Rs. 500 were omitted to record in books of accounts?

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 ► Sales account
► Rahim’s account
► Cash account
► Both sales and Rahim’s Account correct

Question No: 29 ( Marks: 1 ) - Please choose one

If the provision for doubtful debts is not created, which of the following entry is passed
to record the bad debts in control account?
► Bade debts (Dr) and Debtors Control A/c (Cr)
► Allowance for doubtful debts (Dr) and Debtors Control A/c (Cr)
► Allowance for doubtful debts (Dr) and Debtors A/c (Cr)
► Debtors Control A/c (Dr) and Allowance for doubtful debts (Cr)

Question No: 30 ( Marks: 1 ) - Please choose one

If Bad Debts written off are given in adjustment, then which of the following entry for bad
debts written off is CORRECT?

► Bad debts a/c (Dr) and Trading a/c (Cr)

► Provision for Bad and Doubtful debts a/c (Dr) and Bad debts a/c(Cr)
► Bad debts a/c (Dr) and debtors a/c (Cr)
► Trading a/c (Dr) and Bad debts a/c (Cr)

Question No: 31 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Bad Debts (Given in trial balance) 500
Old provisions (Given in trial balance) 800
Sundry Debtors (Given in trial balance) 44,500
Provision for doubtful debts @ 5%
What will be the amount of new provision ?

► Rs. 2,225
► Rs. 2,525
► Rs. 1,925
► Rs. 3,025

Question No: 32 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400

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Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 5%

Requirement: Identify the Total amount which will deduct from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 1,540
► Rs. 3,940 correct

Question No: 33 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 5 % of the sundry debtors are
doubtful. Actual bad debts are Rs. 1600. What amount of new provision for doubtful
debts will be credited in profit & loss account.

► Rs. 3,600
► Rs. 2,000 correct
► Rs. 1,600
► Rs. 400

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following option is TRUE about the characteristic(s) of Bad Debt?

► It is a definite loss to the business

► It is not shown in Balance Sheet
► No provision is necessary for it
► All of the given options

Question No: 35 ( Marks: 1 ) - Please choose one

A debit balance in the Bank Statement indicates:

► Cash at bank
► Bank overdraft
► Overpayment to creditors
► Cash in hand

Question No: 36 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine 1,00,000
Cost of new machine purchased during the year 50,000
Depreciation during the year 21,000
Closing written down value (WDV) ?

► Rs. 1, 29,000
► Rs. 1, 50,000
► Rs. 1, 21,000
► Rs. 71,000

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Question No: 37 ( Marks: 1 ) - Please choose one
Depreciable value of an asset is equal to:

► Cost + scrap value

► Cost + market price
► Cost – scrap value
► None of the given options

Question No: 38 ( Marks: 1 ) - Please choose one

If a business pays rent in advance for 12 months, it will be treated as:

► Prepaid expenses of business

► Long term liability of business
► Fixed assets of business
► Current liability of business

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following asset is NOT depreciated?

► Factory Buildings
► Office Equipment
► Plant & Machinery
► Land

Question No: 40 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?

► These are the running expenses of the business

► They improve the financial position of the business
► They reduce the profit of the concern
► They do not appear in the balance sheet

Question No: 41 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about Capital Expenditure?
► Creates future benefits
► Incurred to acquire fixed assets
► Incurred to increase the economic life of existing fixed assets
► Reduce the profit of the concern

Question No: 42 ( Marks: 1 ) - Please choose one

Expenditures incurred anually on renewal of patent are known as:

► Revenue Expenditures
► Capital Expenditures
► Financial Expenditures
► Operating Expenditures

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following is NOT a type of voucher?

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 ► Journal Voucher
► Receipt Voucher
► Payment Voucher
► Drawings Voucher

Question No: 44 ( Marks: 1 ) - Please choose one

If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating expenses are Rs.
100,000. What will be the net result?

► Rs. 5,000 Loss

► Rs. 5, 000 Profit
► Rs.1, 95,000 Profit
► Rs.1, 95,000 Loss

Question No: 45 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are
Rs.20,000 during the year. What would be the Net Profit?

► Rs.15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).

► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account

Question No: 47 ( Marks: 1 ) - Please choose one

Accounts Receivable & Inventory are the examples of:

► Liquid assets
► Current assets
► Fixed assets
► Capital assets

Question No: 48 ( Marks: 1 ) - Please choose one

A summarized record of transactions related to individuals or things is called a/an
___________.

► Account
► Voucher
► Journal
► Trial balance

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Question No: 49 ( Marks: 1 ) - Please choose one
When Capital is increased by an amount, it is recorded on the:

► Left or credit side of the account

► Right or debit side of the account
► Left or debit side of the account
► Right or credit side of the account

Question No: 50 ( Marks: 1 ) - Please choose one

What would be the affect on the components of the accounting equation, if goods are
purchased on cash?

► Increase in cash and decrease in equity

► Increase in cash and increase in goods
► Increase in goods and decrease in cash
► Increase in equipment and increase in equity

Question No: 51 ( Marks: 5 )

Calculate net income with the help of given date for the year end of 2007 and show complete
working of Cost of Goods sold.

Raw material Stocks on 1-1-2007 Rs. 30,000

Work in process on 1-1-2007 35,600
Finished Goods on 1-1-2007 35,400

Raw material Stocks 31-12-2007 Rs. 31,000

Work in process 31-12-2007 25,000
Finished Goods 31-12-2007 53,900
Total factory Cost 543,339

Additional data
v Other expenses for the year is Rs. 5,000.
v Operating expenses for the year Rs. 15,000
v Sale for the year Rs. 1,500,000

Solution:
Name of the Company
Income Statement
For the period of 2007

Particulars Amount Rs Amount Rs

Sales 1500000
Less Cost of Good Sold (534439)
Gross Profit 965561
Less: Expenses:
Other Expenses 5000
Operating expenses 15000

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 (20000)
Net Income
945561

Working:
Calculate Cost of Good Sold:
Raw Material:
Opening Raw Material: 30000
- Closing Raw Material: 31000
Cost of Material Consumed: -1000
Conversion Cost:
Direct Labor: 0
FOH: 0
Total Factory Cost: 542339
Work in Process:
+Opening WIP: 35600
-Closing WIP: 25000
Cost of Goods Manufactured: 552939
Finish Goods:
+Opening FG: 35400
-Closing FG: 53900
Cost of Good Sold: 534439

Question No: 52 ( Marks: 10 )

Write down the at least ten distinguishing features of a limited company which differentiate it
from sole proprietor business

Question No: 53 ( Marks: 10 )

On 01-01-2007, the provision for doubtful debts a/c stood at Rs. 12,000 (credit balance).
In 2007, the bad debts amounted to Rs. 10,000. The debtors on 31-12-2007 are amounted
to Rs. 3, 20,000 and a provision for doubtful debt to be maintained @ 10%.

Required:
Show Journal entries and necessary accounts. Also show how the items will appear in
Profit and Loss account and Balance sheet

Solution:
Entry#1
Provision for Doubtful Debts 32000
Debtors Control Account 32000

Make Ledgers of each account

Debtors Account
Debit Side Credit Side
Date No. Particulars Dr. Rs. Date No. Particulars Cr. Rs.
Balance 32000 Provision for 32000

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 doubtful debts
32000 32000

Provision of Doubtful debts

Debit Side Credit Side
Date No. Particulars Dr. Rs. Date No. Particulars Cr. Rs.
Debtors 32000 Balance 32000
Account
32000 32000

And you people already know to show these accounts in P n L and Balance Sheet.

IN PL Account = 32000+10000-12000=30000 on Debit Side

In Balance Sheet
Debtors = 320000-32000-12000-276000

Question No: 54 ( Marks: 10 )

Following information is extracted from the books of Arfan Ltd as on December 31st,
2007.

Particulars Cost Depreciation Accumulated Depreciation

rate On 01-01-2007
Vehicles 01-01-2007 1,90,000 10% 10,000
Building 01-01-2007 4,00,000 20% 12,500
Furniture & Fixture 01-01-2007 4,15,000 15% 34,500
Land 01-01-2007 1,58,000 -- ---

You are required to calculate Written down value of each asset and show working of complete
depreciation for the year ending on December 2007.

Particulars Cost Rate Accumulated Depreciation WDV

As Addition/ As As At For As At
st
At deletion At 1-1- The 31 -
st
1-1- 31 - 2007 Year 12-
2007 12- 2007
2007

Vehicles 190000 0 190000 10% 10000 19000 29000 161000

Building 400000 0 400000 20% 12500 80000 92500 307500

Furniture 415000 0 415000 15% 34500 62250 96750 318250

Land 158000 0 158000 0 0 0 0 158000

Total 1163000 0 1163000 57000 161250 218250 944750

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 Paper No:21
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION
Fall 2008
MGT101- Financial Accounting (Session - 1)

Question No: 1 ( Marks: 1 ) - Please choose one

Debenture is also named as:
► Share
► Bond
► Equity
► Reserve

Question No: 2 ( Marks: 1 ) - Please choose one

A company declares a cash dividend to be paid to its stockholders next month. The
effect of the transaction is to:

► Decrease assets and liabilities.

► Increase assets and stockholders' equity.
► Decrease assets and stockholders' equity. correct
► Increase liabilities and decrease stockholders' equity.

Question No: 3 ( Marks: 1 ) - Please choose one

The beginning balance of retained earnings was Rs. 7,500. The dividends paid to
stockholders' were Rs.1, 500. The ending balance of retained earnings is Rs. 5,000. What
was the net income or net loss for the accounting period?
► Net loss of Rs.1, 000
► Net income of Rs. 1,000
► Net loss of Rs. 2,000
► Net income of Rs. 2,500

Question No: 4 ( Marks: 1 ) - Please choose one

The net income calculated in the income statement for the accounting period is reported
on:

► Bank Statement
► Statement of retained earnings
► Statement of cash flows
► None of the given options

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Question No: 5 ( Marks: 1 ) - Please choose one
If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A,
Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. B in distributable
profit.

► Rs. 98,000
► Rs. 1, 47,000
► Rs. 2, 45,000
► Rs. 3, 43,000

Question No: 6 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?

► In case of death of partner

► At the admission of new partner
► If any partner resigned from partnership
► All of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

A private limited company can commence its business:

► Immediately on receiving a certificate of incorporation

► Without receiving a certificate of incorporation
► Only when it receives certificate of commencement of business
► Only when it receives both, the certificate of incorporation as well as certificate of
commencement of business

Question No: 8 ( Marks: 1 ) - Please choose one

The balance sheet reported a beginning balance of Rs. 20,000 in Accounts Receivable
and an ending balance of Rs. 15,000. Credit Sales of Rs. 200,000 were made during the
year. Using this information, compute cash collected from customers.

► Rs. 215,000
► Rs. 195,000
► Rs. 200,000
► Rs. 205,000

Question No: 9 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Annual Report

Question No: 10 ( Marks: 1 ) - Please choose one

If dividend is proposed by directors of the company @ 30% for the year, it will be
calculated on:

► Capital Reserve
► Authorized share capital

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 ► Paid up share capital
► Share premium

Question No: 11 ( Marks: 1 ) - Please choose one

Share premium account is used for what?
► Write off Preliminary Expenses of the company.
► Write off the balance amount, in issuing shares on discount.
► Issue fully paid Bonus Shares.
► All of the given options

Question No: 12 ( Marks: 1 ) - Please choose one

Authorized share capital is also known as:
► Registered capital
► Issued capital
► Paid up capital
► Called up capital

Question No: 13 ( Marks: 1 ) - Please choose one

In case of fixed capital accounts, other transactions such as Drawings and Profit etc. are
recorded in a separate account that is called ___________.

► Fixed Capital Account

► Current Account
► Fluctuating Capital Account
► Floating Capital Account

Question No: 14 ( Marks: 1 ) - Please choose one

A, B, C are partners. Their profit sharing ratio is equal. Capital balance on July 1st of
Partner A --- Rs. 40,000 Partner B --- Rs. 30,000 and Partner C--- Rs. 20,000.Their private
property of Partner A is Rs.15,000, Partner B is Rs. 7,000 and Partner C is Rs. 1,500. What
is the level of their liabilities under the partnership firm?
► Partner A—Rs. 40,000, Partner B---- Rs. 30,000, Partner C – 20,000
► Partner A—Rs. 40,000, Partner B---- Rs. 30,000, Partner C – 21,500
► Partner A—Rs. 40,000, Partner B---- Rs. 37,000, Partner C – 20,000
► Partner A—Rs. 55,000, Partner B---- Rs. 37,000, Partner C – 21,500

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following item will be shown on debit side of capital account of sole
proprietor?

► Cash
► Drawings
► Debtors
► Profit

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if cash is drawn by a Proprietor?

► Proprietor’s drawings a/c (Dr.) and Cash a/c (Cr.)

► Cash a/c (Dr.) and Proprietor’s drawings a/c (Cr.)
► Proprietor’s Capital (Dr.) and Proprietor’s drawings a/c (Cr.)

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 ► Proprietor’s drawings (Dr.) and Proprietor’s Capital a/c (Cr.)

Question No: 17 ( Marks: 1 ) - Please choose one

An asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used
► It can be realized in cash or sold or consumed in the business within one year
► It is a piece of new machinery that is expected to last for at least ten years
► All of the given options

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following appears in both the Income Statement debit column and the
Balance Sheet credit?

► Net income
► Net loss
► Dividends
► Retained earnings

Question No: 19 ( Marks: 1 ) - Please choose one

General office expenses are charged to which of the following head:

► Administrative expenses
► Marketing expenses
► Selling expenses
► Financial expenses

Question No: 20 ( Marks: 1 ) - Please choose one

Consider the following table:

Financial statement item Classification

A. Inventory Current asset
B. Tangible assets Non-current asset
C. Accrued expenses Current asset
D. Bonds payable Long-term liabilities

Identify the row above, showing an INCORRECT financial-statement classification?

► Row A
► Row B
► Row C
► Row D

Question No: 21 ( Marks: 1 ) - Please choose one

Short-term investments include all of the following EXCEPT:

► A bond receivable intended to be sold within one year

► Frequently traded securities
► A stock investment in the General Electric Company intended to be sold within
one year

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 ► A shares investment in the Coca-Cola Company intended to be held for several
years

Question No: 22 ( Marks: 1 ) - Please choose one

The figure of cash received from debtors can be located either from cash book or:

► Debtor’s Control Account

► Balance Sheet
► Profit & Loss Account
► Bills Payable Account

Question No: 23 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 10% of the sundry debtors
are doubtful. Actual bad debts are Rs. 1600. What amount of new provision for doubtful
debts will be credited in profit & loss account
► Rs. 3,600
► Rs. 4,000 doubted
► Rs. 1,600
► Rs. 2, 400

Question No: 24 ( Marks: 1 ) - Please choose one

When one or both aspects of a transaction are recorded in the wrong class or category
of account, this is called:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following account will be credited when a typewriter is sold that has been
used in the office?

► Cash Account
► Sales Account
► Purchase Account
► Office Equipment Account

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. “A” of Rs.336
have been debited to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)
► Sales account (Dr.) and B’s account (cr.)
► B’s account (Dr.) and Sales account (Cr.)

Question No: 27 ( Marks: 1 ) - Please choose one

Goods purchased from “Mr. A” for Rs. 2,000 passed through the sales book. The
rectification of error will result in:

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 ► Increase of gross profit
► Decrease of gross profit correct
► Remains constant and no effect on net profit
► There is no relation between goods purchased and gross profit

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales to
Rahim Rs. 336 posted to his account as Rs. 363?

► Sales account
► Rahim’s account
► Cash account
► Both sales and Rahim’s Account

Question No: 29 ( Marks: 1 ) - Please choose one

Control account tells about:

► Picture collectively instead of individually

► Details of loyal clients
► Customer attitude of payments
► Complete history of transactions of business clients

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for debtors control
account?

► Sales Day Book

► Sales Return
► Debtors Ledger
► All of the given options

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded when the Bad Debts are recovered?

► Cash account (Dr.) & Bad Debts recovered account (Cr.)

► Accounts Receivable account (Dr.) & Bad Debts recovered account (Cr.)
► Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)
► Provision for doubtful debts account (Dr.) & Cash account (Cr.)

Question No: 32 ( Marks: 1 ) - Please choose one

If the (New provision + Bad debts) > Amount of old provision then resulting figure will be
shown at:

► Debit side of Profit & Loss Account

► Credit side of Profit & Loss Account
► Asset side of Balance Sheet
► Liability side of Balance Sheet

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Question No: 33 ( Marks: 1 ) - Please choose one
Which of the following would be deducted from Sundry Debtors in Balance Sheet?

► Bad debts (Trial balance item)

► Old provision for doubtful debts
► New provision for doubtful debts
► Both Bad debts (given in adjustment) and new provision for doubtful debts

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following option is TRUE about the characteristic(s) of Bad Debt?

► It is a definite loss to the business

► It is not shown in Balance Sheet
► No provision is necessary for it
► All of the given options

Question No: 35 ( Marks: 1 ) - Please choose one

Which one of the following transactions will cause the balance in Mr. Terry's Cash Book
to be greater than his Bank Statement balance?
► A cheque is drawn but not yet presented at the bank for payment
► The bank has not yet notified to Mr. Terry about a dishonored cheque
► A credit transfer into Terry's Bank Account
► A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110 correct

Question No: 36 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets ?
Owner's equity 1,50,000
Liabilities 1,00,000

► Rs. 49,000
► Rs. 55,000
► Rs. 50,000
► Rs. 2, 50,000

Question No: 37 ( Marks: 1 ) - Please choose one

Accounting is the language of:

► Business
► School
► Proprietor
► Management

Question No: 38 ( Marks: 1 ) - Please choose one

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 Which of the following account balance is shown on credit side of Trial Balance? (It is
assumed that all account balances are shown on normal balance)

► Cash account
► Furniture account
► Vehicle account
► Capital account

Question No: 39 ( Marks: 1 ) - Please choose one

Under the reducing balance method of depreciation:

► Amount of depreciation increases every year

► Amount of depreciation remains constant for every year
► Amount of depreciation decreases every year
► None of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

85 units were sold, Use the FIFO method of inventory costing and determine the cost of
goods sold.

► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 992

Question No: 41 ( Marks: 1 ) - Please choose one

WhicWhich of the following is an example of direct materials cost?

► Polish and finishing material for chair

► A piece of wood for the production of chair
► Production worker’s wages
► Depreciation expenses

Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if the goods are sold on credit to Mr.
Mahmood?

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 ► Cash account
► Mr. Mahood account
► Sales account
► Purchases account

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business sold goods for Rs.10,000 on
credit?

► Cash account
► Sales account
► Accounts receivable account
► Purchases account

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following is an example of a Current liability?

► Closing inventory
► Opening inventory
► Petty cash
► Bank overdraft

Question No: 45 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT for trading account?

► It inculdes cost of goods sold and all the direct expenses related to sales
► It inculdes cost of goods sold and all the indirect expenses related to sales
► It inculdes cost of goods sold and all the direct and indirect expenses
► It inculdes cost of goods sold and all the direct and selling, administrative
expenses

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following are the components of General Ledger?
1) Title of account
2) Amount of transaction
3) Date of transaction
► (1) & (2) only
► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)

Question No: 47 ( Marks: 1 ) - Please choose one

The original book of entry, in which all vouchers are first recorded, is called:

► General Journal
► General Ledger
► Trial Balance
► Balance Sheet

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Question No: 48 ( Marks: 1 ) - Please choose one
When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account

Question No: 49 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in
the business made by the owner will effect:

► Cash & Capital Account

► Cash & Expense Account
► Capital & Revenue Account
► Capital & Expense Account

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following is non- profit organization?
► Sole proprietorship
► Partnership
► Limited company
► Trust

Question No: 51 ( Marks: 5 )

What is bank overdraft? Mention an example for this. Why companies have to pay mark
up on it. Under which head mark up paid on overdraft is shown in financial statement.

Answer:
An overdraft occurs when withdrawals from a bank account exceed the available balance.
In this situation a person is said to be "overdrawn”.

Question No: 52 ( Marks: 10 )

Income Statement of XYZ Ltd for the year ended on 30th June, 2007:

Particulars Rs. Rs.

Sales 500,000
Less: Cost of Goods Sold 250,000
Gross Profit 250,000
Less: Operating expenses
Administrative expenses 110,000
Interest expenses 20,000 130,000
Net profit before Tax 120,000
Less: Taxes 36,000
Net profit after tax 84,000

Opening Stock for the year was Rs. 60,000.

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Balance Sheet of XYZ Ltd on 30th June, 2007:

Assets Rs.
Fixed Assets 400,000
Stock 60,000
Debtors 230,000
Bills Receivable 40,000
Cash at bank 150,000
Prepaid expenses 20,000
Total 900,000
Liabilities
Share capital 200,000
Reserves and surplus 250,000
10% Debentures 200,000
Creditors 180,000
Bills payable 70,000
Total 900,000

Calculate following ratios from the financial statement of XYZ Ltd.

1. Current Ratio
2. Acid Test Ratio
3. Stock turn over Ratio
4. Debt equity Ratio
5. Gross profit Ratio
Solution:
1: Current Ratio:
Total Assets/Total Liabilities
= 900000/900000
=1

2: Acid Test Ratio

Total Assets-Stock/Total Liabilities
= 900000-60000/900000
= 840000/900000
= 0.933333

3: Stock turn over Ratio

(Average Stock / Cost of goods sold) x 365

Average Stock = opening stock + Closing Stock/2

= 60000+60000/2
= 60000
= (Average Stock / Cost of goods sold) x 365
= (60000/250000) x 365
= 0.24 x 365
= 87.4

4: Debt equity Ratio

Long term Liabilities / Equity

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= 200000/200000
=1

5: Gross profit Ratio

(Gross Profit / Sales) x 100
= 250000/500000 x 100
= 0.5 x 100
= 50

Question No: 53 ( Marks: 10 )

Pass the rectifying entries to correct the following errors:

Question No: 54 ( Marks: 10 )

The following discrepancies were noted on comparing Cash Book with Pass Book.

(1) The following cheques were deposited into bank on 28th March but were
not collected by the bank by 31stMarch, (i) Rs. 500, (ii) Rs. 300, (iii) Rs. 200.
(2) The following cheques were issued but were not presented for the
payment by 31st March. (i) Rs. 200, (ii) Rs. 450 (iii) Rs. 525 (iv) Rs. 375.
(3) The bank credited a dividend of Rs. 2,000 on 31st march but intimation was
received by the trader on 5th April, 2008.
(4) The bank credited interest of Rs. 50 on 31st March but not debited in Cash
Book.
(5) The Bank charged (debited) a commission of Rs. 100 on 31st March.
(6) A cheque of Rs. 500 was received from customer and was entered in the
bank column of Cash Book on 25thMarch, but was paid into the bank on
1st April.

Required: Prepare a Bank Reconciliation Statement, if the Bank balance as per Cash
Book (Dr.) was Rs. 15,000 on 31stMarch, 2008.

Answer:

Balance as per Cash book. Dr 15000

Less not collected Cheques. (500+300+200) Cr 1000
Dr 14000
Add UN Presented Cheques (200+450+525+375) Dr 1550
Dr 15550
Add dividend Credit by bank Dr 2000
Dr 17550
Add interest credit by bank Dr 50
Dr 17600
Less bank charges Cr 100
Dr 17500
Less Cheque received Cr 500

Balance as per Bank Book Cr 17000

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 Paper No: 22
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION

Fall 2008

MGT101- Financial Accounting (Session - 4)

Question No: 1 ( Marks: 1 ) - Please choose one

Wages outstanding given in the trial balance will be treated as a (an):

► Asset

► Liability

► Revenue

► Deferred expense

Question No: 2 ( Marks: 1 ) - Please choose one

What does a credit balance in a partner’s current account represent to a business?

► Current Assets

► Current Liability

► Long-term liability

► Share of profit

Question No: 3 ( Marks: 1 ) - Please choose one

Particulars Rs.
Debentures 1, 50, 000
Equity Capital 2, 00,000
General Reserve 90, 000
Accumulated profit 60,000
What is debt equity ratio ?

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 ► 15: 20 (or 3:4)

► 15:24 (or 5: 8)

► 15:29

► 15:35 (or 3: 7) correct

Question No: 4 ( Marks: 1 ) - Please choose one

Particulars Rs.
Share capital of Rs. 10 each 1,000,000
Profit before tax 150,000
Taxes 10,000
Earning per share =?

► Rs. 1.50 per share

► Rs. 1.40 per share

► Rs. 1.15 per share

► Rs. 1.25 per share

Question No: 5 ( Marks: 1 ) - Please choose one

Mark up cover ratio = operating profit before financial charges ÷ ?

► Selling expenses

► Administrative expenses

► Financial charges

► Direct expenses

Question No: 6 ( Marks: 1 ) - Please choose one

In calculating earning per share (EPS), the net profit is divided by which of the following?

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 ► Number of ordinary shares

► Number of preference shares

► Paid up capital

► Authorized capital

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following business publishes the Financial Statements?

► Sole-Proprietorship

► Partnership

► Trust

► Public Limited Company

Question No: 8 ( Marks: 1 ) - Please choose one

The primary purpose of preparing a cash flow statement for an entity is to provide information
about:

► Its financial position at the end of an accounting period

► Its cash receipts and cash payments during an accounting period

► Its financial position at the start of an accounting period

► None of the given options

Question No: 9 ( Marks: 1 ) - Please choose one

How dividend declared is treated in the Balance Sheet of the company?

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 ► Provision

► Current liability

► Reserves and surplus

► Current assets

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following option(s) is TRUE about the Sales returns?

► Sales returns reduce the Gross sales of the firm

► Sales returns affect the Net income of the firm

► Sales returns affect the flow of cash

► All of the given options

Question No: 11 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?

► Total assets employed

► Total liabilities

► Total assets

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 ► Current assets

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following is TRUE about a merchandising company?

► A merchandising company's business is to buy and sell products

► A merchandising company must use the perpetual system to account for merchandising
inventory

► A merchandising company's business is to provide services

► A Sugar Mill is an example of a merchandising company

Question No: 13 ( Marks: 1 ) - Please choose one

Capital account of sole proprietors is affected by which of the following items?

a. Profit & Loss account

b. Drawings account

c. Balances of capital account

► a,b

► b,c

► a,c

► a,b,c

Question No: 14 ( Marks: 1 ) - Please choose one

Which of the following is/are TRUE about the sole trader form of business?

► A sole trader is liable to pay income tax on his/her earnings

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 ► Sole traders do not need to consult accountants

► Sole traders must register the name of their business with the Registrar of Companies

► All of the given options

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following is (are) characteristic(s) of Reserve?

► Its amount is generally determined by the management on the basis of the amount of
profit earned.

► It is shown on liabilities side of balance sheet

► It does not affect profit or loss, since it is created after ascertaining net profit

► All of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which account is increased with a debit and decreased with a credit?

► Cash

► Accounts Payable

► Contributed Capital

► Retained Earnings

Question No: 17 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

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 ► A cash flow statement

► The bank statement for the business

► A balance sheet

► A statement of retained earnings

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following appears in both the Income Statement debit column and the Balance
Sheet credit?

► Net income

► Net loss

► Dividends

► Retained earnings

Question No: 19 ( Marks: 1 ) - Please choose one

The Balance Sheet item that represents the resources invested by the owner is known as:

► Accounts Receivable

► Cash

► Note Payable

► Owner's Equity

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is an example of operating expense?

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 ► Purchasing operating equipment

► Purchasing cleaning services doubted

► Purchasing an investment in another company

► Purchasing a computer for the accounting office

Question No: 21 ( Marks: 1 ) - Please choose one

The main objective of financial reporting is to provide:

► Essential information to internal users of financial reports.

► Useful economic information about the business to the external parties for sound
financial decisions.

► Information to internal users about the cash position of the business.

► Information to the Securities Exchange Commission (SEC).

Question No: 22 ( Marks: 1 ) - Please choose one

The figure of cash received from debtors can be located either from cash book or:

► Debtor’s Control Account

► Balance Sheet

► Profit & Loss Account

► Bills Payable Account

Question No: 23 ( Marks: 1 ) - Please choose one

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 Consider the following data and identify the amount which will be shown in profit & loss
account.

Particulars Rs.
Bad debts 3,500
Provision for doubtful debts (old) 6,000
Current year’s provision (new) 1,500

► Rs. (1,000)

► Rs. 1,000

► Rs. (5,000)

► Rs. 5,000

Question No: 24 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss
account.

Particulars Rs.
Bad debts 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600

► Rs. 1,600

► Rs. 2,000

► Rs. 2,600

Question No: 25 ( Marks: 1 ) - Please choose one

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 Which of the following rectifying entry will be recorded, if sales to Mr. “A” of Rs.336 have
been debited to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)

► Sales account (Dr.) and B’s account (cr.)

► B’s account (Dr.) and Sales account (Cr.)

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of a purchase
return of Rs.200 to Mr. “A” entered in sales book instead of purchase return book?

► A’s account only

► Sales account only

► Purchase returns account and sales account

► Purchases account only

Question No: 27 ( Marks: 1 ) - Please choose one

A receipt of cash Rs. 10,000 from Mr. Bilal is recorded as Rs. 1,000. What amount will be
adjusted in rectifying entry?

► Rs. 1,000

► Rs. 9,000

► Rs. 10,000

► Rs. 11,000

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Question No: 28 ( Marks: 1 ) - Please choose one

If provision is created for doubtful debts, which of the following entry will be passed to record
bad debts in control account?

► Bade debts (Dr) and Debtors Control A/c (Cr)

► Provision for doubtful debts (Dr) and Debtors Control A/c (Cr) correct

► Provision for doubtful debts (Dr) and Debtors A/c (Cr)

► Debtors Control A/c (Dr) and Provision for doubtful debts (Cr)

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following is a detailed record of an individual account in case of large business?

► Control Account

► Subsidiary Ledger

► Balance Sheet

► Trial Balance

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is shown on credit side of creditors control account?

► Bills Receivable

► Return inwards

► Credit purchases

► Discount allowed

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Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is an item of a creditors control account?

► Cash sales

► Credit sales

► Credit purchase

► Cash purchases

Question No: 32 ( Marks: 1 ) - Please choose one

In which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business

► Failure of repeated attempt to collect the debt

► All of the given options

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following best describes unpresented cheques?

► Cheques received on behalf of the business by the bank

► Cheques drawn but yet to be recorded in the bank records

► Cheques issued by the bank not recorded in business records

► Cheques received but yet to be recorded in the bank records

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Question No: 34 ( Marks: 1 ) - Please choose one

The following balance and discrepancies were found on 31 March 2008:

Particulars Rs.
Cash book balance (Dr) 5 000
Unpresented cheques 1 000
Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)

► Rs. 5 500 (Cr)

► Rs. 4 500 (Dr)

► Rs. 4 500 (Cr) correct

Question No: 35 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets ?
Owner's equity 1,50,000
Liabilities 1,00,000

► Rs. 49,000

► Rs. 55,000

► Rs. 50,000

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 ► Rs. 2, 50,000

Question No: 36 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Furniture Rs. 90,000

Cash Rs.1, 00, 000
Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 90, 000

► Rs. 2, 01,000 liabilities

► Rs. 1, 11, 000 liabilities

► Rs. 2, 90, 000 liabilities

► Rs. 2, 91, 000 liabilities

Question No: 37 ( Marks: 1 ) - Please choose one

Accountancy covers which of the following area(s):

► Book-keeping

► Accounting

► Auditing

► All of the given options

Question No: 38 ( Marks: 1 ) - Please choose one

___________ is the detail of transaction in one's account provided by the bank.

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 ► Bank statement

► Bank reconciliation statement

► Income statement

► Financial statement

Question No: 39 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Date Item Quantity Cost/Unit Total

2007Jan. 2 Opening inventory 100 Rs.18.00 Rs.1,800
Mar. 4 Purchase 400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500

Four hundred units are unsold, Use the FIFO method of inventory costing and determine the
value assigned to the 400 units on hand at the end of the period.

► Rs.7, 500

► Rs.7, 978

► Rs.8, 000

► Rs.8, 400

Question No: 40 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Cost/Unit Total

Date Item Quantity Rs. Rs.

Jan. 2 Beginning inventory 10 10 100

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Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

85 units were sold, Use the FIFO method of inventory costing and determine the cost of goods
sold.

► Rs. 1,225

► Rs. 1,015

► Rs. 965

► Rs. 992

Question No: 41 ( Marks: 1 ) - Please choose one

All the costs incurred on the incomplete assets up to the balance sheet date must be transferred
to:

► Capital account

► Capital work in progress account

► Relevant asset account

► Owner's equity account

Question No: 42 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000

Life of asset 5 years
Depreciation for each year Rs. 15,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

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 ► Rs.25, 000

► Rs. 75,000

► Rs. 15,000

► Rs. 1, 00,000

Question No: 43 ( Marks: 1 ) - Please choose one

Direct materials costs Rs.70,000

Direct labor costs 30,000
Manufacturing overhead costs 60,000
conversion cost ?

► Rs. 20,000

► Rs.40, 000

► Rs.90, 000

► Rs.160, 000

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following shows summary of a company's financial position at a specific date?

► Profit & Loss Account

► Cash Flow Statement

► Balance Sheet

► Income & Expenditure Account

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Question No: 45 ( Marks: 1 ) - Please choose one

Bank book is part of:

► Voucher

► General Journal

► General Ledger

► Trial Balance

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following are the components of General Ledger?

1) Title of account

2) Amount of transaction

3) Date of transaction

► (1) & (2) only

► (2) & (3) only

► (1) & (3) only

► (1), (2) & (3)

Question No: 47 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit and loss

account—Balance Sheet

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 ► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit and loss
account—Balance Sheet

► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and loss

account—Balance Sheet

► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and loss

account—Balance Sheet

Question No: 48 ( Marks: 1 ) - Please choose one

Vehicles which are used to supply finished products are called business ________.

► Tangible assets

► Intangible assets

► Capital

► Liabilities

Question No: 49 ( Marks: 1 ) - Please choose one

The basic accounting principle/concept according to which Business is independent from its
owner(s) is known as:

► Separate Entity Concept

► Matching Concept

► Going Concern Concept

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 ► Materiality Concept

Question No: 50 ( Marks: 1 ) - Please choose one

Shares for which amount is paid by public are called ________ shares.

► Paid up

► Authorized

► Bonus shares

► All are correct options

Question No: 51 ( Marks: 5 )

10 % Debentures of Rs. 80,000 are shown in trial balance. How it will be shown in
financial statements? Also mention why a company issues debentures.

Answer:

10% Debentures of Rs. 80000 is shown the Owners Equity pr liability Side of Balance sheet.

Debentures are issued under the common seal of the company and debentures are an instrument
for obtaining the loan from the general public. Company also paid mark up on debentures which
generally equal to the market rate.

Question No: 52 ( Marks: 10 )

Following information is extracted from the books of Arfan Ltd as on December 31st, 2007.

Particulars Cost Depreciation Accumulated Depreciation

rate On 01-01-2007

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Vehicles 01-01-2007 1,90,000 10% 10,000
Building 01-01-2007 4,00,000 20% 12,500
Furniture & Fixture 01-01-2007 4,15,000 15% 34,500
Land 01-01-2007 1,58,000 -- ---

You are required to calculate Written down value of each asset and show working of
complete depreciation for the year ending on December 2007.

Particulars Cost Rate Accumulated Depreciation WDV

As Addition/ As As At For As At
At At
deletion 1-1- The st
31 -
1-1- st 2007
31 - 12-
2007 12- Year 2007
2007
Vehicles 190000 0 190000 10% 10000 19000 29000 161000
Building 400000 0 400000 20% 12500 80000 92500 307500
Furniture 415000 0 415000 15% 34500 62250 96750 318250
Land 158000 0 158000 0 0 0 0 158000
Total 1163000 0 1163000 57000 161250 218250 944750

Question No: 53 ( Marks: 10 )

Prepare Profit and Loss Account for the year ending 31st December 2007 from the Trial
Balance and adjustments of MS Company given below:

Debit Credit
Particulars
Rs. Rs.
Drawings 14,000
Capital Account 80,000
Opening Stock 55,000
Purchases 485,000
Sales 610,000
Sundry Debtors 80,000
Sundry Creditors 60,500
Sales Returns 5,000
Carriage Inwards 6,000
Salaries 28,000
Rent, Rates, Taxes 15,000

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Insurance 4,000
Machinery 50,000
Furniture 5,000
Cash in hand 3,500
Total 750,500 750,500

Adjustments:

4) Depreciate machinery and furniture @20%p.a.

5) Outstanding Salaries Rs. 2,000

6) Insurance paid in advance Rs. 500

7) Maintain @5% reserve for doubtful debts on debtors.

8) Closing Stock was valued at Rs. 60,000

Trading & Profit & Loss Account

For the year ending 31st December 2007

Particulars Debit Balance/Rs Particulars Credit Balance/Rs

Opening Stock 55000 Sales 610000 605000

Purchases 485000 Less returns: 5000

Carriage in 6000 Closing Stock 60000

Gross Profit 119000

665000 665000
Salaries 28000 Gross Profit 119000

+outstanding: 2000 30000

Rent, Rate, Taxes 15000

Insurance 4000

Less advance: 500 3500

Depreciation:

Machinery: 10000

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Furniture: 1000 11000

Provision of bed debts 4000

Net Profit:

55500
119000 119000

Question No: 54 ( Marks: 10 )

What is the effect of given adjustments on Trading & Profit & Loss account and Balance
Sheet?

a. Accrued Expenses or Outstanding Expenses

b. Prepaid Expenses or Unexpired Expenses

c. Accrued Revenue or Revenue Receivable

d. Unearned Revenue or Revenue Received in Advance

e. Depreciation of Asset

1. Accrued Expenses or Outstanding Expenses

Trading and profit and loss account effect

These expenses will be shown in profit and loss account under administrative expenses
and will and be deducted from gross profit. They will be used to calculate net profit

Balance sheet effect

These expenses will be shown as expense payable or accrued expenses in balance sheet as
current liabilities and will be shown under current liabilities section of liabilities as they have
to be paid by business..

2. Prepaid Expenses or Unexpired Expenses

Trading and profit and loss account effect

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 These will be deducted from relevant expense account to get the actual expenses for the
period and that actual amount of expense will be deducted from gross profit to arrive at net
profit. This amount of prepaid expenses will not be included in profit and loss account as an
expense itself but its effect will be on current expenses for the period for which profit and
loss is being calculated.

Balance sheet effect

These prepaid expenses will be show and current assets in balance sheet and will be shown
under the section of current assets in balance sheet.

3. Accrued Revenue or Revenue Receivable

Trading and profit and loss account effect

These will be added to sales in trading account in profit and loss statement and will be
treated as a revenue in the calculation of gross profit by subtracting cost of goods sold from
net sales. This will affect gross profit in trading account.

Balance sheet effect

In balance sheet this revenue will be shown under current assets as receivables from debtors
and will be shown under the section of current assets of the business.

4. Unearned Revenue or Revenue Received in Advance

Trading and profit and loss account effect

This will not be added to the sales as sales is recognized when the actual services have been
provided or when goods have been shipped irrespective of whether payment has been
received or not. So this will not affect profit and loss account as it is still not recognized as
sales/revenue.

Balance sheet effect

This is a liability for the company because the company has to give goods or services to the
buyer for the advance payment done by the buyer and will be shown as a liability in the
balance sheet under the current liability section of balance sheet. Also the same amount will
be shown in the bank or cash as current asset to offset the liability because the cash or cheque
has been received for goods not given or services not rendered yet.

5. Depreciation of Asset

Trading and profit and loss account effect

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 The depreciation of asset is an operating expense for the business and will affect profit and
loss account. It will be added to the administrative expense and will be appear in the
administrative expense section of profit and loss account and will be deducted from gross
profits to arrive at net profits along with other expenses.

Balance sheet effect

In balance sheet it will appear as deduction from the fixed asset as the fixed assets in balance
sheet will be shown at written down value. So this will be added to previous balance of
accumulated depreciation and will be deducted from the total cost of the fixed assets and will
appear in the assets section under the heading of fixed asset. It might appear in notes as
sometimes in balance sheet summarized figure of fixed asset at WDV will be shown. In any
case it is deducted from fixed asset in balance sheet and affects the total assets side

Paper No:23
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION

Fall 2008

MGT101- Financial Accounting (Session - 1)

Time: 120 min

Marks: 85

Question No: 1 ( Marks: 1 ) - Please choose one

If
company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A, Mr. B and Mr. C is
2:3:5 respectively what will be the Profit share for Mr. B in distributable profit.

► Rs. 98,000

► Rs. 1, 47,000

► Rs. 2, 45,000

► Rs. 3, 43,000

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Question No: 2 ( Marks: 1 ) - Please choose one

What types of changes (is) are made at the admission of partner in partnership?

► Assets of old business will be revalued

► Liabilities of old business will be revalued

► Good will of business will be revalued

► All of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

A
firm may earn profit during an accounting period but have less money in the bank at the end of the
period then it had at the beginning. Which of the followings, on its own, could explain this?

► Not paying invoices received from creditors

► The sale of fixed assets during the period

► An increase in trade debtors over the course of the period

► An increase in the depreciation charge relative to the previous accounting period doubted

Question No: 4 ( Marks: 1 ) - Please choose one

In
which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only

► In income statement under the administrative expense only

► In both balance sheet under the head of current liabilities and income statement under the
administrative expense

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Question No: 5 ( Marks: 1 ) - Please choose one

The
charter of a company which defines the limitations and powers of the company is called:

► The memorandum of association

► Articles of association

► Statutory report

► Certificate of commencement

Question No: 6 ( Marks: 1 ) - Please choose one

By
which if the following Act/ Ordinance, a company is allowed to issue shares at a higher price than their
face value.

► Companies ordinance 1984

► Contract act 1872

► Sales of Goods act 1930

► None of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following clause/s are discussed in Memorandum of Association of Companies?

► Name of company

► Place of registered office of company

► Objective of the company

► All of the given options

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Question No: 8 ( Marks: 1 ) - Please choose one

Identify the selling expenses of manufacturing concern with the help of given data.

Particulars Rs.

Salesman’s salary 70,000

Commission on sales 28,000

Carriage outward 10,000

Carriage inward 5,000

► Rs. 80,000

► Rs. 60,000

► Rs. 38,000

► Rs. 1, 08,000

Question No: 9 ( Marks: 1 ) - Please choose one

Which of the following account is affected from the Drawings of cash in sole-proprietorship business?

► Capital account

► Shareholder account

► Liability account

► Expense account

Question No: 10 ( Marks: 1 ) - Please choose one

Regardless of how long it takes to produce and sell , inventory is always considered to be a:

► current liability

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 ► long-term asset

► stockholders' equity

► current asset

Question No: 11 ( Marks: 1 ) - Please choose one

An
asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used

► It can be realized in cash or sold or consumed in the business within one year

► It is a piece of new machinery that is expected to last for at least ten years

► All of the given options

Question No: 12 ( Marks: 1 ) - Please choose one

General office expenses are charged to which of the following head:

► Administrative expenses

► Marketing expenses

► Selling expenses

► Financial expenses

Question No: 13 ( Marks: 1 ) - Please choose one

Wages paid to laborers working in the manufacturing department is treated as an expense of:

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 ► Cost of goods sold

► Administrative expenses

► Selling expenses

► Marketing expenses

Question No: 14 ( Marks: 1 ) - Please choose one

It is
st
supposed that on 31 December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of
past experience, it is estimated that 10% of the sundry debtors are doubtful. Actual bad debts are Rs.
1600. What amount of new provision for doubtful debts will be deducted from Sundry debtors?

► Rs. 3,600

► Rs. 4,000

► Rs. 1,600

► Rs. 2, 400

Question No: 15 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss account.

Particulars Rs.

Bad debts 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 1,000

► Rs. 600

► Rs. 1,600

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 ► Rs. 2,000

► Rs. 2,600

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales Rs.100 to Mr. “A”
recorded in the purchases book?

► Sales account

► Purchase account

► A’s account and Sales account

► Sales account, purchase account and A’s account

Question No: 17 ( Marks: 1 ) - Please choose one

"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in books of accounts", is an
example of:

► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 18 ( Marks: 1 ) - Please choose one

Transaction that has been completely forgotten to enter is called:

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 ► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 19 ( Marks: 1 ) - Please choose one

Goods purchased from “Mr. A” for Rs. 2,000 passed through the sales book. The rectification of error
will result in:

► Increase of gross profit

► Decrease of gross profit

► Remains constant and no effect on net profit

► There is no relation between goods purchased and gross profit

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of purchases return of Rs.
200 to “Mr.P” mistakenly entered in sales book?

► P’s account

► Purchases return account

► Sales account

► Purchases returns account and sales account

Question No: 21 ( Marks: 1 ) - Please choose one

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 If
provision is created for doubtful debts, which of the following entry will be passed to record bad debts
in control account?

► Bade debts (Dr) and Debtors Control A/c (Cr)

► Provision for doubtful debts (Dr) and Debtors Control A/c (Cr)

► Provision for doubtful debts (Dr) and Debtors A/c (Cr)

► Debtors Control A/c (Dr) and Provision for doubtful debts (Cr)

Question No: 22 ( Marks: 1 ) - Please choose one

Control account tells about:

► Picture collectively instead of individually

► Details of loyal clients

► Customer attitude of payments

► Complete history of transactions of business clients

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following is an item of a creditors control account?

► Cash sales

► Credit sales

► Credit purchase

► Cash purchases

Question No: 24 ( Marks: 1 ) - Please choose one

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Which of the following is an item of a debtors control account?

► Cash sale

► Credit sales

► Credit purchase

► Cash purchases

Question No: 25 ( Marks: 1 ) - Please choose one

Consider the following data:

Provision created in 2006 Rs. 2,500

Bad debts in 2007 Rs. 1,500

Sundry debtors on 31-12- 2007 were Rs. 40,000 and provision is created @ 5%.

Which journal entry is Correct for the provision for doubtful debts for the year 2007.

► Provision for doubtful debts a/c Rs. 1,000 (Dr) & Profit & Loss a/c Rs. 1,000 (Cr)

► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000 (Cr)

► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000 (Cr)

► Profit & Loss a/c Rs. 1,000 (Dr) & Provision for doubtful debts a/c Rs. 1,000 (Cr)

Question No: 26 ( Marks: 1 ) - Please choose one

It is
supposed that on 31-12-2007, the sundry debtors are amounted to Rs. 40,000. On the basis of past
experience, it is estimated that 5 % of the sundry debtors are doubtful. What entry will pass to transfer
the bad debts to provision for doubtful debts?

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 ► Profit & Loss a/c Rs. 1,600 (Dr) & Provision for doubtful debts a/c Rs. 1,600 (Cr)

► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000 (Cr)

► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000 (Cr)

► Provision for doubtful debts a/c Rs. 1,600 (Dr) & Bad Debts a/c Rs. 1,600 (Cr)

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded when the Bad Debts are recovered?

► Cash account (Dr.) & Bad Debts recovered account (Cr.)

► Accounts Receivable account (Dr.) & Bad Debts recovered account (Cr.)

► Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)

► Provision for doubtful debts account (Dr.) & Cash account (Cr.)

Question No: 28 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss account.

Particulars Rs.

Bad debts 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 800

► Rs. 400

► Rs. 800

► Rs. 2,000

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 ► Rs. 2,400

Question No: 29 ( Marks: 1 ) - Please choose one

In
which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business

► Failure of repeated attempt to collect the debt

► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT for Doubtful Debt?

► It is shown in balance sheet

► It is a definite loss to the business

► It is not shown in balance sheet

► No provision is necessary for it

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following option is TRUE about the characteristic(s) of Bad Debt?

► It is a definite loss to the business

► It is not shown in Balance Sheet

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 ► No provision is necessary for it

► All of the given options

Question No: 32 ( Marks: 1 ) - Please choose one

Which one of the following transactions will cause the balance in Mr. Terry's Cash Book to be greater
than his Bank Statement balance?

► A cheque is drawn but not yet presented at the bank for payment

► The bank has not yet notified to Mr. Terry about a dishonoured cheque

► A credit transfer into Terry's Bank Account

► A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110

Question No: 33 ( Marks: 1 ) - Please choose one

Upon checking the Bank Statement against the Cash Book by Mr. A, It was discovered that an amount of
Rs.120 for dividend from XYZ Co. had not been entered in the Cash Book. Which of the following entry
should be recorded to rectify the mistake?

► Bank Account(Dr.) and Dividend Account (Cr.)

► XYZ Co. Account (Dr.) and Bank Account (Cr.)

► Dividend Account (Dr.) and Bank Account (Cr.)

► Bank Account (Dr.) and XYZ Co. Account (Cr.) doubted

Question No: 34 ( Marks: 1 ) - Please choose one

A
Bank Reconciliation Statement is prepared to:

► Ascertain that the difference between the Cash Book balance and the Bank

Statement balance has been accounted for

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 ► Correct errors in the Cash Book or errors in the Bank Statement

► Amend the balance of the Bank Statement of the firm

► Amend the balance in the Cash Book of the firm

Question No: 35 ( Marks: 1 ) - Please choose one

Firms charge depreciation each year:

► To ensure there is enough money in the firm to replace the asset

► To spread the cost of the asset over its working life

► To reduce the profit and thus reduce the dividends they can pay to share holders

► Because the law states they must be reduced

Question No: 36 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?

► These are the running expenses of the business

► They improve the financial position of the business

► They reduce the profit of the concern

► They do not appear in the balance sheet

Question No: 37 ( Marks: 1 ) - Please choose one

The
amount of depreciation charged on machinery will be debited to:

► Machinery account

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 ► Depreciation account

► Cash account

► Capital account

Question No: 38 ( Marks: 1 ) - Please choose one

In
cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw material inventory

► Opening raw material inventory - Purchases + Ending raw material inventory

► Ending raw material inventory + Opening raw material inventory - Purchases

► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following particulars are included in the specimen of a bank receipt voucher?

4) Name of the organization

5) Bank code
6) Date of transaction

► (1) & (2) only

► (1) & (3) only

► (2) & (3) only

► (1), (2) & (3)

Question No: 40 ( Marks: 1 ) - Please choose one

If the
cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs.20,000 during the year.
What would be the Net Profit?

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 ► Rs.15,000

► Rs. 35,000

► Rs. 55,000

► Rs. 60,000

Question No: 41 ( Marks: 1 ) - Please choose one

The
return of goods by a customer should be debited to:

► Customer’s account

► Sales return account

► Goods account

► Accounts receivable

Question No: 42 ( Marks: 1 ) - Please choose one

Mr.
A provided the following information from his books of accounts at the end of the month.

Particulars Rs.

Cash 100

Accounts Receivable 500

Accounts Payable 200

Bank Loans 1,000

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Based on the information provided, what are Mr. A’s total liabilities?

► Rs.200

► Rs. 900

► Rs. 1200

► Rs. 1700

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following shows the categories of assets in a Balance Sheet?

► Current assets, Long term assets and Accounts payable

► Current assets, Long term assets and Fixed assets

► Current assets, Quick assets and Business debts

► Current assets, Fixed assets and Deferred cost

Question No: 44 ( Marks: 1 ) - Please choose one

An
informal accounting statement that lists the ledger account balances at a point in time and compares
the total of debit balances with the total of credit balances is known as:

► Income Statement

► Balance Sheet

► Trial Balance

► Cash Book

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Question No: 45 ( Marks: 1 ) - Please choose one

The
original book of entry, in which all vouchers are first recorded, is called:

► General Journal

► General Ledger

► Trial Balance

► Balance Sheet

Question No: 46 ( Marks: 1 ) - Please choose one

Commercial Accounting is based on:

► Single entry book keeping

► Double entry book keeping

► Both single and double entry book keeping

► Cash basis of book keeping

Question No: 47 ( Marks: 1 ) - Please choose one

Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only

► Both cash and accrual accounting

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 ► None of the given options

Question No: 48 ( Marks: 1 ) - Please choose one

An
accounting system is used by a business to:

► Analyze transactions

► Handle routine book-keeping tasks

► Structure information

► All of the given options

Question No: 49 ( Marks: 1 ) - Please choose one

The
estimation of expenses and revenues for future is called:

► Budgeting

► Costing

► Management

► Auditing

Question No: 50 ( Marks: 1 ) - Please choose one

Shares for which amount is paid by public are called ________ shares.

► Paid up doubted

► Authorized

► Bonus shares

► All are correct options

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Question No: 51 ( Marks: 5 )

What is the difference between accounts payable and accounts receivable? Discuss it with the help of
example.

Accounts Payable:

Liabilities are debts. The person or organization to which the debt is owed is called creditors. All
businesses have liabilities; even the most successful companies purchase stocks, supplies, and services on
credit. The liabilities arising from such purchases are called accounts payable. For example, if a person A
is our creditor and we have to return his money so he it is recorded in our books as accounts payable.

Accounts Receivable:

Debtors are the person from whom our money is receivable. He has to return our money which he had
borrowed from us at sometime. Such money or accounts are called Accounts receivable. For example A
person named A is our debtor so he is recorded in our book as the account receivable.

Question No: 52 ( Marks: 10 )

The
st
following Trial Balance was extracted from the books of Naeem & Sons on 31 December, 2007. From
this you are required to prepare Balance Sheet as on.

Particulars Debit Credit

Rs. Rs.

Cash 5,200

Accounts Receivable 9,000

Merchandise Inventory on 1.1.2007 6,000

Plant and Machinery 24,000

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Land and Building 82,000

Furniture and Fixtures 2,600

Capital 136,000

Accounts Payable 3800

Purchases 60,000

Purchases returns and allowances 2,800

Sales 70,000

Sales returns and allowances 4,600

Insurance Prepaid 3,400

Advertisement expenses 4,000

Salaries expenses 12,000

Total 212,600 212,600

Liabilities: Assets

Capital 136000 Accounts receivable 9000

Purchase return and allowances (2800) Merc. Inventory 6000

Plant n machinery 2400

Land n building 82000

Furniture n fixtures 2600

133220 102000

Current liabilities: Current Assets

Accounts payable (3800) Sales 70000

Salaries expenses 12000 Sales return (4600)

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Advertisement expenses 4000

Cash 5200

12200 70600

ADDITIONAL INFORMATION:

· Prepaid insurance on 31st December, 2007 is Rs. 1,400

· Outstanding salaries Rs. 1,000
· Depreciation on Plant and Machinery @ 10% p.a.
· Merchandise inventory on 31st December, 2007 was valued at Rs. 6,000
· Net Loss for the period Rs. 13,000

Question No: 53 ( Marks: 10 )

Prepare Profit & Loss Account for the year ended 31st December, 2007.

Particulars Rs.

Capital 1,20,000

Trade Creditors 17,500

Bills payable 1,000

Sales 6,26,100

Raw material Stocks on 1-1-2007 30,000

Work in process on 1-1-2007 35,600

Finished Goods on 1-1-2007 35,400

Purchases 5,18,000

Carriage inwards 8,900

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 Discount Allowed 750

debtors 16,000

Sales man commission 2,000

Office expenses 2,000

Carriage outwards 1,700

Bad debts 1,400

Salaries 13,000

Direct labor 1,800

FOH 1,100

Plant & Machinery 53,000

Buildings 35,000

Tools 8,650

Stock as on 31st December, 2007

Ø Raw material Stocks Rs. 31,000

Ø Work in process Rs. 25,000
Ø Finished Goods Rs. 53,900
Depreciation Rate:

· Plant & Machinery @ 10% and charged to FOH

· Buildings @ 5% and 40% charged to Administrative expenses and balance will be charged to FOH
· Tools @ 15% and 30 % charged to FOH and balancing will be charged to administrative expenses
Additional data

Ø Reserve and bad debts is to be created at 5% on debtors.

Ø 40% of salaries will charge to office and balance to FOH.

Question No: 54 ( Marks: 10 )

You
are required to prepare Debtors control account and Creditor control account from the given data
from the books of ABC Co. Ltd for the year 2007.

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 Opening balance

Debtors Rs.1,55,000

Creditors 2,55,000

Sales

Cash Rs.1,85,000

Credit 2,65,000

Purchases

Cash Rs.120,000

Credit 200,000

Other information

Total receipts Rs.3,50,000

Total payments 2,50,000

Additional Information

Discount allowed Rs.20,000

Discount received 15,000

Bad debts written off 20,000

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 Creditors control account

Discount received 15000 Opening balance 255000

Total payments 250000 Total purchases 200000

balance 190000

455000 455000

Debtors Control Account

Opening balance 155000

Total sales 185000 Receipts 350000

discount 20000

340000

Paper No:24
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION

Fall 2008

MGT101- Financial Accounting (Session - 3)

Ref

Time: 120 min

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 Marks: 85

Question No: 1 ( Marks: 1 ) - Please choose one

If
company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A, Mr. B and Mr. C is
2:3:5 respectively what will be the Profit share for Mr. B in distributable profit.

► Rs. 98,000

► Rs. 1, 47,000 (Correct)

► Rs. 2, 45,000

► Rs. 3, 43,000

Question No: 2 ( Marks: 1 ) - Please choose one

What does a credit balance in a partner’s current account represent to a business?

► Current Assets

► Current Liability

► Long-term liability

► Share of profit (doubted)

Question No: 3 ( Marks: 1 ) - Please choose one

Which of the following ratio tells about “How a company would repays its loans”

► Mark up cover ratio doubted

► Acid test ratio

► Current ratio

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 ► Debt Equity ratio

Question No: 4 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT about Gross Profit Ratio?

► (Gross profit / Net Sales) x 100

► (Gross profit / Operating Income) x 100

► (Gross profit / Sales Return) x 100 (Correct)

► (Gross profit / Net Income) x 100

Question No: 5 ( Marks: 1 ) - Please choose one

Current ratio may be increased by:

► Overstating current Assets

► Overstating current Liabilities

► Understating current Assets

► Understating current assets and overstating current liabilities

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following is a type of business formed under the Companies Ordinance 1984?

► Sole-Proprietorship

► Partnership

► Joint Stock Company (Correct)

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 ► All of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

When preparing cash flow statements, the repayments of a loan during the year should be included
under which of the following heading?

► Operating activities

► Financing activities

► Investing activities

► None of the given options

Question No: 8 ( Marks: 1 ) - Please choose one

In
cash flow statements, which of the following would appear as an inflow of cash?

► The repayments of a bank loan

► Dividend issue in the current year

► Money received as result of selling fixed assets (Correct)

► The difference between the valuations of old and new fixed assets

Question No: 9 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if Rs. 6,000 transfer to general reserve is given in
adjustment?

► It will be treated in Income Statement only

► It will be treated as current liability in balance sheet only

► It will be treated in profit and loss appropriation account only

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 ► it will be treated in both profit and loss appropriation account and in the balance sheet
(Correct)

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association (Correct)

► Articles of Association

► Prospectus

► Annual Report

Question No: 11 ( Marks: 1 ) - Please choose one

Preliminary Expenses of the company may write off against:

► Share premium account (Correct)

► Share holder account

► Debtors control account

► Creditor control account

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following clause/s are discussed in Memorandum of Association of Companies?

► Name of company

► Place of registered office of company

► Objective of the company

► All of the given options (Correct)

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Question No: 13 ( Marks: 1 ) - Please choose one

The
Joint Stock Company is formed under the Companies Ordinance:

► 1984 (Correct)

► I884

► 1948

► 1965

Question No: 14 ( Marks: 1 ) - Please choose one

When the capitals are fixed, which of the following account will be debited for drawings made by a
partner?

► Individual Partner’s Current Account

► Partner’s Cash Account

► Partner’s Bank Account

► Partners Capital Account

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following account will be debited when the interest on drawings is charged?

► Partner’s capital account

► Interest account

► Partner’s current account

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 ► Profit & Loss account doubted

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT if depreciation is given in trial balance?

► It means depreciation has already been deducted from concerned asset account

► It will be shown as an expense in income statement only (Correct)

► It will not be deducted from concerned asset in Balance Sheet

► All of the given options are correct

Question No: 17 ( Marks: 1 ) - Please choose one

An
asset which is NOT easily convertible to cash or not expected to become cash within a period of twelve
months is called:

► Liquid asset

► Current asset

► Fixed asset

► Floating asset

Question No: 18 ( Marks: 1 ) - Please choose one

Which one of the following is TRUE about provisions?

► It is necessary to prepare for showing true picture of balance sheet

► It is a reduction from assets

► It is prepared for specific purposes

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 ► All of the given options

Question No: 19 ( Marks: 1 ) - Please choose one

The
Balance Sheet item that represents the resources invested by the owner is known as:

► Accounts Receivable

► Cash

► Note Payable

► Owner's Equity (Correct)

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is NOT an operating expense?

► Salaries and wages expense

► Rent expense

► Interest expense

► Depreciation expense (Correct)

Question No: 21 ( Marks: 1 ) - Please choose one

A
financial statement that indicates the success or failure of a business, over a period of time is called:

► A cash flow statement

► A retained earnings statement

► An income statement

► A balance sheet (Correct)

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Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is the first phase of the typical operating cycle?

► Receive cash from customers

► Pay cash to suppliers

► Sell goods and services to customers

► Purchase goods and services (Correct)

Question No: 23 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

Closing value of stock 40,000

Write off Bad debts (given in adjustments) 2,400

Sundry Debtors (given in trial balance) 33,200

Provision is created on Debtors at 10%

Identify the Total amount deducted from Sundry debtors.

► Rs. 460

► Rs. 2,400

► Rs. 3,080

► Rs. 5,480 (Correct)

Question No: 24 ( Marks: 1 ) - Please choose one

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 It is
st
supposed that on 31 December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of
past experience, it is estimated that 10% of the sundry debtors are doubtful. Actual bad debts are Rs.
1600. What amount of new provision for doubtful debts will be deducted from Sundry debtors?

► Rs. 3,600

► Rs. 4,000

► Rs. 1,600

► Rs. 2, 400 (doubted)

Question No: 25 ( Marks: 1 ) - Please choose one

When one or both aspects of a transaction are recorded in the wrong class or category of account, this is
called:

► Error of principle (Correct)

► Error of omission

► Error of commission

► Error of original entry

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales Rs.100 to Mr. “A”
recorded in the purchases book?

► Sales account

► Purchase account

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 ► A’s account and Sales account

► Sales account, purchase account and A’s account (Correct)

Question No: 27 ( Marks: 1 ) - Please choose one

A
receipt of cash Rs. 10,000 from Mr. Bilal is recorded as Rs. 1,000. What amount will be adjusted in
rectifying entry?

► Rs. 1,000

► Rs. 9,000 (Correct)

► Rs. 10,000

► Rs. 11,000

Question No: 28 ( Marks: 1 ) - Please choose one

_____ are committed in those cases where proper distinction between revenue and capital items is not
made.

► Error of principle

► Error of omission

► Error of commission (Correct)

► Error of original entry

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following is (are) benefit/s of subsidiary ledger accounts to business?

► It tells about customer attitude of payments

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 ► It can be checked against the control account to pick up recording errors

► It tells about the complete history of transactions of business client

► All of the given options (Correct)

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?

► Cash sales (Correct)

► Credit sales

► Bills receivable

► Discount allowed

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is/are the item/s of a Control Account?

► Credit sale only

► Cash sale only

► Credit purchase only

► Both Credit sales and Credit purchase

Question No: 32 ( Marks: 1 ) - Please choose one

It is
st
supposed that on 31 December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of
past experience, it is estimated that 5 % of the sundry debtors are doubtful. Actual bad debts are Rs.
1600. What amount of new provision for doubtful debts will be credited in profit & loss account.

► Rs. 3,600

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 ► Rs. 2,000

► Rs. 1,600

► Rs. 400 (doubted)

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is NOT a function of bank reconciliation statement?

► To reconcile the difference between the cash book and the bank statement

► To check for errors in balance sheet (Correct)

► To update omitted entries into the cash book

► To update omitted entries into the bank statement

Question No: 34 ( Marks: 1 ) - Please choose one

Which one of the following transactions will cause the balance in Mr. Terry's Cash Book to be greater
than his Bank Statement balance?

► A cheque is drawn but not yet presented at the bank for payment

► The bank has not yet notified to Mr. Terry about a dishonoured cheque

► A credit transfer into Terry's Bank Account

► A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110

Question No: 35 ( Marks: 1 ) - Please choose one

The
following balance and discrepancies were found on 31 March 2008:

Particulars Rs.

Cash book balance (Dr) 5 000

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 Unpresented cheques 1 000

Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)

► Rs. 5 500 (Cr)

► Rs. 4 500 (Dr)

► Rs. 4 500 (Cr) (Correct)

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is NOT a characteristic of Joint Stock Company?

► Separate Legal Entity

► Limited Liability

► Easy Formation (Correct)

► Common Seal

Question No: 37 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.

Assets 1,98,000

Owner's equity 95,000

Liabilities ?

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 ► Rs. 49,000

► Rs. 55,000

► Rs. 1, 25,000

► Rs. 1, 03,000 (Correct)

Question No: 38 ( Marks: 1 ) - Please choose one

The
basic purpose of depreciation is to achieve the:

► Matching principle (Correct)

► Dual aspect principle

► Separate entity concept

► Money measurement concept

Question No: 39 ( Marks: 1 ) - Please choose one

Accountancy covers which of the following area(s):

► Book-keeping

► Accounting

► Auditing

► All of the given options (Correct)

Question No: 40 ( Marks: 1 ) - Please choose one

Bank
Reconciliation Statement is prepared by:

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 ► Bankers

► Accountant of the business (Correct)

► Statutory auditor

► Manger

Question No: 41 ( Marks: 1 ) - Please choose one

Under the reducing balance method, deprecation is calculated on:

► Scrap value of an asset

► Original cost of an asset

► Book value of an asset (Correct)

► Fair value of an asset

Question No: 42 ( Marks: 1 ) - Please choose one

The
products that are ready for sale are known as:

► Raw material

► Work in process

► Finished goods (Correct)

► Closing stock

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following item appears in Trading Account of a business?

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 ► Interest expenses

► Wages and salaries (Correct)

► Depreciation expenses

► Discount Allowed

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following financial statement DO NOT show the financial health of a business at a specific
date?

► Profit and loss account (Correct)

► Balance sheet

► Statement of financial position

► All of the given options

Question No: 45 ( Marks: 1 ) - Please choose one

Which of the following account will be credited in the books of XYZ Co. Ltd, if the business purchased a
vehicle though cheque?

► Vehicle account

► Cash account

► Business account

► Bank account (Correct)

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Question No: 46 ( Marks: 1 ) - Please choose one

Gross Profit > Operating Expenses=?

► Net Profit (Correct)

► Cost of Goods Sold

► Net Loss

► Gross Loss

Question No: 47 ( Marks: 1 ) - Please choose one

Bank
book is part of:

► Voucher

► General Journal

► General Ledger (Correct)

► Trial Balance

Question No: 48 ( Marks: 1 ) - Please choose one

What would be the affect on the components of the accounting equation, if goods are purchased on
cash?

► Increase in cash and decrease in equity

► Increase in cash and increase in goods

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 ► Increase in goods and decrease in cash (Correct)

► Increase in equipment and increase in equity

Question No: 49 ( Marks: 1 ) - Please choose one

We
can say that the business is in profit, when:

► Assets exceed Liabilities

► Income exceeds Expenditure (Correct)

► Income exceeds Liabilities

► Assets exceed Expenditure

Question No: 50 ( Marks: 1 ) - Please choose one

A
business event which can be measured in terms of money and must be recorded in books of accounts is
called:

► Information

► Condition

► Transaction (Correct)

► Record

Question No: 51 ( Marks: 5 )

Calculate Net income with the help of given date for the year 2007 and also show complete working
to support your answer.

Raw material Stocks on 1-1-2007 Rs. 30,000

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 Work in process on 1-1-2007 35,600

Finished Goods on 1-1-2007 35,400

Raw material Stocks 31-12-2007 Rs. 31,000

Work in process 31-12-2007 25,000

Finished Goods 31-12-2007 53,900

Total factory Cost 543,339

Additional data

v Other income for the year is Rs. 5,000.

v Operating expenses for the year Rs. 15,000.
v Sale for the year Rs. 1,000,000.

Question No: 52 ( Marks: 10 )

The
st
following Trial Balance was extracted from the books of Naeem & Sons on 31 December, 2007. From
this you are required to prepare an Income Statement for the year ended on 31st December, 2007,

Debit Credit
Particulars
Rs. Rs.

Cash 5,000

Accounts Receivable 9,000

Merchandise Inventory on 1.1.2007 6,000

Plant and Machinery 24,000

Land and Building 82,000

Furniture and Fixtures 2,600

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 Capital 136,000

Accounts Payable 3800

Purchases 60,000

Purchases returns and allowances 2,800

Sales 70,000

Sales returns and allowances 4,600

Insurance Prepaid 3,400

Advertisement expenses 4,000

Salaries expenses 12,000

Total 212,600 212,600

ADDITIONAL INFORMATION:

· Prepaid insurance on 31st December, 2007 is Rs. 1,400

· Outstanding salaries Rs. 1,000
· Depreciation on Plant and Machinery @ 10% p.a.
· Merchandise inventory on 31st December, 2007 was valued at Rs. 6,000

Answer:

Trading Account for the year ending

31.12.2007

Opening stock 6000 Sales 70000

Less :
Sales
Return 4600

Purchase 60000 65400

Less Return 2800

57200

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 Closing Stock 6000

Gross Profit 8200

71400 71400

Profit & Loss Account for the year

ending 31.12.2007

Gross
Advertisement Exp 4000 Profit 8200

Salaries 12000

Add: Outstanding 1000

13000

Depreciation

Plant & Mach 2400

Insurance 3400

1400

2000

Net Loss 13200

19400 21400

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Balance Sheet as on 31.12.2007

Accouts Receivable 9000 Capital 136000

Less :Net
Loss 13200

Cash 5000 122800

Plant & Mach 24000 Accounts Payable 3800

Less: Depr 2400

Outstanding
21600 salaries 1000

Land & Building 82000

Furniture 2600

Prepaid Insurance 1400

Closing Stock 6000

127600 127600

Question No: 53 ( Marks: 10 )

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Prepare Profit and Loss Account for the year ending 31st December 2007 from the Trial Balance and
adjustments of MS Company given below:

Debit Credit
Particulars
Rs. Rs.

Drawings 14,000

Capital Account 80,000

Opening Stock 55,000

Purchases 485,000

Sales 610,000

Sundry Debtors 80,000

Sundry Creditors 60,500

Sales Returns 5,000

Carriage Inwards 6,000

Salaries 28,000

Rent, Rates, Taxes 15,000

Insurance 4,000

Machinery 50,000

Furniture 5,000

Cash in hand 3,500

Total 750,500 750,500

Adjustments:

· Depreciate machinery and furniture @20%p.a.

· Outstanding Salaries Rs. 2,000
· Insurance paid in advance Rs. 500

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 · Maintain @5% reserve for doubtful debts on debtors.
· Closing Stock was valued at Rs. 60,000

Answer:

Trading Account for the year ending

31.12.2007

Opening stock 55000 Sales 610000

Less : Sales
Return 5000

Purchase 485000 605000

Closing
Caririage Inward 6000 Stock 60000

Gross Profit 119000

665000 665000

Profit & Loss Account for the year

ending 31.12.2007

Salaries 28000 Gross Profit 119000

Add: Outstanding 2000

30000

Rent, Rates, Taxes 15000

Insurance 4000

Less :Advance 500

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 3500

Depreciation

Machinery 10000

Furniture 1000

11000

Provision on Doubtful Debts 4000

Net Profit 55500

119000 119000

NOTE: PLEASE CONSIDER ALL ENTRIES ON LEFT SIDE AS ON RIGHT HAND SIDE AND VICE VERSA. JUST
SHOWN BY MISTAKE. I HOPE YOU CONSIDER MY REQUEST DUE TO SHORATGE OF TIME.

Question No: 54 ( Marks: 10 )

What is the difference between public and private company?

Answer:

Private Limited Company

Ø Number of members in a private limited company varies from 2 to 50.

Ø Any 2 members can subscribe their names in memorandum and articles of association along
with other requirements of the companies’ ordinance 1984. They can also apply to security
exchange commission for company’s registration.
Ø The shareholders of the private limited company elect two members of the company as
Directors. These directors form a board of directors to run the affairs of the company.
Ø The head of board of directors is called chief executive.
Ø Private limited company can not offer its shares to general public.

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 Ø In case a investor decides to sell his/her/her shares, his/her shares are first offered to existing
shareholders. If all existing shareholders decide not to buy these shares, then an outsider
investor can buy.
Ø Words and digression “(Private) Limited” are added at the end of the name of a private limited
company.

Public Limited Company

Ø Least number of members in a public limited company is 7 with no upper limit in number of
members.
Ø Any 7members can subscribe their names in memorandum and articles of association along with
other requirements of the companies’ ordinance 1984. They can also apply to security exchange
commission for company’s registration.
Ø The shareholders of the public limited company elect seven members of the company as
Directors and these directors form a board of directors to run the daily affairs.
Ø The head of board of directors is called Chief Executive.
Ø Public limited company can offer its shares to general public at large.
Ø Word “Limited” is added at the end of the name of a public limited company.
Ø Each subscriber of the memorandum shall write opposite to his name, the number of shares
held by him/her.

On top of that there are two types of public limited company:

1. Listed Company
2. Non Listed Company

LISTED COMPANY

Listed company is the one whose shares are quoted and traded on stock exchange. It is also called
quoted company.

NON LISTED COMPANY

Non listed company is the one whose shares are not quoted or traded.

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www.vustudents.net
 Paper N0:15
Solved by Chanda Rehman, Nomi chakwal ABr
FINALTERM EXAMINATION

Fall 2009

MGT101- Financial Accounting (Session - 4)

Time: 120 min

Marks: 87

Question No: 1 ( Marks: 1 ) - Please choose one

Shares for which amount is paid by public are called ________ shares.

► Paid up

► Authorized

► Bonus shares

► All are correct options

Question No: 2 ( Marks: 1 ) - Please choose one

Which of the following is non- profit organization?

► Sole proprietorship

► Partnership

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 ► Limited company

► Trust

Question No: 3 ( Marks: 1 ) - Please choose one

Commercial Accounting is based on:

► Single entry book keeping

► Double entry book keeping

► Both single and double entry book keeping

► Cash basis of book keeping

Question No: 4 ( Marks: 1 ) - Please choose one

An Asset that is NOT physical in nature is called _________.

► Intangible Asset

► Liquid Asset

► Current Asset

► Fixed Asset

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit and loss

account—Balance Sheet

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 ► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit and loss
account—Balance Sheet

► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and loss

account—Balance Sheet

► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and loss

account—Balance Sheet

Question No: 6 ( Marks: 1 ) - Please choose one

Accounts Receivable & Inventory are the examples of:

► Liquid assets

► Current assets

► Fixed assets

► Capital assets

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following account will be credited in the books of XYZ Co. Ltd, if the business
purchased a vehicle though cheque?

► Vehicle account

► Cash account

► Business account

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 ► Bank account

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business bought goods on credit from Mr.
Ali?

► Purchases account

► Mr. Ali account

► Cash account

► Sales account

Question No: 9 ( Marks: 1 ) - Please choose one

In which of the following condition a company will have positive working capital?

► If current assets > current liabilities

► If current Assets < current Liabilities

► If current assets = current liabilities

► If current assets < current liabilities

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following is an example of direct materials cost?

► Polish and finishing material for chair

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 ► A piece of wood for the production of chair

► Production worker’s wages

► Depreciation expenses

Question No: 11 ( Marks: 1 ) - Please choose one

In cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw material inventory

► Opening raw material inventory - Purchases + Ending raw material inventory

► Ending raw material inventory + Opening raw material inventory - Purchases

► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 12 ( Marks: 1 ) - Please choose one

What would be the value of total factory cost, if the cost of material consumed during the month
is Rs. 6,000, labor cost incurred is Rs. 2,000 and the factory over head cost is Rs. 2,500?

► Rs. 6,000

► Rs. 8,000

► Rs. 4,500

► Rs. 10,500

Question No: 13 ( Marks: 1 ) - Please choose one

In cost of goods sold statement the ‘cost of goods manufactured’ is equal to:

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 ► Total factory cost + Opening work in process + Ending work in process

► Total factory cost + Opening work in process – Ending work in process

► Total factory cost - Opening work in process + Ending work in process

► Ending work in process +Total factory cost – Opening work in process

Question No: 14 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000

Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

► Rs.25, 000

► Rs. 75,000

► Rs. 15,000

► Rs. 1, 00,000

Question No: 15 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 85,000
Purchases of raw material during the period 200, 000

Cost of Material Consumed ?

► Rs. 205,000

► Rs. 215,000

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 ► Rs. 220,000

► Rs. 225,000

Question No: 16 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit

First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit

Eighty units were sold, what is the value of the ending inventory using the FIFO method of
inventory costing?

► Rs.260

► Rs.232

► Rs.284

► Rs.320

[100+385+480+260=1225-905= (10*10=100, 35*11=385, 35*12=420)]

Question No: 17 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs.1, 00, 000

Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 1, 000

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 ► Rs. 12,000 liabilities

► Rs. 11,000 liabilities

► Rs. 1, 10,000 liabilities

► Rs. 1, 11,000 liabilities

Question No: 18 ( Marks: 1 ) - Please choose one

Bank Statement is a record of transactions between the bank and the holder of:

► A foreign currency account

► A current account

► A saving account

► All of the given options

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following option is TRUE about the characteristic(s) of Bad Debt?

► It is a definite loss to the business

► It is not shown in Balance Sheet

► No provision is necessary for it

► All of the given options

Question No: 20 ( Marks: 1 ) - Please choose one

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Consider the following data and identify the amount which will be deducted from Sundry
Debtors in Balance Sheet.

Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 800

► Rs. 400

► Rs. 800

► Rs. 2,000

► Rs. 2,400

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following entry is passed to record discount allowed in control account?

► Discount Allowed (Dr) and Debtors Control A/c (Cr)

► Discount Allowed (Dr) and Debtors A/c (Cr)

► Debtors Control A/c (Dr) and Discount Allowed (Cr)

► Debtors A/c (Dr) and Discount Allowed (Cr)

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded, if a cheque deposited is dishonored by bank?

► Bank Account (Dr.) and Debtor's Account (Cr.)

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 ► Debtor's Account (Dr.) and Bank Account (Cr.)

► Dishonored Cheque Account (Dr.) and Bank Account (Cr.)

► Creditor's Account (Dr.) and Bank Account (Cr.)

Question No: 23 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs. 40,000. On
the basis of past experience, it is estimated that 10% of the sundry debtors are doubtful. Actual
bad debts are Rs. 1600. What amount of new provision for doubtful debts will be deducted from
Sundry debtors?

► Rs. 3,600

► Rs. 4,000

► Rs. 1,600

► Rs. 2, 400

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT if depreciation is given in trial balance?

► All of the given options are correct

► It means depreciation has already been deducted from concerned asset account

► It will be shown as an expense in income statement only

► It will not be deducted from concerned asset in Balance Sheet

Question No: 25 ( Marks: 1 ) - Please choose one

The persons who sign articles and memorandum of the company and contribute in the initial
share capital of the company are called:

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 ► Subscribers

► Shareholders

► Managers

► Directors

Question No: 26 ( Marks: 1 ) - Please choose one

Merchandise on hand at either the beginning or end of the reporting period is called_________.

► Raw material

► Cost of good sold

► Work in process

► Inventory

Question No: 27 ( Marks: 1 ) - Please choose one

In which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only

► In income statement under the administrative expense only

► In both balance sheet under the head of current liabilities and income statement under the
administrative expense

Question No: 28 ( Marks: 1 ) - Please choose one

In which of the following interim dividend is treated?

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 ► In profit and Loss account

► In profit and Loss appropriation account

► On the asset side of the Balance Sheet

► In trading account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following documents contains rules and regulations for internal management of the
company?

► Memorandum of Association

► Articles of Association

► Prospectus

► Statutory Declaration

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT a cash inflow?

► Sale of fixed asset

► Issue of debentures

► Cash from business operation

► Purchase of fixed asset

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Question No: 31 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as a cash outflow?

► The payments for purchases made during the year

► A decrease in trade debtors over the course of an accounting period

► Money received as a result of issuing new shares

► Money received as result of selling fixed assets

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form of business?

► The limited company form of business allows ownership of the business to be spread
amongst many people

► Shareholders can appoint professionals

► Shareholders are personally liable for all the liabilities incurred by the business

► Regular filing of information about the affairs of the company is a legal requirement

Question No: 33 ( Marks: 1 ) - Please choose one

What does a credit balance in a partner’s current account represent to a business?

► Current Assets

► Current Liability

► Long-term liability

► Share of profit

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Question No: 34 ( Marks: 1 ) - Please choose one

A company declares a cash dividend to be paid to its stockholders next month. The effect of the
transaction is to:

► Decrease assets and liabilities.

► Increase assets and stockholders' equity.

► Decrease assets and stockholders' equity.

► Increase liabilities and decrease stockholders' equity.

Question No: 35 ( Marks: 1 ) - Please choose one

An uncollectible account receivable is also termed as:

► Asset

► Uncollectible asset

► Uncollectible accounts expense

► None of the given options

Question No: 36 ( Marks: 1 ) - Please choose one

Suppose a firm has 100 debtors, and each of them owes exactly Rs.150 at the start of June.
During June each debtor has paid-off exactly Rs.100 on their account, either by cash or by
cheque. What should be the revised total debtors figure?

► Rs. 5,000

► Rs. 9,850

► Rs. 25,000

► Rs. 14,900

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Question No: 37 ( Marks: 1 ) - Please choose one

Credit sales appear on the __ __________ side of the Debtors control account.

► Left side or credit

► Left side or debit

► Right side or debit

► Right side or credit

Question No: 38 ( Marks: 1 ) - Please choose one

The financial year of Atif Brothers & Co. is closed on June 30, 2009. Total cash sales are Rs.
150,000, credit sales are Rs. 180,000 and total receipts are Rs. 250,000. Credit receipts will be:

► Rs. 150,000

► Rs. 100,000

► Rs. 220,000

► Rs. 280,000

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following is usually not an accrued expense?

► Interest payable

► Wages payable

► Taxes payable

► Notes payable ( its liability not an expense)

Question No: 40 ( Marks: 1 ) - Please choose one

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Which of the following is NOT a financial statement?

► Balance sheet

► Audit report

► Income statement

► Cash flow statement

Question No: 41 ( Marks: 1 ) - Please choose one

Sunset tours has Rs.3,500 account receivable from the Del Mar Rotary. On January 20, the
Rotary makes a partial payment of Rs.2,100 to Sunset Tours. The journal entry made on January
20 by Sunset Tours to record this transaction includes:

► A debit to the Cash Received account of Rs. 3,500

► A credit to the Accounts Receivable account of Rs.2,100

► A debit to the Cash account of Rs.1,400

► A debit to the Accounts Receivables account of Rs.1,400

Question No: 42 ( Marks: 1 ) - Please choose one

A and B entered in partnership in capital ratio of 2:3. They earned a profit of Rs.6,600 during
the year. What will be the share of profit of Mr. A? ► Rs.2,640

► Rs.1,320

► Rs.2,640

► Rs.3,960

► Rs.6,600

Question No: 43 ( Marks: 1 ) - Please choose one

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 Income tax expense of Eden Corporation shows a debit balance of Rs.7,000 in its unadjusted
trial balance and Rs.7,600 in adjusted trial balance. Which of the following account will be
debited in adjusting entry? ► Income tax expense

► Income tax payable

► Prepaid income tax

► Income tax expense

► Income tax paid

Question No: 44 ( Marks: 1 ) - Please choose one

Sanders Construction sold a plant asset that originally cost Rs.80,000 for Rs.52,000 cash. If
Sanders correctly reports a Rs.5,000 gain on this sale, the accumulated depreciation on the asset
at the date of sale must have been:

► Rs.23,000

► Rs.28,000

► Rs.33,000

► Some other amount

Question No: 45 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.65,000 and Rs.50,000 with an equal share in
profit or loss. Markup on drawings of Mr. A is Rs.1,000 and of Mr. B is Rs.1,500. The net
income for the year is Rs.55,000. What will be the amount of distributable profit? ► Rs.57,500

► Rs.52,500

► Rs.56,000

► Rs.56,500

► Rs.57,500

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Question No: 46 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal share in profit or loss.
Markup on capital of Mr. A is Rs.2,000 and markup on drawings of Mr. B is Rs.3,000. The net
income for the year is Rs.50,000. What will be the profit share of Mr. A? ► Rs.22,500

► Rs.22,500

► Rs.25,500

► Rs.27,500

► Rs.55,000

Question No: 47 ( Marks: 1 ) - Please choose one

Which of the following is quoted company?

► Private Limited Company

► Public Limited Company

► Listed company

► Non Listed Company

Question No: 48 ( Marks: 1 ) - Please choose one

Which of the following can be utilized to issue bonus shares?

► Reserves

► Debentures

► Share premium

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 ► Term finance certificate

Question No: 49 ( Marks: 1 ) - Please choose one

Which of the following can be utilized to set off any loss on revaluation?

► Capital reserve

► General reserve

► Revaluation reserve

► None of the given options

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following capital is required for the registration of the company?

► Issued capital

► Subscribed capital

► Authorized capital

► Reserve capital

Question No: 51 ( Marks: 1 ) - Please choose one

Which of the following capital is taken up by the general public?

► Issued capital

► Subscribed capital

► Authorized capital

► Reserve capital

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Question No: 52 ( Marks: 1 ) - Please choose one

According to the statement of cash flows following are the examples of investing activities
except:

► Sales of machinery

► Capital invested by the owners

► Purchase of building for the business use

► Cash received from the disposal of equipment

Question No: 53 ( Marks: 1 ) - Please choose one

The financial statement that captures both the current operating result and the associated
changes in the balance sheet is:

► Statement of retained earnings

► Statement of financial position

► Statement of cash flows

► Statement of changes in equity

Question No: 54 ( Marks: 1 ) - Please choose one

In statement of cash flows, all of the following items are considered as financing activity,
except:

► Cash received from issuance of shares

► Cash received from issuance of bonds

► Payment made for short term debts

► Collections on loans

Question No: 55 ( Marks: 3 )

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 Mr. Hassan is a partner in a partnership firm. His capital on July 1, 2001 was Rs. 400,000. He
invested further capital of Rs. 150,000 on March 01, 2002. Markup rate is @6%p.a. The
financial year of such a business is from 1st July to 30th June.

Required: You are required to calculate his markup on Capital at the end of 30th June 2002.

400000x6/100=2400

400000

Question No: 56 ( Marks: 5 )

What do you mean by “Bad Debts” and “Doubtful Debts”? Distinguish between these.

Ans: Bad Debts

when we are going to sell the products on credit so our business take risk that there are some
customer in market that they will never pay for stock sold to them.So,such situation in which the
amount which is due to the debetor are call bad debts

This is a loss sustained loss for business due to risk. It is recorded in Profit and Loss Account in
the period in which it is happen.

Doubtful Debts

A doubtful debt is a debt, which the business considers may not be paid

Question No: 57 ( Marks: 5 )

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 a. In trial balance at June 30, 2007 10% debentures are shown at Rs.75,000 and mark
up on debentures are shown at Rs.3,750. Six months debenture mark up is to be accrued.
What will be the amount of total mark up on debentures show in profit and loss account?

b. From the following information calculate cost of goods sold.

Stock opening balance Rs.56,950

Purchases 175,750
Stock closing balance 65,020
Carriage inward 5,200
Sales 245,500

Opening stock : Rs.56,950

Add bpurchase: 175,750

Add Carriage inward : 5,200

Less Stock closing balance: (65020)

Cost of goods sold = Rs 172,880

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Question No: 58 ( Marks: 10 )

Prepare Bank Reconciliation Statement as on 31st March 2009 with the help of given data.

Particulars Rs.
1 Balance as per Cash Book (Dr.) 180,000
2 Cheques paid into Bank in March 2009 but credited by the bank in April 2009 7,900

4,500

1,300
3 Cheques issued in March 2009 but cashed in April 2009 11,000

5,800
4 Cheques entered in the Cash Book in March 2009 but paid into bank in April 2009 1,000

5 Interest allowed by the bank 2,500

6 Interest charged by the bank 500

S.No Narration / Withdrawals Deposits Balance

Particulars Amountnt Amount Dr/(Cr)

Balance as per Cash Book (Dr.) 180,000

7900
4500

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 1300

Question No: 59 ( Marks: 10 )

Listed below are selected items from the financial statements of ABC Mfg. Co. for the year
ended December 31, 2007.

Note payable to Bank Al-Falah Rs.500,000

Income taxes payable 40,000
Mortgage note payable 750,000
Accrued interest on mortgage note payable 5,000
Trade accounts payable 250,000
Unearned revenue 15,000
Accrued expenses and payroll taxes 60,000
Debenture 500,000

Other information:

1. The note payable owed to Bank Al-Falah is due in 60 days. ABC Mfg. Co. has
arranged with this bank to renew the note for an additional 24 months.

2. The mortgage requires payment of Rs.6,000 per month. An amortization table

shows that its balance will be paid down to Rs.739,000 by December 31, 2008.

3. Debenture of Rs.150,000 is due in 180 days.

Instructions:

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Using the information, prepare the current liabilities and long-term liabilities sections of a
classified balance sheet at December 31, 2007.

Solved by Chanda Rehman, Nomi chakwal and ABr

Paper N0:16

FINALTERM EXAMINATION

Fall 2009

MGT101- Financial Accounting (Session - 2)

Time: 120 min

Marks: 87

Question No: 1 ( Marks: 1 ) - Please choose one

Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only

► Both cash and accrual accounting

► None of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

If a business purchases machinery for Rs. 30,000 on 31st January 2008 having life of 10 years,
this expense will be realized ___________ under the concept of accrual accounting.

► For the year 2008 only

► For the last day of 10th year only

► Over 10 years

► Nothing can be said about it

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Question No: 3 ( Marks: 1 ) - Please choose one

According to the double entry system of accounting, an account that obtains benefit is:

► Debit (Handouts Page 11, 12)

► Credit

► Income

► No need to show as accounting record

Question No: 4 ( Marks: 1 ) - Please choose one

What will be the effect on accounting equation, when payment is made to the creditor of the
business?

► Increase in an asset, increase in owner's equity

► Increase in an asset, increase in a liability

► Decrease in an asset, decrease in owner's equity

► Decrease in an asset, decrease in a liability

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT for Trading account?

► It inculdes cost of goods sold and all the direct expenses related to sales

► It inculdes cost of goods sold and all the indirect expenses related to sales

► It inculdes cost of goods sold and all the direct and indirect expenses

► It inculdes cost of goods sold and all the direct and selling, administrative expenses

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following organizations do NOT prepare Income & Expenditure account?

► Public limited companies

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 ► Private limited companies

► Partnership firms

► All of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

An asset on the balance sheet which is expected to be sold or used within one year is known
as:

► Tangible asset

► Current asset

► Fixed asset

► Long term asset

Question No: 8 ( Marks: 1 ) - Please choose one

In which of the following condition a company will have positive working capital?

► If current assets > current liabilities

► If current Assets < current Liabilities

► If current assets = current liabilities

► If current assets < current liabilities

Question No: 9 ( Marks: 1 ) - Please choose one

If the Company ABC has current assets Rs. 100,000, current liabilities Rs. 75,000 and fixed
assets Rs. 200,000, what would be the value of working capital?

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 ► Rs. 25,000

► Rs. 1, 00,000

► Rs. 1, 75,000

► Rs. 3, 00,000

Question No: 10 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is known as:

► Prime cost (Handouts Page 121)

► Conversion cost

► Sunk cost

► Opportunity cost

Question No: 11 ( Marks: 1 ) - Please choose one

Particulars Rs.

Opening stock of raw material 100,000

Closing stock of raw material 80,000

Purchases of raw material during the 200, 000

period

Cost of Material Consumed ?

► Rs. 205,000

► Rs. 215,000

► Rs. 220,000

► Rs. 225,000

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Question No: 12 ( Marks: 1 ) - Please choose one

Accounting is the language of:

► Business

► School

► Proprietor

► Management

Question No: 13 ( Marks: 1 ) - Please choose one

Bank Statement is a record of transactions between the bank and the holder of:

► A foreign currency account

► A current account

► A saving account

► All of the given options

Question No: 14 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss
account.

Particulars Rs.

Bad debts 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 800

► Rs. 400

► Rs. 800

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 ► Rs. 2,000

► Rs. 2,400

Question No: 15 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

Closing value of stock 40,000

Bad Debts (Given in trial balance) 500

Old provisions (Given in trial balance) 800

Sundry Debtors (Given in trial balance) 44,500

Provision for doubtful debts @ 5%

Which amount of new provision will be deducted from Sundry Debtors ?

► Rs. 2,225

► Rs. 2,525

► Rs. 1,925

► Rs. 3,025

Question No: 16 ( Marks: 1 ) - Please choose one

It is supposed that on 31-12-2007, the sundry debtors are amounted to Rs. 40,000. On the
basis of past experience, it is estimated that 5 % of the sundry debtors are doubtful. What entry
will pass to transfer the bad debts to provision for doubtful debts?

► Profit & Loss a/c Rs. 1,600 (Dr) & Provision for doubtful debts a/c Rs. 1,600 (Cr)

► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000 (Cr)

► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000 (Cr)

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 ► Provision for doubtful debts a/c Rs. 1,600 (Dr) & Bad Debts a/c Rs. 1,600 (Cr)

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following is/are the item/s of a Control Account?

► Credit sale only

► Cash sale only

► Credit purchase only

► Both Credit sales and Credit purchase

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following is a detailed record of an individual account in case of large business?

► Control Account

► Subsidiary Ledger

► Balance Sheet

► Trial Balance

Question No: 19 ( Marks: 1 ) - Please choose one

If the provision for doubtful debts is not created, which of the following entry is passed to record
the bad debts in control account?

► Debtors Control A/c (Dr) and Allowance for doubtful debts (Cr)

► Bade debts (Dr) and Debtors Control A/c (Cr)

► Allowance for doubtful debts (Dr) and Debtors Control A/c (Cr)

► Allowance for doubtful debts (Dr) and Debtors A/c (Cr)

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of carriage charges,
paid for a new plant purchased mistakenly debited to carriage account?

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 ► Plant account

► Carriage account

► Both plant account and carriage account

► Trading account

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following item must be recorded in the adjusted Cash Book in order to bring it in
line with the entries in the Bank Statement?

► Bank charges

► An error on the Bank Statement

► An uncredited deposit

► An unpresented cheque

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is normally treated as the last expense listed in the income statement of
a company?

► Interest expense

► General and administrative expenses

► Salaries and wages expense

► Income tax expense

Question No: 23 ( Marks: 1 ) - Please choose one

The Balance Sheet item that represents the resources invested by the owner is known as:

► Accounts Receivable

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 ► Cash

► Note Payable

► Owner's Equity (Handouts Lesson 12, Page 83)

Question No: 24 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business

► A balance sheet

► A statement of retained earnings

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following account is affected from the Drawings of cash in sole-proprietorship
business?

► Capital account

► Shareholder account

► Liability account

► Expense account

Question No: 26 ( Marks: 1 ) - Please choose one

In which type of a business, the owner and his business are considered same in the eyes of
law?

► Sole proprietorship

► Public companies

► Limited companies

► Listed companies

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Question No: 27 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?

► Total assets employed

► Total liabilities

► Total assets

► Current assets

Question No: 28 ( Marks: 1 ) - Please choose one

When the capitals are fixed, which of the following account will be debited for drawings made
by a partner?

► Individual Partner’s Current Account

► Partner’s Cash Account

► Partner’s Bank Account

► Partners Capital Account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following documents contains rules and regulations for internal management of
the company?

► Memorandum of Association

► Articles of Association

► Prospectus

► Statutory Declaration

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Question No: 30 ( Marks: 1 ) - Please choose one

When preparing a cash flow statement, which of the following would be classified as a financing
activity?

► A new long-term loan taken out to finance the purchase of fixed assets

► Salaries paid

► Interest paid on a long-term bank loan

► The cost of purchasing a patent

CASH FLOW FROM FINANCING ACTIVITIES (Handouts Page 266)

Cash flow from financing activities includes cash receipts and payments that arise from Owners
of the business and other long term liabilities of the organization.

• Cash receipts and payments for other long term loans and borrowings.

Question No: 31 ( Marks: 1 ) - Please choose one

Current ratio may be increased by:

► Overstating current Assets (Handouts Page 311)

► Overstating current Liabilities

► Understating current Assets

► Understating current assets and overstating current liabilities

Question No: 32 ( Marks: 1 ) - Please choose one

Mark up cover ratio = operating profit before financial charges ÷ ?

► Selling expenses

► Administrative expenses

► Financial charges (Handouts Page 311)

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 ► Direct expenses

Question No: 33 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?

► In case of death of partner

► At the admission of new partner

► If any partner resigned from partnership

► All of the given options

Question No: 34 ( Marks: 1 ) - Please choose one

If company has distributable profit of Rs. 490,000, Profit sharing share ratio of Mr. A, Mr. B and
Mr. C is 2:3:5 respectively. What will be the share of profit for Mr. A in distributable profit?

► Rs. 98,000

► Rs. 147,000

► Rs. 245,000

► Rs. 343,000

Question No: 35 ( Marks: 1 ) - Please choose one

The beginning balance of retained earnings was Rs. 7,500. The dividends paid to stockholders'
were Rs.1, 500. The ending balance of retained earnings is Rs. 5,000. What was the net income
or net loss for the accounting period?

► Net loss of Rs.1, 000

► Net income of Rs. 1,000

► Net loss of Rs. 2,000

► Net income of Rs. 2,500

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Question No: 36 ( Marks: 1 ) - Please choose one

A company declares a cash dividend to be paid to its stockholders next month. The effect of the
transaction is to:

► Decrease assets and liabilities.

► Increase assets and stockholders' equity.

► Decrease assets and stockholders' equity.

► Increase liabilities and decrease stockholders' equity.

Question No: 37 ( Marks: 1 ) - Please choose one

Which of the following statement is the detail of transaction in one’s account provided by the
bank?

► Bank statement

► Bank reconciliation statement

► Income statement

► Financial statement

Question No: 38 ( Marks: 1 ) - Please choose one

An asset cost Rs. 50,000, has an estimated residual value of Rs.1, 500, and an estimated
useful life of 8 years. What is the depreciation rate under reducing balance method?

► 11.5%

► 20.0%

► 25.0%

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 ► 35.5%

(Handouts Page 135)

In reducing balance method, a formula is used for calculation of depreciation rate. i e.

Rate =1– n
RV / C = 1 - 8 1500 / 50000 = 1 - 8
0.03 = 1 – 0.645 = 0.355 × 100 = 35.5%

1/ n
Or = 1 – (RV / C ) = 1 – (1500/50000) 1 / 8 = 1- (0.03) 1 / 8 = 1- 0.645=0.355 × 100= 35.5%

Question No: 39 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in the
business made by the owner will effect:

► Cash Account & Capital Account

► Cash Account & Expense Account

► Capital Account & Revenue Account

► Capital Account & Expense Account

Question No: 40 ( Marks: 1 ) - Please choose one

Which of the following transaction have NO affect on stockholders' equity?

► Purchase of building on credit

► Dividends to stockholders

► Net loss

► Investment in cash by stockholders

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Question No: 41 ( Marks: 1 ) - Please choose one

Receipts from debtors appear on the ___________ side of the individual debtors account.

► Left side or credit

► Left side or debit

► Right side or debit

► Right side or credit

Question No: 42 ( Marks: 1 ) - Please choose one

We usually allow the customer to deduct a certain amount from the invoice value for prompt
payment. In doing so we are granting a:

► Commission

► Allowance

► Discount

► Rebate

Question No: 43 ( Marks: 1 ) - Please choose one

The financial year of Atif Brothers & Co. is closed on June 30, 2009. Total cash sales are Rs.
150,000, credit sales are Rs. 180,000 and total receipts are Rs. 250,000. Credit receipts will be:

► Rs. 150,000

► Rs. 100,000

► Rs. 220,000

► Rs. 280,000

Question No: 44 ( Marks: 1 ) - Please choose one

Capital and drawings are reported in which of the following section of balance sheet?

► Assets

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 ► Other assets

► Non current liabilities

► Owner’s equity

Question No: 45 ( Marks: 1 ) - Please choose one

Insurance premiums paid in advance but not yet expired are reported in which of the following
account?

► Insurance payable

► Prepaid insurance

► Advance payment account

► Insurance expense

Question No: 46 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal share in profit or loss.
Markup on capital of Mr. A is Rs.2,500 and markup on drawings of Mr. B is Rs.2,800. The net
income for the year is Rs.95,000. What will be the amount of distributable profit?

► Rs.89, 700

► Rs.94, 700

► Rs.95, 300

► Rs.100, 300 (Not 100 % sure)

Question No: 47 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership with an equal investment and equal share in profit or loss.
Markup on capital of Mr. A is Rs.2,000 and markup on drawings of Mr. B is Rs.3,000. The net
income for the year is Rs.50,000. What will be the profit share of Mr. A?

► Rs.22, 500

► Rs.25, 500

► Rs.27, 500

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 ► Rs.55, 000

Question No: 48 ( Marks: 1 ) - Please choose one

How many members can subscribe their names in memorandum of association for registration
of public limited company?

►2

►3

►5

►7

Question No: 49 ( Marks: 1 ) - Please choose one

Which of the following can be utilized to set off any loss on revaluation?

► Capital reserve

► General reserve

► Revaluation reserve

► None of the given options

Question No: 50 ( Marks: 1 ) - Please choose one

According to the statement of cash flows following are the examples of investing activities
except:

► Sales of machinery

► Capital invested by the owners

► Purchase of building for the business use

► Cash received from the disposal of equipment

No: 51 ( Marks: 1 ) - Please choose one

Which of the following ratio is widely used to measure the short-term debt-paying ability
of a company? (Correct Answer is Creditors Turnover Ratio)

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 ► Acid-test ratio

► Debt ratio

► Current ratio

► None of the given options

Creditors Turnover Ratio (Handouts Page 309)

Creditors turnover means how many times or in how many days a company pay to its creditors.
The formulae for this ratio are as follows:

Creditor Turnover (Number of days) = (Average Creditors / Credit Purchases) x 365

Creditor Turnover (Number of times) = Credit Purchases / Average Creditors

Acid Test Ratio (Handouts Page 311)

Acid test ratio is the proportion of current assets which are convertible into cash and current
liabilities. The formula for calculating this ratio is as follows:

Acid Test Ratio = (Current Assets – Stock) / Current Liabilities

Debt Equity Ratio (Handouts Page 310)

This ratio shows the composition of finance that have funded the asset of the company.
This ratio varies for different projects. In Pakistan, maximum advised ratio is 60: 40. i-e.
40% of the assets should be bought with company, s investment and 60% should be bought
with the loan taken by the company. The formula for calculating this ratio is as follows:

Debt Equity Ratio = Long term Liabilities / Equity

Current Ratio (Handouts Page 310,311)

Current ratio shows the proportion of current assets and current liabilities. This ratio should be
1:1. i-e. For every liability of one rupee, there should be an asset of one rupee to pay it. The
formula for calculating this ratio is as follows:

Current Ratio = Current Assets / Current Liabilities

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Question No: 52 ( Marks: 1 ) - Please choose one

Which of the following usually is least important as a measure of short-term liquidity?

► Quick ratio

► Debt ratio

► Current ratio

► Cash flows from operating activities

Question No: 53 ( Marks: 1 ) - Please choose one

In statement of cash flows, a payment of cash dividends is related to:

► Investing activity

► Financing activity

► Operating activity

► Cash flows from operations

CASH FLOW FROM INVESTING ACTIVITIES (Handouts Page 265)

Cash flow from investing activities includes cash receipts and payments that arise from Fixed
and Long Term assets of the organization.

• Cash payments and receipts from acquisition and disposal of other than long term assets
e.g. Shares, debentures, TFC, long term loans given etc.

CASH FLOW FROM FINANCING ACTIVITIES (Handouts Page 266)

Cash flow from financing activities includes cash receipts and payments that arise from Owners
of the business and other long term liabilities of the organization.

• Cash receipts and payments for other long term loans and borrowings.

Question No: 54 ( Marks: 1 ) - Please choose one

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 In statement of cash flows, all of the following items are considered as financing activity,
except:

► Cash received from issuance of shares

► Cash received from issuance of bonds

► Payment made for short term debts

► Collections on loans

Question No: 55 ( Marks: 3 )

Show how the following items will appear in profit and loss account.

Particulars Rs.

Bad debts 3,600

Provision for doubtful debts (old) 2,500

Provision for doubtful debts (new) 800

Question No: 56 ( Marks: 5 )

Pass the Journal Entries in proper format of JOURNAL for the following:

v To create provision for doubtful debts

v To reduce the provision

v To increase the provision

Solution:

To create provision for doubtful debts

Debit: Provision for Bad Debts (P&L)

Credit: Provision for Bad Debts

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The debit account is charged against current years profit and the credit head is shown as a
deduction from debtors in the balance sheet.

When the bad debt for which provision is already made is confirmed, following entry is passed:

Debit: Provision for Bad Debts

Credit: Debtors

As expense has already been charged, therefore, no affect is given to P&L at this point.

To reduce the provision

Debit: Provision for Bad Debts (Balance Sheet)

Credit: Provision for Bad Debts (P&L)

To increase the provision

Debit: Provision for Bad Debts (P&L)

Credit: Provision for bad debts

Question No: 57 ( Marks: 5 )

Briefly discuss the followings:

1. Issuance of shares at premium

When a company has a good reputation and earns huge profits, the demand of
its shares increases in the market. In that case, the company is allowed by the
Companies Ordinance 1984, to issue shares at a higher price than their face
value. Such an issue is called Shares Issued at Premium. The amount received;
in excess of the face value of the shares is transferred to an account called
“Share Premium Account”. This account is used to:

• Write off Preliminary Expenses of the company.

• Write off the balance amount, in issuing shares on discount.
• Issue fully paid Bonus Shares.

2. Cash flow statement

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 Cash Flow Statement shows the movement of cash resources during the year. It
gives information about sources of income and account heads on which this
amount is spent. It is an integral part of financial statements.

3. Debentures

Debentures are issued under the common seal (Stamp) of the company, as
acknowledgement of debt, owed by the company to the public at large for a
defined period of time for obtaining loan from general public and has a mark up
(profit) rate attached to it, generally equal to the market rate.

4. Notes to the accounts

Notes to the accounts are explanatory notes on financial statements of the

company. These include all the information, from formation of company to the
calculation of figures, arrived at, during the preparation of financial statements.

Question No: 58 ( Marks: 10 )

On 31st December, 2006, a merchant has to receive Rs. 50,000 from sundry debtors and
creates provision of 5 percent on this amount for doubtful debts. Actual bad debts during the
year 2007 were Rs.1, 400. The debtors on 31st December, 2007, are Rs. 40,000 on which he
again creates provision of 5 % for doubtful debts. During 2008 actual bad debts are Rs. 600 and
the debtors at the end of 2008 totalled Rs. 25,000, on which a reserve a reserve of 5 % for
doubtful debts is required to be maintained.

Required: Prepare provision for doubtful debts account with the help of given data.

Question No: 59 ( Marks: 10 )

The following Trial Balance was extracted from the books of Naeem & Sons
on 31st December, 2007. From this you are required to prepare an Income Statement for
the year ended 31st December, 2007.

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 Debit Credit
Particulars
Rs. Rs.

Cash 5,000

Accounts Receivable 9,000

Merchandise Inventory on 1.1.2007 6,000

Plant and Machinery 24,000

Land and Building 82,000

Furniture and Fixtures 2,600

Capital 136,000

Accounts Payable 3800

Purchases 60,000

Purchases returns and allowances 2,800

Sales 70,000

Sales returns and allowances 4,600

Insurance 3,400

Advertisement expenses 4,000

Salaries expenses 12,000

Total 212,600 212,600

ADDITIONAL INFORMATION:

5. Prepaid insurance on 31st December, 2007 is Rs. 1,400

6. Outstanding salaries Rs. 1,000

7. Depreciation on Plant and Machinery @ 10% p.a.

8. Merchandise inventory on 31st December, 2007 was valued at Rs. 6,000

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 Paper No:17
Solved by Chanda Rehman, Nomi chakwal ABr
FINALTERM EXAMINATION

Fall 2009

MGT101- Financial Accounting (Session - 4)

Ref No: 1195706

Time: 120 min

Marks: 87

Question No: 1 ( Marks: 1 ) - Please choose one

Word “Credit” is derived from ______ language.

► Latin

► English

► French

► Chinese

Question No: 2 ( Marks: 1 ) - Please choose one

What is the nature of an expense account?

► Debit

► Credit

► Revenue

► None of the given options

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Question No: 3 ( Marks: 1 ) - Please choose one

A
summarized record of transactions related to individuals or things is called a/an ___________.

► Account

► Voucher

► Journal

► Trial balance

Question No: 4 ( Marks: 1 ) - Please choose one

In an
account, if credit side < debit side then the balance is known as:

► Negative Balance

► Debit Balance

► Positive Balance

► Credit Balance

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following organizations do NOT prepare Income & Expenditure account?

► Public limited companies

► Private limited companies

► Partnership firms

► All of the given options

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Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following account will be credited in the books of XYZ Co. Ltd, if the business purchased a
vehicle though cheque?

► Vehicle account

► Cash account

► Business account

► Bank account

Question No: 7 ( Marks: 1 ) - Please choose one

If the
cost of sales is Rs. 60,000, sales are Rs. 90,000 and operating expenses are Rs. 25,000 during the year.
What would be the Net Profit?

► Rs. 5,000

► Rs. 25,000

► Rs. 55,000

► Rs. 60,000

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following financial statement DO NOT show the financial health of a business

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 ► Profit and loss account

► Balance sheet

► Statement of financial position

► All of the given options

at a specific date?

Question No: 9 ( Marks: 1 ) - Please choose one

The
total of all costs incurred to convert raw material into finished goods is known as:

► Prime cost

► Conversion cost

► Sunk cost

► Opportunity cost

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following particular is NOT included in the specimen of a Journal Voucher?

► Name of organization

► Bank receipt

► Debit amount

► Credit amount

Question No: 11 ( Marks: 1 ) - Please choose one

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Accountancy covers which of the following area(s):

► Book-keeping

► Accounting

► Auditing

► All of the given options

Question No: 12 ( Marks: 1 ) - Please choose one

Depreciation arises because of:

► Fall in the market value of an asset

► Fall in the value of money

► Physical wear and tear

► All of the given options

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following account will be debited, when the bad debts are recovered?

► Bad debt recovered a/c

► Cash a/c

► Doubtful debts a/c

► Bad debts a/c

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Question No: 14 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss account.

Particulars Rs.

Bad debts 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 800

► Rs. 400

► Rs. 800

► Rs. 2,000

► Rs. 2,400

Question No: 15 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss account.

Particulars Rs.

Bad debts 3,600

Provision for doubtful debts (old) 6,000

Current year’s provision (new) 1,500

► Rs. (5,100)

► Rs. 5,100

► Rs. (900) (Minus main answer hai tabi Credit side par show hoga)

► Rs. 900

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Question No: 16 ( Marks: 1 ) - Please choose one

On
which of the following system control accounts are based?

► Double entry book keeping system

► Single entry book keeping system

► Cash accounting system

► All of the given options

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following entry will be passed to record discount received in control account?

► Discount Received (Dr) and Creditors Control A/c (Cr)

► Discount Received (Dr) and Creditors A/c (Cr)

► Creditors Control A/c (Dr) and Discount Received (Cr)

► Creditors A/c (Dr) and Discount Received (Cr)

Question No: 18 ( Marks: 1 ) - Please choose one

A
receipt of cash Rs. 10,000 from Mr. Bilal is recorded as Rs. 1,000. What amount will be adjusted in
rectifying entry?

► Rs. 1,000

► Rs. 9,000

► Rs. 10,000

► Rs. 11,000

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Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. “A” of Rs.336 have been debited
to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)

► Sales account (Dr.) and B’s account (cr.)

► B’s account (Dr.) and Sales account (Cr.)

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of Sale to Mr.”A” Rs. 336
was not recorded at all?

► Only sales account

► Only A’s account

► Only cash account

► Both sales account and A’s account

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following item must be recorded in the adjusted Cash Book in order to bring it in line with
the entries in the Bank Statement?

► Bank charges

► An error on the Bank Statement

► An uncredited deposit

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 ► An unpresented cheque

Question No: 22 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be deducted from Sundry Debtors in
Balance Sheet.

Particulars Rs.

Bad debts (from trial balance) 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 1,000

► Rs. 600

► Rs. 1,000

► Rs. 2,000

► Rs. 2,600

Question No: 23 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

Bad Debts (Given in trial balance) 500

Old provisions (Given in trial balance) 700

Sundry Debtors (Given in trial balance) 44,800

If the Provision for doubtful debts has been increased by 5%, which amount of new provision will be
shown in Profit & Loss Account?

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 ► Rs. 2,240

► Rs. 2,425

► Rs. 1,925

► Rs. 3,025

Question No: 24 ( Marks: 1 ) - Please choose one

The
main objective of financial reporting is to provide:

► Essential information to internal users of financial reports.

► Useful economic information about the business to the external parties for sound financial
decisions.

► Information to internal users about the cash position of the business.

► Information to the Securities Exchange Commission (SEC).

Question No: 25 ( Marks: 1 ) - Please choose one

A
financial statement that indicates the success or failure of a business, over a period of time is called:

► A cash flow statement

► A retained earnings statement

► An income statement

► A balance sheet

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is/are NOT shown in balance sheet of sole proprietor?

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 ► Fixed assets

► Current liabilities

► Profit sharing ratio

► Long term assets

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?

► Accounts receivable arises when a company buys goods or services from another party on credit

► Accounts receivable is a miscellaneous category that may include loans to employees

► Accounts receivable are more formal than notes receivable

► Accounts receivable are often called trade receivables

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account will be debited when the interest on drawings is charged?

► Partner’s capital account

► Interest account

► Partner’s current account

► Profit & Loss account

Question No: 29 ( Marks: 1 ) - Please choose one

In
case of fixed capital accounts, other transactions such as Drawings and Profit etc. are recorded in a
separate account that is called ___________.

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 ► Fixed Capital Account

► Current Account

► Fluctuating Capital Account

► Floating Capital Account

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following clause/s are discussed in Memorandum of Association of Companies?

► Name of company

► Place of registered office of company

► Objective of the company

► All of the given options

Question No: 31 ( Marks: 1 ) - Please choose one

Preliminary Expenses of the company may write off against:

► Share premium account

► Share holder account

► Debtors control account

► Creditor control account

Question No: 32 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if provision for Income Tax to be made Rs. 12,000 is given
in adjustment?

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 ► It will be deducted in Income Statement only

► It will be treated as current liability in balance sheet only

► It will be treated as current asset in balance sheet only

► Both it will be deducted in income statement and it will be treated as current liability in balance
sheet

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is NOT a cash inflow?

► Sale of fixed asset

► Issue of debentures

► Cash from business operation

► Purchase of fixed asset

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form of business?

► The limited company form of business allows ownership of the business to be spread amongst
many people

► Shareholders can appoint professionals

► Shareholders are personally liable for all the liabilities incurred by the business

► Regular filing of information about the affairs of the company is a legal requirement

Question No: 35 ( Marks: 1 ) - Please choose one

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 If
company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A, Mr. B and Mr. C is
2:3:5 respectively what will be the Profit share for Mr. C in distributable profit.

► Rs. 98,000

► Rs. 1, 47,000

► Rs. 2, 45,000

► Rs. 3, 43,000

Question No: 36 ( Marks: 1 ) - Please choose one

What is the treatment of Accumulated Depreciation in Balance Sheet?

► It may treated as a deficit not sure

► It may treated as a surplus

► It may treated as a revenue

► None of the given options I think this one

Question No: 37 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in the business
made by the owner will effect:

► Cash Account & Capital Account

► Cash Account & Expense Account

► Capital Account & Revenue Account

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 ► Capital Account & Expense Account

Question No: 38 ( Marks: 1 ) - Please choose one

The
return of goods by a customer should be debited to:

► Customer’s account

► Sales return account

► Goods account

► Accounts receivable account

Question No: 39 ( Marks: 1 ) - Please choose one

Expenditures incurred annually on renewal of patent are known as:

► Revenue Expenditures

► Capital Expenditures

► Deferred Expenditures

► None of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

Debts that are not collectible and worthless to the creditor are known as:

► Doubtful debts

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 ► Bad debts

► Provision for doubtful debts

► Loss

Question No: 41 ( Marks: 1 ) - Please choose one

ABC
Company received discount on its credit purchases, which of the following will be debited while entering
in journal?

► Cash

► Discount received

► Creditors

► Bank

Question No: 42 ( Marks: 1 ) - Please choose one

The
amount owed by debtors at the start of a month appears on the ___________ side of the individual
debtors account.

► Left side or credit

► Left side or debit

► Right side or debit

► Right side or credit

Question No: 43 ( Marks: 1 ) - Please choose one

Ahmad Industries want to make payment to its supplier in the form of a pay order. The bank deducted
Rs.160 as service charges without its knowledge. The error is known as:

► Error of commission

► Error of omission

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 ► Error of original entry

► Error of principle

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following accounts would never be reported in the income statement as an expense?

► Depreciation expense

► Income tax expense

► Interest expense

► Dividends expense

Question No: 45 ( Marks: 1 ) - Please choose one

In
the heading of financial statement, ___________ is not required?

► Title of financial statement

► Name of the person who prepares financial statement

► Period for which financial statement is prepared

► Name of business entity

Question No: 46 ( Marks: 1 ) - Please choose one

In a
partnership of Mr. A and Mr. B, the share of profit of Mr. A is Rs.75,375 and the share of profit of Mr. B
is Rs. 25,125. What will be the ratio of their share?

► 1:2

► 2:3

► 3:2

► 3:1

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Question No: 47 ( Marks: 1 ) - Please choose one

Which of the following is decreased when an asset is converted into expense in adjustment?

► Revenue

► Net income

► Expense

► Liability

Question No: 48 ( Marks: 1 ) - Please choose one

Mr.
A & B entered into a partnership with an equal investment and equal share in profit or loss. Markup on
capital of Mr. A is Rs.2,500 and markup on drawings of Mr. B is Rs.2,800. The net income for the year is
Rs.95,000. What will be the amount of distributable profit?

► Rs.89,700

► Rs.94,700

► Rs.95,300

► Rs.100,300

Question No: 49 ( Marks: 1 ) - Please choose one

How
many members can subscribe their names in memorandum of association for registration of public
limited company?

►2

►3

►5

►7

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Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following is responsible to register the companies?

► State Bank of Pakistan

► Security and Exchange Commission of Pakistan

► Supreme Court

► Stock Exchange

Question No: 51 ( Marks: 1 ) - Please choose one

The
amount of share premium can be utilized except:

► To write off preliminary expenses

► To meet the expenses of issue of shares

► To distribute among the share holders

► To issue bonus shares

Question No: 52 ( Marks: 1 ) - Please choose one

Which of the following capital is required for the registration of the company?

► Issued capital

► Subscribed capital

► Authorized capital

► Reserve capital

Question No: 53 ( Marks: 1 ) - Please choose one

Which of the following items of balance sheet are useful in evaluating a company’s liquidity?

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 ► Current assets and other assets

► Current liabilities and current assets

► Current liabilities and plant and equipment

► Non current liabilities and other assets

Question No: 54 ( Marks: 1 ) - Please choose one

The
company ABC purchased an asset for Rs. 40,000, paying 30,000 in cash and issuing a long term note
payable for remaining balance. The amount will be recorded in statement of cash flows as:

► Rs. 40,000 cash outflow as investing activity

► Rs. 30,000 cash outflow as investing activity

► Rs. 10,000 cash inflow as investing activity

► Rs. 70,000 cash inflow as investing activity

Question No: 55 ( Marks: 3 )

Why
an organization is needed to prepare a cash flow statement.

Question No: 56 ( Marks: 5 )

Show the following assets at Written Down Value in Balance Sheet with complete working.

Particulars Rs.

Plant & Machinery 53,000

Buildings 35,000

Tools & Equipment 8,650

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Depreciation Rate:

v Plant & Machinery @ 10%

v Buildings @ 5%
v Tools& Equipment @ 15%

Question No: 57 ( Marks: 5 )

Financial year decided by partnership agreement is 1st July to 30th June. Mr. Ali is partner and having a
capital of Rs. 1,500,000 on July 1st 2007 and he introduced more capital on August 1st 2007 Rs. 10,000
on April 1st 2008, Rs.500,000 and on June 1st 2008 , Rs. 5,000. Mark up rate is 10% p.a.

Calculate mark up on Mr. Ali’s capital for the year ending on 30th June 2008.

Question No: 58 ( Marks: 10 )

The
following errors have been discovered in the book of a Business Concern:

1. Wage of Rs. 500 paid for the installation of plant debited to Wages Account.
2. Purchases of Office Equipment Rs. 2,000 were recorded as regular purchases of business.
3. Credit sale of Rs. 600 to Kareem was wrongly debited to Kamran.
4. Rs. 200 drawn by the proprietor was treated as Trade Expenses.
5. Rs. 300 received as a Commission was wrongly credited to Sales Account.

Required:

Pass the rectifying entries only.

Question No: 59 ( Marks: 10 )

Prepare Balance Sheet for the manufacturing concern as on 31st December, 2007 with the help of
given data.

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 Particulars Rs.

Capital 120,000

Trade Creditors 17,500

Bills payable 1,000

Sales 626,100

Raw material Stocks on 1-1-2007 30,000

Work in process on 1-1-2007 35,600

Finished Goods on 1-1-2007 35,400

Purchases 518,000

Carriage inwards 8,900

Discount Allowed 750

Debtors 16,000

Sales man commission 2,000

Office expenses 2,000

Carriage outwards 1,700

Bad debts 1,400

Salaries 13,000

Direct labor 1,800

FOH 1,100

Plant & Machinery 53,000

Buildings 35,000

Tools 8,650

Long term liability 4,902

Drawings 5,000

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Stock as on 31st December, 2007

Ø Raw material Stocks Rs. 31,000

Ø Work in process Rs. 25,000
Ø Finished Goods Rs. 53,900
Depreciation Rate:

v Plant & Machinery is depreciated @ 10%

v Buildings is depreciated @ 5%
v Tools is depreciated @ 15%
Additional data

v Reserve and bad debts is to be created at 5% on debtors.

v Net Income for the year Rs. 75,000
Paper no 18
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION,

Fall 2008

MGT101- Financial Accounting (Session - 1)

Time: 120 min

Marks: 85

Question No: 1 ( Marks: 1 ) - Please choose one

Which of the following item will be credited in capital account of sole proprietor?

► Cash

► Drawings

► Debtors

► Profit

Question No: 2 ( Marks: 1 ) - Please choose one

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Debenture is also named as:

► Share

► Bond

► Equity

► Reserve

Question No: 3 ( Marks: 1 ) - Please choose one

A
firm may earn profit during an accounting period but have less money in the bank at the end of the period
then it had at the beginning. Which of the followings, on its own, could explain this?

► Not paying invoices received from creditors

► The sale of fixed assets during the period

► An increase in trade debtors over the course of the period

► An increase in the depreciation charge relative to the previous accounting period doubted

Question No: 4 ( Marks: 1 ) - Please choose one

In
cash flow statements, which of the following would appear as a cash outflow?

► The payments for purchases made during the year

► A decrease in trade debtors over the course of an accounting period

► Money received as a result of issuing new shares

► Money received as result of selling fixed assets

Question No: 5 ( Marks: 1 ) - Please choose one

In
cash flow statements, which of the following would appear as an inflow of cash?

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 ► The repayments of a bank loan

► Dividend issue in the current year

► Money received as result of selling fixed assets

► The difference between the valuations of old and new fixed assets

Question No: 6 ( Marks: 1 ) - Please choose one

A
company is said to have been registered when:

► It filed with the Registrar of Companies articles certain documents, like memorandum and articles
of association

► It gets certificate of incorporation from registrar of Companies doubted

► It gets certificate of commencement of business from registrar of Companies

► It actually starts its business

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following option(s) is TRUE about the Sales returns?

► Sales returns reduce the Gross sales of the firm

► Sales returns affect the Net income of the firm

► Sales returns affect the flow of cash

► All of the given options

Question No: 8 ( Marks: 1 ) - Please choose one

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Share premium account is used for what?

► Write off Preliminary Expenses of the company.

► Write off the balance amount, in issuing shares on discount.

► Issue fully paid Bonus Shares.

► All of the given options

Question No: 9 ( Marks: 1 ) - Please choose one

The
maximum amount with which the company is registered is called:

► Authorized Share Capital

► Issued Share Capital

► Paid up capital

► Called up capital

Question No: 10 ( Marks: 1 ) - Please choose one

The
Joint Stock Company is formed under the Companies Ordinance:

► 1984

► I884

► 1948

► 1965

Question No: 11 ( Marks: 1 ) - Please choose one

In
case of fixed capital accounts, other transactions such as Drawings and Profit etc. are recorded in a
separate account that is called ___________.

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 ► Fixed Capital Account

► Current Account

► Fluctuating Capital Account

► Floating Capital Account

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have agreed to share the profit of
business carried on by all or any of them acting for all?

► Sole-ownership

► Private limited company

► Public limited company

► Partnership

Question No: 13 ( Marks: 1 ) - Please choose one

Current accounts of the partners should be opened when the capitals are:

► Normal

► Floating

► Fixed

► Fluctuating

Question No: 14 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?

► Total assets employed

► Total liabilities

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 ► Total assets

► Current assets

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if cash is drawn by a Proprietor?

► Proprietor’s drawings a/c (Dr.) and Cash a/c (Cr.)

► Cash a/c (Dr.) and Proprietor’s drawings a/c (Cr.)

► Proprietor’s Capital (Dr.) and Proprietor’s drawings a/c (Cr.)

► Proprietor’s drawings (Dr.) and Proprietor’s Capital a/c (Cr.)

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following will be debited, if cash is drawn by Proprietor?

► Proprietor’s drawings

► Proprietor’s cash

► Proprietor’s capital

► Proprietor’s income

Question No: 17 ( Marks: 1 ) - Please choose one

An
asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used

► It can be realized in cash or sold or consumed in the business within one year

► It is a piece of new machinery that is expected to last for at least ten years

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 ► All of the given options

Question No: 18 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business

► A balance sheet

► A statement of retained earnings

Question No: 19 ( Marks: 1 ) - Please choose one

The
Balance Sheet item that represents the resources invested by the owner is known as:

► Accounts Receivable

► Cash

► Note Payable

► Owner's Equity

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is NOT an operating expense?

► Salaries and wages expense

► Rent expense

► Interest expense

► Depreciation expense

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Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following accounts would be increased with a debit?

► Contributed Capital

► Retained Earnings

► Revenues

► Expenses

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for creditors control account?

► Purchase Day Book

► Purchase Return

► Creditors Ledger

► All of the given options

Question No: 23 ( Marks: 1 ) - Please choose one

It is
st
supposed that on 31 December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of
past experience, it is estimated that 10% of the sundry debtors are doubtful. Actual bad debts are Rs.
1600. What amount of new provision for doubtful debts will be credited in profit & loss account

► Rs. 3,600

► Rs. 4,000

► Rs. 1,600

► Rs. 2, 400

Question No: 24 ( Marks: 1 ) - Please choose one

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Consider the following data and identify the amount which will be shown in profit & loss account.

Particulars Rs.

Bad debts 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 1,000

► Rs. 600

► Rs. 1,600

► Rs. 2,000

► Rs. 2,600

Question No: 25 ( Marks: 1 ) - Please choose one

Sale
of goods to Mr. Amir is wrongly debited to Umair A/c(debtor) instead of Amir A/c(debtor), this is an
example of:

► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 26 ( Marks: 1 ) - Please choose one

"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in books of accounts", is an
example of:

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 ► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 27 ( Marks: 1 ) - Please choose one

Transaction that has been completely forgotten to enter is called:

► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales to Rahim Rs. 336
posted to his account as Rs. 363?

► Sales account

► Rahim’s account

► Cash account

► Both sales and Rahim’s Account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following is a detailed record of an individual account in case of large business?

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 ► Control Account

► Subsidiary Ledger

► Balance Sheet

► Trial Balance

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?

► Cash sales

► Credit sales

► Bills receivable

► Discount allowed

Question No: 31 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

Closing value of stock 40,000

Write off Bad debts (given in adjustments) 2,400

Sundry Debtors (given in trial balance) 33,200

Provision is created on Debtors at 5%

Requirement: Identify the Total amount which will deduct from Sundry debtors.

► Rs. 460

► Rs. 2,400

► Rs. 1,540

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 ► Rs. 3,940

Question No: 32 ( Marks: 1 ) - Please choose one

Bad
debts written off (given in adjustment) always affect the:

► Debtors account

► Creditors account

► Cash account

► Capital account

Question No: 33 ( Marks: 1 ) - Please choose one

debts
that are not collectible and worthless to the creditor are known as:

► Bad debts

► Good debts

► Doubtful debts

► Provision for doubtful debts

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following is NOT a function of bank reconciliation statement?

► To reconcile the difference between the cash book and the bank statement

► To check for errors in balance sheet

► To update omitted entries into the cash book

► To update omitted entries into the bank statement

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Question No: 35 ( Marks: 1 ) - Please choose one

The
following balance and discrepancies were found on 31 March 2008:

Particulars Rs.

Cash book balance (Dr) 5 000

Unpresented cheques 1 000

Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)

► Rs. 5 500 (Cr)

► Rs. 4 500 (Dr)

► Rs. 4 500 (Cr)

Question No: 36 ( Marks: 1 ) - Please choose one

In
accounting accumulated depreciation is:

► Treated as a reserve

► Treated as a contra asset

► Treated as a surplus

► Treated as an expense

Question No: 37 ( Marks: 1 ) - Please choose one

Find
out the missing value of an Accounting Equation with the help of given data:

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 Cash at bank Rs. 22,500

Other assets Rs. 1,000

Creditors Rs. 8,385

Other liabilities Rs. 9,000

► Rs. 6,115 owner’s equity

► Rs. 31,885 owner’s equity

► Rs. 17,385 owner’s equity

► Rs. 18,385 owner’s equity

Question No: 38 ( Marks: 1 ) - Please choose one

Find
out the missing value of an Accounting Equation with the help of given data:

Total Assets Rs. 34,500

Accounts payable Rs. 1, 000

Other liabilities Rs. 11,500

► Rs. 22,000 owner’s equity

► Rs. 23, 000 owner’s equity

► Rs. 24,000 owner’s equity

► Rs. 46,000 owner’s equity

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following particular is NOT included in the specimen of a Journal Voucher?

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 ► Name of organization

► Bank receipt

► Debit amount

► Credit amount

Question No: 40 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000

Life of asset 5 years

Depreciation for each year Rs. 15,000

Sale price after 5 years Rs.50,000

Book value of Asset after 5 years ?

► Rs.25, 000

► Rs. 75,000

► Rs. 15,000

► Rs. 1, 00,000

Question No: 41 ( Marks: 1 ) - Please choose one

Which of the following account will be debited, when the labor cost is charged to production?

► Finished goods account

► Labor cost account

► Work in process account doubted

► COGFactor over head account

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Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following organization converts raw material into finished goods?

► Trading concern

► Manufacturing concern

► Merchandising concern

► Service concern

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following particular is NOT included in the specimen of a payment voucher?

► Name of organization

► Cash payment amount

► Date of transaction

► Bank receipt

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following particulars are included in the specimen of a bank receipt voucher?

1) Name of the organization

2) Bank code
3) Date of transaction

► (1) & (2) only

► (1) & (3) only

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 ► (2) & (3) only

► (1), (2) & (3)

Question No: 45 ( Marks: 1 ) - Please choose one

If
the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs. 20,000 during the year,
what would be the value of Gross Profit?

► Rs. 15,000

► Rs. 35,000

► Rs. 55,000

► Rs. 60,000

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following statement is NOT TRUE about Current liabilities?

► These are due within one year

► These are short-term loans

► These are consist of all debts, payable after 12 months

► In working capital, these are deducted from current assets

Question No: 47 ( Marks: 1 ) - Please choose one

Accrued expenses are the example of:

► Current liabilities

► Long term liabilities

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 ► Deferred costs

► Capital expenses

Question No: 48 ( Marks: 1 ) - Please choose one

Which of the following item will appear on the Balance Sheet as current assets?

► Prepaid expenses

► Accrued expenses

► Furniture and Equipment

► Unearned revenue

Question No: 49 ( Marks: 1 ) - Please choose one

When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account

► Left or credit side of the account

► Right or credit side of the account

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following is non- profit organization?

► Sole proprietorship

► Partnership

► Limited company

► Trust

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 Question No: 51 ( Marks: 5 )

The
following errors have been discovered in the book of a Business Concern:

1. A credit purchase of Rs. 10,000 from Rizwan was wrongly passed through the sales book.
2. The casting of the sales book Rs. 1, 15,594 was carried to the sales account as Rs. 1, 51,954.

Required:

Pass the rectifying entries only.

1.Debit Creditor’s account

Credit Sales book account

2.Debit Cash account Rs 36360

Credit Sales account Rs (36360)

Question No: 52 ( Marks: 10 )

Following information is extracted from the books of Arfan Ltd as on December 31st, 2007.

Particulars Cost Depreciation Accumulated Depreciation

rate On 01-01-2007

Vehicles 01-01-2007 1,90,000 10% 10,000

Building 01-01-2007 4,00,000 20% 12,500

Furniture & Fixture 01-01-2007 4,15,000 15% 34,500

Land 01-01-2007 1,58,000 -- ---

You are required to calculate Written down value of each asset and show working of complete
depreciation for the year ending on December 2007.

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Question No: 53 ( Marks: 10 )

Write a note on legal documents required for the formation of company.

Question No: 54 ( Marks: 10 )

The
following discrepancies were noted on comparing Cash Book with Pass Book.

3. Balance as per Cash Book (Cr) is Rs. 19,000.

4. Cheque for Rs. 5,000 paid into the bank for collection on 20th March, 2008 has not yet been
collected.
5. Cheques for Rs. 15,000 Issued on 24th March, 2008, out of which Cheques for Rs. 10,000
presented during March, 2008
6. An amount of Rs. 1,000 for interest on overdraft was debited in the Pass Book but was intimated
to Mr. David on 4th April, 2008.
7. Mr. David paid into his bank account an amount of Rs. 3,000 but it was wrongly credited to Mr.
Denial’s Account.
8. On 20th March, 2008 the bank received dividend of Rs. 10,000 from a company where Mr.
David's has invested his money, the same had been recorded in Cash Book on 31st March, 2008.
9. Cheque of Rs. 2,500 was shown in Pass Book as dishonored.

Required: Prepare a Bank Reconciliation Statement as on 31st March, 2008

Paper No:19
Solved By Chanda Rehman n ABr
FINALTERM EXAMINATION

Fall 2008

MGT101- Financial Accounting (Session - 3)

Time: 120 min

Marks: 85

Question No: 1 ( Marks: 1 ) - Please choose one

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Debenture is also named as:

► Share

► Bond

► Equity

► Reserve

Question No: 2 ( Marks: 1 ) - Please choose one

What types of changes (is) are made at the admission of partner in partnership?

► Assets of old business will be revalued

► Liabilities of old business will be revalued

► Good will of business will be revalued

► All of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

The
balance sheet reported a beginning balance of Rs. 20,000 in Accounts Receivable and an ending balance
of Rs. 15,000. Credit Sales of Rs. 200,000 were made during the year. Using this information, compute
cash collected from customers.

► Rs. 215,000

► Rs. 195,000

► Rs. 200,000

► Rs. 205,000

Beginning – ending + credit sales

20,000 – 15,000 + 200,000

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Question No: 4 ( Marks: 1 ) - Please choose one

In
cash flow statements, which of the following would appear as an inflow of cash?

► The repayments of a bank loan

► Dividend issue in the current year

► Money received as result of selling fixed assets

► The difference between the valuations of old and new fixed assets

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following is NOT a cash inflow?

► Purchase of fixed asset

► Sale of fixed asset

► Issue of debentures

► Cash from business operation

Question No: 6 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if Rs. 6,000 transfer to general reserve is given in
adjustment?

► It will be treated in Income Statement only

► It will be treated as current liability in balance sheet only

► It will be treated in profit and loss appropriation account only

► it will be treated in both profit and loss appropriation account and in the balance sheet

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Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association

► Articles of Association

► Prospectus

► Annual Report

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following document(s) define the relation of company with outside world?

► Memorandum of Association

► Articles of Association

► Prospectus

► Statutory Declaration doubted

Question No: 9 ( Marks: 1 ) - Please choose one

The
income statement of the Limited company is also known as:

► Manufacturing account

► Profit and Loss account

► Profit and Loss Appropriation account

► Current Account

Question No: 10 ( Marks: 1 ) - Please choose one

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 In
which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only

► In income statement under the administrative expense only

► In both balance sheet under the head of current liabilities and income statement under the
administrative expense

Question No: 11 ( Marks: 1 ) - Please choose one

The
charter of a company which defines the limitations and powers of the company is called:

► The memorandum of association

► Articles of association

► Statutory report

► Certificate of commencement

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following represents the partnership agreement in writing?

► Partnership registration

► Partnership-at-will

► Partnership deed

► Partnership certification

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have agreed to share the profit of
business carried on by all or any of them acting for all?

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 ► Sole-ownership

► Private limited company

► Public limited company

► Partnership

Question No: 14 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?

► Accounts receivable arises when a company buys goods or services from another party on credit

► Accounts receivable is a miscellaneous category that may include loans to employees

► Accounts receivable are more formal than notes receivable

► Accounts receivable are often called trade receivables

Question No: 15 ( Marks: 1 ) - Please choose one

Which one of the following is TRUE about provisions?

► It is necessary to prepare for showing true picture of balance sheet

► It is a reduction from assets

► It is prepared for specific purposes

► All of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business

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 ► A balance sheet

► A statement of retained earnings

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following is an example of operating expense?

► Purchasing operating equipment

► Purchasing cleaning services doubted

► Purchasing an investment in another company

► Purchasing a computer for the accounting office

Question No: 18 ( Marks: 1 ) - Please choose one

Short-term investments include all of the following EXCEPT:

► A bond receivable intended to be sold within one year

► Frequently traded securities

► A stock investment in the General Electric Company intended to be sold within one year

► A shares investment in the Coca-Cola Company intended to be held for several years

Question No: 19 ( Marks: 1 ) - Please choose one

The
figure of cash received from debtors can be located either from cash book or:

► Debtor’s Control Account

► Balance Sheet

► Profit & Loss Account

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 ► Bills Payable Account

Question No: 20 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

Closing value of stock 40,000

Write off Bad debts (given in adjustments) 2,400

Sundry Debtors (given in trial balance) 33,200

Provision is created on Debtors at 10%

Identify the Total amount deducted from Sundry debtors.

► Rs. 460

► Rs. 2,400

► Rs. 3,080

► Rs. 5,480

Question No: 21 ( Marks: 1 ) - Please choose one

Consi
der the following data and identify the amount which will be deducted from Sundry Debtors in Balance
Sheet.

Particulars Rs.

Bad debts (from trial balance) 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 1,000

► Rs. 600

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 ► Rs. 1,000

► Rs. 2,000

► Rs. 2,600

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded, if a cheque deposited is dishonored by bank?

► Bank Account (Dr.) and Debtor's Account (Cr.)

► Debtor's Account (Dr.) and Bank Account (Cr.)

► Dishonored Cheque Account (Dr.) and Bank Account (Cr.)

► Creditor's Account (Dr.) and Bank Account (Cr.)

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of an amount Rs.200
received from Mr.”P” wrongly credited to Mr.”Q’s” account?

► Both of Mr. P's & Mr.Q's Account

► Only Cash Account

► Only P’s account

► Only Q’s account

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales Rs.100 to Mr. “A”
recorded in the purchases book?

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 ► Sales account

► Purchase account

► A’s account and Sales account

► Sales account, purchase account and A’s account

Question No: 25 ( Marks: 1 ) - Please choose one

"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in books of accounts", is an
example of:

► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 26 ( Marks: 1 ) - Please choose one

Transaction that has been completely forgotten to enter is called:

► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following is (are) included in Creditors Control Account?

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 ► Discount received from supplier

► Credit purchases

► Bills payable

► All of the given options

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?

► Cash sales

► Credit sales

► Bills receivable

► Discount allowed

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for debtors control account?

► Sales Day Book

► Sales Return

► Debtors Ledger

► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT based on the concept of double entry book keeping system?

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 ► Subsidiary Ledgers

► Creditors Control Accounts

► Debtors Control Accounts

► All of the given options doubted

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded when the Bad Debts are recovered?

► Cash account (Dr.) & Bad Debts recovered account (Cr.)

► Accounts Receivable account (Dr.) & Bad Debts recovered account (Cr.)

► Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)

► Provision for doubtful debts account (Dr.) & Cash account (Cr.)

Question No: 32 ( Marks: 1 ) - Please choose one

In
which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business

► Failure of repeated attempt to collect the debt

► All of the given options

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT for Doubtful Debt?

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 ► It is shown in balance sheet

► It is a definite loss to the business

► It is not shown in balance sheet

► No provision is necessary for it

Question No: 34 ( Marks: 1 ) - Please choose one

The
following balance and discrepancies were found on 31 March 2008:

Particulars Rs.

Cash book balance (Dr) 5 000

Unpresented cheques 1 000

Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)

► Rs. 5 500 (Cr)

► Rs. 4 500 (Dr)

► Rs. 4 500 (Cr)

Question No: 35 ( Marks: 1 ) - Please choose one

A
Bank Reconciliation Statement is prepared to:

► Ascertain that the difference between the Cash Book balance and the Bank

Statement balance has been accounted for

► Correct errors in the Cash Book or errors in the Bank Statement

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 ► Amend the balance of the Bank Statement of the firm

► Amend the balance in the Cash Book of the firm

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT regarding depreciation?

► It is a systematic allocation of depreciable amount of an asset over its estimated useful life

► It refers to the end life of an asset

► It refers to the increase in value of asset

► It is another name of Impairment

Question No: 37 ( Marks: 1 ) - Please choose one

Find
out the missing value of an Accounting Equation with the help of given data:

Cash Rs.1, 00, 000

Debtors Rs.10, 000

Other Assets Rs. 1,000

Owner’s equity Rs. 1, 000

► Rs. 12,000 liabilities

► Rs. 11,000 liabilities

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 ► Rs. 1, 10,000 liabilities

► Rs. 1, 11,000 liabilities

Question No: 38 ( Marks: 1 ) - Please choose one

Which of the following essentials will be shown in the format of Cash Book?

(1) Ledger code

(2) Amount of Receipt

(3) Amount of payment

► (1) only

► (1) & (2) only

► (1) & (3) only

► (1), (2) & (3)

Question No: 39 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit

First purchase 35 units @ Rs. 11 per unit

Second purchase 40 units @ Rs. 12 per unit

Third purchase 20 units @ Rs. 13 per unit

Eighty units were sold, what is the value of the ending inventory using the FIFO method of inventory
costing?

► Rs.260

► Rs.232

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 ► Rs.284

► Rs.320

Question No: 40 ( Marks: 1 ) - Please choose one

In
cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw material inventory

► Opening raw material inventory - Purchases + Ending raw material inventory

► Ending raw material inventory + Opening raw material inventory - Purchases

► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 41 ( Marks: 1 ) - Please choose one

Following are the inventories of Manufacturing Concern EXCEPT:

► Raw material

► Work in process

► Finished goods

► Merchandise inventory

Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following is an alternate term which can be used for “Capital”?

► Liability

► Owner’s net worth

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 ► Working capital

► Asset

Question No: 43 ( Marks: 1 ) - Please choose one

In
which of the following condition a company will have positive working capital?

► If current assets > current liabilities

► If current Assets < current Liabilities

► If current assets = current liabilities

► If current assets < current liabilities

Question No: 44 ( Marks: 1 ) - Please choose one

If
salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office building) is Rs. 300 during the
year, what would be the total of "general & administrative expenses"?

► Rs. 300

► Rs. 2,500

► Rs. 2,800

► Rs.18, 800

Question No: 45 ( Marks: 1 ) - Please choose one

The
amount brought by the proprietor in the business should be credited to:

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 ► Cash account

► Capital account

► Drawings account

► Proprietor account

Question No: 46 ( Marks: 1 ) - Please choose one

An
asset on the balance sheet which is expected to be sold or used within one year is known as:

► Tangible asset

► Current asset

► Fixed asset

► Long term asset

Question No: 47 ( Marks: 1 ) - Please choose one

Which one of the following is a type of General Ledger?

► Book of original entry

► ‘T’ Account

► Source document

► Day book

Question No: 48 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in the business made
by the owner will effect:

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 ► Cash & Capital Account

► Cash & Expense Account

► Capital & Revenue Account

► Capital & Expense Account

Question No: 49 ( Marks: 1 ) - Please choose one

Mr.”
A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated as _____________ for
business.

► Revenue

► Net profit

► Gross profit

► Operating profit

Question No: 50 ( Marks: 1 ) - Please choose one

when income exceeds expenses in a specific time period is known as:

► Savings

► Net profit

► Gross profit

► Operating profit

Question No: 51 ( Marks: 5 )

Financial year decided by partnership agreement is 1st July to 30th June. Mr. Ali is partner and having a
capital of Rs. 1,500,000 on July 1st 2007 and he introduced more capital on August 1st 2007 Rs. 10,000
on April 1st 2008, Rs.500,000 and on June 1st 2008 , Rs. 5,000. Mark up rate is 10% p.a.

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Capital = 1500000 mark up= 1500000

2nd capital= 10000 markup= 1000

3rd capital= 500000 markup= 50000

4th capital= 5000 markup= 500

Total markup= Rs. 201500

Calculate mark up on Mr. Ali’s capital for the year ending on 31th June 2008.

Question No: 52 ( Marks: 10 )

Write a note on legal documents required for the formation of company.

In Pakistan when someone wants to form a company. He will contact with SECP, its abbreviation
for Securities and Exchange Commission of Pakistan. it came in 1984 in law of Pakistan which is
called companies ordinance. It controls all affairs of limited companies. For making of private
limited company 2 members can submit their names in memorandum and articles of association
along with other requirements of company ordinance 1984. while for public limited company seven
members will sent their names. By this way they can apply and make registration of the company.

Question No: 53 ( Marks: 10 )

What is the difference between public and private company?

The main difference between public and private company is that in public limited companies there
is no restriction on number of persons to be its members. There is one restriction. That there should
be a minimum of three members to form a public limited company. Public limited company can
offer its shares to general public.

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While in private company two to fifty persons can form a company. Minimum two members are
elected to form a board of directors. This board is given the responsibility to run day to day
business of the company. Private limited company cannot offer its share to general public.

Question No: 54 ( Marks: 10 )

The
following discrepancies were noted on comparing Cash Book with Pass Book.

1. Balance as per Cash Book (Cr) is Rs. 19,000.

2. Cheque for Rs. 5,000 paid into the bank for collection on 20th March, 2008 has not yet been
collected.
3. Cheques for Rs. 15,000 Issued on 24th March, 2008, out of which Cheques for Rs. 10,000
presented during March, 2008
4. An amount of Rs. 1,000 for interest on overdraft was debited in the Pass Book but was
intimated to Mr. David on 4th April, 2008.
5. Mr. David paid into his bank account an amount of Rs. 3,000 but it was wrongly credited to
Mr. Denial’s Account.
6. On 20th March, 2008 the bank received dividend of Rs. 10,000 from a company where Mr.
David's has invested his money, the same had been recorded in Cash Book on 31st March,
2008.
7. Cheque of Rs. 2,500 was shown in Pass Book as dishonored.

Required: Prepare a Bank Reconciliation Statement as on 31st March, 2008

Balance as per Cash Book Cr 19000

Unpresented cheques Dr 5000

Uncredited cheque Dr 10000

Interest by bank Dr. 1000

Paper No:20
Solved byABr & Chanda Rehman
FINALTERM EXAMINATION
Fall 2008

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 MGT101- Financial Accounting (Session - 3)

Question No: 1 ( Marks: 1 ) - Please choose one

Debenture is also named as:
► Share
► Bond
► Equity
► Reserve

Question No: 2 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?

► In case of death of partner

► At the admission of new partner
► If any partner resigned from partnership
► All of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

Particulars Rs.
Debentures 1, 50, 000
Equity Capital 2, 00,000
General Reserve 90, 000
Accumulated profit 60,000
What is debt equity ratio ?

► 15:24 (or 5: 8)
► 15:29
► 15:35 (or 3: 7)
15 : 20

Question No: 4 ( Marks: 1 ) - Please choose one

Particulars Rs.
Share capital of Rs. 10 each 1,000,000
Profit before tax 150,000
Taxes 10,000
Earning per share =?

► Rs. 1.50 per share

► Rs. 1.40 per share
► Rs. 1.15 per share
► Rs. 1.25 per share

Question No: 5 ( Marks: 1 ) - Please choose one

In calculating earning per share (EPS), the net profit is divided by which of the
following?

► Number of ordinary shares

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 ► Number of preference shares
► Paid up capital
► Authorized capital

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form of
business?

► The limited company form of business allows ownership of the business to be

spread amongst many people
► Shareholders can appoint professionals
► Shareholders are personally liable for all the liabilities incurred by the business
correct
► Regular filing of information about the affairs of the company is a legal
requirement

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Annual Report

Question No: 8 ( Marks: 1 ) - Please choose one

In which of the following interim dividend is treated?

► In profit and Loss account

► In profit and Loss appropriation account
► On the asset side of the Balance Sheet
► In trading account

Question No: 9 ( Marks: 1 ) - Please choose one

The income statement of the Limited company is also known as:

► Manufacturing account
► Profit and Loss account
► Profit and Loss Appropriation account
► Current Account

Question No: 10 ( Marks: 1 ) - Please choose one

In which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only
► In income statement under the administrative expense only
► In both balance sheet under the head of current liabilities and income statement
under the administrative expense

Question No: 11 ( Marks: 1 ) - Please choose one

Preliminary Expenses of the company may write off against:

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 ► Share premium account
► Share holder account
► Debtors control account
► Creditor control account

Question No: 12 ( Marks: 1 ) - Please choose one

The amount received; in excess of the face value of the shares is transferred to which of
the following?

► Share premium account

► Share holder account
► Share capital account
► Right share

Question No: 13 ( Marks: 1 ) - Please choose one

The maximum amount with which the company is registered is called:
► Authorized Share Capital
► Issued Share Capital
► Paid up capital
► Called up capital

Question No: 14 ( Marks: 1 ) - Please choose one

When the capitals are fixed, which of the following account will be debited for drawings
made by a partner?

► Individual Partner’s Current Account

► Partner’s Cash Account
► Partner’s Bank Account
► Partners Capital Account

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following is(are) type(s) of capital account in partnership?

► Fixed Capital
► Current Capital
► Fluctuating Capital
► Both Fixed Capital and Fluctuating Capital

Question No: 16 ( Marks: 1 ) - Please choose one

Current accounts of the partners should be opened when the capitals are:
► Normal
► Floating
► Fixed
► Fluctuating

Question No: 17 ( Marks: 1 ) - Please choose one

Identify the selling expenses of manufacturing concern with the help of given data.

Particulars Rs.
Salesman’s salary 70,000

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Commission on sales 28,000
Carriage outward 10,000
Carriage inward 5,000

► Rs. 80,000
► Rs. 60,000
► Rs. 38,000
► Rs. 1, 08,000

Question No: 18 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?

► Total assets employed

► Total liabilities
► Total assets
► Current assets

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT if depreciation is given in trial balance?
► It means depreciation has already been deducted from concerned asset account
► It will be shown as an expense in income statement only
► It will not be deducted from concerned asset in Balance Sheet
► All of the given options are correct

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if cash is drawn by a Proprietor?

► Proprietor’s drawings a/c (Dr.) and Cash a/c (Cr.)

► Cash a/c (Dr.) and Proprietor’s drawings a/c (Cr.)
► Proprietor’s Capital (Dr.) and Proprietor’s drawings a/c (Cr.)
► Proprietor’s drawings (Dr.) and Proprietor’s Capital a/c (Cr.)

Question No: 21 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business
► A balance sheet
► A statement of retained earnings

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is a selling expense?

► Any tax/freight is paid on purchases

► General salaries paid to laborers
► Tax & freight paid on sale
► Interest on deposits

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following would NOT be considered as a component of 'cost' of stock?

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 ► Salaries of selling staff
► Transportation inward costs
► Import duties
► Purchase price

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following accounts would be increased with a debit?

► Contributed Capital
► Retained Earnings
► Revenues
► Expenses

Question No: 25 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss
account.

Particulars Rs.
Bad debts 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600
► Rs. 1,600
► Rs. 2,000
► Rs. 2,600

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following account will be credited when a typewriter is sold that has been
used in the office?

► Cash Account
► Sales Account
► Purchase Account
► Office Equipment Account

Question No: 27 ( Marks: 1 ) - Please choose one

A sum of Rs. 200 written off as bad debt now received credited to the account of debtor
would:

► Increase the net profit by Rs.200

► Decrease the profit by Rs.200
► Remains constant and no effect on net profit
► There is no relation between debtor and profit

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales to
Rahim of Rs. 500 were omitted to record in books of accounts?

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 ► Sales account
► Rahim’s account
► Cash account
► Both sales and Rahim’s Account correct

Question No: 29 ( Marks: 1 ) - Please choose one

If the provision for doubtful debts is not created, which of the following entry is passed
to record the bad debts in control account?
► Bade debts (Dr) and Debtors Control A/c (Cr)
► Allowance for doubtful debts (Dr) and Debtors Control A/c (Cr)
► Allowance for doubtful debts (Dr) and Debtors A/c (Cr)
► Debtors Control A/c (Dr) and Allowance for doubtful debts (Cr)

Question No: 30 ( Marks: 1 ) - Please choose one

If Bad Debts written off are given in adjustment, then which of the following entry for bad
debts written off is CORRECT?

► Bad debts a/c (Dr) and Trading a/c (Cr)

► Provision for Bad and Doubtful debts a/c (Dr) and Bad debts a/c(Cr)
► Bad debts a/c (Dr) and debtors a/c (Cr)
► Trading a/c (Dr) and Bad debts a/c (Cr)

Question No: 31 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Bad Debts (Given in trial balance) 500
Old provisions (Given in trial balance) 800
Sundry Debtors (Given in trial balance) 44,500
Provision for doubtful debts @ 5%
What will be the amount of new provision ?

► Rs. 2,225
► Rs. 2,525
► Rs. 1,925
► Rs. 3,025

Question No: 32 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400

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Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 5%

Requirement: Identify the Total amount which will deduct from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 1,540
► Rs. 3,940 correct

Question No: 33 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 5 % of the sundry debtors are
doubtful. Actual bad debts are Rs. 1600. What amount of new provision for doubtful
debts will be credited in profit & loss account.

► Rs. 3,600
► Rs. 2,000 correct
► Rs. 1,600
► Rs. 400

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following option is TRUE about the characteristic(s) of Bad Debt?

► It is a definite loss to the business

► It is not shown in Balance Sheet
► No provision is necessary for it
► All of the given options

Question No: 35 ( Marks: 1 ) - Please choose one

A debit balance in the Bank Statement indicates:

► Cash at bank
► Bank overdraft
► Overpayment to creditors
► Cash in hand

Question No: 36 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine 1,00,000
Cost of new machine purchased during the year 50,000
Depreciation during the year 21,000
Closing written down value (WDV) ?

► Rs. 1, 29,000
► Rs. 1, 50,000
► Rs. 1, 21,000
► Rs. 71,000

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Question No: 37 ( Marks: 1 ) - Please choose one
Depreciable value of an asset is equal to:

► Cost + scrap value

► Cost + market price
► Cost – scrap value
► None of the given options

Question No: 38 ( Marks: 1 ) - Please choose one

If a business pays rent in advance for 12 months, it will be treated as:

► Prepaid expenses of business

► Long term liability of business
► Fixed assets of business
► Current liability of business

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following asset is NOT depreciated?

► Factory Buildings
► Office Equipment
► Plant & Machinery
► Land

Question No: 40 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?

► These are the running expenses of the business

► They improve the financial position of the business
► They reduce the profit of the concern
► They do not appear in the balance sheet

Question No: 41 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about Capital Expenditure?
► Creates future benefits
► Incurred to acquire fixed assets
► Incurred to increase the economic life of existing fixed assets
► Reduce the profit of the concern

Question No: 42 ( Marks: 1 ) - Please choose one

Expenditures incurred anually on renewal of patent are known as:

► Revenue Expenditures
► Capital Expenditures
► Financial Expenditures
► Operating Expenditures

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following is NOT a type of voucher?

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 ► Journal Voucher
► Receipt Voucher
► Payment Voucher
► Drawings Voucher

Question No: 44 ( Marks: 1 ) - Please choose one

If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating expenses are Rs.
100,000. What will be the net result?

► Rs. 5,000 Loss

► Rs. 5, 000 Profit
► Rs.1, 95,000 Profit
► Rs.1, 95,000 Loss

Question No: 45 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are
Rs.20,000 during the year. What would be the Net Profit?

► Rs.15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).

► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account

Question No: 47 ( Marks: 1 ) - Please choose one

Accounts Receivable & Inventory are the examples of:

► Liquid assets
► Current assets
► Fixed assets
► Capital assets

Question No: 48 ( Marks: 1 ) - Please choose one

A summarized record of transactions related to individuals or things is called a/an
___________.

► Account
► Voucher
► Journal
► Trial balance

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Question No: 49 ( Marks: 1 ) - Please choose one
When Capital is increased by an amount, it is recorded on the:

► Left or credit side of the account

► Right or debit side of the account
► Left or debit side of the account
► Right or credit side of the account

Question No: 50 ( Marks: 1 ) - Please choose one

What would be the affect on the components of the accounting equation, if goods are
purchased on cash?

► Increase in cash and decrease in equity

► Increase in cash and increase in goods
► Increase in goods and decrease in cash
► Increase in equipment and increase in equity

Question No: 51 ( Marks: 5 )

Calculate net income with the help of given date for the year end of 2007 and show complete
working of Cost of Goods sold.

Raw material Stocks on 1-1-2007 Rs. 30,000

Work in process on 1-1-2007 35,600
Finished Goods on 1-1-2007 35,400

Raw material Stocks 31-12-2007 Rs. 31,000

Work in process 31-12-2007 25,000
Finished Goods 31-12-2007 53,900
Total factory Cost 543,339

Additional data
v Other expenses for the year is Rs. 5,000.
v Operating expenses for the year Rs. 15,000
v Sale for the year Rs. 1,500,000

Solution:
Name of the Company
Income Statement
For the period of 2007

Particulars Amount Rs Amount Rs

Sales 1500000
Less Cost of Good Sold (534439)
Gross Profit 965561
Less: Expenses:
Other Expenses 5000
Operating expenses 15000

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 (20000)
Net Income
945561

Working:
Calculate Cost of Good Sold:
Raw Material:
Opening Raw Material: 30000
- Closing Raw Material: 31000
Cost of Material Consumed: -1000
Conversion Cost:
Direct Labor: 0
FOH: 0
Total Factory Cost: 542339
Work in Process:
+Opening WIP: 35600
-Closing WIP: 25000
Cost of Goods Manufactured: 552939
Finish Goods:
+Opening FG: 35400
-Closing FG: 53900
Cost of Good Sold: 534439

Question No: 52 ( Marks: 10 )

Write down the at least ten distinguishing features of a limited company which differentiate it
from sole proprietor business

Question No: 53 ( Marks: 10 )

On 01-01-2007, the provision for doubtful debts a/c stood at Rs. 12,000 (credit balance).
In 2007, the bad debts amounted to Rs. 10,000. The debtors on 31-12-2007 are amounted
to Rs. 3, 20,000 and a provision for doubtful debt to be maintained @ 10%.

Required:
Show Journal entries and necessary accounts. Also show how the items will appear in
Profit and Loss account and Balance sheet

Solution:
Entry#1
Provision for Doubtful Debts 32000
Debtors Control Account 32000

Make Ledgers of each account

Debtors Account
Debit Side Credit Side
Date No. Particulars Dr. Rs. Date No. Particulars Cr. Rs.
Balance 32000 Provision for 32000

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 doubtful debts
32000 32000

Provision of Doubtful debts

Debit Side Credit Side
Date No. Particulars Dr. Rs. Date No. Particulars Cr. Rs.
Debtors 32000 Balance 32000
Account
32000 32000

And you people already know to show these accounts in P n L and Balance Sheet.

IN PL Account = 32000+10000-12000=30000 on Debit Side

In Balance Sheet
Debtors = 320000-32000-12000-276000

Question No: 54 ( Marks: 10 )

Following information is extracted from the books of Arfan Ltd as on December 31st,
2007.

Particulars Cost Depreciation Accumulated Depreciation

rate On 01-01-2007
Vehicles 01-01-2007 1,90,000 10% 10,000
Building 01-01-2007 4,00,000 20% 12,500
Furniture & Fixture 01-01-2007 4,15,000 15% 34,500
Land 01-01-2007 1,58,000 -- ---

You are required to calculate Written down value of each asset and show working of complete
depreciation for the year ending on December 2007.

Particulars Cost Rate Accumulated Depreciation WDV

As Addition/ As As At For As At
st
At deletion At 1-1- The 31 -
st
1-1- 31 - 2007 Year 12-
2007 12- 2007
2007

Vehicles 190000 0 190000 10% 10000 19000 29000 161000

Building 400000 0 400000 20% 12500 80000 92500 307500

Furniture 415000 0 415000 15% 34500 62250 96750 318250

Land 158000 0 158000 0 0 0 0 158000

Total 1163000 0 1163000 57000 161250 218250 944750

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 Paper No:21
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION
Fall 2008
MGT101- Financial Accounting (Session - 1)

Question No: 1 ( Marks: 1 ) - Please choose one

Debenture is also named as:
► Share
► Bond
► Equity
► Reserve

Question No: 2 ( Marks: 1 ) - Please choose one

A company declares a cash dividend to be paid to its stockholders next month. The
effect of the transaction is to:

► Decrease assets and liabilities.

► Increase assets and stockholders' equity.
► Decrease assets and stockholders' equity. correct
► Increase liabilities and decrease stockholders' equity.

Question No: 3 ( Marks: 1 ) - Please choose one

The beginning balance of retained earnings was Rs. 7,500. The dividends paid to
stockholders' were Rs.1, 500. The ending balance of retained earnings is Rs. 5,000. What
was the net income or net loss for the accounting period?
► Net loss of Rs.1, 000
► Net income of Rs. 1,000
► Net loss of Rs. 2,000
► Net income of Rs. 2,500

Question No: 4 ( Marks: 1 ) - Please choose one

The net income calculated in the income statement for the accounting period is reported
on:

► Bank Statement
► Statement of retained earnings
► Statement of cash flows
► None of the given options

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Question No: 5 ( Marks: 1 ) - Please choose one
If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A,
Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. B in distributable
profit.

► Rs. 98,000
► Rs. 1, 47,000
► Rs. 2, 45,000
► Rs. 3, 43,000

Question No: 6 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?

► In case of death of partner

► At the admission of new partner
► If any partner resigned from partnership
► All of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

A private limited company can commence its business:

► Immediately on receiving a certificate of incorporation

► Without receiving a certificate of incorporation
► Only when it receives certificate of commencement of business
► Only when it receives both, the certificate of incorporation as well as certificate of
commencement of business

Question No: 8 ( Marks: 1 ) - Please choose one

The balance sheet reported a beginning balance of Rs. 20,000 in Accounts Receivable
and an ending balance of Rs. 15,000. Credit Sales of Rs. 200,000 were made during the
year. Using this information, compute cash collected from customers.

► Rs. 215,000
► Rs. 195,000
► Rs. 200,000
► Rs. 205,000

Question No: 9 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Annual Report

Question No: 10 ( Marks: 1 ) - Please choose one

If dividend is proposed by directors of the company @ 30% for the year, it will be
calculated on:

► Capital Reserve
► Authorized share capital

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 ► Paid up share capital
► Share premium

Question No: 11 ( Marks: 1 ) - Please choose one

Share premium account is used for what?
► Write off Preliminary Expenses of the company.
► Write off the balance amount, in issuing shares on discount.
► Issue fully paid Bonus Shares.
► All of the given options

Question No: 12 ( Marks: 1 ) - Please choose one

Authorized share capital is also known as:
► Registered capital
► Issued capital
► Paid up capital
► Called up capital

Question No: 13 ( Marks: 1 ) - Please choose one

In case of fixed capital accounts, other transactions such as Drawings and Profit etc. are
recorded in a separate account that is called ___________.

► Fixed Capital Account

► Current Account
► Fluctuating Capital Account
► Floating Capital Account

Question No: 14 ( Marks: 1 ) - Please choose one

A, B, C are partners. Their profit sharing ratio is equal. Capital balance on July 1st of
Partner A --- Rs. 40,000 Partner B --- Rs. 30,000 and Partner C--- Rs. 20,000.Their private
property of Partner A is Rs.15,000, Partner B is Rs. 7,000 and Partner C is Rs. 1,500. What
is the level of their liabilities under the partnership firm?
► Partner A—Rs. 40,000, Partner B---- Rs. 30,000, Partner C – 20,000
► Partner A—Rs. 40,000, Partner B---- Rs. 30,000, Partner C – 21,500
► Partner A—Rs. 40,000, Partner B---- Rs. 37,000, Partner C – 20,000
► Partner A—Rs. 55,000, Partner B---- Rs. 37,000, Partner C – 21,500

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following item will be shown on debit side of capital account of sole
proprietor?

► Cash
► Drawings
► Debtors
► Profit

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if cash is drawn by a Proprietor?

► Proprietor’s drawings a/c (Dr.) and Cash a/c (Cr.)

► Cash a/c (Dr.) and Proprietor’s drawings a/c (Cr.)
► Proprietor’s Capital (Dr.) and Proprietor’s drawings a/c (Cr.)

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 ► Proprietor’s drawings (Dr.) and Proprietor’s Capital a/c (Cr.)

Question No: 17 ( Marks: 1 ) - Please choose one

An asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used
► It can be realized in cash or sold or consumed in the business within one year
► It is a piece of new machinery that is expected to last for at least ten years
► All of the given options

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following appears in both the Income Statement debit column and the
Balance Sheet credit?

► Net income
► Net loss
► Dividends
► Retained earnings

Question No: 19 ( Marks: 1 ) - Please choose one

General office expenses are charged to which of the following head:

► Administrative expenses
► Marketing expenses
► Selling expenses
► Financial expenses

Question No: 20 ( Marks: 1 ) - Please choose one

Consider the following table:

Financial statement item Classification

A. Inventory Current asset
B. Tangible assets Non-current asset
C. Accrued expenses Current asset
D. Bonds payable Long-term liabilities

Identify the row above, showing an INCORRECT financial-statement classification?

► Row A
► Row B
► Row C
► Row D

Question No: 21 ( Marks: 1 ) - Please choose one

Short-term investments include all of the following EXCEPT:

► A bond receivable intended to be sold within one year

► Frequently traded securities
► A stock investment in the General Electric Company intended to be sold within
one year

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 ► A shares investment in the Coca-Cola Company intended to be held for several
years

Question No: 22 ( Marks: 1 ) - Please choose one

The figure of cash received from debtors can be located either from cash book or:

► Debtor’s Control Account

► Balance Sheet
► Profit & Loss Account
► Bills Payable Account

Question No: 23 ( Marks: 1 ) - Please choose one

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs.
40,000. On the basis of past experience, it is estimated that 10% of the sundry debtors
are doubtful. Actual bad debts are Rs. 1600. What amount of new provision for doubtful
debts will be credited in profit & loss account
► Rs. 3,600
► Rs. 4,000 doubted
► Rs. 1,600
► Rs. 2, 400

Question No: 24 ( Marks: 1 ) - Please choose one

When one or both aspects of a transaction are recorded in the wrong class or category
of account, this is called:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following account will be credited when a typewriter is sold that has been
used in the office?

► Cash Account
► Sales Account
► Purchase Account
► Office Equipment Account

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. “A” of Rs.336
have been debited to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)
► Sales account (Dr.) and B’s account (cr.)
► B’s account (Dr.) and Sales account (Cr.)

Question No: 27 ( Marks: 1 ) - Please choose one

Goods purchased from “Mr. A” for Rs. 2,000 passed through the sales book. The
rectification of error will result in:

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 ► Increase of gross profit
► Decrease of gross profit correct
► Remains constant and no effect on net profit
► There is no relation between goods purchased and gross profit

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales to
Rahim Rs. 336 posted to his account as Rs. 363?

► Sales account
► Rahim’s account
► Cash account
► Both sales and Rahim’s Account

Question No: 29 ( Marks: 1 ) - Please choose one

Control account tells about:

► Picture collectively instead of individually

► Details of loyal clients
► Customer attitude of payments
► Complete history of transactions of business clients

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for debtors control
account?

► Sales Day Book

► Sales Return
► Debtors Ledger
► All of the given options

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded when the Bad Debts are recovered?

► Cash account (Dr.) & Bad Debts recovered account (Cr.)

► Accounts Receivable account (Dr.) & Bad Debts recovered account (Cr.)
► Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)
► Provision for doubtful debts account (Dr.) & Cash account (Cr.)

Question No: 32 ( Marks: 1 ) - Please choose one

If the (New provision + Bad debts) > Amount of old provision then resulting figure will be
shown at:

► Debit side of Profit & Loss Account

► Credit side of Profit & Loss Account
► Asset side of Balance Sheet
► Liability side of Balance Sheet

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Question No: 33 ( Marks: 1 ) - Please choose one
Which of the following would be deducted from Sundry Debtors in Balance Sheet?

► Bad debts (Trial balance item)

► Old provision for doubtful debts
► New provision for doubtful debts
► Both Bad debts (given in adjustment) and new provision for doubtful debts

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following option is TRUE about the characteristic(s) of Bad Debt?

► It is a definite loss to the business

► It is not shown in Balance Sheet
► No provision is necessary for it
► All of the given options

Question No: 35 ( Marks: 1 ) - Please choose one

Which one of the following transactions will cause the balance in Mr. Terry's Cash Book
to be greater than his Bank Statement balance?
► A cheque is drawn but not yet presented at the bank for payment
► The bank has not yet notified to Mr. Terry about a dishonored cheque
► A credit transfer into Terry's Bank Account
► A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110 correct

Question No: 36 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets ?
Owner's equity 1,50,000
Liabilities 1,00,000

► Rs. 49,000
► Rs. 55,000
► Rs. 50,000
► Rs. 2, 50,000

Question No: 37 ( Marks: 1 ) - Please choose one

Accounting is the language of:

► Business
► School
► Proprietor
► Management

Question No: 38 ( Marks: 1 ) - Please choose one

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 Which of the following account balance is shown on credit side of Trial Balance? (It is
assumed that all account balances are shown on normal balance)

► Cash account
► Furniture account
► Vehicle account
► Capital account

Question No: 39 ( Marks: 1 ) - Please choose one

Under the reducing balance method of depreciation:

► Amount of depreciation increases every year

► Amount of depreciation remains constant for every year
► Amount of depreciation decreases every year
► None of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

85 units were sold, Use the FIFO method of inventory costing and determine the cost of
goods sold.

► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 992

Question No: 41 ( Marks: 1 ) - Please choose one

WhicWhich of the following is an example of direct materials cost?

► Polish and finishing material for chair

► A piece of wood for the production of chair
► Production worker’s wages
► Depreciation expenses

Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if the goods are sold on credit to Mr.
Mahmood?

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 ► Cash account
► Mr. Mahood account
► Sales account
► Purchases account

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business sold goods for Rs.10,000 on
credit?

► Cash account
► Sales account
► Accounts receivable account
► Purchases account

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following is an example of a Current liability?

► Closing inventory
► Opening inventory
► Petty cash
► Bank overdraft

Question No: 45 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT for trading account?

► It inculdes cost of goods sold and all the direct expenses related to sales
► It inculdes cost of goods sold and all the indirect expenses related to sales
► It inculdes cost of goods sold and all the direct and indirect expenses
► It inculdes cost of goods sold and all the direct and selling, administrative
expenses

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following are the components of General Ledger?
1) Title of account
2) Amount of transaction
3) Date of transaction
► (1) & (2) only
► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)

Question No: 47 ( Marks: 1 ) - Please choose one

The original book of entry, in which all vouchers are first recorded, is called:

► General Journal
► General Ledger
► Trial Balance
► Balance Sheet

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Question No: 48 ( Marks: 1 ) - Please choose one
When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account

Question No: 49 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in
the business made by the owner will effect:

► Cash & Capital Account

► Cash & Expense Account
► Capital & Revenue Account
► Capital & Expense Account

Question No: 50 ( Marks: 1 ) - Please choose one

Which of the following is non- profit organization?
► Sole proprietorship
► Partnership
► Limited company
► Trust

Question No: 51 ( Marks: 5 )

What is bank overdraft? Mention an example for this. Why companies have to pay mark
up on it. Under which head mark up paid on overdraft is shown in financial statement.

Answer:
An overdraft occurs when withdrawals from a bank account exceed the available balance.
In this situation a person is said to be "overdrawn”.

Question No: 52 ( Marks: 10 )

Income Statement of XYZ Ltd for the year ended on 30th June, 2007:

Particulars Rs. Rs.

Sales 500,000
Less: Cost of Goods Sold 250,000
Gross Profit 250,000
Less: Operating expenses
Administrative expenses 110,000
Interest expenses 20,000 130,000
Net profit before Tax 120,000
Less: Taxes 36,000
Net profit after tax 84,000

Opening Stock for the year was Rs. 60,000.

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Balance Sheet of XYZ Ltd on 30th June, 2007:

Assets Rs.
Fixed Assets 400,000
Stock 60,000
Debtors 230,000
Bills Receivable 40,000
Cash at bank 150,000
Prepaid expenses 20,000
Total 900,000
Liabilities
Share capital 200,000
Reserves and surplus 250,000
10% Debentures 200,000
Creditors 180,000
Bills payable 70,000
Total 900,000

Calculate following ratios from the financial statement of XYZ Ltd.

1. Current Ratio
2. Acid Test Ratio
3. Stock turn over Ratio
4. Debt equity Ratio
5. Gross profit Ratio
Solution:
1: Current Ratio:
Total Assets/Total Liabilities
= 900000/900000
=1

2: Acid Test Ratio

Total Assets-Stock/Total Liabilities
= 900000-60000/900000
= 840000/900000
= 0.933333

3: Stock turn over Ratio

(Average Stock / Cost of goods sold) x 365

Average Stock = opening stock + Closing Stock/2

= 60000+60000/2
= 60000
= (Average Stock / Cost of goods sold) x 365
= (60000/250000) x 365
= 0.24 x 365
= 87.4

4: Debt equity Ratio

Long term Liabilities / Equity

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= 200000/200000
=1

5: Gross profit Ratio

(Gross Profit / Sales) x 100
= 250000/500000 x 100
= 0.5 x 100
= 50

Question No: 53 ( Marks: 10 )

Pass the rectifying entries to correct the following errors:

Question No: 54 ( Marks: 10 )

The following discrepancies were noted on comparing Cash Book with Pass Book.

(1) The following cheques were deposited into bank on 28th March but were
not collected by the bank by 31stMarch, (i) Rs. 500, (ii) Rs. 300, (iii) Rs. 200.
(2) The following cheques were issued but were not presented for the
payment by 31st March. (i) Rs. 200, (ii) Rs. 450 (iii) Rs. 525 (iv) Rs. 375.
(3) The bank credited a dividend of Rs. 2,000 on 31st march but intimation was
received by the trader on 5th April, 2008.
(4) The bank credited interest of Rs. 50 on 31st March but not debited in Cash
Book.
(5) The Bank charged (debited) a commission of Rs. 100 on 31st March.
(6) A cheque of Rs. 500 was received from customer and was entered in the
bank column of Cash Book on 25thMarch, but was paid into the bank on
1st April.

Required: Prepare a Bank Reconciliation Statement, if the Bank balance as per Cash
Book (Dr.) was Rs. 15,000 on 31stMarch, 2008.

Answer:

Balance as per Cash book. Dr 15000

Less not collected Cheques. (500+300+200) Cr 1000
Dr 14000
Add UN Presented Cheques (200+450+525+375) Dr 1550
Dr 15550
Add dividend Credit by bank Dr 2000
Dr 17550
Add interest credit by bank Dr 50
Dr 17600
Less bank charges Cr 100
Dr 17500
Less Cheque received Cr 500

Balance as per Bank Book Cr 17000

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 Paper No: 22
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION

Fall 2008

MGT101- Financial Accounting (Session - 4)

Question No: 1 ( Marks: 1 ) - Please choose one

Wages outstanding given in the trial balance will be treated as a (an):

► Asset

► Liability

► Revenue

► Deferred expense

Question No: 2 ( Marks: 1 ) - Please choose one

What does a credit balance in a partner’s current account represent to a business?

► Current Assets

► Current Liability

► Long-term liability

► Share of profit

Question No: 3 ( Marks: 1 ) - Please choose one

Particulars Rs.
Debentures 1, 50, 000
Equity Capital 2, 00,000
General Reserve 90, 000
Accumulated profit 60,000
What is debt equity ratio ?

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 ► 15: 20 (or 3:4)

► 15:24 (or 5: 8)

► 15:29

► 15:35 (or 3: 7) correct

Question No: 4 ( Marks: 1 ) - Please choose one

Particulars Rs.
Share capital of Rs. 10 each 1,000,000
Profit before tax 150,000
Taxes 10,000
Earning per share =?

► Rs. 1.50 per share

► Rs. 1.40 per share

► Rs. 1.15 per share

► Rs. 1.25 per share

Question No: 5 ( Marks: 1 ) - Please choose one

Mark up cover ratio = operating profit before financial charges ÷ ?

► Selling expenses

► Administrative expenses

► Financial charges

► Direct expenses

Question No: 6 ( Marks: 1 ) - Please choose one

In calculating earning per share (EPS), the net profit is divided by which of the following?

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 ► Number of ordinary shares

► Number of preference shares

► Paid up capital

► Authorized capital

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following business publishes the Financial Statements?

► Sole-Proprietorship

► Partnership

► Trust

► Public Limited Company

Question No: 8 ( Marks: 1 ) - Please choose one

The primary purpose of preparing a cash flow statement for an entity is to provide information
about:

► Its financial position at the end of an accounting period

► Its cash receipts and cash payments during an accounting period

► Its financial position at the start of an accounting period

► None of the given options

Question No: 9 ( Marks: 1 ) - Please choose one

How dividend declared is treated in the Balance Sheet of the company?

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 ► Provision

► Current liability

► Reserves and surplus

► Current assets

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following option(s) is TRUE about the Sales returns?

► Sales returns reduce the Gross sales of the firm

► Sales returns affect the Net income of the firm

► Sales returns affect the flow of cash

► All of the given options

Question No: 11 ( Marks: 1 ) - Please choose one

Fixed Assets (WDV) + Working Capital =?

► Total assets employed

► Total liabilities

► Total assets

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 ► Current assets

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following is TRUE about a merchandising company?

► A merchandising company's business is to buy and sell products

► A merchandising company must use the perpetual system to account for merchandising
inventory

► A merchandising company's business is to provide services

► A Sugar Mill is an example of a merchandising company

Question No: 13 ( Marks: 1 ) - Please choose one

Capital account of sole proprietors is affected by which of the following items?

a. Profit & Loss account

b. Drawings account

c. Balances of capital account

► a,b

► b,c

► a,c

► a,b,c

Question No: 14 ( Marks: 1 ) - Please choose one

Which of the following is/are TRUE about the sole trader form of business?

► A sole trader is liable to pay income tax on his/her earnings

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 ► Sole traders do not need to consult accountants

► Sole traders must register the name of their business with the Registrar of Companies

► All of the given options

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following is (are) characteristic(s) of Reserve?

► Its amount is generally determined by the management on the basis of the amount of
profit earned.

► It is shown on liabilities side of balance sheet

► It does not affect profit or loss, since it is created after ascertaining net profit

► All of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which account is increased with a debit and decreased with a credit?

► Cash

► Accounts Payable

► Contributed Capital

► Retained Earnings

Question No: 17 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

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 ► A cash flow statement

► The bank statement for the business

► A balance sheet

► A statement of retained earnings

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following appears in both the Income Statement debit column and the Balance
Sheet credit?

► Net income

► Net loss

► Dividends

► Retained earnings

Question No: 19 ( Marks: 1 ) - Please choose one

The Balance Sheet item that represents the resources invested by the owner is known as:

► Accounts Receivable

► Cash

► Note Payable

► Owner's Equity

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is an example of operating expense?

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 ► Purchasing operating equipment

► Purchasing cleaning services doubted

► Purchasing an investment in another company

► Purchasing a computer for the accounting office

Question No: 21 ( Marks: 1 ) - Please choose one

The main objective of financial reporting is to provide:

► Essential information to internal users of financial reports.

► Useful economic information about the business to the external parties for sound
financial decisions.

► Information to internal users about the cash position of the business.

► Information to the Securities Exchange Commission (SEC).

Question No: 22 ( Marks: 1 ) - Please choose one

The figure of cash received from debtors can be located either from cash book or:

► Debtor’s Control Account

► Balance Sheet

► Profit & Loss Account

► Bills Payable Account

Question No: 23 ( Marks: 1 ) - Please choose one

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 Consider the following data and identify the amount which will be shown in profit & loss
account.

Particulars Rs.
Bad debts 3,500
Provision for doubtful debts (old) 6,000
Current year’s provision (new) 1,500

► Rs. (1,000)

► Rs. 1,000

► Rs. (5,000)

► Rs. 5,000

Question No: 24 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss
account.

Particulars Rs.
Bad debts 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600

► Rs. 1,600

► Rs. 2,000

► Rs. 2,600

Question No: 25 ( Marks: 1 ) - Please choose one

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 Which of the following rectifying entry will be recorded, if sales to Mr. “A” of Rs.336 have
been debited to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)

► Sales account (Dr.) and B’s account (cr.)

► B’s account (Dr.) and Sales account (Cr.)

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of a purchase
return of Rs.200 to Mr. “A” entered in sales book instead of purchase return book?

► A’s account only

► Sales account only

► Purchase returns account and sales account

► Purchases account only

Question No: 27 ( Marks: 1 ) - Please choose one

A receipt of cash Rs. 10,000 from Mr. Bilal is recorded as Rs. 1,000. What amount will be
adjusted in rectifying entry?

► Rs. 1,000

► Rs. 9,000

► Rs. 10,000

► Rs. 11,000

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Question No: 28 ( Marks: 1 ) - Please choose one

If provision is created for doubtful debts, which of the following entry will be passed to record
bad debts in control account?

► Bade debts (Dr) and Debtors Control A/c (Cr)

► Provision for doubtful debts (Dr) and Debtors Control A/c (Cr) correct

► Provision for doubtful debts (Dr) and Debtors A/c (Cr)

► Debtors Control A/c (Dr) and Provision for doubtful debts (Cr)

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following is a detailed record of an individual account in case of large business?

► Control Account

► Subsidiary Ledger

► Balance Sheet

► Trial Balance

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is shown on credit side of creditors control account?

► Bills Receivable

► Return inwards

► Credit purchases

► Discount allowed

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Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is an item of a creditors control account?

► Cash sales

► Credit sales

► Credit purchase

► Cash purchases

Question No: 32 ( Marks: 1 ) - Please choose one

In which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business

► Failure of repeated attempt to collect the debt

► All of the given options

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following best describes unpresented cheques?

► Cheques received on behalf of the business by the bank

► Cheques drawn but yet to be recorded in the bank records

► Cheques issued by the bank not recorded in business records

► Cheques received but yet to be recorded in the bank records

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Question No: 34 ( Marks: 1 ) - Please choose one

The following balance and discrepancies were found on 31 March 2008:

Particulars Rs.
Cash book balance (Dr) 5 000
Unpresented cheques 1 000
Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)

► Rs. 5 500 (Cr)

► Rs. 4 500 (Dr)

► Rs. 4 500 (Cr) correct

Question No: 35 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets ?
Owner's equity 1,50,000
Liabilities 1,00,000

► Rs. 49,000

► Rs. 55,000

► Rs. 50,000

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 ► Rs. 2, 50,000

Question No: 36 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Furniture Rs. 90,000

Cash Rs.1, 00, 000
Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 90, 000

► Rs. 2, 01,000 liabilities

► Rs. 1, 11, 000 liabilities

► Rs. 2, 90, 000 liabilities

► Rs. 2, 91, 000 liabilities

Question No: 37 ( Marks: 1 ) - Please choose one

Accountancy covers which of the following area(s):

► Book-keeping

► Accounting

► Auditing

► All of the given options

Question No: 38 ( Marks: 1 ) - Please choose one

___________ is the detail of transaction in one's account provided by the bank.

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 ► Bank statement

► Bank reconciliation statement

► Income statement

► Financial statement

Question No: 39 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Date Item Quantity Cost/Unit Total

2007Jan. 2 Opening inventory 100 Rs.18.00 Rs.1,800
Mar. 4 Purchase 400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500

Four hundred units are unsold, Use the FIFO method of inventory costing and determine the
value assigned to the 400 units on hand at the end of the period.

► Rs.7, 500

► Rs.7, 978

► Rs.8, 000

► Rs.8, 400

Question No: 40 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Cost/Unit Total

Date Item Quantity Rs. Rs.

Jan. 2 Beginning inventory 10 10 100

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Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

85 units were sold, Use the FIFO method of inventory costing and determine the cost of goods
sold.

► Rs. 1,225

► Rs. 1,015

► Rs. 965

► Rs. 992

Question No: 41 ( Marks: 1 ) - Please choose one

All the costs incurred on the incomplete assets up to the balance sheet date must be transferred
to:

► Capital account

► Capital work in progress account

► Relevant asset account

► Owner's equity account

Question No: 42 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000

Life of asset 5 years
Depreciation for each year Rs. 15,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

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 ► Rs.25, 000

► Rs. 75,000

► Rs. 15,000

► Rs. 1, 00,000

Question No: 43 ( Marks: 1 ) - Please choose one

Direct materials costs Rs.70,000

Direct labor costs 30,000
Manufacturing overhead costs 60,000
conversion cost ?

► Rs. 20,000

► Rs.40, 000

► Rs.90, 000

► Rs.160, 000

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following shows summary of a company's financial position at a specific date?

► Profit & Loss Account

► Cash Flow Statement

► Balance Sheet

► Income & Expenditure Account

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Question No: 45 ( Marks: 1 ) - Please choose one

Bank book is part of:

► Voucher

► General Journal

► General Ledger

► Trial Balance

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following are the components of General Ledger?

1) Title of account

2) Amount of transaction

3) Date of transaction

► (1) & (2) only

► (2) & (3) only

► (1) & (3) only

► (1), (2) & (3)

Question No: 47 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit and loss

account—Balance Sheet

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 ► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit and loss
account—Balance Sheet

► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and loss

account—Balance Sheet

► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and loss

account—Balance Sheet

Question No: 48 ( Marks: 1 ) - Please choose one

Vehicles which are used to supply finished products are called business ________.

► Tangible assets

► Intangible assets

► Capital

► Liabilities

Question No: 49 ( Marks: 1 ) - Please choose one

The basic accounting principle/concept according to which Business is independent from its
owner(s) is known as:

► Separate Entity Concept

► Matching Concept

► Going Concern Concept

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 ► Materiality Concept

Question No: 50 ( Marks: 1 ) - Please choose one

Shares for which amount is paid by public are called ________ shares.

► Paid up

► Authorized

► Bonus shares

► All are correct options

Question No: 51 ( Marks: 5 )

10 % Debentures of Rs. 80,000 are shown in trial balance. How it will be shown in
financial statements? Also mention why a company issues debentures.

Answer:

10% Debentures of Rs. 80000 is shown the Owners Equity pr liability Side of Balance sheet.

Debentures are issued under the common seal of the company and debentures are an instrument
for obtaining the loan from the general public. Company also paid mark up on debentures which
generally equal to the market rate.

Question No: 52 ( Marks: 10 )

Following information is extracted from the books of Arfan Ltd as on December 31st, 2007.

Particulars Cost Depreciation Accumulated Depreciation

rate On 01-01-2007

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Vehicles 01-01-2007 1,90,000 10% 10,000
Building 01-01-2007 4,00,000 20% 12,500
Furniture & Fixture 01-01-2007 4,15,000 15% 34,500
Land 01-01-2007 1,58,000 -- ---

You are required to calculate Written down value of each asset and show working of
complete depreciation for the year ending on December 2007.

Particulars Cost Rate Accumulated Depreciation WDV

As Addition/ As As At For As At
At At
deletion 1-1- The st
31 -
1-1- st 2007
31 - 12-
2007 12- Year 2007
2007
Vehicles 190000 0 190000 10% 10000 19000 29000 161000
Building 400000 0 400000 20% 12500 80000 92500 307500
Furniture 415000 0 415000 15% 34500 62250 96750 318250
Land 158000 0 158000 0 0 0 0 158000
Total 1163000 0 1163000 57000 161250 218250 944750

Question No: 53 ( Marks: 10 )

Prepare Profit and Loss Account for the year ending 31st December 2007 from the Trial
Balance and adjustments of MS Company given below:

Debit Credit
Particulars
Rs. Rs.
Drawings 14,000
Capital Account 80,000
Opening Stock 55,000
Purchases 485,000
Sales 610,000
Sundry Debtors 80,000
Sundry Creditors 60,500
Sales Returns 5,000
Carriage Inwards 6,000
Salaries 28,000
Rent, Rates, Taxes 15,000

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Insurance 4,000
Machinery 50,000
Furniture 5,000
Cash in hand 3,500
Total 750,500 750,500

Adjustments:

4) Depreciate machinery and furniture @20%p.a.

5) Outstanding Salaries Rs. 2,000

6) Insurance paid in advance Rs. 500

7) Maintain @5% reserve for doubtful debts on debtors.

8) Closing Stock was valued at Rs. 60,000

Trading & Profit & Loss Account

For the year ending 31st December 2007

Particulars Debit Balance/Rs Particulars Credit Balance/Rs

Opening Stock 55000 Sales 610000 605000

Purchases 485000 Less returns: 5000

Carriage in 6000 Closing Stock 60000

Gross Profit 119000

665000 665000
Salaries 28000 Gross Profit 119000

+outstanding: 2000 30000

Rent, Rate, Taxes 15000

Insurance 4000

Less advance: 500 3500

Depreciation:

Machinery: 10000

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Furniture: 1000 11000

Provision of bed debts 4000

Net Profit:

55500
119000 119000

Question No: 54 ( Marks: 10 )

What is the effect of given adjustments on Trading & Profit & Loss account and Balance
Sheet?

a. Accrued Expenses or Outstanding Expenses

b. Prepaid Expenses or Unexpired Expenses

c. Accrued Revenue or Revenue Receivable

d. Unearned Revenue or Revenue Received in Advance

e. Depreciation of Asset

1. Accrued Expenses or Outstanding Expenses

Trading and profit and loss account effect

These expenses will be shown in profit and loss account under administrative expenses
and will and be deducted from gross profit. They will be used to calculate net profit

Balance sheet effect

These expenses will be shown as expense payable or accrued expenses in balance sheet as
current liabilities and will be shown under current liabilities section of liabilities as they have
to be paid by business..

2. Prepaid Expenses or Unexpired Expenses

Trading and profit and loss account effect

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 These will be deducted from relevant expense account to get the actual expenses for the
period and that actual amount of expense will be deducted from gross profit to arrive at net
profit. This amount of prepaid expenses will not be included in profit and loss account as an
expense itself but its effect will be on current expenses for the period for which profit and
loss is being calculated.

Balance sheet effect

These prepaid expenses will be show and current assets in balance sheet and will be shown
under the section of current assets in balance sheet.

3. Accrued Revenue or Revenue Receivable

Trading and profit and loss account effect

These will be added to sales in trading account in profit and loss statement and will be
treated as a revenue in the calculation of gross profit by subtracting cost of goods sold from
net sales. This will affect gross profit in trading account.

Balance sheet effect

In balance sheet this revenue will be shown under current assets as receivables from debtors
and will be shown under the section of current assets of the business.

4. Unearned Revenue or Revenue Received in Advance

Trading and profit and loss account effect

This will not be added to the sales as sales is recognized when the actual services have been
provided or when goods have been shipped irrespective of whether payment has been
received or not. So this will not affect profit and loss account as it is still not recognized as
sales/revenue.

Balance sheet effect

This is a liability for the company because the company has to give goods or services to the
buyer for the advance payment done by the buyer and will be shown as a liability in the
balance sheet under the current liability section of balance sheet. Also the same amount will
be shown in the bank or cash as current asset to offset the liability because the cash or cheque
has been received for goods not given or services not rendered yet.

5. Depreciation of Asset

Trading and profit and loss account effect

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 The depreciation of asset is an operating expense for the business and will affect profit and
loss account. It will be added to the administrative expense and will be appear in the
administrative expense section of profit and loss account and will be deducted from gross
profits to arrive at net profits along with other expenses.

Balance sheet effect

In balance sheet it will appear as deduction from the fixed asset as the fixed assets in balance
sheet will be shown at written down value. So this will be added to previous balance of
accumulated depreciation and will be deducted from the total cost of the fixed assets and will
appear in the assets section under the heading of fixed asset. It might appear in notes as
sometimes in balance sheet summarized figure of fixed asset at WDV will be shown. In any
case it is deducted from fixed asset in balance sheet and affects the total assets side

Paper No:23
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION

Fall 2008

MGT101- Financial Accounting (Session - 1)

Time: 120 min

Marks: 85

Question No: 1 ( Marks: 1 ) - Please choose one

If
company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A, Mr. B and Mr. C is
2:3:5 respectively what will be the Profit share for Mr. B in distributable profit.

► Rs. 98,000

► Rs. 1, 47,000

► Rs. 2, 45,000

► Rs. 3, 43,000

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Question No: 2 ( Marks: 1 ) - Please choose one

What types of changes (is) are made at the admission of partner in partnership?

► Assets of old business will be revalued

► Liabilities of old business will be revalued

► Good will of business will be revalued

► All of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

A
firm may earn profit during an accounting period but have less money in the bank at the end of the
period then it had at the beginning. Which of the followings, on its own, could explain this?

► Not paying invoices received from creditors

► The sale of fixed assets during the period

► An increase in trade debtors over the course of the period

► An increase in the depreciation charge relative to the previous accounting period doubted

Question No: 4 ( Marks: 1 ) - Please choose one

In
which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only

► In income statement under the administrative expense only

► In both balance sheet under the head of current liabilities and income statement under the
administrative expense

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Question No: 5 ( Marks: 1 ) - Please choose one

The
charter of a company which defines the limitations and powers of the company is called:

► The memorandum of association

► Articles of association

► Statutory report

► Certificate of commencement

Question No: 6 ( Marks: 1 ) - Please choose one

By
which if the following Act/ Ordinance, a company is allowed to issue shares at a higher price than their
face value.

► Companies ordinance 1984

► Contract act 1872

► Sales of Goods act 1930

► None of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following clause/s are discussed in Memorandum of Association of Companies?

► Name of company

► Place of registered office of company

► Objective of the company

► All of the given options

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Question No: 8 ( Marks: 1 ) - Please choose one

Identify the selling expenses of manufacturing concern with the help of given data.

Particulars Rs.

Salesman’s salary 70,000

Commission on sales 28,000

Carriage outward 10,000

Carriage inward 5,000

► Rs. 80,000

► Rs. 60,000

► Rs. 38,000

► Rs. 1, 08,000

Question No: 9 ( Marks: 1 ) - Please choose one

Which of the following account is affected from the Drawings of cash in sole-proprietorship business?

► Capital account

► Shareholder account

► Liability account

► Expense account

Question No: 10 ( Marks: 1 ) - Please choose one

Regardless of how long it takes to produce and sell , inventory is always considered to be a:

► current liability

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 ► long-term asset

► stockholders' equity

► current asset

Question No: 11 ( Marks: 1 ) - Please choose one

An
asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used

► It can be realized in cash or sold or consumed in the business within one year

► It is a piece of new machinery that is expected to last for at least ten years

► All of the given options

Question No: 12 ( Marks: 1 ) - Please choose one

General office expenses are charged to which of the following head:

► Administrative expenses

► Marketing expenses

► Selling expenses

► Financial expenses

Question No: 13 ( Marks: 1 ) - Please choose one

Wages paid to laborers working in the manufacturing department is treated as an expense of:

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 ► Cost of goods sold

► Administrative expenses

► Selling expenses

► Marketing expenses

Question No: 14 ( Marks: 1 ) - Please choose one

It is
st
supposed that on 31 December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of
past experience, it is estimated that 10% of the sundry debtors are doubtful. Actual bad debts are Rs.
1600. What amount of new provision for doubtful debts will be deducted from Sundry debtors?

► Rs. 3,600

► Rs. 4,000

► Rs. 1,600

► Rs. 2, 400

Question No: 15 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss account.

Particulars Rs.

Bad debts 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 1,000

► Rs. 600

► Rs. 1,600

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 ► Rs. 2,000

► Rs. 2,600

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales Rs.100 to Mr. “A”
recorded in the purchases book?

► Sales account

► Purchase account

► A’s account and Sales account

► Sales account, purchase account and A’s account

Question No: 17 ( Marks: 1 ) - Please choose one

"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in books of accounts", is an
example of:

► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 18 ( Marks: 1 ) - Please choose one

Transaction that has been completely forgotten to enter is called:

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 ► Error of principle

► Error of omission

► Error of commission

► Error of original entry

Question No: 19 ( Marks: 1 ) - Please choose one

Goods purchased from “Mr. A” for Rs. 2,000 passed through the sales book. The rectification of error
will result in:

► Increase of gross profit

► Decrease of gross profit

► Remains constant and no effect on net profit

► There is no relation between goods purchased and gross profit

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of purchases return of Rs.
200 to “Mr.P” mistakenly entered in sales book?

► P’s account

► Purchases return account

► Sales account

► Purchases returns account and sales account

Question No: 21 ( Marks: 1 ) - Please choose one

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 If
provision is created for doubtful debts, which of the following entry will be passed to record bad debts
in control account?

► Bade debts (Dr) and Debtors Control A/c (Cr)

► Provision for doubtful debts (Dr) and Debtors Control A/c (Cr)

► Provision for doubtful debts (Dr) and Debtors A/c (Cr)

► Debtors Control A/c (Dr) and Provision for doubtful debts (Cr)

Question No: 22 ( Marks: 1 ) - Please choose one

Control account tells about:

► Picture collectively instead of individually

► Details of loyal clients

► Customer attitude of payments

► Complete history of transactions of business clients

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following is an item of a creditors control account?

► Cash sales

► Credit sales

► Credit purchase

► Cash purchases

Question No: 24 ( Marks: 1 ) - Please choose one

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Which of the following is an item of a debtors control account?

► Cash sale

► Credit sales

► Credit purchase

► Cash purchases

Question No: 25 ( Marks: 1 ) - Please choose one

Consider the following data:

Provision created in 2006 Rs. 2,500

Bad debts in 2007 Rs. 1,500

Sundry debtors on 31-12- 2007 were Rs. 40,000 and provision is created @ 5%.

Which journal entry is Correct for the provision for doubtful debts for the year 2007.

► Provision for doubtful debts a/c Rs. 1,000 (Dr) & Profit & Loss a/c Rs. 1,000 (Cr)

► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000 (Cr)

► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000 (Cr)

► Profit & Loss a/c Rs. 1,000 (Dr) & Provision for doubtful debts a/c Rs. 1,000 (Cr)

Question No: 26 ( Marks: 1 ) - Please choose one

It is
supposed that on 31-12-2007, the sundry debtors are amounted to Rs. 40,000. On the basis of past
experience, it is estimated that 5 % of the sundry debtors are doubtful. What entry will pass to transfer
the bad debts to provision for doubtful debts?

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 ► Profit & Loss a/c Rs. 1,600 (Dr) & Provision for doubtful debts a/c Rs. 1,600 (Cr)

► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs. 2,000 (Cr)

► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs. 2,000 (Cr)

► Provision for doubtful debts a/c Rs. 1,600 (Dr) & Bad Debts a/c Rs. 1,600 (Cr)

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded when the Bad Debts are recovered?

► Cash account (Dr.) & Bad Debts recovered account (Cr.)

► Accounts Receivable account (Dr.) & Bad Debts recovered account (Cr.)

► Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)

► Provision for doubtful debts account (Dr.) & Cash account (Cr.)

Question No: 28 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be shown in profit & loss account.

Particulars Rs.

Bad debts 1,600

Provision for doubtful debts (old) 2,000

Current year’s provision (new) 800

► Rs. 400

► Rs. 800

► Rs. 2,000

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 ► Rs. 2,400

Question No: 29 ( Marks: 1 ) - Please choose one

In
which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business

► Failure of repeated attempt to collect the debt

► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT for Doubtful Debt?

► It is shown in balance sheet

► It is a definite loss to the business

► It is not shown in balance sheet

► No provision is necessary for it

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following option is TRUE about the characteristic(s) of Bad Debt?

► It is a definite loss to the business

► It is not shown in Balance Sheet

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 ► No provision is necessary for it

► All of the given options

Question No: 32 ( Marks: 1 ) - Please choose one

Which one of the following transactions will cause the balance in Mr. Terry's Cash Book to be greater
than his Bank Statement balance?

► A cheque is drawn but not yet presented at the bank for payment

► The bank has not yet notified to Mr. Terry about a dishonoured cheque

► A credit transfer into Terry's Bank Account

► A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110

Question No: 33 ( Marks: 1 ) - Please choose one

Upon checking the Bank Statement against the Cash Book by Mr. A, It was discovered that an amount of
Rs.120 for dividend from XYZ Co. had not been entered in the Cash Book. Which of the following entry
should be recorded to rectify the mistake?

► Bank Account(Dr.) and Dividend Account (Cr.)

► XYZ Co. Account (Dr.) and Bank Account (Cr.)

► Dividend Account (Dr.) and Bank Account (Cr.)

► Bank Account (Dr.) and XYZ Co. Account (Cr.) doubted

Question No: 34 ( Marks: 1 ) - Please choose one

A
Bank Reconciliation Statement is prepared to:

► Ascertain that the difference between the Cash Book balance and the Bank

Statement balance has been accounted for

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 ► Correct errors in the Cash Book or errors in the Bank Statement

► Amend the balance of the Bank Statement of the firm

► Amend the balance in the Cash Book of the firm

Question No: 35 ( Marks: 1 ) - Please choose one

Firms charge depreciation each year:

► To ensure there is enough money in the firm to replace the asset

► To spread the cost of the asset over its working life

► To reduce the profit and thus reduce the dividends they can pay to share holders

► Because the law states they must be reduced

Question No: 36 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?

► These are the running expenses of the business

► They improve the financial position of the business

► They reduce the profit of the concern

► They do not appear in the balance sheet

Question No: 37 ( Marks: 1 ) - Please choose one

The
amount of depreciation charged on machinery will be debited to:

► Machinery account

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 ► Depreciation account

► Cash account

► Capital account

Question No: 38 ( Marks: 1 ) - Please choose one

In
cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw material inventory

► Opening raw material inventory - Purchases + Ending raw material inventory

► Ending raw material inventory + Opening raw material inventory - Purchases

► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following particulars are included in the specimen of a bank receipt voucher?

4) Name of the organization

5) Bank code
6) Date of transaction

► (1) & (2) only

► (1) & (3) only

► (2) & (3) only

► (1), (2) & (3)

Question No: 40 ( Marks: 1 ) - Please choose one

If the
cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs.20,000 during the year.
What would be the Net Profit?

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 ► Rs.15,000

► Rs. 35,000

► Rs. 55,000

► Rs. 60,000

Question No: 41 ( Marks: 1 ) - Please choose one

The
return of goods by a customer should be debited to:

► Customer’s account

► Sales return account

► Goods account

► Accounts receivable

Question No: 42 ( Marks: 1 ) - Please choose one

Mr.
A provided the following information from his books of accounts at the end of the month.

Particulars Rs.

Cash 100

Accounts Receivable 500

Accounts Payable 200

Bank Loans 1,000

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Based on the information provided, what are Mr. A’s total liabilities?

► Rs.200

► Rs. 900

► Rs. 1200

► Rs. 1700

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following shows the categories of assets in a Balance Sheet?

► Current assets, Long term assets and Accounts payable

► Current assets, Long term assets and Fixed assets

► Current assets, Quick assets and Business debts

► Current assets, Fixed assets and Deferred cost

Question No: 44 ( Marks: 1 ) - Please choose one

An
informal accounting statement that lists the ledger account balances at a point in time and compares
the total of debit balances with the total of credit balances is known as:

► Income Statement

► Balance Sheet

► Trial Balance

► Cash Book

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Question No: 45 ( Marks: 1 ) - Please choose one

The
original book of entry, in which all vouchers are first recorded, is called:

► General Journal

► General Ledger

► Trial Balance

► Balance Sheet

Question No: 46 ( Marks: 1 ) - Please choose one

Commercial Accounting is based on:

► Single entry book keeping

► Double entry book keeping

► Both single and double entry book keeping

► Cash basis of book keeping

Question No: 47 ( Marks: 1 ) - Please choose one

Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only

► Both cash and accrual accounting

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 ► None of the given options

Question No: 48 ( Marks: 1 ) - Please choose one

An
accounting system is used by a business to:

► Analyze transactions

► Handle routine book-keeping tasks

► Structure information

► All of the given options

Question No: 49 ( Marks: 1 ) - Please choose one

The
estimation of expenses and revenues for future is called:

► Budgeting

► Costing

► Management

► Auditing

Question No: 50 ( Marks: 1 ) - Please choose one

Shares for which amount is paid by public are called ________ shares.

► Paid up doubted

► Authorized

► Bonus shares

► All are correct options

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Question No: 51 ( Marks: 5 )

What is the difference between accounts payable and accounts receivable? Discuss it with the help of
example.

Accounts Payable:

Liabilities are debts. The person or organization to which the debt is owed is called creditors. All
businesses have liabilities; even the most successful companies purchase stocks, supplies, and services on
credit. The liabilities arising from such purchases are called accounts payable. For example, if a person A
is our creditor and we have to return his money so he it is recorded in our books as accounts payable.

Accounts Receivable:

Debtors are the person from whom our money is receivable. He has to return our money which he had
borrowed from us at sometime. Such money or accounts are called Accounts receivable. For example A
person named A is our debtor so he is recorded in our book as the account receivable.

Question No: 52 ( Marks: 10 )

The
st
following Trial Balance was extracted from the books of Naeem & Sons on 31 December, 2007. From
this you are required to prepare Balance Sheet as on.

Particulars Debit Credit

Rs. Rs.

Cash 5,200

Accounts Receivable 9,000

Merchandise Inventory on 1.1.2007 6,000

Plant and Machinery 24,000

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Land and Building 82,000

Furniture and Fixtures 2,600

Capital 136,000

Accounts Payable 3800

Purchases 60,000

Purchases returns and allowances 2,800

Sales 70,000

Sales returns and allowances 4,600

Insurance Prepaid 3,400

Advertisement expenses 4,000

Salaries expenses 12,000

Total 212,600 212,600

Liabilities: Assets

Capital 136000 Accounts receivable 9000

Purchase return and allowances (2800) Merc. Inventory 6000

Plant n machinery 2400

Land n building 82000

Furniture n fixtures 2600

133220 102000

Current liabilities: Current Assets

Accounts payable (3800) Sales 70000

Salaries expenses 12000 Sales return (4600)

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Advertisement expenses 4000

Cash 5200

12200 70600

ADDITIONAL INFORMATION:

· Prepaid insurance on 31st December, 2007 is Rs. 1,400

· Outstanding salaries Rs. 1,000
· Depreciation on Plant and Machinery @ 10% p.a.
· Merchandise inventory on 31st December, 2007 was valued at Rs. 6,000
· Net Loss for the period Rs. 13,000

Question No: 53 ( Marks: 10 )

Prepare Profit & Loss Account for the year ended 31st December, 2007.

Particulars Rs.

Capital 1,20,000

Trade Creditors 17,500

Bills payable 1,000

Sales 6,26,100

Raw material Stocks on 1-1-2007 30,000

Work in process on 1-1-2007 35,600

Finished Goods on 1-1-2007 35,400

Purchases 5,18,000

Carriage inwards 8,900

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 Discount Allowed 750

debtors 16,000

Sales man commission 2,000

Office expenses 2,000

Carriage outwards 1,700

Bad debts 1,400

Salaries 13,000

Direct labor 1,800

FOH 1,100

Plant & Machinery 53,000

Buildings 35,000

Tools 8,650

Stock as on 31st December, 2007

Ø Raw material Stocks Rs. 31,000

Ø Work in process Rs. 25,000
Ø Finished Goods Rs. 53,900
Depreciation Rate:

· Plant & Machinery @ 10% and charged to FOH

· Buildings @ 5% and 40% charged to Administrative expenses and balance will be charged to FOH
· Tools @ 15% and 30 % charged to FOH and balancing will be charged to administrative expenses
Additional data

Ø Reserve and bad debts is to be created at 5% on debtors.

Ø 40% of salaries will charge to office and balance to FOH.

Question No: 54 ( Marks: 10 )

You
are required to prepare Debtors control account and Creditor control account from the given data
from the books of ABC Co. Ltd for the year 2007.

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 Opening balance

Debtors Rs.1,55,000

Creditors 2,55,000

Sales

Cash Rs.1,85,000

Credit 2,65,000

Purchases

Cash Rs.120,000

Credit 200,000

Other information

Total receipts Rs.3,50,000

Total payments 2,50,000

Additional Information

Discount allowed Rs.20,000

Discount received 15,000

Bad debts written off 20,000

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 Creditors control account

Discount received 15000 Opening balance 255000

Total payments 250000 Total purchases 200000

balance 190000

455000 455000

Debtors Control Account

Opening balance 155000

Total sales 185000 Receipts 350000

discount 20000

340000

Paper No:24
Solved by Chanda Rehman & ABr
FINALTERM EXAMINATION

Fall 2008

MGT101- Financial Accounting (Session - 3)

Ref

Time: 120 min

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 Marks: 85

Question No: 1 ( Marks: 1 ) - Please choose one

If
company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A, Mr. B and Mr. C is
2:3:5 respectively what will be the Profit share for Mr. B in distributable profit.

► Rs. 98,000

► Rs. 1, 47,000 (Correct)

► Rs. 2, 45,000

► Rs. 3, 43,000

Question No: 2 ( Marks: 1 ) - Please choose one

What does a credit balance in a partner’s current account represent to a business?

► Current Assets

► Current Liability

► Long-term liability

► Share of profit (doubted)

Question No: 3 ( Marks: 1 ) - Please choose one

Which of the following ratio tells about “How a company would repays its loans”

► Mark up cover ratio doubted

► Acid test ratio

► Current ratio

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 ► Debt Equity ratio

Question No: 4 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT about Gross Profit Ratio?

► (Gross profit / Net Sales) x 100

► (Gross profit / Operating Income) x 100

► (Gross profit / Sales Return) x 100 (Correct)

► (Gross profit / Net Income) x 100

Question No: 5 ( Marks: 1 ) - Please choose one

Current ratio may be increased by:

► Overstating current Assets

► Overstating current Liabilities

► Understating current Assets

► Understating current assets and overstating current liabilities

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following is a type of business formed under the Companies Ordinance 1984?

► Sole-Proprietorship

► Partnership

► Joint Stock Company (Correct)

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 ► All of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

When preparing cash flow statements, the repayments of a loan during the year should be included
under which of the following heading?

► Operating activities

► Financing activities

► Investing activities

► None of the given options

Question No: 8 ( Marks: 1 ) - Please choose one

In
cash flow statements, which of the following would appear as an inflow of cash?

► The repayments of a bank loan

► Dividend issue in the current year

► Money received as result of selling fixed assets (Correct)

► The difference between the valuations of old and new fixed assets

Question No: 9 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if Rs. 6,000 transfer to general reserve is given in
adjustment?

► It will be treated in Income Statement only

► It will be treated as current liability in balance sheet only

► It will be treated in profit and loss appropriation account only

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 ► it will be treated in both profit and loss appropriation account and in the balance sheet
(Correct)

Question No: 10 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association (Correct)

► Articles of Association

► Prospectus

► Annual Report

Question No: 11 ( Marks: 1 ) - Please choose one

Preliminary Expenses of the company may write off against:

► Share premium account (Correct)

► Share holder account

► Debtors control account

► Creditor control account

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following clause/s are discussed in Memorandum of Association of Companies?

► Name of company

► Place of registered office of company

► Objective of the company

► All of the given options (Correct)

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Question No: 13 ( Marks: 1 ) - Please choose one

The
Joint Stock Company is formed under the Companies Ordinance:

► 1984 (Correct)

► I884

► 1948

► 1965

Question No: 14 ( Marks: 1 ) - Please choose one

When the capitals are fixed, which of the following account will be debited for drawings made by a
partner?

► Individual Partner’s Current Account

► Partner’s Cash Account

► Partner’s Bank Account

► Partners Capital Account

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following account will be debited when the interest on drawings is charged?

► Partner’s capital account

► Interest account

► Partner’s current account

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 ► Profit & Loss account doubted

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT if depreciation is given in trial balance?

► It means depreciation has already been deducted from concerned asset account

► It will be shown as an expense in income statement only (Correct)

► It will not be deducted from concerned asset in Balance Sheet

► All of the given options are correct

Question No: 17 ( Marks: 1 ) - Please choose one

An
asset which is NOT easily convertible to cash or not expected to become cash within a period of twelve
months is called:

► Liquid asset

► Current asset

► Fixed asset

► Floating asset

Question No: 18 ( Marks: 1 ) - Please choose one

Which one of the following is TRUE about provisions?

► It is necessary to prepare for showing true picture of balance sheet

► It is a reduction from assets

► It is prepared for specific purposes

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 ► All of the given options

Question No: 19 ( Marks: 1 ) - Please choose one

The
Balance Sheet item that represents the resources invested by the owner is known as:

► Accounts Receivable

► Cash

► Note Payable

► Owner's Equity (Correct)

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is NOT an operating expense?

► Salaries and wages expense

► Rent expense

► Interest expense

► Depreciation expense (Correct)

Question No: 21 ( Marks: 1 ) - Please choose one

A
financial statement that indicates the success or failure of a business, over a period of time is called:

► A cash flow statement

► A retained earnings statement

► An income statement

► A balance sheet (Correct)

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Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is the first phase of the typical operating cycle?

► Receive cash from customers

► Pay cash to suppliers

► Sell goods and services to customers

► Purchase goods and services (Correct)

Question No: 23 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.

Closing value of stock 40,000

Write off Bad debts (given in adjustments) 2,400

Sundry Debtors (given in trial balance) 33,200

Provision is created on Debtors at 10%

Identify the Total amount deducted from Sundry debtors.

► Rs. 460

► Rs. 2,400

► Rs. 3,080

► Rs. 5,480 (Correct)

Question No: 24 ( Marks: 1 ) - Please choose one

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 It is
st
supposed that on 31 December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of
past experience, it is estimated that 10% of the sundry debtors are doubtful. Actual bad debts are Rs.
1600. What amount of new provision for doubtful debts will be deducted from Sundry debtors?

► Rs. 3,600

► Rs. 4,000

► Rs. 1,600

► Rs. 2, 400 (doubted)

Question No: 25 ( Marks: 1 ) - Please choose one

When one or both aspects of a transaction are recorded in the wrong class or category of account, this is
called:

► Error of principle (Correct)

► Error of omission

► Error of commission

► Error of original entry

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales Rs.100 to Mr. “A”
recorded in the purchases book?

► Sales account

► Purchase account

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 ► A’s account and Sales account

► Sales account, purchase account and A’s account (Correct)

Question No: 27 ( Marks: 1 ) - Please choose one

A
receipt of cash Rs. 10,000 from Mr. Bilal is recorded as Rs. 1,000. What amount will be adjusted in
rectifying entry?

► Rs. 1,000

► Rs. 9,000 (Correct)

► Rs. 10,000

► Rs. 11,000

Question No: 28 ( Marks: 1 ) - Please choose one

_____ are committed in those cases where proper distinction between revenue and capital items is not
made.

► Error of principle

► Error of omission

► Error of commission (Correct)

► Error of original entry

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following is (are) benefit/s of subsidiary ledger accounts to business?

► It tells about customer attitude of payments

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 ► It can be checked against the control account to pick up recording errors

► It tells about the complete history of transactions of business client

► All of the given options (Correct)

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?

► Cash sales (Correct)

► Credit sales

► Bills receivable

► Discount allowed

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is/are the item/s of a Control Account?

► Credit sale only

► Cash sale only

► Credit purchase only

► Both Credit sales and Credit purchase

Question No: 32 ( Marks: 1 ) - Please choose one

It is
st
supposed that on 31 December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of
past experience, it is estimated that 5 % of the sundry debtors are doubtful. Actual bad debts are Rs.
1600. What amount of new provision for doubtful debts will be credited in profit & loss account.

► Rs. 3,600

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 ► Rs. 2,000

► Rs. 1,600

► Rs. 400 (doubted)

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is NOT a function of bank reconciliation statement?

► To reconcile the difference between the cash book and the bank statement

► To check for errors in balance sheet (Correct)

► To update omitted entries into the cash book

► To update omitted entries into the bank statement

Question No: 34 ( Marks: 1 ) - Please choose one

Which one of the following transactions will cause the balance in Mr. Terry's Cash Book to be greater
than his Bank Statement balance?

► A cheque is drawn but not yet presented at the bank for payment

► The bank has not yet notified to Mr. Terry about a dishonoured cheque

► A credit transfer into Terry's Bank Account

► A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110

Question No: 35 ( Marks: 1 ) - Please choose one

The
following balance and discrepancies were found on 31 March 2008:

Particulars Rs.

Cash book balance (Dr) 5 000

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 Unpresented cheques 1 000

Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)

► Rs. 5 500 (Cr)

► Rs. 4 500 (Dr)

► Rs. 4 500 (Cr) (Correct)

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is NOT a characteristic of Joint Stock Company?

► Separate Legal Entity

► Limited Liability

► Easy Formation (Correct)

► Common Seal

Question No: 37 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.

Assets 1,98,000

Owner's equity 95,000

Liabilities ?

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 ► Rs. 49,000

► Rs. 55,000

► Rs. 1, 25,000

► Rs. 1, 03,000 (Correct)

Question No: 38 ( Marks: 1 ) - Please choose one

The
basic purpose of depreciation is to achieve the:

► Matching principle (Correct)

► Dual aspect principle

► Separate entity concept

► Money measurement concept

Question No: 39 ( Marks: 1 ) - Please choose one

Accountancy covers which of the following area(s):

► Book-keeping

► Accounting

► Auditing

► All of the given options (Correct)

Question No: 40 ( Marks: 1 ) - Please choose one

Bank
Reconciliation Statement is prepared by:

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 ► Bankers

► Accountant of the business (Correct)

► Statutory auditor

► Manger

Question No: 41 ( Marks: 1 ) - Please choose one

Under the reducing balance method, deprecation is calculated on:

► Scrap value of an asset

► Original cost of an asset

► Book value of an asset (Correct)

► Fair value of an asset

Question No: 42 ( Marks: 1 ) - Please choose one

The
products that are ready for sale are known as:

► Raw material

► Work in process

► Finished goods (Correct)

► Closing stock

Question No: 43 ( Marks: 1 ) - Please choose one

Which of the following item appears in Trading Account of a business?

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 ► Interest expenses

► Wages and salaries (Correct)

► Depreciation expenses

► Discount Allowed

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following financial statement DO NOT show the financial health of a business at a specific
date?

► Profit and loss account (Correct)

► Balance sheet

► Statement of financial position

► All of the given options

Question No: 45 ( Marks: 1 ) - Please choose one

Which of the following account will be credited in the books of XYZ Co. Ltd, if the business purchased a
vehicle though cheque?

► Vehicle account

► Cash account

► Business account

► Bank account (Correct)

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Question No: 46 ( Marks: 1 ) - Please choose one

Gross Profit > Operating Expenses=?

► Net Profit (Correct)

► Cost of Goods Sold

► Net Loss

► Gross Loss

Question No: 47 ( Marks: 1 ) - Please choose one

Bank
book is part of:

► Voucher

► General Journal

► General Ledger (Correct)

► Trial Balance

Question No: 48 ( Marks: 1 ) - Please choose one

What would be the affect on the components of the accounting equation, if goods are purchased on
cash?

► Increase in cash and decrease in equity

► Increase in cash and increase in goods

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 ► Increase in goods and decrease in cash (Correct)

► Increase in equipment and increase in equity

Question No: 49 ( Marks: 1 ) - Please choose one

We
can say that the business is in profit, when:

► Assets exceed Liabilities

► Income exceeds Expenditure (Correct)

► Income exceeds Liabilities

► Assets exceed Expenditure

Question No: 50 ( Marks: 1 ) - Please choose one

A
business event which can be measured in terms of money and must be recorded in books of accounts is
called:

► Information

► Condition

► Transaction (Correct)

► Record

Question No: 51 ( Marks: 5 )

Calculate Net income with the help of given date for the year 2007 and also show complete working
to support your answer.

Raw material Stocks on 1-1-2007 Rs. 30,000

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 Work in process on 1-1-2007 35,600

Finished Goods on 1-1-2007 35,400

Raw material Stocks 31-12-2007 Rs. 31,000

Work in process 31-12-2007 25,000

Finished Goods 31-12-2007 53,900

Total factory Cost 543,339

Additional data

v Other income for the year is Rs. 5,000.

v Operating expenses for the year Rs. 15,000.
v Sale for the year Rs. 1,000,000.

Question No: 52 ( Marks: 10 )

The
st
following Trial Balance was extracted from the books of Naeem & Sons on 31 December, 2007. From
this you are required to prepare an Income Statement for the year ended on 31st December, 2007,

Debit Credit
Particulars
Rs. Rs.

Cash 5,000

Accounts Receivable 9,000

Merchandise Inventory on 1.1.2007 6,000

Plant and Machinery 24,000

Land and Building 82,000

Furniture and Fixtures 2,600

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 Capital 136,000

Accounts Payable 3800

Purchases 60,000

Purchases returns and allowances 2,800

Sales 70,000

Sales returns and allowances 4,600

Insurance Prepaid 3,400

Advertisement expenses 4,000

Salaries expenses 12,000

Total 212,600 212,600

ADDITIONAL INFORMATION:

· Prepaid insurance on 31st December, 2007 is Rs. 1,400

· Outstanding salaries Rs. 1,000
· Depreciation on Plant and Machinery @ 10% p.a.
· Merchandise inventory on 31st December, 2007 was valued at Rs. 6,000

Answer:

Trading Account for the year ending

31.12.2007

Opening stock 6000 Sales 70000

Less :
Sales
Return 4600

Purchase 60000 65400

Less Return 2800

57200

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 Closing Stock 6000

Gross Profit 8200

71400 71400

Profit & Loss Account for the year

ending 31.12.2007

Gross
Advertisement Exp 4000 Profit 8200

Salaries 12000

Add: Outstanding 1000

13000

Depreciation

Plant & Mach 2400

Insurance 3400

1400

2000

Net Loss 13200

19400 21400

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Balance Sheet as on 31.12.2007

Accouts Receivable 9000 Capital 136000

Less :Net
Loss 13200

Cash 5000 122800

Plant & Mach 24000 Accounts Payable 3800

Less: Depr 2400

Outstanding
21600 salaries 1000

Land & Building 82000

Furniture 2600

Prepaid Insurance 1400

Closing Stock 6000

127600 127600

Question No: 53 ( Marks: 10 )

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Prepare Profit and Loss Account for the year ending 31st December 2007 from the Trial Balance and
adjustments of MS Company given below:

Debit Credit
Particulars
Rs. Rs.

Drawings 14,000

Capital Account 80,000

Opening Stock 55,000

Purchases 485,000

Sales 610,000

Sundry Debtors 80,000

Sundry Creditors 60,500

Sales Returns 5,000

Carriage Inwards 6,000

Salaries 28,000

Rent, Rates, Taxes 15,000

Insurance 4,000

Machinery 50,000

Furniture 5,000

Cash in hand 3,500

Total 750,500 750,500

Adjustments:

· Depreciate machinery and furniture @20%p.a.

· Outstanding Salaries Rs. 2,000
· Insurance paid in advance Rs. 500

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 · Maintain @5% reserve for doubtful debts on debtors.
· Closing Stock was valued at Rs. 60,000

Answer:

Trading Account for the year ending

31.12.2007

Opening stock 55000 Sales 610000

Less : Sales
Return 5000

Purchase 485000 605000

Closing
Caririage Inward 6000 Stock 60000

Gross Profit 119000

665000 665000

Profit & Loss Account for the year

ending 31.12.2007

Salaries 28000 Gross Profit 119000

Add: Outstanding 2000

30000

Rent, Rates, Taxes 15000

Insurance 4000

Less :Advance 500

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 3500

Depreciation

Machinery 10000

Furniture 1000

11000

Provision on Doubtful Debts 4000

Net Profit 55500

119000 119000

NOTE: PLEASE CONSIDER ALL ENTRIES ON LEFT SIDE AS ON RIGHT HAND SIDE AND VICE VERSA. JUST
SHOWN BY MISTAKE. I HOPE YOU CONSIDER MY REQUEST DUE TO SHORATGE OF TIME.

Question No: 54 ( Marks: 10 )

What is the difference between public and private company?

Answer:

Private Limited Company

Ø Number of members in a private limited company varies from 2 to 50.

Ø Any 2 members can subscribe their names in memorandum and articles of association along
with other requirements of the companies’ ordinance 1984. They can also apply to security
exchange commission for company’s registration.
Ø The shareholders of the private limited company elect two members of the company as
Directors. These directors form a board of directors to run the affairs of the company.
Ø The head of board of directors is called chief executive.
Ø Private limited company can not offer its shares to general public.

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 Ø In case a investor decides to sell his/her/her shares, his/her shares are first offered to existing
shareholders. If all existing shareholders decide not to buy these shares, then an outsider
investor can buy.
Ø Words and digression “(Private) Limited” are added at the end of the name of a private limited
company.

Public Limited Company

Ø Least number of members in a public limited company is 7 with no upper limit in number of
members.
Ø Any 7members can subscribe their names in memorandum and articles of association along with
other requirements of the companies’ ordinance 1984. They can also apply to security exchange
commission for company’s registration.
Ø The shareholders of the public limited company elect seven members of the company as
Directors and these directors form a board of directors to run the daily affairs.
Ø The head of board of directors is called Chief Executive.
Ø Public limited company can offer its shares to general public at large.
Ø Word “Limited” is added at the end of the name of a public limited company.
Ø Each subscriber of the memorandum shall write opposite to his name, the number of shares
held by him/her.

On top of that there are two types of public limited company:

1. Listed Company
2. Non Listed Company

LISTED COMPANY

Listed company is the one whose shares are quoted and traded on stock exchange. It is also called
quoted company.

NON LISTED COMPANY

Non listed company is the one whose shares are not quoted or traded.

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www.vustudents.net
Question No: 1 ( Marks: 1 ) - Please choose one
Wages outstanding given in the trial balance will be treated as a (an):

► Asset
► Liability
► Revenue
► Deferred expense

Question No: 2 ( Marks: 1 ) - Please choose one

Prepaid interest given in the Trial Balance will be treated as a (an):

► Asset
► Liability
► Revenue
► Deferred expense

Question No: 3 ( Marks: 1 ) - Please choose one

If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of
Mr. A, Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. C
in distributable profit.

► Rs. 98,000
► Rs. 1, 47,000
► Rs. 2, 45,000
► Rs. 3, 43,000

Question No: 4 ( Marks: 1 ) - Please choose one

If the Capitals of partners are fixed then, at the end of financial year a partner’s
drawings are transferred to the:

► Credit side of the partner’s capital account

► Credit side of the partner’s current account
► Debit side of partnership bank account
► Debit side of the partner’s current account

Question No: 5 ( Marks: 1 ) - Please choose one

If company has distributable profit of Rs. 490,000, Profit sharing share ratio of
Mr. A, Mr. B and Mr. C is 2:3:5 respectively. What will be the share of profit for
Mr. A in distributable profit?
 ► Rs. 98,000
► Rs. 147,000
► Rs. 245,000
► Rs. 343,000

Question No: 6 ( Marks: 1 ) - Please choose one

In which situation(s) Partnership is dissolved?

► In case of death of partner

► At the admission of new partner
► If any partner resigned from partnership
► All of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

In calculating earning per share (EPS), the net profit is divided by which of the
following?

► Number of ordinary shares

► Number of preference shares
► Paid up capital
► Authorized capital

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following statement in NOT TRUE about the limited company form
of business?

► The limited company form of business allows ownership of the business

to be spread amongst many people
► Shareholders can appoint professionals
► Shareholders are personally liable for all the liabilities incurred by
the business
► Regular filing of information about the affairs of the company is a legal
requirement

Question No: 9 ( Marks: 1 ) - Please choose one

A private limited company can commence its business:

► Immediately on receiving a certificate of incorporation

► Without receiving a certificate of incorporation
► Only when it receives certificate of commencement of business
► Only when it receives both, the certificate of incorporation as well as
certificate of commencement of business

Question No: 10 ( Marks: 1 ) - Please choose one

An example of financing activities in the context of cash flow statement is:
 ► Capital expenditures on purchase of fixed assets
► Long-term deposit
► Financial charges paid
► Dividend paid

Question No: 11 ( Marks: 1 ) - Please choose one

A firm may earn profit during an accounting period but have less money in the
bank at the end of the period then it had at the beginning. Which of the
followings, on its own, could explain this?

► Not paying invoices received from creditors

► The sale of fixed assets during the period
► An increase in trade debtors over the course of the period
► An increase in the depreciation charge relative to the previous accounting
period

Question No: 12 ( Marks: 1 ) - Please choose one

The primary purpose of preparing a cash flow statement for an entity is to
provide information about:
► Its financial position at the end of an accounting period
► Its cash receipts and cash payments during an accounting period
► Its financial position at the start of an accounting period
► None of the given options

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following option(s) is TRUE about the Sales returns?

► Sales returns reduce the Gross sales of the firm

► Sales returns affect the Net income of the firm
► Sales returns affect the flow of cash
► All of the given options

Question No: 14 ( Marks: 1 ) - Please choose one

The persons who sign articles and memorandum of the company and contribute
in the initial share capital of the company are called:

► Subscribers
► Shareholders
► Managers
► Directors

Question No: 15 ( Marks: 1 ) - Please choose one

 The charter of a company which defines the limitations and powers of the
company is called:
► The memorandum of association
► Articles of association
► Statutory report
► Certificate of commencement

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following can offer its share to general public at large?

► A private limited company

► A listed company
► A partnership firm
► A trust

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following are the owners of a company?
► Proprietors
► Partners
► Shareholders
► Managers

Question No: 18 ( Marks: 1 ) - Please choose one

Current accounts of the partners should be opened when the capitals are:
► Normal
► Floating
► Fixed
► Fluctuating

Question No: 19 ( Marks: 1 ) - Please choose one

Rent receivable (given in trial balance) is an item of_____________.

► Balance Sheet
► Profit & Loss Account
► Trading Account
► Both Balance Sheet and Profit & Loss Account

Question No: 20 ( Marks: 1 ) - Please choose one

When closing stock is given in trial balance, then it will effect:
► Trading account only
► Balance sheet only
► Owner's equity only
► Both Trading account and Balance sheet

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following account is affected from the Drawings of cash in sole-
proprietorship business?
► Capital account
► Shareholder account
► Liability account
► Expense account

Question No: 22 ( Marks: 1 ) - Please choose one

An asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used
► It can be realized in cash or sold or consumed in the business within
one year
► It is a piece of new machinery that is expected to last for at least ten years
► All of the given options

Question No: 23 ( Marks: 1 ) - Please choose one

General office expenses are charged to which of the following head:

► Administrative expenses
► Marketing expenses
► Selling expenses
► Financial expenses

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following would NOT be considered as a component of 'cost' of
stock?

► Salaries of selling staff

► Transportation inward costs
► Import duties
► Purchase price

Question No: 25 ( Marks: 1 ) - Please choose one

A financial statement that indicates the success or failure of a business, over a
period of time is called:

► A cash flow statement

► A retained earnings statement
► An income statement
► A balance sheet

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is NOT correct about income tax?
► Different companies pay tax on different rates
► It is treated as an expense and debited in Profit & Loss account
 ► When financial statements are prepared, an estimate of expected tax
liability is made
► It is treated as an expense and credited in Profit & Loss account

Question No: 27 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400
Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 10%
Identify the Total amount deducted from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 3,080
► Rs. 5,480

Question No: 28 ( Marks: 1 ) - Please choose one

If (Amount of new provision + Amount of bad debts) < Amount of old provision
then amount will be shown on:

► Debit side of P & L account

► Credit side of P & L account
► Asset side of Balance Sheet
► Liability side of Balance Sheet

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following rectifying entry will be recorded, if sales to Mr. “A” of
Rs.336 have been debited to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)

► B’s account (Dr.) and A’s account (Cr.)
► Sales account (Dr.) and B’s account (cr.)
► B’s account (Dr.) and Sales account (Cr.)

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of
sales Rs.100 to Mr. “A” recorded in the purchases book?

► Sales account
► Purchase account
► A’s account and Sales account
► Sales account, purchase account and A’s account
Question No: 31 ( Marks: 1 ) - Please choose one
Which of the following is shown on credit side of creditors control account?

► Bills Receivable
► Return inwards
► Credit purchases
► Discount allowed

Question No: 32 ( Marks: 1 ) - Please choose one

Sales are calculated by adding:

► Cash sales and cash received from debtors

► Credit sales and cash received from debtors
► Cash sales and credit sales
► Cash ales and credit purchases

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is NOT based on the concept of double entry book
keeping system?

► Subsidiary Ledgers
► Creditors Control Accounts
► Debtors Control Accounts
► All of the given options

Question No: 34 ( Marks: 1 ) - Please choose one

If Bad Debts written off are given in adjustment, then which of the following entry
for bad debts written off is CORRECT?

► Bad debts a/c (Dr) and Trading a/c (Cr)

► Provision for Bad and Doubtful debts a/c (Dr) and Bad debts a/c(Cr)
► Bad debts a/c (Dr) and debtors a/c (Cr)
► Trading a/c (Dr) and Bad debts a/c (Cr)

Question No: 35 ( Marks: 1 ) - Please choose one

Consider the following data:
Provision created in 2006 Rs. 2,500
Bad debts in 2007 Rs. 1,500
Sundry debtors on 31-12- 2007 were Rs. 40,000 and provision is created @
5%.
Which journal entry is Correct for the provision for doubtful debts for the year
2007.

► Provision for doubtful debts a/c Rs. 1,000 (Dr) & Profit & Loss a/c Rs.
1,000 (Cr)
 ► Profit & Loss a/c Rs. 2,000 (Dr) & Provision for doubtful debts a/c Rs.
2,000 (Cr)
► Provision for doubtful debts a/c Rs. 2,000 (Dr) & Profit & Loss a/c Rs.
2,000 (Cr)
► Profit & Loss a/c Rs. 1,000 (Dr) & Provision for doubtful debts a/c Rs.
1,000 (Cr)

Question No: 36 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine 4,00,000
Cost of machine purchased during the year 50,000
Depreciation during the year 20,000
closing written down value (WDV) of the Machines ?

► Rs. 4, 30,000
► Rs. 4, 50,000
► Rs. 4, 70,000
► Rs. 70,000

Question No: 37 ( Marks: 1 ) - Please choose one

In accounting accumulated depreciation is:

► Treated as a reserve
► Treated as a contra asset
► Treated as a surplus
► Treated as an expense

Question No: 38 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given
data:

Cash Rs. 22,500

Debtors Rs. 500
Total Assets Rs. 80, 385
Accounts payable Rs. 1,000
Total liabilities Rs. 20,000

► Rs. 60,385 owner’s equity

► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity

Question No: 39 ( Marks: 1 ) - Please choose one

Stock of Trading concern consists of:

► Raw material
 ► Work in process
► Merchandise inventory
► All of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Date Item Quantity Cost/Unit Total

2007Jan. 2 Opening 100 Rs.18.00 Rs.1,800
inventory
Mar. 4 Purchase 400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500
Four hundred units are unsold, Use the FIFO method of inventory costing and
determine the value assigned to the 400 units on hand at the end of the period.

► Rs.7, 500
► Rs.7, 978
► Rs.8, 000
► Rs.8, 400

Question No: 41 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 85,000
Purchases of raw material during the 200, 000
period
Cost of Material Consumed ?

► Rs. 205,000
► Rs. 215,000
► Rs. 220,000
► Rs. 225,000

Question No: 42 ( Marks: 1 ) - Please choose one

In cost of goods sold statement the ‘cost of goods manufactured’ is equal to:

► Total factory cost + Opening work in process + Ending work in process

► Total factory cost + Opening work in process – Ending work in
process
► Total factory cost - Opening work in process + Ending work in process
► Ending work in process +Total factory cost – Opening work in process
Question No: 43 ( Marks: 1 ) - Please choose one
What would be the value of total factory cost, if the cost of material consumed
during the month is Rs. 6,000, labor cost incurred is Rs. 2,000 and the factory
over head cost is Rs. 2,500?

► Rs. 6,000
► Rs. 8,000
► Rs. 4,500
► Rs. 10,500

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following item appears in Trading Account of a business?

► Interest expenses
► Wages and salaries
► Depreciation expenses
► Discount Allowed

Question No: 45 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses
are Rs. 20,000 during the year, what would be the value of Gross Profit?

► Rs. 15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000

Question No: 46 ( Marks: 1 ) - Please choose one

Identify that which of the following particular(s) would NOT be shown in the
format of a Cash Book?
(1) Cheque number
(2) Date of transaction
(3) Amount of transaction
► (1) only
► (1) & (2) only
► (1) & (3) only
► (2) & (3) only

Question No: 47 ( Marks: 1 ) - Please choose one

The process of transferring journal entry information to the ledger is called:

► Journalizing
 ► Posting
► Balancing
► Analyzing

Question No: 48 ( Marks: 1 ) - Please choose one

Which one of the following is a type of General Ledger?

► Book of original entry

► ‘T’ Account
► Source document
► Day book
Question No: 1 ( Marks: 1 ) - Please choose one
Debenture is also named as:
► Share
► Bond
► Equity
► Reserve

Question No: 2 ( Marks: 1 ) - Please choose one

What types of changes (is) are made at the admission of partner in partnership?
► Assets of old business will be revalued
► Liabilities of old business will be revalued
► Good will of business will be revalued
► All of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

The balance sheet reported a beginning balance of Rs. 20,000 in Accounts Receivable
and an ending balance of Rs. 15,000. Credit Sales of Rs. 200,000 were made during the
year. Using this information, compute cash collected from customers.

► Rs. 215,000
► Rs. 195,000
► Rs. 200,000
► Rs. 205,000

Question No: 4 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as an inflow of cash?
► The repayments of a bank loan
► Dividend issue in the current year
► Money received as result of selling fixed assets
► The difference between the valuations of old and new fixed assets

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following is NOT a cash inflow?

► Purchase of fixed asset

 ► Sale of fixed asset
► Issue of debentures
► Cash from business operation

Question No: 6 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if Rs. 6,000 transfer to general reserve is
given in adjustment?

► It will be treated in Income Statement only

► It will be treated as current liability in balance sheet only
► It will be treated in profit and loss appropriation account only
► it will be treated in both profit and loss appropriation account and in the
balance sheet

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Annual Report

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following document(s) define the relation of company with outside world?

► Memorandum of Association
► Articles of Association
► Prospectus
► Statutory Declaration

Question No: 9 ( Marks: 1 ) - Please choose one

The income statement of the Limited company is also known as:

► Manufacturing account
► Profit and Loss account
► Profit and Loss Appropriation account
► Current Account

Question No: 10 ( Marks: 1 ) - Please choose one

In which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only
► In income statement under the administrative expense only
► In both balance sheet under the head of current liabilities and income
statement under the administrative expense
Question No: 11 ( Marks: 1 ) - Please choose one
The charter of a company which defines the limitations and powers of the company is
called:
► The memorandum of association
► Articles of association
► Statutory report
► Certificate of commencement

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following represents the partnership agreement in writing?
► Partnership registration
► Partnership-at-will
► Partnership deed
► Partnership certification

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have agreed to
share the profit of business carried on by all or any of them acting for all?
► Sole-ownership
► Private limited company
► Public limited company
► Partnership

Question No: 14 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?
► Accounts receivable arises when a company buys goods or services from
another party on credit
► Accounts receivable is a miscellaneous category that may include loans to
employees
► Accounts receivable are more formal than notes receivable
► Accounts receivable are often called trade receivables

Question No: 15 ( Marks: 1 ) - Please choose one

Which one of the following is TRUE about provisions?

► It is necessary to prepare for showing true picture of balance sheet

► It is a reduction from assets
► It is prepared for specific purposes
► All of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business
 ► A balance sheet
► A statement of retained earnings

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following is an example of operating expense?

► Purchasing operating equipment

► Purchasing cleaning services
► Purchasing an investment in another company
► Purchasing a computer for the accounting office

Question No: 18 ( Marks: 1 ) - Please choose one

Short-term investments include all of the following EXCEPT:

► A bond receivable intended to be sold within one year

► Frequently traded securities
► A stock investment in the General Electric Company intended to be sold within
one year
► A shares investment in the Coca-Cola Company intended to be held for
several years

Question No: 19 ( Marks: 1 ) - Please choose one

The figure of cash received from debtors can be located either from cash book or:

► Debtor’s Control Account

► Balance Sheet
► Profit & Loss Account
► Bills Payable Account

Question No: 20 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400
Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 10%
Identify the Total amount deducted from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 3,080
► Rs. 5,480

Question No: 21 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be deducted from
Sundry Debtors in Balance Sheet.
 Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600
► Rs. 1,000
► Rs. 2,000
► Rs. 2,600

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded, if a cheque deposited is dishonored by
bank?

► Bank Account (Dr.) and Debtor's Account (Cr.)

► Debtor's Account (Dr.) and Bank Account (Cr.)
► Dishonored Cheque Account (Dr.) and Bank Account (Cr.)
► Creditor's Account (Dr.) and Bank Account (Cr.)

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of an
amount Rs.200 received from Mr.”P” wrongly credited to Mr.”Q’s” account?
► Both of Mr. P's & Mr.Q's Account
► Only Cash Account
► Only P’s account
► Only Q’s account

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales
Rs.100 to Mr. “A” recorded in the purchases book?

► Sales account
► Purchase account
► A’s account and Sales account
► Sales account, purchase account and A’s account

Question No: 25 ( Marks: 1 ) - Please choose one

"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in books of
accounts", is an example of:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry
Question No: 26 ( Marks: 1 ) - Please choose one
Transaction that has been completely forgotten to enter is called:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following is (are) included in Creditors Control Account?

► Discount received from supplier

► Credit purchases
► Bills payable
► All of the given options

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?

► Cash sales
► Credit sales
► Bills receivable
► Discount allowed

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for debtors control
account?

► Sales Day Book

► Sales Return
► Debtors Ledger
► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT based on the concept of double entry book keeping
system?

► Subsidiary Ledgers
► Creditors Control Accounts
► Debtors Control Accounts
► All of the given options

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded when the Bad Debts are recovered?
 ► Cash account (Dr.) & Bad Debts recovered account (Cr.)
► Accounts Receivable account (Dr.) & Bad Debts recovered account (Cr.)
► Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)
► Provision for doubtful debts account (Dr.) & Cash account (Cr.)

Question No: 32 ( Marks: 1 ) - Please choose one

In which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business
► Failure of repeated attempt to collect the debt
► All of the given options

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT for Doubtful Debt?

► It is shown in balance sheet

► It is a definite loss to the business
► It is not shown in balance sheet
► No provision is necessary for it

Question No: 34 ( Marks: 1 ) - Please choose one

The following balance and discrepancies were found on 31 March 2008:

Particulars Rs.
Cash book balance (Dr) 5 000
Unpresented cheques 1 000
Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)
► Rs. 5 500 (Cr)
► Rs. 4 500 (Dr)
► Rs. 4 500 (Cr)

Question No: 35 ( Marks: 1 ) - Please choose one

A Bank Reconciliation Statement is prepared to:

► Ascertain that the difference between the Cash Book balance and the Bank
Statement balance has been accounted for
► Correct errors in the Cash Book or errors in the Bank Statement
► Amend the balance of the Bank Statement of the firm
► Amend the balance in the Cash Book of the firm

Question No: 36 ( Marks: 1 ) - Please choose one

 Which of the following is CORRECT regarding depreciation?

► It is a systematic allocation of depreciable amount of an asset over its

estimated useful life
► It refers to the end life of an asset
► It refers to the increase in value of asset
► It is another name of Impairment

Question No: 37 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs.1, 00, 000

Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 1, 000

► Rs. 12,000 liabilities

► Rs. 11,000 liabilities
► Rs. 1, 10,000 liabilities
► Rs. 1, 11,000 liabilities

Question No: 38 ( Marks: 1 ) - Please choose one

Which of the following essentials will be shown in the format of Cash Book?
(1) Ledger code
(2) Amount of Receipt
(3) Amount of payment

► (1) only
► (1) & (2) only
► (1) & (3) only
► (1), (2) & (3)

Question No: 39 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO method
of inventory costing?
 ► Rs.260
► Rs.232
► Rs.284
► Rs.320

Question No: 40 ( Marks: 1 ) - Please choose one

In cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw material

inventory
► Opening raw material inventory - Purchases + Ending raw material inventory
► Ending raw material inventory + Opening raw material inventory - Purchases
► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 41 ( Marks: 1 ) - Please choose one

Following are the inventories of Manufacturing Concern EXCEPT:

► Raw material
► Work in process
► Finished goods
► Merchandise inventory

Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following is an alternate term which can be used for “Capital”?

► Liability
► Owner’s net worth
► Working capital
► Asset

Question No: 43 ( Marks: 1 ) - Please choose one

In which of the following condition a company will have positive working capital?
► If current assets > current liabilities
► If current Assets < current Liabilities
► If current assets = current liabilities
► If current assets < current liabilities

Question No: 44 ( Marks: 1 ) - Please choose one

If salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office building) is Rs.
300 during the year, what would be the total of "general & administrative expenses"?
 ► Rs. 300
► Rs. 2,500
► Rs. 2,800
► Rs.18, 800

Question No: 45 ( Marks: 1 ) - Please choose one

The amount brought by the proprietor in the business should be credited to:

► Cash account
► Capital account
► Drawings account
► Proprietor account

Question No: 46 ( Marks: 1 ) - Please choose one

An asset on the balance sheet which is expected to be sold or used within one year is
known as:

► Tangible asset
► Current asset
► Fixed asset
► Long term asset

Question No: 47 ( Marks: 1 ) - Please choose one

Which one of the following is a type of General Ledger?

► Book of original entry

► ‘T’ Account
► Source document
► Day book

Question No: 48 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in
the business made by the owner will effect:

► Cash & Capital Account

► Cash & Expense Account
► Capital & Revenue Account
► Capital & Expense Account

Question No: 49 ( Marks: 1 ) - Please choose one

Mr.” A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated as
_____________ for business.
► Revenue
► Net profit
► Gross profit
 ► Operating profit

Question No: 50 ( Marks: 1 ) - Please choose one

when income exceeds expenses in a specific time period is known as:
► Savings
► Net profit
► Gross profit
► Operating profit
Question No: 1 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening written down value of machine 3,00,000
Cost of machine purchased during the year 50,000
Depreciation during the year 9,000
closing written down value (WDV) of the Machine ?

ANS► Rs. 3, 41,000

► Rs. 3, 50,000
► Rs. 3, 59,000
► Rs. 59,000

Question No: 2 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine Rs. 2,00,000
Cost of new machine purchased during the year Rs. 50,000
Depreciation during the year Rs. 25,000
Closing written down value (WDV) of machines ?

ANS► Rs. 2, 25,000

► Rs. 2, 50,000
► Rs. 2, 75,000
► Rs. 75,000

Question No: 3 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets 1,98,000
Owner's equity 95,000
Liabilities ?

► Rs. 49,000
► Rs. 55,000
► Rs. 1, 25,000
ANS► Rs. 1, 03,000

Question No: 4 ( Marks: 1 ) - Please choose one

 Find out the missing value of an Accounting Equation with the help of given
data:

Cash Rs. 22,500

Debtors Rs. 500
Total Assets Rs. 80, 385
Accounts payable Rs. 1,000
Total liabilities Rs. 20,000

ANS ► Rs. 60,385 owner’s equity

► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity

Question No: 5 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given
data:

Furniture Rs. 90,000

Cash Rs.1, 00, 000
Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 90, 000

► Rs. 2, 01,000 liabilities

ANS► Rs. 1, 11, 000 liabilities
► Rs. 2, 90, 000 liabilities
► Rs. 2, 91, 000 liabilities

Question No: 6 ( Marks: 1 ) - Please choose one

When the process of production is completed, all the costs must be charged to:

► Raw material account

► Work in process account
ANS► Finished goods account
► Merchandise account

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following assets are shown at written down value in balance sheet?

► Current assets
► Liquid assets
ANS► Floating assets
► Fixed assets

Question No: 8 ( Marks: 1 ) - Please choose one

 Which of the following asset is NOT depreciated?

► Factory Buildings
► Office Equipment
► Plant & Machinery
ANS ► Land

Question No: 9 ( Marks: 1 ) - Please choose one

The main goal of Bank Reconciliation Statement is to determine:

► If the discrepancy is due to error rather than timing

► If the discrepancy is due to timing rather than error
ANS► If the discrepancy is due to error rather than amount
► If the discrepancy is due to amount rather than timing

Question No: 10 ( Marks: 1 ) - Please choose one

Sale proceeds of goods are an example of:

ANS ► Revenue expense

► Capital expense
► Capital receipt
► Revenue receipt

Question No: 11 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?

► These are the running expenses of the business

► They improve the financial position of the business
► They reduce the profit of the concern
ANS ► They do not appear in the balance sheet

Question No: 12 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO
method of inventory costing?

► Rs.260
► Rs.232
► Rs.284
ans► Rs.320
 Question No: 13 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

80 units were sold, Use the FIFO method of inventory costing and determine the
cost of goods sold.

► Rs. 1,225
► Rs. 1,015
► Rs. 965
ans► Rs. 905

Question No: 14 ( Marks: 1 ) - Please choose one

If, Cost of machine = Rs.400, 000
Useful life = 5 years
Rate of depreciation= 40%
The book value of machine after one years using diminishing balance method is
?

► Rs.86, 400
► Rs. 1, 44,000
ans► Rs. 2, 40,000
► Rs. 51,840

Question No: 15 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

► Rs.25, 000
ans► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000
 Question No: 16 ( Marks: 1 ) - Please choose one
Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Written down value of asset on 5th year Rs.75,000
profit or loss on disposal of fixed assets ?

► Rs.25, 000 loss

► Rs. 75,000 loss
ans► Rs. 15,000 profit
► Rs. 1, 00,000 profit

Question No: 17 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for the each year Rs. 5,000
Sale price after 5 years Rs.15,000
Written Down Value of Asset on 5th year Rs. 75,000
Profit or loss on disposal of fixed asset ?

► Rs. 60,000 loss

ans► Rs. 75,000 profit
► Rs. 25,000 loss
► Rs. 1, 00,000 profit

Question No: 18 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is
known as:

► Prime cost
► Conversion cost
► Sunk cost
ans► Opportunity cost

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following is an example of direct materials cost?

 ► Polish and finishing material for chair
ans► A piece of wood for the production of chair
► Production worker’s wages
► Depreciation expenses

Question No: 20 ( Marks: 1 ) - Please choose one

If the working capital and the current assets of company XYZ are Rs. 5,000 and
Rs.15,000 respectively, calculate the current liabilities.

► Rs. 5,000
ans ► Rs. 10,000
► Rs. 15,000
► Rs. 20,000

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following item appears in Trading Account of a business?

► Interest expenses
► Wages and salaries
ans► Depreciation expenses
► Discount Allowed

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is an alternate term which can be used for “Capital”?

► Liability
ans► Owner’s net worth
► Working capital
► Asset

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following financial statement DO NOT show the financial health of a
business at a specific date?

ans► Profit and loss account

► Balance sheet
► Statement of financial position
► All of the given options

Question No: 24 ( Marks: 1 ) - Please choose one

If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating expenses are
Rs. 100,000. What will be the net result?
 ► Rs. 5,000 Loss
ans► Rs. 5, 000 Profit
► Rs.1, 95,000 Profit
► Rs.1, 95,000 Loss

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial
Balance? (It is assumed that all account balances are shown on normal balance)

► Cash account
► Furniture account
► Vehicle account
ans► All of the given options

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial
Balance? (It is assumed that all account balances are shown on normal balance).

► Capital account
► Sundry creditors account
► Accounts payable account
ans ► Cash account

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if the payment of furniture
purchased is made through cheque?

ans► Furniture account (Dr) and Bank account (Cr)

► Furniture account (Dr) and Profit & Loss account (Cr)
► Furniture account (Dr) and Cash account (Cr)
► Cash account (Dr) and Furniture account (Cr)

Question No: 28 ( Marks: 1 ) - Please choose one

Which one of the following statement is CORRECT about Long term liabilities?

► These are due within one year

ans► These are consist of all debts, payable after 12 months
► In working capital, these are deducted from current assets
► All of the given options

Question No: 29 ( Marks: 1 ) - Please choose one

What type of expenses are paid out of Gross Profit?

ans► Selling Expenses

► General Expenses
 ► Financial Expenses
► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

While making Income & Expenditure account, Excess of income over expenses
in a specified accounting period is called:

► Deficit
ans► Surplus
► Profit
► Loss

Question No: 31 ( Marks: 1 ) - Please choose one

Which one of the following is NOT prepared by Non profit organizations?

► Profit & Loss account

ans ► Income & Expenditure account
► Receipts & Payments account
► Balance Sheet

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following financial statement summarizes the profitability of an
organization for a particular period?

► Trading and Profit & Loss account

► Cash Flow Statement
ans► Statement of Retained Earnings
► Balance Sheet

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following period is known as a fiscal Year of the Government of
Pakistan?

► 1st January to 31st December

► 1st June to 31st May
ans ► 1st July to 30th June
► 1st October to 30th September

Question No: 34 ( Marks: 1 ) - Please choose one

What would be the affect on the components of the accounting equation, if
goods are purchased on cash?

► Increase in cash and decrease in equity

► Increase in cash and increase in goods
 ans ► Increase in goods and decrease in cash
► Increase in equipment and increase in equity

Question No: 35 ( Marks: 1 ) - Please choose one

Obligations to pay cash or un-earned incomes by the business are the:

ans ► Assets
► Liabilities
► Equities
► Expenses

Question No: 36 ( Marks: 1 ) - Please choose one

Commercial Accounting is based on:
► Single entry book keeping
ans► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping

Question No: 37 ( Marks: 1 ) - Please choose one

Word “Credit” is derived from ______ language.

ans ► Latin
► English
► French
► Chinese

Question No: 38 ( Marks: 1 ) - Please choose one

The basic accounting principle/concept according to which Business is
independent from its owner(s) is known as:

ans ► Separate Entity Concept

► Matching Concept
► Going Concern Concept
► Materiality Concept

Question No: 39 ( Marks: 1 ) - Please choose one

Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only
ans ► Both cash and accrual accounting
 ► None of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

An accounting system is used by a business to:
► Analyze transactions
► Handle routine book-keeping tasks
► Structure information
ans ► All of the given options
1. If Accumulated profit brought forward has credit nature, what will be its
treatment?
a. It will be added in net profit for the year
b. It will be subtracted from the net profit for the year
c. It will be deducted from current Assets
d. It will be added in current assets
2. Fixed Assets at WDV + working capital =?
a. Total shareholders equity
b. Net capital employed
c. Long term loan
d. Current liability
3. Keeping in view the following data, what will be Net Cash Flow from
Investing Activities?
Particulars Rs.
Purchases from short term borrowing 45,000
Purchases of marketable securities (65,000)
Proceeds from marketable securities 40,000
Loans made to borrowers (17,000)
Cash paid acquire plant assets (160,000)
Proceeds from sales of sales of plant Assets 75,000
Collection on loans 12,000
a. Rs. (115,000)
b. Rs. 100,000
c. Rs. 55,000
d. None of the given options
4. Keeping in view the following data, what will be Net cash provided by
operating activities?
Particulars Rs.
Net income 65,000
Depreciation expenses 40,000
Decrease in accrued interest receivable 1,000
Increase in accounts payable 15,000
Increase in accrued liabilities 7,000
Non operating loss on sales of marketable securities 4,000
Increase in accounts receivable 30,000
Increase in inventory 10,000
Decrease in accrued liabilities 8,000
Increase in prepayments 3,000
Non operating gain on sales of plant assets 31,000
Net cash provided by operating activities ?
a. Rs. 115,000
b. Rs. 100,000
c. Rs. 50,000
d. None of the given options
5. Advances from customers are shown in which of the following heads in
Balance Sheet?
a. Current Assets
b. Current liabilities
c. Fixed Assets
d. Long term liabilities
6. While preparing cash flow statements, the repayments of a loan during
the
year should be included under the heading of:
a. Operating activities
b. Financing activities
c. Investing activities
d. None of the given options
7. Which of the following statement is also known as a source and use
statements?
a. Income Statements
b. Statement of Cash Flows
c. Balance Sheet
d. Statement of Retained Earnings
8. Calculate depreciation for the year =?
Building at cost = Rs. 1, 00,000
Depreciation rate = 10%
a. Rs. 10,000
b. Rs. 1,000
c. Rs. 500
d. Rs. 0
9. Mr. A, Mr. B and Mr. C are three partners of a partnership firm. The profit
sharing ratio is2:3:5. If company has distributable profit of Rs. 4, 90,000,
determine the profit of Mr. A.
a. Rs. 98,000
b. Rs. 1, 47,000
c. Rs. 2, 45,000
d. Rs. 3, 43,000
10. An example of financing activities in the context of cash flow statement
is:
a. Fixed capital expenditure
b. Long-term deposit
c. Financial charges paid
d. Dividend paid
Question No: 1 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening written down value of machine 3,00,000
Cost of machine purchased during the year 50,000
Depreciation during the year 9,000
closing written down value (WDV) of the Machine ?

► Rs. 3, 41,000
► Rs. 3, 50,000
► Rs. 3, 59,000
► Rs. 59,000

Question No: 2 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine Rs. 2,00,000
Cost of new machine purchased during the year Rs. 50,000
Depreciation during the year Rs. 25,000
Closing written down value (WDV) of machines ?
 ► Rs. 2, 25,000
► Rs. 2, 50,000
► Rs. 2, 75,000
► Rs. 75,000

Question No: 3 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets 1,98,000
Owner's equity 95,000
Liabilities ?

► Rs. 49,000
► Rs. 55,000
► Rs. 1, 25,000
► Rs. 1, 03,000

Question No: 4 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given
data:

Cash Rs. 22,500

Debtors Rs. 500
Total Assets Rs. 80, 385
Accounts payable Rs. 1,000
Total liabilities Rs. 20,000

► Rs. 60,385 owner’s equity

► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity

Question No: 5 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given
data:

Furniture Rs. 90,000

Cash Rs.1, 00, 000
Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 90, 000

► Rs. 2, 01,000 liabilities

► Rs. 1, 11, 000 liabilities
 ► Rs. 2, 90, 000 liabilities
► Rs. 2, 91, 000 liabilities

Question No: 6 ( Marks: 1 ) - Please choose one

When the process of production is completed, all the costs must be charged to:

► Raw material account

► Work in process account
► Finished goods account
► Merchandise account

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following assets are shown at written down value in balance sheet?

► Current assets
► Liquid assets
► Floating assets
► Fixed assets

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following asset is NOT depreciated?

► Factory Buildings
► Office Equipment
► Plant & Machinery
► Land

Question No: 9 ( Marks: 1 ) - Please choose one

The main goal of Bank Reconciliation Statement is to determine:

► If the discrepancy is due to error rather than timing

► If the discrepancy is due to timing rather than error
► If the discrepancy is due to error rather than amount
► If the discrepancy is due to amount rather than timing

Question No: 10 ( Marks: 1 ) - Please choose one

Sale proceeds of goods are an example of:

► Revenue expense
► Capital expense
► Capital receipt
► Revenue receipt

Question No: 11 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?
 ► These are the running expenses of the business
► They improve the financial position of the business
► They reduce the profit of the concern
► They do not appear in the balance sheet

Question No: 12 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO
method of inventory costing?

► Rs.260
► Rs.232
► Rs.284
► Rs.320

Question No: 13 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

80 units were sold, Use the FIFO method of inventory costing and determine the
cost of goods sold.

► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 905

Question No: 14 ( Marks: 1 ) - Please choose one

If, Cost of machine = Rs.400, 000
Useful life = 5 years
Rate of depreciation= 40%
The book value of machine after one years using diminishing balance method is
?
 ► Rs.86, 400
► Rs. 1, 44,000
► Rs. 2, 40,000
► Rs. 51,840

Question No: 15 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000

Question No: 16 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Written down value of asset on 5th year Rs.75,000
profit or loss on disposal of fixed assets ?

► Rs.25, 000 loss

► Rs. 75,000 loss
► Rs. 15,000 profit
► Rs. 1, 00,000 profit

Question No: 17 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for the each year Rs. 5,000
Sale price after 5 years Rs.15,000
Written Down Value of Asset on 5th year Rs. 75,000
Profit or loss on disposal of fixed asset ?

► Rs. 60,000 loss

► Rs. 75,000 profit
► Rs. 25,000 loss
► Rs. 1, 00,000 profit
100% sure Question No: 1 ( Marks: 1 ) - Please choose one(chapter # 30)
Debenture is also named as:
► Share
► Bond
► Equity
► Reserve

Question No: 2 ( Marks: 1 ) - Please choose one

What types of changes (is) are made at the admission of partner in partnership?
► Assets of old business will be revalued
► Liabilities of old business will be revalued
► Good will of business will be revalued
► All of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

The balance sheet reported a beginning balance of Rs. 20,000 in Accounts Receivable
and an ending balance of Rs. 15,000. Credit Sales of Rs. 200,000 were made during the
year. Using this information, compute cash collected from customers.

► Rs. 215,000
► Rs. 195,000
► Rs. 200,000
► Rs. 205,000

Question No: 4 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as an inflow of cash?
► The repayments of a bank loan
► Dividend issue in the current year
► Money received as result of selling fixed assets
► The difference between the valuations of old and new fixed assets

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following is NOT a cash inflow?

► Purchase of fixed asset

► Sale of fixed asset
► Issue of debentures
► Cash from business operation

Question No: 6 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if Rs. 6,000 transfer to general reserve is
given in adjustment?

► It will be treated in Income Statement only

► It will be treated as current liability in balance sheet only
► It will be treated in profit and loss appropriation account only
 ► it will be treated in both profit and loss appropriation account
and in the balance sheet

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Annual Report

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following document(s) define the relation of company with outside world?

► Memorandum of Association
► Articles of Association
► Prospectus
► Statutory Declaration

Question No: 9 ( Marks: 1 ) - Please choose one

The income statement of the Limited company is also known as:

► Manufacturing account
► Profit and Loss account
► Profit and Loss Appropriation account
► Current Account

Question No: 10 ( Marks: 1 ) - Please choose one

In which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only
► In income statement under the administrative expense only
► In both balance sheet under the head of current liabilities and
income statement under the administrative expense
Question No: 11 ( Marks: 1 ) - Please choose one
The charter of a company which defines the limitations and powers of the company is
called:
► The memorandum of association
► Articles of association
► Statutory report
► Certificate of commencement

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following represents the partnership agreement in writing?
► Partnership registration
► Partnership-at-will
► Partnership deed
► Partnership certification

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have agreed to
share the profit of business carried on by all or any of them acting for all?
► Sole-ownership
► Private limited company
► Public limited company
► Partnership
Question No: 14 ( Marks: 1 ) - Please choose one
Which of the following statement is TRUE about the Accounts receivable?
► Accounts receivable arises when a company buys goods or services from
another party on credit
► Accounts receivable is a miscellaneous category that may include loans to
employees
► Accounts receivable are more formal than notes receivable
► Accounts receivable are often called trade receivables

Question No: 15 ( Marks: 1 ) - Please choose one

Which one of the following is TRUE about provisions?

► It is necessary to prepare for showing true picture of balance sheet

► It is a reduction from assets
► It is prepared for specific purposes
► All of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business
► A balance sheet
► A statement of retained earnings

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following is an example of operating expense?

► Purchasing operating equipment

► Purchasing cleaning services
► Purchasing an investment in another company
► Purchasing a computer for the accounting office
Question No: 18 ( Marks: 1 ) - Please choose one
Short-term investments include all of the following EXCEPT:

► A bond receivable intended to be sold within one year

► Frequently traded securities
► A stock investment in the General Electric Company intended to be sold within
one year
► A shares investment in the Coca-Cola Company intended to be
held for several years
Question No: 19 ( Marks: 1 ) - Please choose one
The figure of cash received from debtors can be located either from cash book or:

► Debtor’s Control Account

► Balance Sheet
► Profit & Loss Account
► Bills Payable Account

Question No: 20 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400
Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 10%
Identify the Total amount deducted from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 3,080
► Rs. 5,480

Question No: 21 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be deducted from
Sundry Debtors in Balance Sheet.
Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600
► Rs. 1,000
► Rs. 2,000
► Rs. 2,600
Question No: 22 ( Marks: 1 ) - Please choose one
Which of the following entry will be recorded, if a cheque deposited is dishonored by
bank?

► Bank Account (Dr.) and Debtor's Account (Cr.)

► Debtor's Account (Dr.) and Bank Account (Cr.)
► Dishonored Cheque Account (Dr.) and Bank Account (Cr.)
► Creditor's Account (Dr.) and Bank Account (Cr.)

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of an
amount Rs.200 received from Mr.”P” wrongly credited to Mr.”Q’s” account?
► Both of Mr. P's & Mr.Q's Account
► Only Cash Account
► Only P’s account
► Only Q’s account

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales
Rs.100 to Mr. “A” recorded in the purchases book?

► Sales account
► Purchase account
► A’s account and Sales account
► Sales account, purchase account and A’s account
100%sure Question No: 25 ( Marks: 1 ) - Please choose one(chapter # 28)
"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in books of
accounts", is an example of:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

100%sure Question No: 26 ( Marks: 1 ) - Please choose one(chapter # 28)

Transaction that has been completely forgotten to enter is called:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry
Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following is (are) included in Creditors Control Account?

► Discount received from supplier

► Credit purchases
► Bills payable
► All of the given options

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?

► Cash sales
► Credit sales
► Bills receivable
► Discount allowed

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for debtors control
account?

► Sales Day Book

► Sales Return
► Debtors Ledger
► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT based on the concept of double entry book keeping
system?

► Subsidiary Ledgers
► Creditors Control Accounts
► Debtors Control Accounts
► All of the given options

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded when the Bad Debts are recovered?

► Cash account (Dr.) & Bad Debts recovered account (Cr.)

► Accounts Receivable account (Dr.) & Bad Debts recovered
account (Cr.)
► Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)
► Provision for doubtful debts account (Dr.) & Cash account (Cr.)
Question No: 32 ( Marks: 1 ) - Please choose one
In which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business
► Failure of repeated attempt to collect the debt
► All of the given options
Question No: 33 ( Marks: 1 ) - Please choose one
Which of the following is CORRECT for Doubtful Debt?

► It is shown in balance sheet

► It is a definite loss to the business
► It is not shown in balance sheet
► No provision is necessary for it

Question No: 34 ( Marks: 1 ) - Please choose one

The following balance and discrepancies were found on 31 March 2008:

Particulars Rs.
Cash book balance (Dr) 5 000
Unpresented cheques 1 000
Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)
► Rs. 5 500 (Cr)
► Rs. 4 500 (Dr)
► Rs. 4 500 (Cr)
Question No: 35 ( Marks: 1 ) - Please choose one
A Bank Reconciliation Statement is prepared to:

► Ascertain that the difference between the Cash Book balance and
the Bank Statement balance has been accounted for
► Correct errors in the Cash Book or errors in the Bank Statement
► Amend the balance of the Bank Statement of the firm
► Amend the balance in the Cash Book of the firm

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT regarding depreciation?
 ► It is a systematic allocation of depreciable amount of an asset
over its estimated useful life
► It refers to the end life of an asset
► It refers to the increase in value of asset
► It is another name of Impairment

Question No: 37 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs.1, 00, 000

Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 1, 000

► Rs. 12,000 liabilities

► Rs. 11,000 liabilities
► Rs. 1, 10,000 liabilities
► Rs. 1, 11,000 liabilities

Question No: 38 ( Marks: 1 ) - Please choose one

Which of the following essentials will be shown in the format of Cash Book?
(1) Ledger code
(2) Amount of Receipt
(3) Amount of payment

► (1) only
► (1) & (2) only
► (1) & (3) only
► (1), (2) & (3)

Question No: 39 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO method
of inventory costing?

► Rs.260
► Rs.232
► Rs.284
 ► Rs.320
Question No: 40 ( Marks: 1 ) - Please choose one
In cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw

material inventory
► Opening raw material inventory - Purchases + Ending raw material inventory
► Ending raw material inventory + Opening raw material inventory - Purchases
► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 41 ( Marks: 1 ) - Please choose one

Following are the inventories of Manufacturing Concern EXCEPT:

► Raw material
► Work in process
► Finished goods
► Merchandise inventory
Question No: 42 ( Marks: 1 ) - Please choose one
Which of the following is an alternate term which can be used for “Capital”?

► Liability
► Owner’s net worth
► Working capital
► Asset

Question No: 43 ( Marks: 1 ) - Please choose one

In which of the following condition a company will have positive working capital?
► If current assets > current liabilities
► If current Assets < current Liabilities
► If current assets = current liabilities
► If current assets < current liabilities

Question No: 44 ( Marks: 1 ) - Please choose one

If salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office building) is Rs.
300 during the year, what would be the total of "general & administrative expenses"?

► Rs. 300
► Rs. 2,500
► Rs. 2,800
 ► Rs.18, 800

Question No: 45 ( Marks: 1 ) - Please choose one

The amount brought by the proprietor in the business should be credited to:

► Cash account
► Capital account
► Drawings account
► Proprietor account

Question No: 46 ( Marks: 1 ) - Please choose one

An asset on the balance sheet which is expected to be sold or used within one year is
known as:

► Tangible asset
► Current asset
► Fixed asset
► Long term asset

Question No: 47 ( Marks: 1 ) - Please choose one

Which one of the following is a type of General Ledger?

► Book of original entry

► ‘T’ Account
► Source document
► Day book

Question No: 48 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in
the business made by the owner will effect:

► Cash & Capital Account

► Cash & Expense Account
► Capital & Revenue Account
► Capital & Expense Account

Question No: 49 ( Marks: 1 ) - Please choose one

Mr.” A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated as
_____________ for business.
► Revenue
► Net profit
► Gross profit
► Operating profit

Question No: 50 ( Marks: 1 ) - Please choose one

when income exceeds expenses in a specific time period is known as:
► Savings
► Net profit
► Gross profit
► Operating profit
 MIDTERM EXAMINATION
MGT101- Financial Accounting (Session - 5)
Time: 60 min
Marks: 50

Question No: 1 ( Marks: 1 ) - Please choose one

An accounting system is used by a business to:
► Analyze transactions
► Handle routine book-keeping tasks
► Classify and summarize financial information
► All of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

The assets which have a limited useful life are termed as:

► Limited assets
► Depreciateable assets
► Unlimited assets
► None of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

Accountancy covers which of the following area(s):

► Book-keeping
► Accounting
► Auditing
► All of the given options

Question No: 4 ( Marks: 1 ) - Please choose one

If a business pays rent in advance for 12 months, it will be treated as:

► Prepaid expenses of business

► Long term liability of business
► Fixed assets of business
► Current liability of business

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following transaction have NO affect on stockholders' equity?

► Purchase of land on credit

► Dividends to stockholders
► Net loss
 ► Investment in cash by stockholders

Question No: 6 ( Marks: 1 ) - Please choose one

Which of the following account balance is shown on credit side of Trial Balance? (It is
assumed that all account balances are shown on normal balance)

► Cash account
► Furniture account
► Vehicle account
► Capital account

Question No: 7 ( Marks: 1 ) - Please choose one

If you start with cash book balance (Dr.), which of the following item will be deducted in
Bank Reconciliation Statement?

► Any cheque drawn to creditor but not paid by bank

► Interest credited by the bank in pass book
► Cheque deposited but not credited by the bank
► Dividend collected by bank on behalf of the customer

Question No: 8 ( Marks: 1 ) - Please choose one

The cost of moving plant and machinery to a new site will be treated as:

► Revenue expense
► Capital expense
► Administrative expense
► Operating expense

Question No: 9 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about Capital Expenditure?
► Creates future benefits
► Incurred to acquire fixed assets
► Incurred to increase the economic life of existing fixed assets
► Reduce the profit of the concern

Question No: 10 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit

First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Sold 10 units @ 10
35 units @ 11
40 units @ 12

Balance
20 units @ 13 = 260
 Eighty-five units were sold, what is the value of the ending inventory using the FIFO
method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
► Rs.268

Question No: 11 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

Opening Stock 100

Add purchases 1125
Total material available
for sale 1225
Less closing ** 320
Cost of good sold 905

Detail of 80 units sold

10 @ 10
35 @ 11
35 @ 12
now remaining are

5 units @ 12 = 60
20 units@ 13 =260
closing stock = 25 units and value = 320

80 units were sold, Use the FIFO method of inventory costing and determine the cost of
goods sold.

► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 905

Question No: 12 ( Marks: 1 ) - Please choose one

If, Cost of machine = Rs.400, 000
Useful life = 5 years
Residual value = Rs.25, 000
The depreciation of machine per year using straight line method is?

= 400,000-25000 / 5 = 75000

► Rs. 160,000
► Rs. 96,000
► Rs. 75,000
► Rs. 57,600

Question No: 13 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 15,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

Asset year 1 = 100,000 - 15000 = 85000

Year 2 = 85000 - 15000 = 70000
Year 3 = 70000 – 15000 = 55000
Year 4 = 55000 – 15000 = 40000
Book value after year 5 = 40000 – 15000 = 25000

► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000

Question No: 14 ( Marks: 1 ) - Please choose one

A decrease in value of a fixed asset due to age, wear and tear is known as:
► Depreciation
► Accumulated Depreciation
► Appreciation
► Written Down Value

Question No: 15 ( Marks: 1 ) - Please choose one

In balance sheet fixed assets are shown at:

► Cost price
► Market value
► Fair value
► Written down value (WDV)

Question No: 16 ( Marks: 1 ) - Please choose one

In cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw material inventory

► Opening raw material inventory - Purchases + Ending raw material inventory
► Ending raw material inventory + Opening raw material inventory - Purchases
► Ending raw material inventory + Opening raw material inventory + Purchases
 Question No: 17 ( Marks: 1 ) - Please choose one
Particulars Rs.
Direct materials costs 80,000
Direct labor costs 50,000
Manufacturing overhead costs 60,000
Prime cost = dm + dl 130000

► Rs.1 Rs.130, 000

► Rs.110, 000
► Rs.140, 000
► Rs.190, 000

Question No: 18 ( Marks: 1 ) - Please choose one

What would be the value of 'cost of goods manufactured' if the total factory cost of the
month is Rs. 6,000, opening work in process is Rs. 2,000 and the closing work in
process is Rs. 2,500?

► Rs. 5,500
► Rs. 8,000
► Rs. 4,500
► Rs. 8,500

Question No: 19 ( Marks: 1 ) - Please choose one

Following are the inventories of Manufacturing Concern EXCEPT:

► Raw material
► Work in process
► Finished goods
► Merchandise inventory

Question No: 20 ( Marks: 1 ) - Please choose one

If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating expenses are Rs.
100,000. What will be the net result?

► Rs. 5,000 Loss

► Rs. 5, 000 Profit
► Rs.1, 95,000 Profit
► Rs.1, 95,000 Loss

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance)

► Cash account
► Furniture account
► Vehicle account
► All of the given options

Question No: 22 ( Marks: 1 ) - Please choose one

The return of goods by a customer should be debited to:
 ► Customer’s account
► Sales return account
► Goods account
► Accounts receivable

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following account will be credited in the books of ABC Co. Ltd., if furniture
is purchased on cash?
► Furniture account
► Cash account
► Business account
► Bank account

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, If Mr. “A” started business with cash
Rs. 2, 00,000?

► Capital account
► Cash account
► Mr. A’s account
► Business account

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if the goods are sold on credit to
Mr. 'B'?

► Mr. “B” / Accounts Receivable account (Dr) and Sales account (Cr)
► Cash account (Dr) and sales account (Cr)
► Sales account (Dr) and Mr. B / Accounts Receivable account (Cr)
► Goods Sold account (Dr) and Mr. B / Accounts Receivable account (Cr)

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following is NOT an item of a Balance Sheet?

► Accounts Receivable
► Accounts Payable
► Sales Revenue
► Marketable Securities

Question No: 27 ( Marks: 1 ) - Please choose one

Accounts Receivable & Inventory are the examples of:

► Liquid assets
► Current assets
► Fixed assets
► Capital assets
Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following shows summary of a company's financial position at a specific

date?

► Profit & Loss Account

► Cash Flow Statement
► Balance Sheet
► Income & Expenditure Account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following summarizes the cash movements during a specified period?

► Trading account
► Profit & Loss account
► Receipts & Payments account
► Balance Sheet

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following financial statement summarizes the profitability of an organization
for a particular period?

► Balance Sheet
► Trading and Profit & Loss account
► Cash Flow Statement
► Statement of Retained Earnings

Question No: 31 ( Marks: 1 ) - Please choose one

In an account, if credit side < debit side then the balance is known as:
► Negative Balance
► Debit Balance
► Positive Balance
► Credit Balance

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit and

loss account—Balance Sheet

► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit and

loss account—Balance Sheet

► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and

loss account—Balance Sheet
 ► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and
loss account—Balance Sheet

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is used to record financial transactions in chronological (day-to-
day) order?

► Voucher
► General Journal
► General Ledger
► Trial balance

Question No: 34 ( Marks: 1 ) - Please choose one

When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account

Question No: 35 ( Marks: 1 ) - Please choose one

What is the nature of an expense account?

► Debit
► Credit
► Revenue
► None of the given options

Question No: 36 ( Marks: 1 ) - Please choose one

Economic resources owned by a business and expected to benefit for the future
operations are called:
► Expenses
► Assets
► Capital
► Liabilities

Question No: 37 ( Marks: 1 ) - Please choose one

Assets total Rs.50, 000 and Liabilities total Rs.10, 000. What is the equity of the
business?

► Rs. 40, 000

► Rs. 60, 000
► Rs. 10,000
► Rs. 50,000

Question No: 38 ( Marks: 1 ) - Please choose one

An expense incurred by the business for the purchase of land & building is an example
of:
 journal
Date Particulars (Dr.) (Cr.)
Rs. Rs.
2008 jan1 Cash account 50,000
► Capital Expense 50,000
Capital account
► Revenue Expense
(owner invested cash )
► Deferred Expense

► Preliminary Expense jan.2 Furniture account 10,000

Cash account 10,000
Question No: 39 ( Marks: (purchased furniture for
1 ) - Please choose one cash)
Which of the following is
non- profit organization? Jan.3 Purchases account 30,000
► Sole proprietorship Cash account 30,000
► Partnership (goods purchased for
► Limited company cash)
► Trust
Jan.5 Cash account 40,000
Question No: 40 ( Marks: Sales account 40,000
1 ) - Please choose one (sold goods for cash)
The area of accounting
concerned with reporting
Jan. 6 Salaries account 5,000
financial information to the
interested parties is called: Cash account 5,000
► Cost Accounting (Salaried paid)
► Financial Accounting
► Management Accounting
► Tax Accounting

Question No: 41 ( Marks: 10 )

Prepare Cash and Capital Accounts with the help of given Journal entries.

CASH A/C (IN STATEMENT FORM)

Date V. No Detail Ref Debit Credit Balance

01/01/08 CAPITAL A/C 50000 0 50000 DR
02/01/08 FURNITURE A/C 0 10000 40000 DR
03/01/08 PURCHASES A/C 0 30000 10000 DR
05/01/08 SALES A/C 40000 0 50000 DR
06/01/08 SALARIES A/C 0 5000 45000 DR
TOTAL 90000 45000 45000 DR

MGT101- Financial Accounting (Session - 2)

Time: 60 min
Marks: 50
Question No: 1 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening written down value of machine 3,00,000
Cost of machine purchased during the year 50,000
Depreciation during the year 9,000
closing written down value (WDV) of the Machine ?

► Rs. 3, 41,000
► Rs. 3, 50,000
► Rs. 3, 59,000
► Rs. 59,000

http://groups.google.com/group/vuZs
Question No: 2 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening written down value of machine Rs. 2,00,000
Cost of new machine purchased during the year Rs. 50,000
Depreciation during the year Rs. 25,000
Closing written down value (WDV) of machines ?

► Rs. 2, 25,000
► Rs. 2, 50,000
► Rs. 2, 75,000
► Rs. 75,000

Question No: 3 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets 1,98,000
Owner's equity 95,000
Liabilities ?

► Rs. 49,000
► Rs. 55,000
► Rs. 1, 25,000
► Rs. 1, 03,000

Question No: 4 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs. 22,500

Debtors Rs. 500
Total Assets Rs. 80, 385
 Accounts payable Rs. 1,000
Total liabilities Rs. 20,000

► Rs. 60,385 owner’s equity

► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity

Question No: 5 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Furniture Rs. 90,000

Cash Rs.1, 00, 000
Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 90, 000

► Rs. 2, 01,000 liabilities

► Rs. 1, 11, 000 liabilities
► Rs. 2, 90, 000 liabilities
► Rs. 2, 91, 000 liabilities

Question No: 6 ( Marks: 1 ) - Please choose one

When the process of production is completed, all the costs must be charged to:

► Raw material account

► Work in process account
► Finished goods account
► Merchandise account

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following assets are shown at written down value in balance sheet?

► Current assets
► Liquid assets
► Floating assets
► Fixed assets

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following asset is NOT depreciated?

► Factory Buildings
► Office Equipment
► Plant & Machinery
► Land

Question No: 9 ( Marks: 1 ) - Please choose one

The main goal of Bank Reconciliation Statement is to determine:

► If the discrepancy is due to error rather than timing

 ► If the discrepancy is due to timing rather than error
► If the discrepancy is due to error rather than amount
► If the discrepancy is due to amount rather than timing

Question No: 10 ( Marks: 1 ) - Please choose one

Sale proceeds of goods are an example of:

► Revenue expense
► Capital expense
► Capital receipt
► Revenue receipt

Question No: 11 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?

► These are the running expenses of the business

► They improve the financial position of the business
► They reduce the profit of the concern
► They do not appear in the balance sheet

Question No: 12 ( Marks: 1 ) - Please choose one

Consider the following:
Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO method
of inventory costing?

► Rs.260
► Rs.232
► Rs.284
► Rs.320

Question No: 13 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

80 units were sold, Use the FIFO method of inventory costing and determine the cost of
goods sold.

► Rs. 1,225
 ► Rs. 1,015
► Rs. 965
► Rs. 905

Question No: 14 ( Marks: 1 ) - Please choose one

If, Cost of machine = Rs.400, 000
Useful life = 5 years
Rate of depreciation= 40%
The book value of machine after one years using diminishing balance method is ?

► Rs.86, 400
► Rs. 1, 44,000
► Rs. 2, 40,000
► Rs. 51,840

Question No: 15 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000

Question No: 16 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Written down value of asset on 5th year Rs.75,000
profit or loss on disposal of fixed assets ?

► Rs.25, 000 loss

► Rs. 75,000 loss
► Rs. 15,000 profit
► Rs. 1, 00,000 profit

Question No: 17 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for the each year Rs. 5,000
Sale price after 5 years Rs.15,000
Written Down Value of Asset on 5th year Rs. 75,000
Profit or loss on disposal of fixed asset ?
 ► Rs. 60,000 loss
► Rs. 75,000 profit
► Rs. 25,000 loss
► Rs. 1, 00,000 profit

Question No: 18 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is known as:

► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost

Question No: 19 ( Marks: 1 ) - Please choose one

Which of the following is an example of direct materials cost?

► Polish and finishing material for chair

► A piece of wood for the production of chair
► Production worker’s wages
► Depreciation expenses

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if the payment of furniture
purchased is made through cheque?

► Furniture account (Dr) and Bank account (Cr)

► Furniture account (Dr) and Profit & Loss account (Cr)
► Furniture account (Dr) and Cash account (Cr)
► Cash account (Dr) and Furniture account (Cr)

Question No: 28 ( Marks: 1 ) - Please choose one

Which one of the following statement is CORRECT about Long term liabilities?

► These are due within one year

► These are consist of all debts, payable after 12 months
► In working capital, these are deducted from current assets
► All of the given options

Question No: 29 ( Marks: 1 ) - Please choose one

What type of expenses are paid out of Gross Profit?

► Selling Expenses
► General Expenses
► Financial Expenses
► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

While making Income & Expenditure account, Excess of income over expenses in a
specified accounting period is called:

► Deficit
► Surplus
► Profit
► Loss

Question No: 31 ( Marks: 1 ) - Please choose one

Which one of the following is NOT prepared by Non profit organizations?

► Profit & Loss account

► Income & Expenditure account
► Receipts & Payments account
► Balance Sheet

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following financial statement summarizes the profitability of an organization
for a particular period?

► Trading and Profit & Loss account

► Cash Flow Statement
► Statement of Retained Earnings
► Balance Sheet

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following period is known as a fiscal Year of the Government of Pakistan?

► 1st January to 31st December

► 1st June to 31st May
► 1st July to 30th June
► 1st October to 30th September

Question No: 34 ( Marks: 1 ) - Please choose one

What would be the affect on the components of the accounting equation, if goods are
purchased on cash?

► Increase in cash and decrease in equity

► Increase in cash and increase in goods
► Increase in goods and decrease in cash
► Increase in equipment and increase in equity

Question No: 35 ( Marks: 1 ) - Please choose one

Obligations to pay cash or un-earned incomes by the business are the:

► Assets
► Liabilities
► Equities
► Expenses
Question No: 36 ( Marks: 1 ) - Please choose one
Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping

Question No: 37 ( Marks: 1 ) - Please choose one

Word “Credit” is derived from ______ language.

► Latin
► English
► French
► Chinese

Question No: 38 ( Marks: 1 ) - Please choose one

The basic accounting principle/concept according to which Business is independent
from its owner(s) is known as:

► Separate Entity Concept

► Matching Concept
► Going Concern Concept
► Materiality Concept

Question No: 39 ( Marks: 1 ) - Please choose one

Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only
► Both cash and accrual accounting
► None of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

An accounting system is used by a business to:
► Analyze transactions
► Handle routine book-keeping tasks
► Structure information
► All of the given options

Question No: 41 ( Marks: 10 )

Record the following transactions in the General Journal.

Date: Transactions
Jan 1, 2007 Mr. Asghar started business with cash Rs. 1, 00,000.
Jan 2, 2007 Opened bank account with amount Rs. 50,000.
Jan 4, 2007 Purchased goods for cash Rs. 15,000.
Jan 9, 2007 Payment made to Karachi store (Creditor) Rs. 15,000 by cheque.
Jan14, 2007 Goods returned to Karachi store worth Rs. 1,500.
Jan22, 2007 Goods sold for cash Rs. 2,000.
DR
Bank account 50,000
Purchased goods for cash Rs. 15,000
Payment made to Karachi store (Creditor) Rs. 15,000 by cheque
Goods returned to Karachi store worth Rs. 1,500
Credit balance 20500

Cr
Mr. Asghar started business with cash Rs. 1, 00,000
Goods sold for cash Rs. 2,000.

MIDTERM EXAMINATION
7th Dec 2009
MGT101- Financial Accounting
Question No: 1 ( Marks: 1 ) - Please choose one
Income of the business includes:
► Cash sales only
► Credit sales only
► Credit purchases only
► Both cash sales and credit sales
Question No: 2 ( Marks: 1 ) - Please choose one
Consider the following:
Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty-five units were sold, what is the value of the ending inventory using the FIFO
method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
► Rs.320
Question No: 3 ( Marks: 1 ) - Please choose one
Which of the following is NOT an example of Current Asset?
► Bank Overdraft
► Accounts Receivable
► Notes Receivable
► Prepaid Expenses
Question No: 4 ( Marks: 1 ) - Please choose one
We can say that the business is in profit, when:
 ► Assets exceed Expenditure
► Assets exceed Liabilities
► Income exceeds Expenditure
► Income exceeds Liabilities

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following essentials are shown in Cash Book?
(1) Date of transaction
(2) Narration of transaction
(3) Cheque number
► (1) & (2) only
► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)
Question No: 6 ( Marks: 1 ) - Please choose one
Income of the business includes:

► Cash sales only

► Credit sales only
► Credit purchases only
► Both cash sales and credit sales
Question No: 7 ( Marks: 1 ) - Please choose one
Economic resources owned by a business and expected to benefit for the future
operations are called:
► Expenses
► Assets
► Capital
► Liabilities
Question No: 8 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, when the goods are purchased on cash?
► Stock account
► Cash account
► Supplier account
► Work in process account
Question No: 9 ( Marks: 1 ) - Please choose one
If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are
Rs.20,000 during the year. What would be the Net Profit?
► Rs.15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000
Question No: 10 ( Marks: 1 ) - Please choose one
Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).
► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account
Question No: 11 ( Marks: 1 ) - Please choose one
Which of the following account will be debited, if business bought goods on cash from
Mr. Ali?
 ► Purchases account
► Mr. Ali account
► Cash account
► Sales account
Question No: 12 ( Marks: 1 ) - Please choose one
A summarized record of transactions related to individuals or things is called a/an ___.
► Account
► Voucher
► Journal
► Trial balance
Question No: 13 ( Marks: 1 ) - Please choose one
When a assets is increased, it is recorded on the:
► Right or debit side of the account
► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account
Question No: 14 ( Marks: 1 ) - Please choose one
Cost incurred for the maintenance of shop is considered as _________.
► Deferred expense
► Capital expense
► Revenue expense
► Preliminary expense
Question No: 15 ( Marks: 1 ) - Please choose one
Double entry accounting system includes:
► Accrual accounting only
► Cash accounting only
► Both cash and accrual accounting
► None of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
The allocation of the cost of a tangible plant asset to expense in the periods, in which
services are received from the asset, is termed as:
► Appreciation
► Depreciation
► Fluctuation
► None of the given options
Question No: 17 ( Marks: 1 ) - Please choose one
Under the reducing balance method of depreciation:
► Amount of depreciation increases every year
► Amount of depreciation remains constant for every year
► Amount of depreciation decreases every year
► None of the given options
Question No: 18 ( Marks: 1 ) - Please choose one
Consider the following:
Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO method
of inventory costing?
► Rs.260
 ► Rs.232
► Rs.284
► Rs.320
Question No: 19 ( Marks: 1 ) - Please choose one
Rs.
1,00,000

Cost of asset
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Profit or Loss ?
► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000
Question No: 20 ( Marks: 1 ) - Please choose one
In accounting accumulated depreciation is:
► Treated as a reserve
► Treated as a contra asset
► Treated as a surplus
► Treated as an expense
Question No: 21 ( Marks: 1 ) - Please choose one
Cash book is a part of:
► Voucher
► General Journal
► General Ledger
► Trial Balance
Question No: 22 ( Marks: 1 ) - Please choose one
Which of the following organization converts raw material into finished goods?
► Trading concern
► Manufacturing concern
► Merchandising concern
► Service concern
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, if business purchased a vehicle on cash?
 ► Vehicle account
► Cash account
► Business account
► Bank account
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following essentials are shown in Bank Book?
(1) Date of transaction
(2) Narration of transaction
(3) Cheque number
► (1) & (2) only
► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)
Question No: 25 ( Marks: 1 ) - Please choose one
Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping
Question No: 26 ( Marks: 1 ) - Please choose one
A book, in which receipts and payments are recorded, is known as:
► Pass Book
► Cash Book
► Purchase Book
► Sales Book
Question No: 27 ( Marks: 1 ) - Please choose one
Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, when the goods are purchased on cash?
► Stock account
► Cash account
► Supplier account
► Work in process account
Question No: 29 ( Marks: 1 ) - Please choose one
Following are the inventories of Trading Concern EXCEPT:
► Raw material
► Work in process
► Finished goods
► Merchandise inventory
Question No: 30 ( Marks: 1 ) - Please choose one
Word “Credit” is derived from ______ language.
► Latin
► English
► French
► Chinese
Question No: 31 ( Marks: 1 ) - Please choose one
"Mr. “A” collected cash from debtors", the journal entry for this transaction is:
► Mr. "A" a/c Dr. and debtors a/c Cr.
► Mr. "A" a/c Dr. and cash a/c Cr.
► Cash a/c Dr. and debtors a/c Cr.
► None of the given options
Question No: 32 ( Marks: 1 ) - Please choose one
The assets which have a limited useful life are termed as:
► Limited assets
► Depreciateable assets
► Unlimited assets
► None of the given options
Question No: 33 ( Marks: 1 ) - Please choose one
When Capital is increased by an amount, it is recorded on the:
► Left or credit side of the account
► Right or debit side of the account
► Left or debit side of the account
► Right or credit side of the account
Question No: 34 ( Marks: 1 ) - Please choose one
Depreciable value of an asset is equal to:
► Cost + scrap value
► Cost + market price
► Cost – scrap value
► None of the given options
Question No: 35 ( Marks: 1 ) - Please choose one
The area of accounting concerned with reporting financial information to the interested
parties is called:
► Cost Accounting
► Financial Accounting
► Management Accounting
► Tax Accounting
Question No: 36 ( Marks: 1 ) - Please choose one
What would be the affect on the components of the accounting equation, if goods are
purchased on cash?
 ► Increase in cash and decrease in equity
► Increase in cash and increase in goods
► Increase in goods and decrease in cash
► Increase in equipment and increase in equity

Question No: 41 ( Marks: 10 )

How you can distinguish between Sole proprietorship, Partnership and Joint Stock
company?
Answer:-
Sole Proprietorship:-
A sole proprietorship also known as a sole trader, or simply proprietorship is a type of
business entity which is owned and run by one individual and where there is no legal
distinction between the owner and the business. All profits and all losses accrue to the
owner (subject to taxation). All assets of the business are owned by the proprietor and
all debts of the business are their debts and they must pay them from their personal
resources. This means that the owner has unlimited liability. It is a "sole" proprietorship
in the sense that the owner has no partners (partnership).
A sole proprietor may do business with a trade name other than his or her legal name.
This also allows the proprietor to open a business account with banking institutions
Partnership:-
A partnership is a type of business entity in which partners (owners) share with each
other the profits or losses of the business. Partnerships are often favored over
corporations for taxation purposes, as the partnership structure does not generally incur
a tax on profits before it is distributed to the partners (i.e. there is no dividend tax levied).
However, depending on the partnership structure and the jurisdiction in which it
operates, owners of a partnership may be exposed to greater personal liability than they
would as shareholders of a corporation.
Joint Stock Company:-
A joint stock company (JSC) is a type of business entity: it is a type of corporation or
partnership involving two or more legal persons. Certificates of ownership (or stocks) are
issued by the company in return for each financial contribution, and the shareholders are
free to transfer their ownership interest at any time by selling their stockholding to others.
In most countries, a joint stock company offers the protection of limited liability; a
shareholder is not liable for any of the company's debt beyond the face value of their
shareholding.
There are two kinds of joint stock company : private and public companies. The shares
of the former are usually only held by the directors and Company Secretary. The shares
of the latter are bought and sold on the open market

MIDTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 5)

Question No: 1 ( Marks: 1 ) - Please choose one

Depreciation arises because of:
 ► Fall in the market value of an asset
► Fall in the value of money
► Physical wear and tear
► All of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit

First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty-five units were sold, what is the value of the ending inventory using the FIFO
method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
► Rs.268
Question No: 3 ( Marks: 1 ) - Please choose one
Which of the following is NOT an example of Current Asset?
► Bank Overdraft
► Accounts Receivable
► Notes Receivable
► Prepaid Expenses
Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following statement is NOT TRUE about Current liabilities?

► These are due within one year

► These are short-term loans
► These are consist of all debts, payable after 12 months
► In working capital, these are deducted from current assets
Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following essentials are shown in Bank Book?

(1) Date of transaction
(2) Narration of transaction
(3) Cheque number

► (1) & (2) only

► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)
Question No: 6 ( Marks: 1 ) - Please choose one
Income of the business includes:

► Cash sales only

► Credit sales only
► Credit purchases only
 ► Both cash sales and credit sales
Question No: 7 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 80,000
Purchases of raw material during the 200, 000
period
Cost of Material Consumed ?

► Rs. 205,000
► Rs. 215,000
► Rs. 220,000
► Rs. 225,000
Question No: 8 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, when the goods are purchased on
cash?

► Stock account
► Cash account
► Supplier account
► Work in process account
Question No: 9 ( Marks: 1 ) - Please choose one
If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are
Rs.20,000 during the year. What would be the Net Profit?

► Rs.15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000
Question No: 10 ( Marks: 1 ) - Please choose one
Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).

► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account
Question No: 11 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, if business bought goods on credit from
Mr. Ali?

► Purchases account
► Mr. Ali account
► Cash account
► Sales account
Question No: 12 ( Marks: 1 ) - Please choose one
A summarized record of transactions related to individuals or things is called
a/an ___________.

► Account
► Voucher
► Journal
► Trial balance
Question No: 13 ( Marks: 1 ) - Please choose one
When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account
Question No: 14 ( Marks: 1 ) - Please choose one
Cost incurred for the maintenance of shop is considered as _________.
► Deferred expense
► Capital expense
► Revenue expense
► Preliminary expense
Question No: 15 ( Marks: 1 ) - Please choose one
Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only
► Both cash and accrual accounting
► None of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
The allocation of the cost of a tangible plant asset to expense in the periods, in which
services are received from the asset, is termed as:

► Appreciation
► Depreciation
► Fluctuation
► None of the given options
Question No: 17 ( Marks: 1 ) - Please choose one
Under the reducing balance method of depreciation:

► Amount of depreciation increases every year

► Amount of depreciation remains constant for every year
► Amount of depreciation decreases every year
► None of the given options
Question No: 18 ( Marks: 1 ) - Please chose one
Consider the following:
Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO method
of inventory costing?

► Rs.260
► Rs.232
► Rs.284
► Rs.320
Question No: 19 ( Marks: 1 ) - Please choose one
Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000
Question No: 20 ( Marks: 1 ) - Please choose one
In cost of goods sold statement the ‘total factory cost’ is equal to:

► Cost of material consumed + Labor cost

► Cost of material consumed + Conversion cost
► Cost of material consumed + Total factory cost
► Cost of material consumed + Factory overhead

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).

► Cash Account
► Furniture Account
► Motor Account
► All of the above
Question No: 22 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, if business sold goods for Rs.10,000 on
credit?

► Cash account
► Sales account
► Accounts receivable account
► Purchases account

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business purchased a vehicle on cash?

► Vehicle account
► Cash account
 ► Business account
► Bank account
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following essentials are shown in Bank Book?
(1) Date of transaction
(2) Narration of transaction
(3) Cheque number

► (1) & (2) only

► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)
Question No: 25 ( Marks: 1 ) - Please choose one
Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping
Question No: 26 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening written down value of machine Rs. 2,00,000
Cost of new machine purchased during the year Rs. 50,000
Depreciation during the year Rs. 25,000
Closing written down value (WDV) of machines ?

► Rs. 2, 25,000
► Rs. 2, 50,000
► Rs. 2, 75,000
► Rs. 75,000
Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following is an example of direct materials cost?

► Polish and finishing material for chair

► A piece of wood for the production of chair
► Production worker’s wages
► Depreciation expenses

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, when the goods are purchased on cash?

► Stock account
► Cash account
► Supplier account
► Work in process account
Question No: 29 ( Marks: 1 ) - Please choose one
Following are the inventories of Manufacturing Concern EXCEPT:

► Raw material
► Work in process
 ► Finished goods
► Merchandise inventory
Question No: 30 ( Marks: 1 ) - Please choose one
Word “Credit” is derived from ______ language.

► Latin
► English
► French
► Chinese
Question No: 31 ( Marks: 1 ) - Please choose one
Consider the following inventory record:

Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

85 units were sold, Use the FIFO method of inventory costing and determine the cost of
goods sold.

► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 905
Question No: 32 ( Marks: 1 ) - Please choose one
The assets which have a limited useful life are termed as:

► Limited assets
► Depreciateable assets
► Unlimited assets
► None of the given options
The cost of moving plant and machinery to a new site will be treated as:

► Revenue expense
► Capital expense
► Administrative expense
► Operating expense
Question No: 33 ( Marks: 1 ) - Please choose one
A decrease in value of a fixed asset due to age, wear and tear is known as:
► Depreciation
► Accumulated Depreciation
► Appreciation
► Written Down Value
Question No: 34 ( Marks: 1 ) - Please choose one
What would be the value of 'cost of goods manufactured' if the total factory cost of the
month is Rs. 6,000, opening work in process is Rs. 2,000 and the closing work in
process is Rs. 2,500?

► Rs. 5,500
► Rs. 8,000
► Rs. 4,500
► Rs. 8,500
Question No: 35 ( Marks: 1 ) - Please choose one
The area of accounting concerned with reporting financial information to the interested
parties is called:
► Cost Accounting
► Financial Accounting
► Management Accounting
► Tax Accounting
Question No: 36 ( Marks: 1 ) - Please choose one
Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs. 22,500

Debtors Rs. 500
Total Assets Rs. 80, 385
Accounts payable Rs. 1,000
Total liabilities Rs. 20,000

► Rs. 60,385 owner’s equity

► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity
Question No: 41 ( Marks: 10 )
Show the effect of the following transactions upon the Accounting Equation.

2007 June1, Mr. Salman started business with cash Rs. 1,00,000
5, Purchased furniture for cash Rs. 4,000
6, Purchased goods for cash Rs. 25,000
10, Paid transportation on goods purchased Rs.1,000
12, Sold goods for cash Rs. 15,000, costing 11,000
15, Purchased goods on credit basis for Rs. 15,000
19, Sold goods to Rashid on credit basis for Rs. 8,000, costing Rs. 6,500
25, Received cash from Rashid Rs. 4,000
28, Cash paid to creditor Rs. 9,000
30, Paid rent and salaries for the month Rs. 4,000

MIDTERM EXAMINATION
Spring 2009
MGT101- Financial Accounting
Time: 60 min
Marks: 50

Question No: 1 ( Marks: 1 ) - Please choose one

Net Profit + Expenses= _________

► Liabilities
► Assets
► Capital
► Income

Question No: 2 ( Marks: 1 ) - Please choose one

The allocation of the cost of a tangible plant asset to expense in the periods, in which
services are received from the asset, is termed as:

► Appreciation
► Depreciation
► Fluctuation
► None of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

The basic purpose of depreciation is to achieve the:
► Matching principle
► Dual aspect principle

► Separate entity concept

► Money measurement concept

Question No: 4 ( Marks: 1 ) - Please choose one

If a business pays rent in advance for 12 months, it will be treated as:

► Prepaid expenses of business

► Long term liability of business
► Fixed assets of business
► Current liability of business
Question No: 5 ( Marks: 1 ) - Please choose one
Cash book is a part of:

► Voucher
► General Journal
► General Ledger
► Trial Balance

Question No: 6 ( Marks: 1 ) - Please choose one

Bank Reconciliation Statement is:

► A memorandum statement
► A ledger account
► A part of cash book
► A part of journal

Question No: 7 ( Marks: 1 ) - Please choose one

If you start with cash book balance (Dr.), which of the following item will be deducted in
Bank Reconciliation Statement?

► Any cheque drawn to creditor but not paid by bank

► Interest credited by the bank in pass book
► Cheque deposited but not credited by the bank
► Dividend collected by bank on behalf of the customer

Question No: 8 ( Marks: 1 ) - Please choose one

The main goal of Bank Reconciliation Statement is to determine:

► If the discrepancy is due to error rather than timing

► If the discrepancy is due to timing rather than error
► If the discrepancy is due to error rather than amount
► If the discrepancy is due to amount rather than timing

Question No: 9 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?

► These are the running expenses of the business

► They improve the financial position of the business
► They reduce the profit of the concern
► They do not appear in the balance sheet

Question No: 10 ( Marks: 1 ) - Please choose one

Under the reducing balance method of depreciation:

► Amount of depreciation increases every year

► Amount of depreciation remains constant for every year
► Amount of depreciation decreases every year
 ► None of the given options

Question No: 11 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Date Item Quantity Cost/Unit Total

2007Jan. 2 Opening inventory 100 Rs.18.00 Rs.1,800
Mar. 4 Purchase 400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500
Four hundred units are unsold, Use the FIFO method of inventory costing and determine
the value assigned to the 400 units on hand at the end of the period.

► Rs.7, 500
► Rs.7, 978
► Rs.8, 000
► Rs.8, 400

Question No: 12 ( Marks: 1 ) - Please choose one

Consider the following:
Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO method
of inventory costing?

► Rs.260
► Rs.232
► Rs.284
► Rs.320

Question No: 13 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 85,000
Purchases of raw material during the 200, 000
period
Cost of Material Consumed ?

► Rs. 205,000
► Rs. 215,000
► Rs. 220,000
► Rs. 225,000

Question No: 14 ( Marks: 1 ) - Please choose one

The amount of depreciation charged on machinery will be debited to:

► Machinery account
 ► Depreciation account
► Cash account
► Capital account

Question No: 15 ( Marks: 1 ) - Please choose one

Under the straight line method of depreciation:

► Amount of depreciation increases every year

► Amount of depreciation remains constant for every year
► Amount of depreciation decreases every year
► None of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000

Question No: 17 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Written down value of asset on 5th year Rs.75,000
profit or loss on disposal of fixed assets ?

► Rs.25, 000 loss

► Rs. 75,000 loss
► Rs. 15,000 profit
► Rs. 1, 00,000 profit

Question No: 18 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for the each year Rs. 5,000
Sale price after 5 years Rs.15,000
Written Down Value of Asset on 5th year Rs. 75,000
Profit or loss on disposal of fixed asset ?

► Rs. 60,000 loss

► Rs. 75,000 profit
► Rs. 25,000 loss
► Rs. 1, 00,000 profit
Question No: 19 ( Marks: 1 ) - Please choose one
In cost of goods sold statement the ‘total factory cost’ is equal to:

► Cost of material consumed + Labor cost

► Cost of material consumed + Conversion cost
► Cost of material consumed + Total factory cost
► Cost of material consumed + Factory overhead

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following organization converts raw material into finished goods?

► Trading concern
► Manufacturing concern
► Merchandising concern
► Service concern

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following item appears in Trading Account of a business?

► Interest expenses
► Wages and salaries
► Depreciation expenses
► Discount Allowed

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is an alternate term which can be used for “Capital”?

► Liability
► Owner’s net worth
► Working capital
► Asset

Question No: 23 ( Marks: 1 ) - Please choose one

If salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office building) is
Rs. 300 during the year, what would be the total of "general & administrative expenses"?

► Rs. 300
► Rs. 2,500
► Rs. 2,800
► Rs.18, 800

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).
 ► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account

Question No: 25 ( Marks: 1 ) - Please choose one

The amount brought by the proprietor in the business should be credited to:

► Cash account
► Capital account
► Drawings account
► Proprietor account

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business sold goods for Rs.10,000 on
credit?

► Cash account
► Sales account
► Accounts receivable account
► Purchases account

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business purchased a vehicle on
cash?

► Vehicle account
► Cash account
► Business account
► Bank account

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if the goods are sold on credit to
Mr. 'B'?

► Mr. “B” / Accounts Receivable account (Dr) and Sales account (Cr)
► Cash account (Dr) and sales account (Cr)
► Sales account (Dr) and Mr. B / Accounts Receivable account (Cr)
► Goods Sold account (Dr) and Mr. B / Accounts Receivable account (Cr)

Question No: 29 ( Marks: 1 ) - Please choose one

Accrued expenses are the example of:
► Current liabilities
► Long term liabilities
► Deferred costs
► Capital expenses
Question No: 30 ( Marks: 1 ) - Please choose one
Which of the following shows summary of a company's financial position at a specific
date?

► Profit & Loss Account

► Cash Flow Statement
► Balance Sheet
► Income & Expenditure Account

Question No: 31 ( Marks: 1 ) - Please choose one

What type of expenses are paid out of Gross Profit?

► Selling Expenses
► General Expenses
► Financial Expenses
► All of the given options

Question No: 32 ( Marks: 1 ) - Please choose one

An informal accounting statement that lists the ledger account balances at a point in
time and compares the total of debit balances with the total of credit balances is known
as:

► Income Statement
► Balance Sheet
► Trial Balance
► Cash Book

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following essentials are shown in Bank Book?
(1) Date of transaction
(2) Narration of transaction
(3) Cheque number

► (1) & (2) only

► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following book(s) is(are) a part of General Ledger?

► Cash Book
► Purchase Return Book
► Purchase Book
► All of the given options

Question No: 35 ( Marks: 1 ) - Please choose one

A book, in which receipts and payments are recorded, is known as:
 ► Pass Book
► Cash Book
► Purchase Book
► Sales Book

Question No: 36 ( Marks: 1 ) - Please choose one

In an account, if credit side < debit side then the balance is known as:
► Negative Balance
► Debit Balance
► Positive Balance
► Credit Balance

Question No: 37 ( Marks: 1 ) - Please choose one

Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping

Question No: 38 ( Marks: 1 ) - Please choose one

According to the double entry system of accounting, an account that obtains benefit is:
► Debit
► Credit
► Income
► No need to show as accounting record

Question No: 39 ( Marks: 1 ) - Please choose one

Which of the following is non- profit organization?
► Sole proprietorship
► Partnership
► Limited company
► Trust

Question No: 40 ( Marks: 1 ) - Please choose one

Mr. “A” sold goods to Mr. “B” for Rs. 3,000 on October 8, 2008 and Mr. “B” paid at the
same time. It will be case of ______________ sales.

► Cash
► Credit
► Accrual based
► None of the given options

Question No: 41 ( Marks: 10 )

State with reasons whether the following items of expenditure are capital or
revenue in nature.
1. Wages paid on the purchase of goods.
2. Carriage paid on goods purchased.
3. Transportation paid on purchase of machinery.
4. Octroi duty paid on machinery.
5. Octori duty paid on goods.
 6. A second hand car was purchased for Rs. 7,000 and Rs, 5,000 were spent
for its repair and overhauling.
7. Office building was whitewashed at a cost of Rs. 3,000.
8. A new machinery was purchased for Rs. 80,000 and a sum of Rs. 1,000
was spent on its installation and erection
9. Old furniture was repaired at a cost of Rs. 500.
10. Land was purchased for Rs. 1, 00,000 and Rs. 5,000 was paid for legal
expenses.

MIDTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 3)

Time: 60 min
Marks: 50

Question No: 1 ( Marks: 1 ) - Please choose one

We can say that the business is in profit, when:

► Assets exceed Expenditure

► Assets exceed Liabilities
► Income exceeds Expenditure
► Income exceeds Liabilities

Question No: 2 ( Marks: 1 ) - Please choose one

Cost incurred for the maintenance of shop is considered as _________.
► Deferred expense
► Capital expense
► Revenue expense
► Preliminary expense

Question No: 3 ( Marks: 1 ) - Please choose one

If a business purchases machinery for Rs. 30,000 on 31st January 2008 having life of
10 years, this expense will be realized ___________ under the concept of accrual
accounting.
► For the year 2008 only
► For the last day of 10th year only
► Over 10 years
► Nothing can be said about it

Question No: 4 ( Marks: 1 ) - Please choose one

Word “Credit” is derived from ______ language.

► Latin
► English
► French
► Chinese

Question No: 5 ( Marks: 1 ) - Please choose one

According to the double entry system of accounting, an account that obtains benefit is:
► Debit
► Credit
► Income
► No need to show as accounting record

Question No: 6 ( Marks: 1 ) - Please choose one

An Asset that is NOT physical in nature is called _________.

► Intangible Asset
► Liquid Asset
► Current Asset
► Fixed Asset

Question No: 7 ( Marks: 1 ) - Please choose one

What would be the affect on the components of the accounting equation, if goods are
purchased on cash?

► Increase in cash and decrease in equity

► Increase in cash and increase in goods
► Increase in goods and decrease in cash
► Increase in equipment and increase in equity

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit

and loss account—Balance Sheet

► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit and

loss account—Balance Sheet

► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and

loss account—Balance Sheet

► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and

loss account—Balance Sheet

Question No: 9 ( Marks: 1 ) - Please choose one

In an account, if credit side < debit side then the balance is known as:
► Negative Balance
► Debit Balance
► Positive Balance
► Credit Balance

Question No: 10 ( Marks: 1 ) - Please choose one

Bank book is part of:

► Voucher
► General Journal
 ► General Ledger
► Trial Balance

Question No: 11 ( Marks: 1 ) - Please choose one

While making Income & Expenditure account, Excess of income over expenses in a
specified accounting period is called:

► Profit
► Loss
► Surplus
► Deficit

Question No: 12 ( Marks: 1 ) - Please choose one

Gross Profit > Operating Expenses=?

► Net Profit
► Cost of Goods Sold
► Net Loss
► Gross Loss

Question No: 13 ( Marks: 1 ) - Please choose one

Accrued expenses are the example of:
► Current liabilities
► Long term liabilities
► Deferred costs
► Capital expenses

Question No: 14 ( Marks: 1 ) - Please choose one

The favorable balance of Profit and Loss account should be:
► Added in liabilities
► Subtracted from current assets
► Subtracted from liabilities
► Added in capital

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).

► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following financial statement DO NOT show the financial health of a
business at a specific date?

► Profit and loss account

► Balance sheet
► Statement of financial position
 ► All of the given options

Question No: 17 ( Marks: 1 ) - Please choose one

In which of the following condition a company will have positive working capital?
► If current assets > current liabilities
► If current Assets < current Liabilities
► If current assets = current liabilities
► If current assets < current liabilities

Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following particular is NOT included in the specimen of a payment
voucher?

► Name of organization
► Cash payment amount
► Date of transaction
► Bank receipt

Question No: 19 ( Marks: 1 ) - Please choose one

The stock of manufacturing concern consists of:

► Work in Process Inventory

► Raw Materials Inventory
► Finished Goods Inventory
► All of the given options

Question No: 20 ( Marks: 1 ) - Please choose one

Following are the inventories of Manufacturing Concern EXCEPT:

► Raw material
► Work in process
► Finished goods
► Merchandise inventory

Question No: 21 ( Marks: 1 ) - Please choose one

The products that are ready for sale are known as:

► Raw material
► Work in process
► Finished goods
► Closing stock

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is an example of direct materials cost?

► Polish and finishing material for chair

► A piece of wood for the production of chair
 ► Production worker’s wages
► Depreciation expenses

Question No: 23 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is known as:

► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost

Question No: 24 ( Marks: 1 ) - Please choose one

In balance sheet fixed assets are shown at:

► Cost price
► Market value
► Fair value
► Written down value (WDV)

Question No: 25 ( Marks: 1 ) - Please choose one

A decrease in value of a fixed asset due to age, wear and tear is known as:
► Depreciation
► Accumulated Depreciation
► Appreciation
► Written Down Value

Question No: 26 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 15,000
Sale price after 5 years Rs.50,000
Written down value of asset at the end of 5th year Rs.25,000
Profit or loss on disposal of fixed assets ?

► Rs.25, 000 profit

► Rs. 75,000 loss
► Rs. 15,000 profit
► Rs. 1, 00,000 profit

Question No: 27 ( Marks: 1 ) - Please choose one

All the costs incurred on the incomplete assets up to the balance sheet date must be
transferred to:

► Capital account
► Capital work in progress account
► Relevant asset account
► Owner's equity account

Question No: 28 ( Marks: 1 ) - Please choose one

Consider the following inventory record:
 Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

80 units were sold, Use the FIFO method of inventory costing and determine the cost of
goods sold.

► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 905

Question No: 29 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Date Item Quantity Cost/Unit Total

2007Jan. 2 Opening inventory 100 Rs.18.00 Rs.1,800
Mar. 4 Purchase 400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500
Four hundred units are unsold, Use the FIFO method of inventory costing and determine
the value assigned to the 400 units on hand at the end of the period.

► Rs.7, 500
► Rs.7, 978
► Rs.8, 000
► Rs.8, 400

Question No: 30 ( Marks: 1 ) - Please choose one

Bank Reconciliation Statement is:

► A memorandum statement
► A ledger account
► A part of cash book
► A part of journal

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following asset is NOT depreciated?

► Factory Buildings
► Office Equipment
► Plant & Machinery
► Land
Question No: 32 ( Marks: 1 ) - Please choose one
The basic purpose of depreciation is to achieve the:
► Matching principle
► Dual aspect principle
► Separate entity concept
► Money measurement concept

Question No: 33 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs. 22,500

Debtors Rs. 500
Total Assets Rs. 80, 385
Accounts payable Rs. 1,000
Total liabilities Rs. 20,000

► Rs. 82,385 owner’s equity

► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity

Question No: 34 ( Marks: 1 ) - Please choose one

Firms charge depreciation each year:

► To ensure there is enough money in the firm to replace the asset

► To spread the cost of the asset over its working life
► To reduce the profit and thus reduce the dividends they can pay to share holders
► Because the law states they must be reduced

Question No: 35 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets 8,20,000
Owner's equity 3,80,000
Liabilities ?

► Rs. 1, 98,000
► Rs. 49,000
► Rs. 55,000
► Rs. 4, 40,000

Question No: 36 ( Marks: 1 ) - Please choose one

Which one of the following is equal to the carrying cost of an asset?
► Original cost minus Accumulated depreciation
 ► Original cost plus Accumulated depreciation
► Original cost minus Residual value
► Written down value minus Accumulated depreciation

Question No: 37 ( Marks: 1 ) - Please choose one

An estimate of the income and expenses needed to carry out business plans for a fiscal
year is known as:
► Budgeting
► Costing
► Management
► Auditing

Question No: 38 ( Marks: 1 ) - Please choose one

Unfavorable balance of the cash book means:

► Credit balance in cash book

► Credit balance in pass book
► Debit balance in cash book
► All of the given options

Question No: 39 ( Marks: 1 ) - Please choose one

Net Profit + Expenses= _________

► Liabilities
► Assets
► Capital
► Income

Question No: 40 ( Marks: 1 ) - Please choose one

What would be the value of conversion cost, if the cost of material consumed during the
month is Rs. 5,000, labor cost incurred is Rs. 2,000 and the factory over head cost is Rs.
1,000?

► Rs. 3,000
► Rs. 8,000
► Rs. 7,000
► Rs. 5,000

Question No: 41 ( Marks: 10 )

The following are some of the causes of difference between the Cash Book and
the Pass Book balances. If you start with the Cash Book (Dr.) balance in Bank
Reconciliation Statement, will you add them or deduct?

Particulars Add/Less
1. Cheques issued but yet not paid by bank. less
2. Cheques deposited but not credited by bank. less
 3. Amount directly deposited into bank by a customer but not
recorded in the Cash Book. add
4. Dividend collected by bank but not entered in Cash Book. add
5. Insurance premium paid by bank but not recorded in Cash
Book. less
6. Cheque deposited but no entry was made in Cash Book. add
7. Bank charges debited by bank but not credited in the Cash
Book less
8. Interest on overdraft debited by bank but not recorded in Cash
Book. less
9. Cheque issued but wrongly debited in Cash Book less
10. Interest credited by bank but not recorded in cash book add

MIDTERM EXAMINATION
Spring 2009
MGT101- Financial Accounting

Question No: 1 ( Marks: 1 ) - Please choose one

The expenses that give benefit for a period of more than twelve months are called
________.
► Capital expenses
► Revenue expenses
► Preliminary expenses
► None of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

An expense incurred by the business for the purchase of land & building is an example
of:

► Capital Expense
► Revenue Expense
► Deferred Expense

► Preliminary Expense

Question No: 3 ( Marks: 1 ) - Please choose one

Income of the business includes:

► Cash sales only

► Credit sales only
► Credit purchases only
► Both cash sales and credit sales

Question No: 4 ( Marks: 1 ) - Please choose one

The basic accounting principle/concept according to which Business is independent
from its owner(s) is known as:

► Separate Entity Concept

► Matching Concept
► Going Concern Concept
► Materiality Concept

Question No: 5 ( Marks: 1 ) - Please choose one

Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping

Question No: 6 ( Marks: 1 ) - Please choose one

Obligations to pay cash or un-earned incomes by the business are the:

► Expenses
► Assets
► Liabilities
► Equities

Question No: 7 ( Marks: 1 ) - Please choose one

What would be the affect on the components of the accounting equation, if goods are
purchased on cash?

► Increase in cash and decrease in equity

► Increase in cash and increase in goods
► Increase in goods and decrease in cash
► Increase in equipment and increase in equity

Question No: 8 ( Marks: 1 ) - Please choose one

When Capital is increased by an amount, it is recorded on the:

► Left or credit side of the account

► Right or debit side of the account
► Left or debit side of the account
► Right or credit side of the account

Question No: 9 ( Marks: 1 ) - Please choose one

Which of the following is also called "The original book of entry"?

► General Journal
► General Ledger
► Trial Balance
► Profit and Loss Account

Question No: 10 ( Marks: 1 ) - Please choose one

An informal accounting statement that lists the ledger account balances at a point in
time and compares the total of debit balances with the total of credit balances is known
as:
 ► Income Statement
► Balance Sheet
► Trial Balance
► Cash Book

Question No: 11 ( Marks: 1 ) - Please choose one (not sure)

Which of the following is CORRECT for Trading account?

► It inculdes cost of goods sold and all the direct expenses related to sales
► It inculdes cost of goods sold and all the indirect expenses related to sales
► It inculdes cost of goods sold and all the direct and indirect expenses
► It inculdes cost of goods sold and all the direct and selling, administrative
expenses

Question No: 12 ( Marks: 1 ) - Please choose one

Which one of the following is NOT prepared by Non profit organizations?

► Profit & Loss account

► Income & Expenditure account
► Receipts & Payments account
► Balance Sheet

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following is an example of a Current liability?

► Closing inventory
► Opening inventory
► Petty cash
► Bank overdraft

Question No: 14 ( Marks: 1 ) - Please choose one

Identify the business transaction for given entry below.

Vehicle Account XXX (Dr.)

Bank Account XXX (Cr.)
► Paid for vehicle through cheque
► Paid for vehicle through cash
► Purchased vehicle on credit
► None of the given options

Question No: 15 ( Marks: 1 ) - Please choose one

"Mr. “A” collected cash from debtors", the journal entry for this transaction is:

► Mr. "A" a/c Dr. and debtors a/c Cr.

► Mr. "A" a/c Dr. and cash a/c Cr.
► Cash a/c Dr. and debtors a/c Cr.
► None of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which of the following is an alternate term which can be used for “Capital”?

► Liability
► Owner’s net worth
► Working capital
► Asset

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following organization converts raw material into finished goods?

► Trading concern
► Manufacturing concern
► Merchandising concern
► Service concern

Question No: 18 ( Marks: 1 ) - Please choose one

The stock of manufacturing concern consists of:

► Work in Process Inventory

► Raw Materials Inventory
► Finished Goods Inventory
► All of the given options

Question No: 19 ( Marks: 1 ) - Please choose one

Direct materials costs Rs.70,000
Direct labor costs 30,000
Manufacturing overhead costs 60,000
conversion cost ?

► Rs. 20,000
► Rs.40, 000
► Rs.90, 000
► Rs.160, 000
NOTE:- Conversion Cost = Direct Labor Cost + Manufacturing Overhead Cost

Question No: 20 ( Marks: 1 ) - Please choose one

In balance sheet fixed assets are shown at:

► Cost price
► Market value
► Fair value
► Written down value (WDV)
NOTE:- Because WDV is a value of fixed asset after deducting the depriciation

Question No: 21 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
 Sale price after 5 years Rs.50,000
Written down value of asset on 5th year Rs.75,000
profit or loss on disposal of fixed assets ?

► Rs.25, 000 loss

► Rs. 75,000 loss
► Rs. 15,000 profit
► Rs. 1, 00,000 profit

Question No: 22 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 15,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000

Question No: 23 ( Marks: 1 ) - Please choose one

If you start with cash book balance (Dr.), which of the following item will be deducted in
Bank Reconciliation Statement?

► Any cheque drawn to creditor but not paid by bank

► Interest credited by the bank in pass book
► Cheque deposited but not credited by the bank
► Dividend collected by bank on behalf of the customer

Question No: 24 ( Marks: 1 ) - Please choose one

If you start with cash book favorable balance in Bank Reconciliation Statement, which
item will be added?
► Cheque deposited but not credited by the bank
► Cheques omitted to be deposited into bank
► Any amount directly collected by bank on behalf of customer but not
recorded in cash book
► Debit side of cash book was overcast

Question No: 25 ( Marks: 1 ) - Please choose one

Bank Reconciliation Statement is:

► A memorandum statement
► A ledger account
► A part of cash book
► A part of journal

Question No: 26 ( Marks: 1 ) - Please choose one

Bank Reconciliation Statement is prepared by:
 ► Bankers
► Accountant of the business
► Statutory auditor
► Manger

Question No: 27 ( Marks: 1 ) - Please choose one

Stock of Trading concern consists of:

► Raw material
► Work in process
► Merchandise inventory
► All of the given options

Question No: 28 ( Marks: 1 ) - Please choose one

When the process of production is completed, all the costs must be charged to:

► Raw material account

► Work in process account
► Finished goods account
► Merchandise account

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following account balance is shown on credit side of Trial Balance? (It is
assumed that all account balances are shown on normal balance)

► Cash account
► Furniture account
► Vehicle account
► Capital account

Question No: 30 ( Marks: 1 ) - Please choose one

If a business pays rent in advance for 12 months, it will be treated as:

► Prepaid expenses of business

► Long term liability of business
► Fixed assets of business
► Current liability of business

Question No: 31 ( Marks: 1 ) - Please choose one

Accountancy covers which of the following area(s):

► Book-keeping
► Accounting
► Auditing
► All of the given options

Question No: 32 ( Marks: 1 ) - Please choose one

The assets which have a limited useful life are termed as:

► Limited assets
► Depreciateable assets
 ► Unlimited assets
► None of the given options

Question No: 33 ( Marks: 1 ) - Please choose one

Depreciable value of an asset is equal to:

► Cost + scrap value

► Cost + market price
► Cost – scrap value
► None of the given options
The depreciable value of an asset is equal to its purchase price minus installation
costs

Question No: 34 ( Marks: 1 ) - Please choose one

Which one of the following is equal to the carrying cost of an asset?
► Original cost minus Accumulated depreciation
► Original cost plus Accumulated depreciation
► Original cost minus Residual value
► Written down value minus Accumulated depreciation

Question No: 35 ( Marks: 1 ) - Please choose one

Which one of the following is another name of carrying cost of an asset?
► Book Value
► Residual Value
► Fair Value
► Break up Value

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following fixed asset is shown at cost rather than book value?
► Machinery
► Furniture
► Vehicles
► Land

Question No: 37 ( Marks: 1 ) - Please choose one

Which of the following statement is the detail of transaction in one’s account provided by
the bank?
► Bank statement
► Bank reconciliation statement
► Income statement
► Financial statement

Question No: 38 ( Marks: 1 ) - Please choose one

When income exceeds expenses in a specific time period is known as:
► Savings
► Net profit
► Gross profit
► Operating profit

Question No: 39 ( Marks: 1 ) - Please choose one

javascript:void(0); An asset cost Rs. 50,000, has an estimated residual value of Rs.1,
500, and an estimated useful life of 8 years. What is the depreciation rate under
reducing balance method?

► 11.5%
► 20.0%
► 25.0%
► 35.5%
To calculate depreciation rate under reducing balance method we use formula:
Depreciation rate= 1- (residual value/ cost) 1/n

Question No: 40 ( Marks: 1 ) - Please choose one

Mr.” A” sold goods for Rs. 300,000 to Mr. “B”, Rs. 300,000 will be treated as
_____________ for business of Mr. "A".
► Revenue
► Net profit
► Gross profit
► Operating profit

Question No: 41 ( Marks: 10 )

Differentiate between capital and revenue expenditure.

CAPITAL: -
The value invested in the business by the owner in whatever form is called capital. The
owner may introduce a capital of Rs. 250,000 which may be in the form of Rs. 200,000
cash and a machinery of Rs. 50,000. The capital of Rs. 250,000 is shown in Balance
sheet as credit balance whereas cash and machinery being assets are shown in balance
sheet as debit balance.
CAPITAL EXPENDITURE:-
These are expenses whose benefits last for a longer period or the benefits are yet to be
enjoyed by the business. For example when a vehicle is purchased by the business, it
will benefit the business for the current period and for the years to come. Capital
expenditure always results in increase in assets. Therefore amount expended on vehicle
is our capital expenditure and vehicle is shown in the balance sheet as an asset.
REVENUE EXPENDITURE:-
These are expenses whose benefits do not last for longer period and are restricted to
current period only and no more benefits are to be enjoyed by the business in the
coming periods. For example Salaries, utility bills, fuel bills paid, against which the
organization enjoyed benefits for only current period

MIDTERM EXAMINATION
MGT101- Financial Accounting

Question No: 1 ( Marks: 1 ) - Please choose one

Depreciation arises because of:

► Fall in the market value of an asset

► Fall in the value of money
► Physical wear and tear
► All of the given options
Question No: 2 ( Marks: 1 ) - Please choose one
Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit

First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty-five units were sold, what is the value of the ending inventory using the FIFO
method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
► Rs.268
Question No: 3 ( Marks: 1 ) - Please choose one
Which of the following is NOT an example of Current Asset?
► Bank Overdraft
► Accounts Receivable
► Notes Receivable
► Prepaid Expenses
Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following statement is NOT TRUE about Current liabilities?

► These are due within one year

► These are short-term loans
► These are consist of all debts, payable after 12 months
► In working capital, these are deducted from current assets
Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following essentials are shown in Bank Book?

(1) Date of transaction
(2) Narration of transaction
(3) Cheque number

► (1) & (2) only

► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)
Question No: 6 ( Marks: 1 ) - Please choose one
Income of the business includes:

► Cash sales only

► Credit sales only
► Credit purchases only
► Both cash sales and credit sales
Question No: 7 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening stock of raw material 100,000
 Closing stock of raw material 80,000
Purchases of raw material during the 200, 000
period
Cost of Material Consumed ?

► Rs. 205,000
► Rs. 215,000
► Rs. 220,000
► Rs. 225,000
Question No: 8 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, when the goods are purchased on
cash?

► Stock account
► Cash account
► Supplier account
► Work in process account
Question No: 9 ( Marks: 1 ) - Please choose one
If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are
Rs.20,000 during the year. What would be the Net Profit?

► Rs.15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000
Question No: 10 ( Marks: 1 ) - Please choose one
Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).

► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account
Question No: 11 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, if business bought goods on credit from
Mr. Ali?

► Purchases account
► Mr. Ali account
► Cash account
► Sales account
Question No: 12 ( Marks: 1 ) - Please choose one
A summarized record of transactions related to individuals or things is called
a/an ___________.

► Account
► Voucher
 ► Journal
► Trial balance
Question No: 13 ( Marks: 1 ) - Please choose one
When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account
Question No: 14 ( Marks: 1 ) - Please choose one
Cost incurred for the maintenance of shop is considered as _________.
► Deferred expense
► Capital expense
► Revenue expense
► Preliminary expense
Question No: 15 ( Marks: 1 ) - Please choose one
Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only
► Both cash and accrual accounting
► None of the given options
Question No: 16 ( Marks: 1 ) - Please choose one
The allocation of the cost of a tangible plant asset to expense in the periods, in which
services are received from the asset, is termed as:

► Appreciation
► Depreciation
► Fluctuation
► None of the given options
Question No: 17 ( Marks: 1 ) - Please choose one
Under the reducing balance method of depreciation:

► Amount of depreciation increases every year

► Amount of depreciation remains constant for every year
► Amount of depreciation decreases every year
► None of the given options
Question No: 18 ( Marks: 1 ) - Please chose one
Consider the following:
Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO method
of inventory costing?

► Rs.260
► Rs.232
► Rs.284
 ► Rs.320
Question No: 19 ( Marks: 1 ) - Please choose one
Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000
Question No: 20 ( Marks: 1 ) - Please choose one
In cost of goods sold statement the ‘total factory cost’ is equal to:

► Cost of material consumed + Labor cost

► Cost of material consumed + Conversion cost
► Cost of material consumed + Total factory cost
► Cost of material consumed + Factory overhead

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).

► Cash Account
► Furniture Account
► Motor Account
► All of the above
Question No: 22 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, if business sold goods for Rs.10,000 on
credit?

► Cash account
► Sales account
► Accounts receivable account
► Purchases account

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business purchased a vehicle on cash?

► Vehicle account
► Cash account
► Business account
► Bank account
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following essentials are shown in Bank Book?
(1) Date of transaction
(2) Narration of transaction
(3) Cheque number

► (1) & (2) only

► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)
Question No: 25 ( Marks: 1 ) - Please choose one
Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping
Question No: 26 ( Marks: 1 ) - Please choose one
Particulars Rs.
Opening written down value of machine Rs. 2,00,000
Cost of new machine purchased during the year Rs. 50,000
Depreciation during the year Rs. 25,000
Closing written down value (WDV) of machines ?

► Rs. 2, 25,000
► Rs. 2, 50,000
► Rs. 2, 75,000
► Rs. 75,000
Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following is an example of direct materials cost?

► Polish and finishing material for chair

► A piece of wood for the production of chair
► Production worker’s wages
► Depreciation expenses

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, when the goods are purchased on cash?

► Stock account
► Cash account
► Supplier account
► Work in process account
Question No: 29 ( Marks: 1 ) - Please choose one
Following are the inventories of Manufacturing Concern EXCEPT:

► Raw material
► Work in process
► Finished goods
► Merchandise inventory
Question No: 30 ( Marks: 1 ) - Please choose one
Word “Credit” is derived from ______ language.
 ► Latin
► English
► French
► Chinese
Question No: 31 ( Marks: 1 ) - Please choose one
Consider the following inventory record:

Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

85 units were sold, Use the FIFO method of inventory costing and determine the cost of
goods sold.

► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 905
Question No: 32 ( Marks: 1 ) - Please choose one
The assets which have a limited useful life are termed as:

► Limited assets
► Depreciateable assets
► Unlimited assets
► None of the given options
The cost of moving plant and machinery to a new site will be treated as:

► Revenue expense
► Capital expense
► Administrative expense
► Operating expense
Question No: 33 ( Marks: 1 ) - Please choose one
A decrease in value of a fixed asset due to age, wear and tear is known as:
► Depreciation
► Accumulated Depreciation
► Appreciation
► Written Down Value
Question No: 34 ( Marks: 1 ) - Please choose one
What would be the value of 'cost of goods manufactured' if the total factory cost of the
month is Rs. 6,000, opening work in process is Rs. 2,000 and the closing work in
process is Rs. 2,500?

► Rs. 5,500
► Rs. 8,000
 ► Rs. 4,500
► Rs. 8,500
Question No: 35 ( Marks: 1 ) - Please choose one
The area of accounting concerned with reporting financial information to the interested
parties is called:
► Cost Accounting
► Financial Accounting
► Management Accounting
► Tax Accounting
Question No: 36 ( Marks: 1 ) - Please choose one
Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs. 22,500

Debtors Rs. 500
Total Assets Rs. 80, 385
Accounts payable Rs. 1,000
Total liabilities Rs. 20,000

► Rs. 60,385 owner’s equity

► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity
Question No: 41 ( Marks: 10 )
Show the effect of the following transactions upon the Accounting Equation.

2007 June1, Mr. Salman started business with cash Rs. 1,00,000
5, Purchased furniture for cash Rs. 4,000
6, Purchased goods for cash Rs. 25,000
10, Paid transportation on goods purchased Rs.1,000
12, Sold goods for cash Rs. 15,000, costing 11,000
15, Purchased goods on credit basis for Rs. 15,000
19, Sold goods to Rashid on credit basis for Rs. 8,000, costing Rs. 6,500
25, Received cash from Rashid Rs. 4,000
28, Cash paid to creditor Rs. 9,000
30, Paid rent and salaries for the month Rs. 4,000

MGT101- Financial Accounting (Session - 2)

Question No: 1 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine 1,00,000
Cost of new machine purchased during the year 50,000
Depreciation during the year 21,000
Closing written down value (WDV) ?

► Rs. 1, 29,000
► Rs. 1, 50,000
 ► Rs. 1, 21,000
► Rs. 71,000

Question No: 2 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Owner’s equity Rs. 22,500

Total Liabilities Rs. 80, 385
Cash in hand Rs. 1,000
Cash at bank Rs. 2,000
Debtors Rs. 500

► Rs. 1, 02,885 other assets

► Rs. 1, 02,885 other liabilities
► Rs. 99,885 current liabilities
► Rs. 99,385 other assets

Question No: 3 ( Marks: 1 ) - Please choose one

Bank Reconciliation Statement is prepared by:

► Bankers
► Accountant of the business
► Statutory auditor
► Manger

Question No: 4 ( Marks: 1 ) - Please choose one

Bank Reconciliation Statement is:

► A memorandum statement
► A ledger account
► A part of cash book
► A part of journal

Question No: 5 ( Marks: 1 ) - Please choose one

Expenditures incurred anually on renewal of patent are known as:

► Revenue Expenditures
► Capital Expenditures
► Financial Expenditures
► Operating Expenditures

Question No: 6 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 85,000
Purchases of raw material during the 200, 000
period
Cost of Material Consumed ?
 ► Rs. 205,000
► Rs. 215,000
► Rs. 220,000
► Rs. 225,000

Question No: 7 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for the each year Rs. 5,000
Sale price after 5 years Rs.15,000
Written Down Value of Asset on 5th year Rs. 75,000
Profit or loss on disposal of fixed asset ?

► Rs. 60,000 loss

► Rs. 75,000 profit
► Rs. 25,000 loss
► Rs. 1, 00,000 profit

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, when the goods are purchased on
cash?

► Stock account
► Cash account
► Supplier account
► Work in process account

Question No: 9 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs.
20,000 during the year, what would be the value of Gross Profit?

► Rs. 15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000

Question No: 10 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are
Rs.20,000 during the year. What would be the Net Profit?

► Rs.15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000

Question No: 11 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).
 ► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account

Question No: 12 ( Marks: 1 ) - Please choose one

The amount of salary paid to Mr. Sohail should be debited to:
► Mr. Sohail account
► Salaries account
► Cash account
► Drawings account

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following account will be credited, if business bought goods on credit from
Mr. Ali?

► Purchases account
► Mr. Ali account
► Cash account
► Sales account

Question No: 14 ( Marks: 1 ) - Please choose one

The unfavorable balance of Profit and Loss account should be:
► Added in liabilities
► Subtracted from current assets
► Subtracted from liabilities
► Subtracted from capital

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following is NOT an example of Current Asset?
► Bank Overdraft
► Accounts Receivable
► Notes Receivable
► Prepaid Expenses

Question No: 16 ( Marks: 1 ) - Please choose one

Which one of the following is NOT prepared by Non profit organizations?

► Profit & Loss account

► Income & Expenditure account
► Receipts & Payments account
► Balance Sheet

Question No: 17 ( Marks: 1 ) - Please choose one

An informal accounting statement that lists the ledger account balances at a point in
time and compares the total of debit balances with the total of credit balances is known
as:

► Income Statement
 ► Balance Sheet
► Trial Balance
► Cash Book

Question No: 18 ( Marks: 1 ) - Please choose one

Documentary evidence, in a specific format used to record the details of a transaction is
known as:

► Account
► Voucher
► Journal
► Ledger

Question No: 19 ( Marks: 1 ) - Please choose one

A summarized record of transactions related to individuals or things is called
a/an ___________.

► Account
► Voucher
► Journal
► Trial balance

Question No: 20 ( Marks: 1 ) - Please choose one

When a Liability is reduced or decreased, it is recorded on the:

► Right or debit side of the account

► Left or debit side of the account
► Left or credit side of the account
► Right or credit side of the account

Question No: 21 ( Marks: 1 ) - Please choose one

What will be the effect on accounting equation, when payment is made to the creditor of
the business?

► Decrease in an asset, decrease in a liability

► Increase in an asset, increase in a liability
► Decrease in an asset, decrease in owner's equity
► Increase in an asset, increase in owner's equity

Question No: 22 ( Marks: 1 ) - Please choose one

Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping

Question No: 23 ( Marks: 1 ) - Please choose one

Cost incurred for the maintenance of shop is considered as _________.
► Deferred expense
 ► Capital expense
► Revenue expense
► Preliminary expense

Question No: 24 ( Marks: 1 ) - Please choose one

Mr.” A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated as
_____________ for business.
► Revenue
► Net profit
► Gross profit
► Operating profit

Question No: 25 ( Marks: 1 ) - Please choose one

Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only
► Both cash and accrual accounting
► None of the given options

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following financial statement shows the financial health of an Organization
at a stated period of time?
► Balance sheet
► Trading and Profit & Loss account
► Cash Flow statement
► Statement of retained earnings

Question No: 27 ( Marks: 1 ) - Please choose one

The records that are kept for the individual asset, liability, equity, revenue, expense, and
dividend components are known as:
► Accounts
► Vouchers
► Journals
► Statements

Question No: 28 ( Marks: 1 ) - Please choose one

Revenue should be recognized or recorded when the goods are sold or services are
rendered to the customer, this concept is known as:
► Consistency concept
► Realization Concept
► Materiality concept
► Matching concept

Question No: 29 ( Marks: 1 ) - Please choose one

A record maintained which is measurable in the form of money, this concept of
accounting is known as:
► Matching concept
► Consistency concept
► Money measurement concept
 ► Materiality concept

Question No: 30 ( Marks: 1 ) - Please choose one

The cost of goods and services used up in the process of obtaining revenue is known
as:
► Revenue
► Expense
► Liability
► Expenditure

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following is an accounting system in which events are recorded as and
when they occur?
► Cash Accounting
► Accrual Accounting
► Both Accrual Accounting and Cash Accounting
► None of the above

Question No: 32 ( Marks: 1 ) - Please choose one

Recording of all financial transactions undertaken by an individual or organization is
known as:
► Summarizing
► Book-keeping
► Classification
► Interpreting

Question No: 33 ( Marks: 1 ) - Please choose one

Any cheque drawn to creditor but not paid by bank will effect as follows:
► Cash book will show less balance & bank book will show more
► Cash book will show more balance & bank book will show less
► Cash book will show double balance
► Bank book will show double balance

Question No: 34 ( Marks: 1 ) - Please choose one

If no distribution is made between capital and revenue expenditure then:

► The figure of debtors and creditors will be incorrect

► Cash or bank figure will be incorrect

► Net profit will be incorrect

► Balance sheet will not balance

Question No: 35 ( Marks: 1 ) - Please choose one

The Policy for charging depreciation is selected by:
► Manufacturer
► Trader
► Management
► Accountant
Question No: 36 ( Marks: 1 ) - Please choose one
The estimated value at which an asset is expected to be sold after the end of its useful
life is called:
► Residual value
► Salvage Value
► Scrap Value
► All of the given options

Question No: 37 ( Marks: 1 ) - Please choose one

Mr. “A” borrowed money from bank; this transaction involves which one of the following
accounts:
► Cash & Mr. A
► Bank & Mr. A
► Drawing & Mr. A
► Cash & Bank

Question No: 38 ( Marks: 1 ) - Please choose one

The beginning balance of Owner’s Equity was Rs.7,500. The dividends paid to
stockholders were Rs.1,500. The ending balance of Owner’s Equity is Rs.5,000. What
was the Net Income or Net Loss for the accounting period?
► Net Loss of Rs. 1,000
► Net Income of Rs. 1,000
► Net Loss of Rs. 3,000
► Net Income of Rs. 3,000

Question No: 39 ( Marks: 1 ) - Please choose one

A company sold Rs. 400,000 of merchandise for cash and Rs.120,000 of merchandise
to credit customers who will pay for the merchandise in a later time period. How much
revenue should be reported on the income statement of the current time period under
Cash Basis of Accounting?
► Rs. 280,000
► Rs. 520,000
► Rs. 400,000
► Rs. 120,000

Question No: 40 ( Marks: 1 ) - Please choose one

Which one of the following statement is wrong about Current liabilities?
► These are due within one year
► These are short-term loans
► A vague term for loans to be repaid by an enterprise after twelve months
► In working capital, these are deducted from assets

Question No: 41 ( Marks: 10 )

Calculate depreciation of the asset for five years by using written down value
method. Also show accumulated depreciation.

Cost of the asset Rs. 1,20,000

Depreciation Rate 10%
Expected Life 5 years
ANSWER
YR Written down RS Accumulated
value method depreciation
1 cost 120,000
Depreciation @ 12,000 12,000
10%...
10%*120,000
WDV… 120,000- 108,000
12,000
2 Dep @ 10%... 10,800 22800
10%*108000
WDV= 108,000- 97,200
10,800
3 Dep @ 10%... 9,720 32520
10%*97,200
WDV= 97,200- 87,480
9,720
4 Dep @ 8,748 41,268
10%...10%*87,480
WDV=87,480-8,748 78,732
5 Dep @ 7873.2 49,141.2
10%...10%*78,732
WDV=78,732- 70858.8
7873.2

100% sure Question No: 1 ( Marks: 1 ) - Please choose one(chapter # 30)

Debenture is also named as:
► Share
► Bond
► Equity
► Reserve

Question No: 2 ( Marks: 1 ) - Please choose one

What types of changes (is) are made at the admission of partner in partnership?
► Assets of old business will be revalued
► Liabilities of old business will be revalued
► Good will of business will be revalued
► All of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

The balance sheet reported a beginning balance of Rs. 20,000 in Accounts Receivable
and an ending balance of Rs. 15,000. Credit Sales of Rs. 200,000 were made during
the year. Using this information, compute cash collected from customers.
 ► Rs. 215,000
► Rs. 195,000
► Rs. 200,000
► Rs. 205,000

Question No: 4 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as an inflow of cash?
► The repayments of a bank loan
► Dividend issue in the current year
► Money received as result of selling fixed assets
► The difference between the valuations of old and new fixed assets

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following is NOT a cash inflow?

► Purchase of fixed asset

► Sale of fixed asset
► Issue of debentures
► Cash from business operation

Question No: 6 ( Marks: 1 ) - Please choose one

What are the effects on financial statements, if Rs. 6,000 transfer to general reserve is
given in adjustment?

► It will be treated in Income Statement only

► It will be treated as current liability in balance sheet only
► It will be treated in profit and loss appropriation account only
► it will be treated in both profit and loss appropriation account and in the
balance sheet

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following is the most important document of the company?

► Memorandum of Association
► Articles of Association
► Prospectus
► Annual Report

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following document(s) define the relation of company with outside world?

► Memorandum of Association
► Articles of Association
► Prospectus
► Statutory Declaration

Question No: 9 ( Marks: 1 ) - Please choose one

The income statement of the Limited company is also known as:
 ► Manufacturing account
► Profit and Loss account
► Profit and Loss Appropriation account
► Current Account

Question No: 10 ( Marks: 1 ) - Please choose one

In which of the following auditor’s remuneration payable is shown?

► In balance sheet under the head of current liabilities only

► In balance sheet under the head of current assets only
► In income statement under the administrative expense only
► In both balance sheet under the head of current liabilities and income
statement under the administrative expense

Question No: 11 ( Marks: 1 ) - Please choose one

The charter of a company which defines the limitations and powers of the company is
called:
► The memorandum of association
► Articles of association
► Statutory report
► Certificate of commencement

Question No: 12 ( Marks: 1 ) - Please choose one

Which of the following represents the partnership agreement in writing?
► Partnership registration
► Partnership-at-will
► Partnership deed
► Partnership certification

Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following represents the relationship between persons who have agreed to
share the profit of business carried on by all or any of them acting for all?
► Sole-ownership
► Private limited company
► Public limited company
► Partnership

Question No: 14 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?
► Accounts receivable arises when a company buys goods or services from
another party on credit
► Accounts receivable is a miscellaneous category that may include loans to
employees
► Accounts receivable are more formal than notes receivable
► Accounts receivable are often called trade receivables

Question No: 15 ( Marks: 1 ) - Please choose one

Which one of the following is TRUE about provisions?

► It is necessary to prepare for showing true picture of balance sheet

 ► It is a reduction from assets
► It is prepared for specific purposes
► All of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Which financial statement show what a business owes at a particular point in time?

► A cash flow statement

► The bank statement for the business
► A balance sheet
► A statement of retained earnings

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following is an example of operating expense?

► Purchasing operating equipment

► Purchasing cleaning services
► Purchasing an investment in another company
► Purchasing a computer for the accounting office

Question No: 18 ( Marks: 1 ) - Please choose one

Short-term investments include all of the following EXCEPT:

► A bond receivable intended to be sold within one year

► Frequently traded securities
► A stock investment in the General Electric Company intended to be sold within
one year
► A shares investment in the Coca-Cola Company intended to be held for
several years

Question No: 19 ( Marks: 1 ) - Please choose one

The figure of cash received from debtors can be located either from cash book or:

► Debtor’s Control Account

► Balance Sheet
► Profit & Loss Account
► Bills Payable Account

Question No: 20 ( Marks: 1 ) - Please choose one

Following information are extracted from books of Mr. XYZ

Particulars Rs.
Closing value of stock 40,000
Write off Bad debts (given in adjustments) 2,400
Sundry Debtors (given in trial balance) 33,200
Provision is created on Debtors at 10%
Identify the Total amount deducted from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 3,080
 ► Rs. 5,480

Question No: 21 ( Marks: 1 ) - Please choose one

Consider the following data and identify the amount which will be deducted from Sundry
Debtors in Balance Sheet.
Particulars Rs.
Bad debts (from trial balance) 1,600
Provision for doubtful debts (old) 2,000
Current year’s provision (new) 1,000

► Rs. 600
► Rs. 1,000
► Rs. 2,000
► Rs. 2,600

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded, if a cheque deposited is dishonored by
bank?

► Bank Account (Dr.) and Debtor's Account (Cr.)

► Debtor's Account (Dr.) and Bank Account (Cr.)
► Dishonored Cheque Account (Dr.) and Bank Account (Cr.)
► Creditor's Account (Dr.) and Bank Account (Cr.)

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of an amount
Rs.200 received from Mr.”P” wrongly credited to Mr.”Q’s” account?
► Both of Mr. P's & Mr.Q's Account
► Only Cash Account
► Only P’s account
► Only Q’s account

Question No: 24 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of sales
Rs.100 to Mr. “A” recorded in the purchases book?

► Sales account
► Purchase account
► A’s account and Sales account
► Sales account, purchase account and A’s account

100%sure Question No: 25 ( Marks: 1 ) - Please choose one(chapter # 28)

"Goods sold to Mr. Salman for Rs. 6,000 have been forgotten to enter in books of
accounts", is an example of:

► Error of principle
► Error of omission
► Error of commission
 ► Error of original entry

100%sure Question No: 26 ( Marks: 1 ) - Please choose one(chapter # 28)

Transaction that has been completely forgotten to enter is called:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following is (are) included in Creditors Control Account?

► Discount received from supplier

► Credit purchases
► Bills payable
► All of the given options

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following is NOT included in Debtors Control Account?

► Cash sales
► Credit sales
► Bills receivable
► Discount allowed

Question No: 29 ( Marks: 1 ) - Please choose one

Which of the following subsidiary book(s) is (are) maintained for debtors control
account?

► Sales Day Book

► Sales Return
► Debtors Ledger
► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

Which of the following is NOT based on the concept of double entry book keeping
system?

► Subsidiary Ledgers
► Creditors Control Accounts
► Debtors Control Accounts
► All of the given options

Question No: 31 ( Marks: 1 ) - Please choose one

Which of the following entry will be recorded when the Bad Debts are recovered?

► Cash account (Dr.) & Bad Debts recovered account (Cr.)

► Accounts Receivable account (Dr.) & Bad Debts recovered account (Cr.)
 ► Bad debts recovered account (Dr.) and Profit & Loss account (Cr.)
► Provision for doubtful debts account (Dr.) & Cash account (Cr.)

Question No: 32 ( Marks: 1 ) - Please choose one

In which of the following condition(s) DEBT is regarded as BAD.

► Bankruptcy of the debtor

► Disappearance of debtor’s business
► Failure of repeated attempt to collect the debt
► All of the given options

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT for Doubtful Debt?

► It is shown in balance sheet

► It is a definite loss to the business
► It is not shown in balance sheet
► No provision is necessary for it

Question No: 34 ( Marks: 1 ) - Please choose one

The following balance and discrepancies were found on 31 March 2008:

Particulars Rs.
Cash book balance (Dr) 5 000
Unpresented cheques 1 000
Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:

► Rs. 5 500 (Dr)
► Rs. 5 500 (Cr)
► Rs. 4 500 (Dr)
► Rs. 4 500 (Cr)

Question No: 35 ( Marks: 1 ) - Please choose one

A Bank Reconciliation Statement is prepared to:

► Ascertain that the difference between the Cash Book balance and the Bank
Statement balance has been accounted for
► Correct errors in the Cash Book or errors in the Bank Statement
► Amend the balance of the Bank Statement of the firm
► Amend the balance in the Cash Book of the firm

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is CORRECT regarding depreciation?

► It is a systematic allocation of depreciable amount of an asset over its

estimated useful life
 ► It refers to the end life of an asset
► It refers to the increase in value of asset
► It is another name of Impairment

Question No: 37 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs.1, 00, 000

Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 1, 000

► Rs. 12,000 liabilities

► Rs. 11,000 liabilities
► Rs. 1, 10,000 liabilities
► Rs. 1, 11,000 liabilities

Question No: 38 ( Marks: 1 ) - Please choose one

Which of the following essentials will be shown in the format of Cash Book?
(1) Ledger code
(2) Amount of Receipt
(3) Amount of payment

► (1) only
► (1) & (2) only
► (1) & (3) only
► (1), (2) & (3)

Question No: 39 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO method
of inventory costing?

► Rs.260
► Rs.232
► Rs.284
► Rs.320

Question No: 40 ( Marks: 1 ) - Please choose one

In cost of goods sold statement, the ‘cost of material consumed’ is equal to:

► Opening raw material inventory + Purchases – Ending raw material

inventory
 ► Opening raw material inventory - Purchases + Ending raw material inventory
► Ending raw material inventory + Opening raw material inventory - Purchases
► Ending raw material inventory + Opening raw material inventory + Purchases

Question No: 41 ( Marks: 1 ) - Please choose one

Following are the inventories of Manufacturing Concern EXCEPT:

► Raw material
► Work in process
► Finished goods
► Merchandise inventory

Question No: 42 ( Marks: 1 ) - Please choose one

Which of the following is an alternate term which can be used for “Capital”?

► Liability
► Owner’s net worth
► Working capital
► Asset

Question No: 43 ( Marks: 1 ) - Please choose one

In which of the following condition a company will have positive working capital?
► If current assets > current liabilities
► If current Assets < current Liabilities
► If current assets = current liabilities
► If current assets < current liabilities

Question No: 44 ( Marks: 1 ) - Please choose one

If salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office building) is
Rs. 300 during the year, what would be the total of "general & administrative expenses"?

► Rs. 300
► Rs. 2,500
► Rs. 2,800
► Rs.18, 800

Question No: 45 ( Marks: 1 ) - Please choose one

The amount brought by the proprietor in the business should be credited to:

► Cash account
► Capital account
► Drawings account
► Proprietor account

Question No: 46 ( Marks: 1 ) - Please choose one

 An asset on the balance sheet which is expected to be sold or used within one year is
known as:

► Tangible asset
► Current asset
► Fixed asset
► Long term asset

Question No: 47 ( Marks: 1 ) - Please choose one

Which one of the following is a type of General Ledger?

► Book of original entry

► ‘T’ Account
► Source document
► Day book

Question No: 48 ( Marks: 1 ) - Please choose one

According to the double entry system of book keeping, the investment of Rs.10, 000 in
the business made by the owner will effect:

► Cash & Capital Account

► Cash & Expense Account
► Capital & Revenue Account
► Capital & Expense Account

Question No: 49 ( Marks: 1 ) - Please choose one

Mr.” A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated as
_____________ for business.
► Revenue
► Net profit
► Gross profit
► Operating profit

Question No: 50 ( Marks: 1 ) - Please choose one

when income exceeds expenses in a specific time period is known as:
► Savings
► Net profit
► Gross profit
► Operating profit

Question No: 51 ( Marks: 5 )

Financial year decided by partnership agreement is 1st July to 30th June. Mr. Ali is
partner and having a capital of Rs. 1,500,000 on July 1st 2007 and he introduced more
capital on August 1st 2007 Rs. 10,000 on April 1st 2008, Rs.500,000 and on June 1st
2008 , Rs. 5,000. Mark up rate is 10% p.a.

Capital = 1500000 mark up= 1500000

2nd capital= 10000 markup= 1000
3rd capital= 500000 markup= 50000
4th capital= 5000 markup= 500

Total markup= Rs. 201500

Calculate mark up on Mr. Ali’s capital for the year ending on 31th June 2008.

Question No: 52 ( Marks: 10 )

Write a note on legal documents required for the formation of company.
In Pakistan when someone wants to form a company. He will contact with SECP, its
abbreviation for Securities and Exchange Commission of Pakistan. it came in 1984 in
law of Pakistan which is called companies ordinance. It controls all affairs of limited
companies. For making of private limited company 2 members can submit their names in
memorandum and articles of association along with other requirements of company
ordinance 1984. while for public limited company seven members will sent their names.
By this way they can apply and make registration of the company.

Question No: 53 ( Marks: 10 )

What is the difference between public and private company?
The main difference between public and private company is that in public limited
companies there is no restriction on number of persons to be its members. There is one
restriction. That there should be a minimum of three members to form a public limited
company. Public limited company can offer its shares to general public.

While in private company two to fifty persons can form a company. Minimum two
members are elected to form a board of directors. This board is given the responsibility
to run day to day business of the company. Private limited company cannot offer its
share to general public.

Question No: 54 ( Marks: 10 )

The following discrepancies were noted on comparing Cash Book with Pass Book.

1. Balance as per Cash Book (Cr) is Rs. 19,000.

2. Cheque for Rs. 5,000 paid into the bank for collection on 20th March, 2008 has
not yet been collected.
3. Cheques for Rs. 15,000 Issued on 24th March, 2008, out of which Cheques for
Rs. 10,000 presented during March, 2008
4. An amount of Rs. 1,000 for interest on overdraft was debited in the Pass Book
but was intimated to Mr. David on 4th April, 2008.
5. Mr. David paid into his bank account an amount of Rs. 3,000 but it was wrongly
credited to Mr. Denial’s Account.
6. On 20th March, 2008 the bank received dividend of Rs. 10,000 from a company
where Mr. David's has invested his money, the same had been recorded in Cash
Book on 31st March, 2008.
7. Cheque of Rs. 2,500 was shown in Pass Book as dishonored.

Required: Prepare a Bank Reconciliation Statement as on 31st March, 2008

Balance as per Cash Book Cr 19000

Unpresented cheques Dr 5000
Uncredited cheque Dr 10000
Interest by bank Dr. 1000

Question No: 1 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine 3,00,000
Cost of machine purchased during the year 50,000
Depreciation during the year 9,000
closing written down value (WDV) of the Machine ?
Opening+expenditure – depreciation
3, 00,000+50,000 – 9,000 =

► Rs. 3, 41,000
► Rs. 3, 50,000
► Rs. 3, 59,000
► Rs. 59,000

Question No: 2 ( Marks: 1 ) - Please choose one

Particulars Rs.
Opening written down value of machine Rs. 2,00,000
Cost of new machine purchased during the year Rs. 50,000
Depreciation during the year Rs. 25,000
Closing written down value (WDV) of machines ?

► Rs. 2, 25,000
► Rs. 2, 50,000
► Rs. 2, 75,000
► Rs. 75,000

100%Sure Question No: 3 ( Marks: 1 ) - Please choose one

Consider the following data:

Particulars Rs.
Assets 1,98,000
Owner's equity 95,000
Liabilities ?

► Rs. 49,000
► Rs. 55,000
► Rs. 1, 25,000
► Rs. 1, 03,000

Question No: 4 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs. 22,500

Debtors Rs. 500
Total Assets Rs. 80, 385
 Accounts payable Rs. 1,000
Total liabilities Rs. 20,000

► Rs. 60,385 owner’s equity

► Rs. 61,385 owner’s equity
► Rs. 99,885 owner’s equity
► Rs. 99,385 owner’s equity

Question No: 5 ( Marks: 1 ) - Please choose one

Find out the missing value of an Accounting Equation with the help of given data:

Furniture Rs. 90,000

Cash Rs.1, 00, 000
Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 90, 000

► Rs. 2, 01,000 liabilities

► Rs. 1, 11, 000 liabilities
► Rs. 2, 90, 000 liabilities
► Rs. 2, 91, 000 liabilities

Question No: 6 ( Marks: 1 ) - Please choose one

When the process of production is completed, all the costs must be charged to:

► Raw material account

► Work in process account
► Finished goods account
► Merchandise account

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following assets are shown at written down value in balance sheet?

► Current assets
► Liquid assets
► Floating assets
► Fixed assets

Question No: 8 ( Marks: 1 ) - Please choose one

Which of the following asset is NOT depreciated?

► Factory Buildings
► Office Equipment
► Plant & Machinery
► Land

Question No: 9 ( Marks: 1 ) - Please choose one

The main goal of Bank Reconciliation Statement is to determine:

► If the discrepancy is due to error rather than timing

 ► If the discrepancy is due to timing rather than error
► If the discrepancy is due to error rather than amount
► If the discrepancy is due to amount rather than timing

Question No: 10 ( Marks: 1 ) - Please choose one

Sale proceeds of goods are an example of:

► Revenue expense
► Capital expense
► Capital receipt
► Revenue receipt

Question No: 11 ( Marks: 1 ) - Please choose one

Which one of the following is NOT true about revenue expenditure?

► These are the running expenses of the business

► They improve the financial position of the business
► They reduce the profit of the concern
► They do not appear in the balance sheet

Question No: 12 ( Marks: 1 ) - Please choose one

Consider the following:

Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Eighty units were sold, what is the value of the ending inventory using the FIFO method
of inventory costing?

► Rs.260
► Rs.232
► Rs.284
► Rs.320

Question No: 13 ( Marks: 1 ) - Please choose one

Consider the following inventory record:

Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225

80 units were sold, Use the FIFO method of inventory costing and determine the cost of
goods sold.
 ► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 905

Question No: 14 ( Marks: 1 ) - Please choose one

If, Cost of machine = Rs.400, 000
Useful life = 5 years
Rate of depreciation= 40%
The book value of machine after one years using diminishing balance method is ?

► Rs.86, 400
► Rs. 1, 44,000
► Rs. 2, 40,000
► Rs. 51,840

Question No: 15 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?

► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000

Question No: 16 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for each year Rs. 5,000
Sale price after 5 years Rs.50,000
Written down value of asset on 5th year Rs.75,000
profit or loss on disposal of fixed assets ?

► Rs.25, 000 loss

► Rs. 75,000 loss
► Rs. 15,000 profit
► Rs. 1, 00,000 profit

Question No: 17 ( Marks: 1 ) - Please choose one

Cost of asset Rs. 1,00,000
Life of asset 5 years
Depreciation for the each year Rs. 5,000
Sale price after 5 years Rs.15,000
Written Down Value of Asset on 5th year Rs. 75,000
 Profit or loss on disposal of fixed asset ?

► Rs. 60,000 loss

► Rs. 75,000 profit
► Rs. 25,000 loss
► Rs. 1, 00,000 profit

Question No: 18 ( Marks: 1 ) - Please choose one

The total of all costs incurred to convert raw material into finished goods is known as:

► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost

Question No: 19 ( Marks: 1 ) - Please choose one

WhicWhich of the following is an example of direct materials cost?

► Polish and finishing material for chair

► A piece of wood for the production of chair
► Production worker’s wages
► Depreciation expenses

Question No: 20 ( Marks: 1 ) - Please choose one

If the working capital and the current assets of company XYZ are Rs. 5,000 and
Rs.15,000 respectively, calculate the current liabilities.

► Rs. 5,000
► Rs. 10,000
► Rs. 15,000
► Rs. 20,000

Question No: 21 ( Marks: 1 ) - Please choose one

Which of the following item appears in Trading Account of a business?

► Interest expenses
► Wages and salaries
► Depreciation expenses
► Discount Allowed

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following is an alternate term which can be used for “Capital”?

► Liability
► Owner’s net worth
 ► Working capital
► Asset

Question No: 23 ( Marks: 1 ) - Please choose one

Which of the following financial statement DO NOT show the financial health of a
business at a specific date?

► Profit and loss account

► Balance sheet
► Statement of financial position
► All of the given options

Question No: 24 ( Marks: 1 ) - Please choose one

If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating expenses are Rs.
100,000. What will be the net result?

► Rs. 5,000 Loss

► Rs. 5, 000 Profit
► Rs.1, 95,000 Profit
► Rs.1, 95,000 Loss

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance)

► Cash account
► Furniture account
► Vehicle account
► All of the given options

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following account balance will be shown on debit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance).

► Capital account
► Sundry creditors account
► Accounts payable account
► Cash account

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following journal entry will be recorded, if the payment of furniture
purchased is made through cheque?

► Furniture account (Dr) and Bank account (Cr)

► Furniture account (Dr) and Profit & Loss account (Cr)
► Furniture account (Dr) and Cash account (Cr)
► Cash account (Dr) and Furniture account (Cr)

Question No: 28 ( Marks: 1 ) - Please choose one

Which one of the following statement is CORRECT about Long term liabilities?
 ► These are due within one year
► These are consist of all debts, payable after 12 months
► In working capital, these are deducted from current assets
► All of the given options

Question No: 29 ( Marks: 1 ) - Please choose one

What type of expenses are paid out of Gross Profit?

► Selling Expenses
► General Expenses
► Financial Expenses
► All of the given options

Question No: 30 ( Marks: 1 ) - Please choose one

While making Income & Expenditure account, Excess of income over expenses in a
specified accounting period is called:

► Deficit
► Surplus
► Profit
► Loss

Question No: 31 ( Marks: 1 ) - Please choose one

Which one of the following is NOT prepared by Non profit organizations?

► Profit & Loss account

► Income & Expenditure account
► Receipts & Payments account
► Balance Sheet

Question No: 32 ( Marks: 1 ) - Please choose one

Which of the following financial statement summarizes the profitability of an organization
for a particular period?

► Trading and Profit & Loss account

► Cash Flow Statement
► Statement of Retained Earnings
► Balance Sheet

Question No: 33 ( Marks: 1 ) - Please choose one

Which of the following period is known as a fiscal Year of the Government of Pakistan?

► 1st January to 31st December

► 1st June to 31st May
► 1st July to 30th June
► 1st October to 30th September
Question No: 34 ( Marks: 1 ) - Please choose one
What would be the affect on the components of the accounting equation, if goods are
purchased on cash?

► Increase in cash and decrease in equity

► Increase in cash and increase in goods
► Increase in goods and decrease in cash
► Increase in equipment and increase in equity

Question No: 35 ( Marks: 1 ) - Please choose one

Obligations to pay cash or un-earned incomes by the business are the:

► Assets
► Liabilities
► Equities
► Expenses

Question No: 36 ( Marks: 1 ) - Please choose one

Commercial Accounting is based on:
► Single entry book keeping
► Double entry book keeping
► Both single and double entry book keeping
► Cash basis of book keeping

Question No: 37 ( Marks: 1 ) - Please choose one

Word “Credit” is derived from ______ language.

► Latin
► English
► French
► Chinese

Question No: 38 ( Marks: 1 ) - Please choose one

The basic accounting principle/concept according to which Business is independent
from its owner(s) is known as:

► Separate Entity Concept

► Matching Concept
► Going Concern Concept
► Materiality Concept

Question No: 39 ( Marks: 1 ) - Please choose one

Double entry accounting system includes:

► Accrual accounting only

► Cash accounting only
► Both cash and accrual accounting
► None of the given options
Question No: 40 ( Marks: 1 ) - Please choose one
An accounting system is used by a business to:
► Analyze transactions
► Handle routine book-keeping tasks
► Structure information
► All of the given options

Question No: 41 ( Marks: 10 )

Record the following transactions in the General Journal.

Date: Transactions
Jan 1, 2007 Mr. Asghar started business with cash Rs. 1, 00,000.
Jan 2, 2007 Opened bank account with amount Rs. 50,000.
Jan 4, 2007 Purchased goods for cash Rs. 15,000.
Jan 9, 2007 Payment made to Karachi store (Creditor) Rs. 15,000 by cheque.
Jan14, 2007 Goods returned to Karachi store worth Rs. 1,500.
Jan22, 2007 Goods sold for cash Rs. 2,000.

DR
Bank account 50,000
Purchased goods for cash Rs. 15,000
Payment made to Karachi store (Creditor) Rs. 15,000 by cheque
Goods returned to Karachi store worth Rs. 1,500
Credit balance 20500

Cr
Mr. Asghar started business with cash Rs. 1, 00,000
Goods sold for cash Rs. 2,000.

1. If Accumulated profit brought forward has credit nature, what will be its

treatment?

a. It will be added in net profit for the year

b. It will be subtracted from the net profit for the year

c. It will be deducted from current Assets

d. It will be added in current assets

2. Fixed Assets at WDV + working capital =?

a. Total shareholders equity

b. Net capital employed

c. Long term loan

d. Current liability

3. Keeping in view the following data, what will be Net Cash Flow from

Investing Activities?

Particulars Rs.

Purchases from short term borrowing 45,000

Purchases of marketable securities (65,000)

Proceeds from marketable securities 40,000

Loans made to borrowers (17,000)

Cash paid acquire plant assets (160,000)

Proceeds from sales of sales of plant Assets 75,000

Collection on loans 12,000

a. Rs. (115,000)

b. Rs. 100,000

c. Rs. 55,000

d. None of the given options

4. Keeping in view the following data, what will be Net cash provided by

operating activities?

Particulars Rs.

Net income 65,000

Depreciation expenses 40,000

Decrease in accrued interest receivable 1,000

Increase in accounts payable 15,000

Increase in accrued liabilities 7,000

Non operating loss on sales of marketable securities 4,000

Increase in accounts receivable 30,000

Increase in inventory 10,000

Decrease in accrued liabilities 8,000

Increase in prepayments 3,000

Non operating gain on sales of plant assets 31,000

Net cash provided by operating activities ?

a. Rs. 115,000

b. Rs. 100,000

c. Rs. 50,000

d. None of the given options

5. Advances from customers are shown in which of the following heads in

Balance Sheet?

a. Current Assets

b. Current liabilities

c. Fixed Assets

d. Long term liabilities

6. While preparing cash flow statements, the repayments of a loan during the

year should be included under the heading of:

a. Operating activities

b. Financing activities

c. Investing activities

d. None of the given options

7. Which of the following statement is also known as a source and use

statements?

a. Income Statements

b. Statement of Cash Flows

c. Balance Sheet

d. Statement of Retained Earnings

8. Calculate depreciation for the year =?

Building at cost = Rs. 1, 00,000

Depreciation rate = 10%

a. Rs. 10,000

b. Rs. 1,000
 http://vustudents.ning.com

ACCOUNTING
1 Which of the following statements is incorrect?
Assets - Capital = Liabilities

Liabilities + Assets = Capital

Liabilities + Capital = Assets

Assets - Liabilities = Capital

2 Which of the following is not an asset?

Buildings

Debtors

Loan from K Harris

Cash balance

3 Which of the following is a liability?

Motor Vehicles

Machinery

Creditors for goods

Cash at Bank

4 Which of the following is incorrect?

(A)

(B)

(C)

(D)

5 Which of the following statements is correct?

(A)

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 http://vustudents.ning.com

(B)

(C)

(D)

6 Which of the following are correct?

(i), (ii) and (ii)

(i) and (ii)

(i) and (iii)

(ii) and (iii)

7 Which of the following are correct?

(i) and (iv) only

(i), (ii) and (iii) only

(i), (ii) and (iv) only

(ii), (iii) and (iv) only

8 Which of the following are incorrect?

(i) and (iii) only

(ii) and (iv) only

(iii) and (iv) only

(ii) and (iii) only

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 http://vustudents.ning.com

9 Which of the following best describes the meaning of ‘Purchases’?

Goods bought on credit

Goods paid for

Goods bought for resale

Items bought

10 Which of the following should not be called ‘Sales’?

Goods sold for cash

Sale of item previously included in ‘Purchases’

Office fixtures sold

Goods sold on credit

11 Of the following, which are correct?

(iii) and (iv) only

(ii) and (iv) only

(i) and (ii) only

(i) and (iii) only

12 Which of the following are incorrect?

(ii) and (iv) only

(iv) only

(iii) only

(i) and (iii) only

13 Given the following, what is the amount of Capital? Assets: Premises £20,000; Stock £8,500;
Cash £100. Liabilities: Creditors £3,000; Loan from A Adams £4,000
£21,100

£21,400

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 http://vustudents.ning.com

£21,600

£32,400

14 Which of the following is correct?

Profit reduces capital

Profit increases capital

Capital can only come from profit

Profit does not alter capital

15 Which of the following are correct?

(i), (ii) and (iii) only

(i) and (ii) only

(i), (ii) and (iv) only

(i), (iii) and (iv) only

16 Of the following, which are incorrect?

(ii) and (ii) only

(ii) and (iv) only

(i) and (iii) only

(ii) and (iii) only

17 What is the balance on the following account on 31 May 20X5?

A debit balance of £395

A credit balance of £395

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There is a nil balance on the account

A debit balance of £380

18 What would have been the balance on the account of C De Freitas in MC17 on 19 May
20X5?
A credit balance of £445

A credit balance of £95

A credit balance of £265

A debit balance of £265

19 Which of the following best describes a trial balance?

Shows all the entries in the books

It is a list of balances on the books

Shows the financial position of a business

It is a special account

20 Is it true that the trial balance totals should agree?

No, there are sometimes good reasons why they differ

Yes, always

Yes, except where the trial balance is extracted at the year end

No, because it is not a balance sheet

21 Gross profit is:

Cost of goods sold + Opening stock

Excess of sales over cost of goods sold

Sales less Purchases

Net profit less expenses of the period.

22 Net profit is calculated in the:

Profit and loss account

Balance sheet

Trial balance

Trading account

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 http://vustudents.ning.com

23 To find the value of closing stock at the end of a period we

do this by stocktaking

deduct cost of goods sold from sales

deduct opening stock from cost of goods sold

look in the stock account

24 The credit entry for net profit is on the credit side of:
The trading account

The drawings account

The capital account

The profit and loss account

25 Which of these best describes a balance sheet?

A statement of assets

A listing of balances

An account proving the books balance

A record of closing entries

26 The descending order in which current assets should be shown in the balance sheet is:
Debtors, Stock, Bank, Cash

Cash, Bank, Debtors, Stock

Stock, Debtors, Cash, Bank

Stock, Debtors, Bank, Cash

27 Which of these best describes fixed assets?

Are bought to be used in the business

Are expensive items bought for the business

Are items which will not wear out quickly

Are of long life and are not bought specifically for resale

28 Carriage inwards is charged to the trading account because:

Carriage outwards goes in the profit and loss account

It is an expense connected with buying goods

It is not part of motor expenses

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It should not go in the balance sheet

29 Given figures showing: Sales £8,200; Opening stock £1,300; Closing stock £900;
Purchases £6,400; Carriage inwards £200, the cost of goods sold figure is:
Another figure

£6,200

£6,800

£7,000

30 The costs of putting goods into a saleable condition should be charged to:
Trading account

Profit and loss account

Balance sheet

None of these

31 Suppliers’ personal accounts are found in the:

Sales ledger

Nominal ledger

Purchases ledger

General ledger

32 The Sales Day Book is best described as:

Containing customers’ accounts

Containing real accounts

Part of the double entry system

A list of credit sales

33 Which of the following are personal accounts?

(i) Buildings
(ii) Wages
(iii) Debtors
(iv) Creditors
(ii) and (iii) only

(i) and (iv) only

(ii) and (iv) only

(iii) and (iv) only

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34 When Lee makes out a cheque for £50 and sends it to Young, then Lee is known as:
The payee

The banker

The drawer

The creditor

35 If you want to make sure that your money will be safe if Cheques sent are lost in the
post, you should:
Always pay by cash

Cross your Cheques ‘Account Payee only, Not Negotiable’

Always take the money in person

Not use the postal service in future

36 When banking money in to your current account you should always use:
A general ledger

A cheque book

A cash book

A paying-in slip

37 A debit balance of £100 in a cash account shows that:

There was £100 cash in hand

The total of cash received was less than £100

£100 was the total of cash paid out

Cash has been overspent by £100

38 £50 cash taken from the cash till and banked is entered:
Debit cash column £50: Credit bank column £50

Debit bank column £50: Credit bank column £50

Debit bank column £50: Credit cash column £50

Debit cash column £50: Credit cash column £50

39 A credit balance of £200 on the cash columns of the cash book would mean:
We have £200 cash in hand

Someone has stolen £200 cash

We have spent £200 more than we have received

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The bookkeeper has made a mistake

40 ‘Posting’ the transactions in bookkeeping means:

Making the second entry of a double entry transaction

Entering items in a cash book

Making the first entry of a double entry transaction

Something other than the above

41 A cash discount is best described as a reduction in the sum to be paid:

If payment is made by cash, not cheque

If purchases are made for cash, not on credit

If payment is made either by cash or cheque

If payment is made within a previously agreed period

42 Discounts received are:

Deducted by us when we pay our accounts

Deducted when we receive cash

Given by us when we sell goods on credit

None of these

43 The total of the ‘Discounts Allowed’ column in the Cash Book is posted to:
The debit of the Discounts Received account

The debit of the Discounts Allowed account

The credit of the Discounts Allowed account

The credit of the Discounts Received account

44 Sales invoices are first entered in:

The Cash Book

The Purchases Journal

The Sales Journal

The Sales Account

45 The total of the Sales Journal is entered on:

The debit side of the Sales Account in the General Ledger

The credit side of the General Account in the Sales Ledger

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The credit side of the Sales Account in the General Ledger

The debit side of the Sales Day Book

46 Given a purchases invoice showing 5 items of £80 each, less trade discount of 25 per
cent and cash discount of 5 per cent, if paid within the credit period, your cheque would
be made out for:
£260

£280

£285

None of these

47 An alternative name for a Sales Journal is:

Sales Day Book

Sales Ledger

Sales Invoice

Daily Sales

48 Entered in the Purchases Journal are:

Discounts received

Purchases invoices

Payments to suppliers

Trade discounts

49 The total of the Purchases Journal is transferred to the:

Credit side of the Purchases Account

Credit side of the Purchases Book

Debit side of the Purchases Account

Debit side of the Purchases Day Book

50 Credit notes issued by us will be entered in our:

Sales Account

Returns Outwards Journal

Returns Inwards Journal

Returns Inwards Account

51 The total of the Returns Outwards Journal is transferred to:

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The debit side of the Returns Outwards Account

The credit side of the Returns Outwards Book

The credit side of the Returns Outwards Account

The debit side of the Purchases Returns Book

52 We originally sold 25 items at £12 each, less 331/3 per cent trade discount. Our
customer now returns 4 of them to us. What is the amount of credit note to be issued?
£36

£30

£32

£48

53 Depreciation is:
The salvage value of a fixed asset

The amount of money spent in replacing assets

The part of the cost of the fixed asset consumed during its period of use by the firm

The amount spent to buy a fixed asset

54 A firm bought a machine for £3,200. It is to be depreciated at a rate of 25 per cent using
the Reducing Balance Method. What would be the remaining book value after 2 years?
£2,400

£1,800

£1,600

Some other figure

55 A firm bought a machine for £16,000. It is expected to be used for 5 years then sold for
£1,000. What is the annual amount of depreciation if the straight line method is used?
£3,750

£3,100

£3,200

£3,000

56 At the balance sheet date the balance on the Accumulated Provision for Depreciation
Account is:
Transferred to Depreciation Account

Transferred to the Asset Account

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Transferred to Profit and Loss Account

Simply deducted from the asset in the Balance Sheet

57 In the trial balance the balance on the Provision for Depreciation Account is:
Not shown, as it is part of depreciation

Sometimes shown as a credit, sometimes as a debit

Shown as a credit item

Shown as a debit item

58 If an accumulated provision for depreciation account is in use then the entries for the
year’s depreciation would be:
Credit Asset Account, debit Provision for Depreciation Account

Debit Asset Account, credit Profit and Loss Account

Credit Provision for Depreciation Account, debit Profit and Loss Account

Credit Profit and Loss Account, debit Provision for Depreciation Account

59 When the final accounts are prepared, the Bad Debts Account is closed by a transfer to
the:
Trading Account

Provision for Doubtful Debts Account

Balance Sheet

Profit and Loss Account

60 A Provision for Doubtful Debts is created:

When debtors cease to be in business

To provide for possible bad debts

When debtors become bankrupt

To write off bad debts

61 Working Capital is a term meaning:

The total of Fixed Assets - Current Assets

The capital less drawings

The amount of capital invested by the proprietor

The excess of the current assets over the current liabilities

62 A credit balance brought down on a Rent Account means:

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We have paid too little in rent

We have paid too much rent

We owe that rent at that date

We have paid that rent in advance at that date

63 A debit balance brought down on a Packing Materials Account means:

We have a stock of packing materials unused

We are owed for packing materials

We have lost money on packing materials

We owe for packing materials

64 If we take goods for own use we should:

Debit Drawings Account: Credit Purchases Account

Debit Drawings Account: Credit Stock Account

Debit Sales Account: Credit Stock Account

Debit Purchases Account: Credit Drawings Account

65 Capital Expenditure is:

The costs of running the business on a day-to-day basis

Money spent on buying fixed assets or adding value to them

Money spent on selling fixed assets

The extra capital paid in by the proprietor

66 In the business of C Songster, who owns a clothing store, which of the following is Capital
Expenditure?
(i) Shop fixtures bought
(ii) Wages of assistants
(iii) New van bought
(iv) Petrol for van
(ii) and (iv)

(i) and (iii)

(i) and (ii)

(ii) and (iii)

67 If £500 was shown added to Purchases instead of being added to a fixed asset:
Net profit only would be overstated

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Both gross and net profits would be understated

Net profit only would be understated

It would not affect net profit

68 A cheque paid by you, but not yet passed through the banking system, is:
A credit transfer

A dishonored cheque

An un-presented cheque

A standing order

69 A Bank Reconciliation Statement is a statement:

Sent by the bank when we have made an error

Drawn up by the bank to verify the cash book

Sent by the bank when the account is overdrawn

Drawn up by us to verify our cash book balance with the bank statement balance

70 Which of the following are not true? A Bank Reconciliation Statement is

(i) Part of the double entry system
(ii) Not part of the double entry system
(iii) Sent by the firm to the bank
(iv) Posted to the ledger accounts.
(i), (ii) and (iv)

(i), (iii) and (iv)

(i) and (ii)

(ii), (iii) and (iv)

71 Which of the following should be entered in the Journal?

(i) Payment for cash purchases
(ii) Fixtures bought on credit
(iii) Credit sale of goods
(iv) Sale of surplus machinery.
(i) and (iv)

(ii) and (iv)

(iii) and (iv)

(ii) and (iii)

72 The Journal is:

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Used when other journals have been mislaid

A supplement to the Cash Book

Not part of the double entry system

Part of the double entry system

73 Given desired cash float of £200, if £146 is spent in the period, how much will be
reimbursed at the end of the period?
£53

£146

£254

£200

74 When a petty cash book is kept there will be:

No entries made at all in the general ledger for items paid by petty cash

The same number of entries in the general ledger

Fewer entries made in the general ledger

More entries made in the general ledger

75 Which of the following do not affect trial balance agreement?

(i) Sales £105 to A Henry entered in P Henry’s account
(ii) Cheque payment of £134 for Motor expenses entered only in Cash Book
(iii) Purchases £440 from C Browne entered in both accounts as £404
(iv) Wages account added up incorrectly, being totaled £10 too much.
(i) and (iii)

(ii) and (iii)

(i) and (iv)

(iii) and (iv)

76 Which of the following are not errors of principle?

(i) Motor expenses entered in Motor Vehicles account
(ii) Purchases of machinery entered in Purchases account
(iii) Sale of £250 to C Phillips completely omitted from books
(iv) Sale to A Henriques entered in A Henry’s account.
(iii) and (iv)

(ii) and (iii)

(i) and (ii)

(i) and (iv)

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77 Errors are corrected via the Journal because:

It saves the bookkeeper’s time

It provides a good record explaining the double entry records

It saves entering them in the ledger

It is much easier to do

78 Which of these errors would be disclosed by the trial balance?

A purchase of £250 was omitted entirely from the books

Credit sales of £300 entered in both double entry accounts as £30

Selling expenses had been debited to Sales Account

Cheque £95 from C Smith entered in Smith’s account as £59

79 If a trial balance totals do not agree, the difference must be entered in:
The Profit and Loss Account

A Nominal Account

The Capital Account

A Suspense Account

80 What should happen if the balance on a Suspense Account is of a material amount?

Write it off to Profit and Loss Account

Should be written off to the balance sheet

Carry forward the balance to the next period

Find the error(s) before publishing the final accounts

81 Given opening debtors of £11,500, Sales £48,000 and receipts from debtors £45,000, the
closing debtors should total:
£14,500

£83,500

£18,500

£8,500

82 In a Sales Ledger Control Account the Bad Debts written off should be shown in the
account:
As a credit

As a debit

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As a balance carried down

Both as a debit and as a credit

83 MC83 If cost price is £90 and selling price is £120, then:

(i) Mark-up is 25 per cent
(ii) Margin is 331/3 per cent
(iii) Margin is 25 per cent
(iv) Mark-up is 331/3 per cent
(i) and (ii)

(i) and (iii)

(iii) and (iv)

(ii) and (iv)

84 Given cost of goods sold £16,000 and margin of 20 per cent, then sales figure is:
£21,000

£20,000

£13,600

£20,160

85 If opening stock is £3,000, closing stock £5,000, sales £40,000 and margin 20 per cent, then
stock turn is:
7 ½ times

8 times

5 times

6 times

86 If creditors at 1 January 20X3 were £2,500, creditors at 31 December 20X3 £4,200 and
payments to creditors £32,000, then purchases for 20X3 are:
£31,600

£38,700

£33,700

£30,300

87 Given opening capital of £16,500, closing capital as £11,350 and drawings were £3,300,
then:
Profit for the year was £8,450

Loss for the year was £8,450

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Profit for the year was £1,850

Loss for the year was £1,850

88 A Receipts and Payments Account is one:

In which the surplus of income over expenditure is calculated

In which the opening and closing cash balances are shown

Which is accompanied by a balance sheet

In which the profit is calculated

89 Prime cost includes:

(i) Direct labour
(ii) Factory overhead expenses
(iii) Raw materials consumed
(iv) Direct expenses
(i), (iii) and (iv)

(i), (ii) and (iii)

(ii), (iii) and (iv)

(i), (ii) and (iv)

90 Which of the following should be charged in the Profit and Loss Account?
Carriage on raw materials

Work in progress

Office rent

Direct materials

91 In the Manufacturing Account is calculated:

The production costs paid in the year

The total cost of goods produced

The gross profit on goods sold

The production cost of goods completed in the period

92 The best method of departmental accounts is:

To allocate expenses in proportion to purchases

To allocate expenses in proportion to sales

To charge against each department its uncontrollable costs

To charge against each department its controllable costs

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93 Where there is no partnership agreement then profits and losses:

Must be shared equally

Must be shared in same proportion as capitals

Must be shared equally after adjusting for interest on capital

None of these

94 If it is required to maintain fixed capitals then the partners’ shares of profits must be:
Credited to capital accounts

Debited to capital accounts

Debited to partners’ current accounts

Credited to partners’ current accounts

95 You are to buy an existing business which has assets valued at buildings £50,000, Motor
vehicles £15,000, Fixtures £5,000 and Stock £40,000. You are to pay £140,000 for the
business. This means that:
You have made an arithmetical mistake

You are paying £40,000 for Goodwill

Buildings are costing you £30,000 more than their value

You are paying £30,000 for Goodwill

96 Assets can be revalued in a partnership change because:

The depreciation charged on them needs to be reversed

It helps prevent injustice to some partners

The law insists upon it

Inflation affects all values

97 Any loss on revaluation is:

Debited to old partners in old profit-sharing ratios

Credited to old partners in old profit-sharing ratios

Credited to new partners in new profit-sharing ratios

Debited to new partners in new profit-sharing ratios

98 In a limited company which of the following are shown in the Appropriation Account?
(i) Debenture interest
(ii) Proposed dividend
(iii) Transfers to reserves
(iv) Directors’ remuneration

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(i) and (ii)

(i) and (ii)

(ii) and (iii)

(ii) and (iv)

99 The Issued Capital of a company is:

Always the same as the Authorized Capital

The same as Preference Share Capital

Equal to the reserves of the company

None of the above

100 A company wishes to pay out all available profits as dividends. Net profit is £26,600. There
are 20,000 8% Preference shares of £1 each, and 50,000 Ordinary shares of £1 each.
£5,000 is to be transferred to General Reserve. What Ordinary dividends are to be paid, in
percentage terms?
40 per cent

60 per cent

10 per cent

20 per cent

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