FINALTERM  EXAMINATION

Fall 2009

MGT101- Financial Accounting (Session - 2)

(Shared by Asad Munir)

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Time: 120 min

M - 87

 Question No: 1    ( M - 1 )    .

 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    ( M - 1 )    .

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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 Bank book is part of:

 

Voucher

General Journal

General Ledger

Trial Balance

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Question No: 7    ( M - 1 )    .

 What type of expenses are paid out of Gross Profit?

 

Selling Expenses

General Expenses

Financial Expenses

All of the given options

   

Question No: 8    ( M - 1 )    .

 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    ( M - 1 )    .

 Which of the following is NOT an example of intangible assets?

 

Franchise rights

Goodwill

Patents

Land

   

Question No: 10    ( M - 1 )    .

 Which of the following is an example of business liability?

 

Land

Building

Cash

Capital

   

Question No: 11    ( M - 1 )    .

 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    ( M - 1 )    .

 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: 13    ( M - 1 )    .

 Interest on loan paid by business is an example of :

Deferred expense

Revenue expense

Capital expense

None of the given options

   

Question No: 14    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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: 18    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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

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Question No: 21    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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: 24    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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: 30    ( M - 1 )    .

 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: 31    ( M - 1 )    .

 Fixed Assets (WDV) + Working Capital =?

 

Total assets employed

Total liabilities

Total assets

Current assets

   

Question No: 32    ( M - 1 )    .

 Current accounts of the partners should be opened when the capitals are:

Fixed

Fluctuating

Floating

Normal

   

Question No: 33    ( M - 1 )    .

 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    ( M - 1 )    .

 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: 35    ( M - 1 )    .

 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: 36    ( M - 1 )    .

 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

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Question No: 37    ( M - 1 )    .

 

 

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    ( M - 1 )    .

 

 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    ( M - 1 )    .

 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: 40    ( M - 1 )    .

 

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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: 46    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 Which of the following capital is taken up by the general public?

Issued capital

Subscribed capital

Authorized capital

Reserve capital

   

Question No: 49    ( M - 1 )    .

 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    ( M - 1 )    .

 Primary purpose of the cash flows statement is to provide the information about:

Errors or discrepancies between cash book and income statement

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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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    ( M - 1 )    .

 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

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Question No: 55    ( M - 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.

 

Question No: 56    ( M - 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    ( M - 5 )

 Why are receipts and payment of interest classified as operating activities?

   

Question No: 58    ( M - 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)

   

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Question No: 59    ( M - 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

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.