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 Liabilities
Question No: 2 ( M - 1 ) .
Term "Credit" means_______ by the business.
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.