FINALTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 2)
Ref No:
Time: 120 min
Marks: 87
| ExamDate: | 3/1/2010 12:00:00 AM |
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
► 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 = ?
► 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 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: 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
► Rs. 50,000
► Rs. 2, 50,000
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
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
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
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 is NOT an item of cost of goods sold statement?
► Purchase of raw material
► Any tax/freight paid on purchases
► 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
► 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
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 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
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
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
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 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.
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