FINALTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 2)
Time: 120 min
Marks: 87
| ExamDate: | 3/1/2010 12:00:00 AM |
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
Obligations to pay cash or un-earned incomes by the business are the:
► Expenses
► Assets
► Liabilities
► Equities
Question No: 3 ( 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: 4 ( 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: 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
Gross Profit > Operating Expenses=?
► Net Profit
► Cost of Goods Sold
► Net Loss
► Gross Loss
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
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: 10 ( 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: 11 ( 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: 12 ( Marks: 1 ) - Please choose one
|
| Rs. 1,00,000 |
| Life of asset | 5 years |
| Depreciation for each year | Rs. 15,000 |
| | 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: 13 ( Marks: 1 ) - Please choose one
Bank Reconciliation Statement is prepared by:
► Bankers
► Accountant of the business
► Statutory auditor
► Manger
Question No: 14 ( 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: 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
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: 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
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: 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
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
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: 22 ( 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: 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
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: 25 ( 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: 26 ( 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: 27 ( 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: 28 ( 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: 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
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: 31 ( 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
Question No: 32 ( 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: 33 ( 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
► All of the given options
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
|
| 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: 36 ( 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: 37 ( 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: 38 ( 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: 39 ( 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: 40 ( 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: 41 ( Marks: 1 ) - Please choose one
Debenture is also named as:
► Share
► Bond
► Equity
► Reserve
Question No: 42 ( Marks: 1 ) - Please choose one
The amount brought by the proprietor in the business should be credited to:
► Cash account
► Capital account
► Drawings account
► Assets account
Question No: 43 ( 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: 44 ( 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: 45 ( Marks: 1 ) - Please choose one
On the balance sheet, liabilities are categorized as current or
► Deferred
► Unearned
► Long-term
► Accrued
Question No: 46 ( Marks: 1 ) - Please choose one
According to the rule of debit and credit for balance sheet accounts:
► Increase in asset, liability, and owners’ equity accounts are recorded by debits.
► Decrease in asset and liability accounts are recorded by credits
► Increase in asset and owners’ equity accounts are recorded by debits
► Decrease in liability and owners’ equity accounts are recorded by debits
Question No: 47 ( 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: 48 ( Marks: 1 ) - Please choose one
Stockholder’s equity would not be affected by:
► Dividends to stockholders
► Net loss
► Purchase of land from the proceeds of bank loan
► Investments of cash by stockholders
Question No: 49 ( 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: 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. A?
► Rs.52,500
► Rs.42,500
► Rs.43,500
► Rs.50,500
Question No: 51 ( 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: 52 ( 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: 53 ( 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
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: 55 ( Marks: 3 )
Following information is extracted from the books of ABC Ltd as on December 31st, 2008.
| Particulars | Rs |
| Advances from customer | 10,000 |
| General reserve | 40,000 |
| Accumulated profit brought forward(credit balance ) | 95,000 |
| Long term loans | 1,00,000 |
| Sundry debtors | 6,500 |
| Stock in trade | 50,000 |
| Advances and prepayments | 9,500 |
| Short term running finance | 45,400 |
You are required to calculate Working Capital
Question No: 56 ( Marks: 5 )
What is the meaning of investment. Differentiate between long term and short term investments.
Investment:
Whatever money or resources from ones’ own pocket are put in a business is referred to as CAPITAL.
Capital is the investment of the Owner in the business.
Long term Investment:
Investments made with the intention that they will be held for a period longer than twelve months are classified as long term (over the year).
Short Term Investment:
Investments made for a period equal to or shorter than 12 months are classified as short term, (usually under the year i.e. quick bond or fast moving shares)
Question No: 57 ( Marks: 5 )
ABC Inc.’s cash balance at December 31, 2007, the end of its financial reporting year, was Rs.165,000. During 2007, cash provided by operations was Rs.140,000, cash used in investing activities was Rs.60,000, and cash provided by financing activities was Rs.15,000. Calculate the amount of ABC’s beginning cash balance at January 1, 2007.
RS 105000
Question No: 58 ( Marks: 10 )
Pass the rectifying entries to correct the following errors:
1) Mr. “Ali” purchased goods of Rs. 1,500 on cash, but omitted to enter in the books of accounts.
Answer:-
Debit Purchase A/c 1,500
Credit Creditor A/c 1,500
2) An amount of Rs. 5,000 received from Mr. Amir, was credited to the account of Mr. Ameer.
Answer:-
Debit Ameer’s A/c 5,000
Credit Amir’s A/c 5,000
3) Goods returned worth Rs. 500 to Mr. “B” wrongly debited to sales Account.
Answer:-
Debit Sales A/c 500
Credit Goods Returned A/c 500
4) A purchase of goods from Mr. “B” of Rs. 400 has been wrongly debited to Furniture Account.
Answer:-
Debit Purchase of Goods A/c 400
Credit Furniture A/c 400
5) Furniture purchased on cash Rs. 8,000 posted as purchases.
Answer:-
Debit Cash 8000
Credit Purchases 8000
Question No: 59 ( Marks: 10 )
Identify which of the following activities are operating, investing or financing in the context of cash flow statement.
6) Payment to owners, such as cash dividends
7) Cash proceeds from collecting principal amounts on loans
8) Payments of interest
9) Payments to acquire investments and plant and intangible assets
10) Payments of income taxes
11) Amounts advanced to borrowers
12) Collections from customers for sales of goods and services
13) Interest and dividends received
14) Proceeds from both short-term and long-term borrowing
15) Cash received from owners
Solution:
| S. No. | Particulars | Activities |
| 1 | Payment to owners, such as cash dividends | Financing |
| 2 | Cash proceeds from collecting principal amounts on loans | Financing |
| 3 | Payments of interest | Financing |
| 4 | Payments to acquire investments and plant and intangible assets | Investing |
| 5 | Payments of income taxes | Operating |
| 6 | Amounts advanced to borrowers | Operating |
| 7 | Collections from customers for sales of goods and services | Operating |
| 8 | Interest and dividends received | Financing |
| 9 | Proceeds from both short-term and long-term borrowing | Financing |
| 10 | Cash received from owners | Financing |
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