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
► 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:
► 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?
► 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
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
► 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
► 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?
► 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
► 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
► 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
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
|
| 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.
Question No: 40 ( Marks: 1 ) - Please choose one
|
| 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
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
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 ( 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
► 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
► 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
► 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.
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 |
| 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.
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