FINALTERM EXAMINATION
Fall 2009
MGT101- Financial Accounting (Session - 2)
Question No: 1 ( Marks: 1 ) - Please choose one
Shares for which amount is paid by public are called ________ shares.
► Paid up
► Authorized
► Bonus shares
► All are correct options
Question No: 2 ( Marks: 1 ) - Please choose one
Which of the following account/s will be affected under the rule of accrual accounting, when furniture is purchased on cash?
► Only Cash Account
► Only Furniture Account
► Cash & Furniture Account
► Only Purchases Account
Question No: 3 ( 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: 4 ( 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: 5 ( Marks: 1 ) - Please choose one
Which of the following is NOT an example of intangible assets?
► Franchise rights
► Goodwill
► Patents
► Land
Question No: 6 ( Marks: 1 ) - Please choose one
Which of the following account will be credited in the books of ABC Co. Ltd., if furniture is purchased on cash?
► Furniture account
► Cash account
► Business account
► Bank account
Question No: 7 ( Marks: 1 ) - Please choose one
If the working capital and the current assets of company XYZ are Rs. 5,000 and Rs.15,000 respectively, calculate the current liabilities.
► Rs. 5,000
► Rs. 10,000
► Rs. 15,000
► Rs. 20,000
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
The total of all costs incurred to convert raw material into finished goods is known as:
► Prime cost
► Conversion cost
► Sunk cost
► Opportunity cost
Question No: 10 ( 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: 11 ( Marks: 1 ) - Please choose one
Fixed assets are also called:
► Depreciable assets
► Current assets
► Liquid assets
► Floating assets
Question No: 12 ( 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: 13 ( Marks: 1 ) - Please choose one
Increase in an asset 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: 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
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
Consider the following data:
Particulars
|
Rs.
|
Assets
|
8,20,000
|
Owner's equity
|
3,80,000
|
Liabilities
|
?
|
► Rs. 1, 98,000
► Rs. 49,000
► Rs. 55,000
► Rs. 4, 40,000
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
Bank Statement is a record of transactions between the bank and the holder of:
► A foreign currency account
► A current account
► A saving account
► 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
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: 21 ( Marks: 1 ) - Please choose one
Which of the following is/are the item/s of a Control Account?
► Credit sale only
► Cash sale only
► Credit purchase only
► Both Credit sales and Credit purchase
Question No: 22 ( Marks: 1 ) - Please choose one
Control account tells about:
► Details of loyal clients
► Customer attitude of payments
► Complete history of transactions of business clients
► Picture collectively instead of individually
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
Which of the following account(s) will be affected, while rectifying the error of a purchase return of Rs.200 to Mr. “A” entered in sales book instead of purchase return book?
► A’s account only
► Sales account only
► Purchase returns account and sales account
► Purchases account only
Question No: 25 ( 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: 26 ( Marks: 1 ) - Please choose one
Which of the following entry will be recorded, if a cheque deposited is dishonored by bank?
► Bank Account (Dr.) and Debtor's Account (Cr.)
► Debtor's Account (Dr.) and Bank Account (Cr.)
► Dishonored Cheque Account (Dr.) and Bank Account (Cr.)
► Creditor's Account (Dr.) and Bank Account (Cr.)
Question No: 27 ( Marks: 1 ) - Please choose one
Following information are extracted from books of Mr. XYZ
Particulars
|
Rs.
|
Closing value of stock
|
40,000
|
Write off Bad debts (given in adjustments)
|
2,400
|
Sundry Debtors (given in trial balance)
|
33,200
|
Provision is created on Debtors at 10%
| |
Identify the Total amount deducted from Sundry debtors.
► Rs. 460
► Rs. 2,400
► Rs. 3,080
► Rs. 5,480
Question No: 28 ( Marks: 1 ) - Please choose one
Following information are extracted from books of Mr. XYZ
Particulars
|
Rs.
|
Closing value of stock
|
40,000
|
Bad Debts (Given in trial balance)
|
500
|
Old provisions (Given in trial balance)
|
700
|
Sundry Debtors (Given in trial balance)
|
44,500
|
Provision for doubtful debts be increases by 5%
| |
What will be the amount of new provision
|
?
|
► Rs. 2,225
► Rs. 2,425
► Rs. 1,925
► Rs. 3,025
Question No: 29 ( 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: 30 ( 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: 31 ( 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: 32 ( Marks: 1 ) - Please choose one
In Income Statement, both beginning inventory and ending inventory appear in the section of:
► Cost of good sold
► Indirect cost
► Selling cost
► Factory over head cost
Question No: 33 ( Marks: 1 ) - Please choose one
If dividend is proposed by directors of the company @ 30% for the year, it will be calculated on:
► Capital Reserve
► Authorized share capital
► Paid up share capital
► Share premium
Question No: 34 ( Marks: 1 ) - Please choose one
A company is said to have been registered when:
► It gets certificate of incorporation from registrar of Companies
► It gets certificate of commencement of business from registrar of Companies
► It actually starts its business
► It filed with the Registrar of Companies articles certain documents, like memorandum and articles of association
Question No: 35 ( Marks: 1 ) - Please choose one
6% Debentures Account Rs. 3, 00,000. What amount of interest on debentures should be shown in profit and loss account?
► Rs. 6,000
► Rs. 3, 00,000
► Rs. 18,000
► Rs. 3, 18,000
Question No: 36 ( Marks: 1 ) - Please choose one
What are the effects on financial statements, if provision for Income Tax to be made Rs. 12,000 is given in adjustment?
► It will be deducted in Income Statement only
► It will be treated as current liability in balance sheet only
► It will be treated as current asset in balance sheet only
► Both it will be deducted in income statement and it will be treated as current liability in balance sheet
Question No: 37 ( Marks: 1 ) - Please choose one
When the current Ratio is 2: 5 and the amount of Current Liabilities is Rs. 25,000. What will be the amount of Current Assets?
► Rs. 62,500
► Rs. 12,500
► Rs. 10,000
► Cannot be calculated with the help of given data
Question No: 38 ( Marks: 1 ) - Please choose one
Prepaid interest given in the Trial Balance will be treated as a (an):
► Asset
► Liability
► Revenue
► Deferred expense
Question No: 39 ( Marks: 1 ) - Please choose one
Which one of the following is another name of carrying cost of an asset?
► Book Value
► Residual Value
► Fair Value
► Break up Value
Question No: 40 ( Marks: 1 ) - Please choose one
An overdraft will appear as:
► A debit balance in both the bank statement and the cash book
► A credit balance in the bank statement but as a debit balance in the cash book
► A credit balance in the cash book but as a debit balance in the bank statement
► A credit balance in both the bank statement and the cash book
Question No: 41 ( Marks: 1 ) - Please choose one
Recovery of bad debts is treated as:
► Profit
► Revenue
► Expense
► Asset
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
The amount owed by debtors at the start of a month appears on the ___________ side of the individual debtors account.
► Left side or credit
► Left side or debit
► Right side or debit
► Right side or credit
Question No: 44 ( Marks: 1 ) - Please choose one
Ahmad Industries want to make payment to its supplier in the form of a pay order. The bank deducted Rs.160 as service charges without its knowledge. The error is known as:
► Error of commission
► Error of omission
► Error of original entry
► Error of principle
Question No: 45 ( Marks: 1 ) - Please choose one
Which of the given statement is CORRECT if both sides of trial balance are equal?
► It is proof that no transaction was completely omitted from the ledger during the posting process
► It is proof that the correct debit or credit balance has been computed for each account
► It is proof that the ledger is in balance
► It is proof that transactions have been correctly analyzed and recorded in the proper accounts
Question No: 46 ( Marks: 1 ) - Please choose one
Which of the following justifies when profit is earned?
► Assets exceed Expenditure
► Income exceeds Expenditure
► Cash Inflow exceeds Cash Outflow
► Income exceeds Liabilities
Question No: 47 ( Marks: 1 ) - Please choose one
In a partnership of Mr. A and Mr. B, the share of profit of Mr. A is Rs.75,375 and the share of profit of Mr. B is Rs. 25,125. What will be the ratio of their share?
► 1:2
► 2:3
► 3:2
► 3:1
Question No: 48 ( Marks: 1 ) - Please choose one
Income tax expense of Eden Corporation shows a debit balance of Rs.7,000 in its unadjusted trial balance and Rs.7,600 in adjusted trial balance. Which of the following account will be credited in adjusting entry?
► Income tax payable
► Prepaid income tax
► Income tax expense
► Income tax paid
Question No: 49 ( Marks: 1 ) - Please choose one
Sanders Construction sold a plant asset that originally cost Rs.80,000 for Rs.52,000 cash. If Sanders correctly reports a Rs.5,000 gain on this sale, the accumulated depreciation on the asset at the date of sale must have been:
► Rs.23,000
► Rs.28,000
► Rs.33,000
► Some other amount
Question No: 50 ( Marks: 1 ) - Please choose one
Which of the following is responsible to register the companies?
► State Bank of Pakistan
► Security and Exchange Commission of Pakistan
► Supreme Court
► Stock Exchange
Question No: 51 ( Marks: 1 ) - Please choose one
Which of the following can be utilized to set off any loss on revaluation?
► Capital reserve
► General reserve
► Revaluation reserve
► None of the given options
Question No: 52 ( 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: 53 ( 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: 54 ( Marks: 1 ) - Please choose one
Short term investments in marketable securities and treasury bills that will mature within ninety days from the date of acquisition, must be classified as:
► Receivables
► Receipts from Capital
► Current and intangible assets
► Cash equivalents
Question No: 55 ( Marks: 3 )
Give four reasons, why capital might change.
1. The entrance or exit of some (new) partner
2. Withdraw by partner(s)
3. Additional Investment by the partner(s)
4. Profit/Loss
Question No: 56 ( Marks: 5 )
Write down the five advantages of Limited Company.
1. It is a legal entity created by law and hence has its own recognition, good will and brand equity etc.
2. It is a wide form of business and hence a formal approach for various partners/investors to come and work for the same objectives in an organized form.
3. Liability limited to company assets only. Investors/partners do not personally liable for any loss or in state of bankrupty.
4. Being a legal entity, easy to get loans or gather funds from public (for public limited companies only) or financial institutes.
5. Being a legal entity, it can enjoy more opportunities for mega projects and trade/operations opportunities in international markets on its on behalf.
Question No: 57 ( 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
Solution:
(A)
Discount Received= (150,000-20,000) x (2/100) = 2600
(B)
Particulars Dr. Cr.
Entry for Purchase
Goods 150,000
A/P 150,000
Entry for Return
A/P 20,000
Goods 20,000
While making Payment (@ 2% discount = 2600)
A/P 130,000
Discount income 2,600
Cash 127,400
Question No: 58 ( Marks: 10 )
State clearly how you will deal with Bad Debts Account, Provision for Bad Debts Account, Profit & Loss account and Balance Sheet in the following case:
The items appearing in the trial balance are bad debts Rs. 300, provision for bad debts Rs. 350 and sundry debtors Rs. 12,000. It is required to increase the provision for bad debts to 5% on sundry debtors.
Question No: 59 ( Marks: 10 )
The unadjusted and adjusted trial balances for Tinker Corporation on December 31, 2007, are shown below:
Tinker Corporation
Trial Balances
December 31, 2007
| ||||
Unadjusted
|
Adjusted
| |||
Debit
Rs.
|
Credit
Rs.
|
Debit
Rs.
|
Credit
Rs.
| |
35,200
|
35,200
| |||
Accounts receivable
|
29,120
|
29,120
| ||
Unexpired insurance
|
1,200
|
600
| ||
Prepaid rent
|
5,400
|
5,400
| ||
Office supplies
|
680
|
380
| ||
Equipment
|
60,000
|
60,000
| ||
Accumulated depreciation: equipment
|
49,000
|
50,000
| ||
Accounts payable
|
900
|
900
| ||
Notes payable
|
5,000
|
5,000
| ||
Interest payable
|
200
|
200
| ||
Salaries payable
|
-
|
2,100
| ||
Income taxes payable
|
1,570
|
1,570
| ||
Unearned revenue
|
6,800
|
3,800
| ||
Capital stock
|
25,000
|
25,000
| ||
Retained earnings
|
30,000
|
30,000
| ||
Fees earned
|
91,530
|
94,530
| ||
Advertising expense
|
1,500
|
1,500
| ||
Insurance expense
|
6,600
|
7,200
| ||
Rent expense
|
19,800
|
19,800
| ||
Office supplies expense
|
1,200
|
1,500
| ||
Repairs expense
|
4,800
|
4,800
| ||
Depreciation expense: equipment
|
11,000
|
12,000
| ||
Salaries expense
|
26,300
|
28,400
| ||
Interest expense
|
200
|
200
| ||
Income taxes expense
|
7,000
|
7,000
| ||
210,000
|
210,000
|
213,100
|
213,100
| |
Journalize the five adjusting entries that the company made on December 31, 2007.
Solution:
Date Particular Dr. Cr.
Dec 31 Insurance expense 600
to Unexpired insurance 600
Dec 31 Office Supplies Expense 300
to Office Supplies 300
Dec 31 Depreciation Expense-Equip. 1000
to Accumulated depreciation-Equip. 1000
Dec 31 Salaries Expense 2100
to Salaries Payable 2100
Dec 31 Unearned revenue 3000
to Fee Earned 3000
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