MIDTERM EXAMINATION
Spring 2010
MGT101- Financial Accounting (Session - 3)
Ref No: 1415841
Time: 60 min
Marks: 47
Student Info
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StudentID:
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MC100200722
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Center:
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OPKST
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ExamDate:
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5/26/2010 12:00:00 AM
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For Teacher's Use Only
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Q No.
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1
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2
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3
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4
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5
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6
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7
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8
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Total
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Marks
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Q No.
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9
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10
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11
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12
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13
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14
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15
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16
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Marks
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Q No.
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17
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18
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19
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20
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21
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22
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23
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24
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Marks
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Q No.
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25
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26
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27
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28
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29
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30
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31
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32
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Marks
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Q No.
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33
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34
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35
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36
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37
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Marks
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Question No: 1 ( 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: 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 of the following is used to record financial transactions in chronological (day-to-day) order?
► Voucher
► General Journal
► General Ledger
► Trial balance
Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following financial statement summarizes the profitability of an organization for a particular period?
► Balance Sheet
► Trading and Profit & Loss account
► Cash Flow Statement
► Statement of Retained Earnings
Question No: 5 ( Marks: 1 ) - Please choose one
While making Income & Expenditure account, Excess of income over expenses in a specified accounting period is called:
► Profit
► Loss
► Surplus
► Deficit
Question No: 6 ( Marks: 1 ) - Please choose one
If the cost of sales is Rs. 60,000, sales are Rs. 90,000 and operating expenses are Rs. 25,000 during the year. What would be the Net Profit?
► Rs. 5,000
► Rs. 25,000
► Rs. 55,000
► Rs. 60,000
Question No: 7 ( Marks: 1 ) - Please choose one
In which of the following condition a company will have positive working capital?
► If current assets > current liabilities
► If current Assets < current Liabilities
► If current assets = current liabilities
► If current assets < current liabilities
Question No: 8 ( Marks: 1 ) - Please choose one
Which one of the following is CORRECT about the closing stock?
► It appears in the assets side of a balance sheet
► It decreases the value of cost of goods sold
► It becomes opening stock of next year
► All of the given option
Question No: 9 ( Marks: 1 ) - Please choose one
In cost of goods sold statement the ‘total factory cost’ is equal to:
► Cost of material consumed + Labor cost
► Cost of material consumed + Conversion cost
► Cost of material consumed + Total factory cost
► Cost of material consumed + Factory overhead
Question No: 10 ( Marks: 1 ) - Please choose one
Consider the following inventory record:
Date
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Item
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Quantity
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Cost/Unit
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Total
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2007Jan. 2
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Opening inventory
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100
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Rs.18.00
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Rs.1,800
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Mar. 4
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Purchase
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400
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19.00
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7,600
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May 8
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Purchase
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800
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20.00
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16,000
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Nov. 3
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Purchase
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500
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21.00
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10,500
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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
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: 12 ( Marks: 1 ) - Please choose one
Which one of the following is NOT true about revaluation of fixed assets?
► Revaluation should be made after regular intervals
► Change in value should be permanent
► Only relevant asset should be revalued in the whole class of asset
► The profit or loss will be transferred to revaluation account
Question No: 13 ( Marks: 1 ) - Please choose one
Particulars
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Rs.
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Direct materials costs
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80,000
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Direct labor costs
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50,000
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Manufacturing overhead costs
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60,000
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Prime cost
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?
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► Rs.130, 000
► Rs.110, 000
► Rs.140, 000
► Rs.190, 000
Question No: 14 ( 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: 15 ( Marks: 1 ) - Please choose one
Which of the following is the recording phase of an accounting system?
► Financial Accounting
► Cost Accounting
► Management Accounting
► Book-keeping
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following are the obligations or debts of the business?
► Withdrawals
► Expenses
► Assets
► Liabilities
Question No: 17 ( Marks: 1 ) - Please choose one
The accounting equation is based on:
► Dual aspect concept
► Money measurement concept
► Going concern concept
► Separate entity concept
Question No: 18 ( Marks: 1 ) - Please choose one
The book in which accounts are maintained is called:
► Day book
► Journal
► Ledger
► Sales book
Question No: 19 ( Marks: 1 ) - Please choose one
Which one of the following is called the king of all books of account?
► The cash book
► Journal
► Ledger
► Trial balance
Question No: 20 ( Marks: 1 ) - Please choose one
Any mistake in ledger can easily be detected with the help of:
► Journal
► Compound entry
► Single entry
► Memorandum entry
Question No: 21 ( Marks: 1 ) - Please choose one
Which of the following account would be credited in case of loss of goods by fire?
► Purchase account
► Sales account
► Loss by fire account
► Capital account
Question No: 22 ( Marks: 1 ) - Please choose one
Which of the following is a book of original entry in which all the vouchers are recorded at first?
► General Journal
► General Ledger
► Trial Balance
► Balance Sheet
Question No: 23 ( Marks: 1 ) - Please choose one
The cash book in book-keeping records:
► All cash and credit purchase of goods
► Only cash payments
► All receipts and payments in cash
► All cash and credit sale of goods
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following journal entry will be recorded, if the cash is deposited in the bank?
► Bank account (Dr) and Cash account (Cr)
► Cash account (Dr) and Bank account (Cr)
► Bank account (Dr) and Profit & Loss account (Cr)
► Cost of goods Sold account (Dr) and Bank account (Cr)
Question No: 25 ( Marks: 1 ) - Please choose one
What is the best condition to finance a business?
► Fully financed from your own resource
► Fully relied on financial institutions
► Investment through own resources as well as rely on financial instructions
► None of the given options
Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following is/are the method(s) for calculating the cost of inventory?
► FIFO Method
► Weighted Average Method
► LIFO Method
► All of the given options
Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following account would be debited in case of depreciation charged to fixed assets?
► Accumulated depreciation – Fixes assets
► Fixed assets
► Depreciation expense
► Depletion
Question No: 28 ( Marks: 1 ) - Please choose one
Depreciation of office building is charged to:
► Cost of Goods Sold
► Administrative Expenses
► Selling Expenses
► Financial expenses
Question No: 29 ( Marks: 1 ) - Please choose one
Written down value of an asset = ----------------.
► Original cost – Accumulated depreciation
► Original cost – Appreciation
► Book value – Accumulated depreciation
► Original cost – Salvage value
Question No: 30 ( Marks: 1 ) - Please choose one
If Original cost is Rs. 100,000; Depreciation rate is 20% p.a. using straight line method; what would be the value of accumulated depreciation at the end of 2nd year?
► Rs. 20,000
► Rs. 40,000
► Rs. 80,000
► Rs. 60,000
Question No: 31 ( Marks: 1 ) - Please choose one
If:
Ø Cost of machine = Rs. 420,000
Ø Useful life = 5 years
Ø Residual value = Rs. 20,000
Ø Sale price at the end of 5th year = Rs. 40,000
What will be the profit or loss on disposal of machine using straight line method?
► Loss of Rs. 40,000
► Profit of Rs. 40,000
► Profit of Rs. 20,000
► Loss of Rs. 20,000
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following is TRUE about the revaluation of fixed assets?
► Revaluation should be carried out at a regular interval
► Revaluation should be carried out at irregular interval
► Revaluation should be carried out by stakeholders
► Revaluation should be carried out by stockholders
Question No: 33 ( Marks: 1 ) - Please choose one
Which of the following is/are TRUE about the revaluation of fixed assets?
► Revaluation should be carried out at a regular interval
► Revaluation should be carried out by an expert.
► The change in value should be permanent.
► All of the given options
Question No: 34 ( Marks: 1 ) - Please choose one
Favourable balance of the cash book means:
► Credit balance in cash book
► Debit balance in pass book
► Debit balance in cash book
► Unfavorable balance in pass book
Question No: 35 ( Marks: 3 )
What do you know about the Profit or Loss on Disposal of a fixed asset in accounting?
Answer:
In accounts sale/disposal of asset evaluated by preparing depreciation schedule, what is cost of purchase and how many years or month utilize the following asset. And evaluate the depleting cost by using straight line method or written down value (WMV). And compare with the market value of that asset, whether to sold this asset is beneficial for organization/company or not. If the market value profitable than the books value then it should be sold. And most important think is that evaluate that the assets in future is valid or not valid for business and what wood be the value of assets.
Question No: 36 ( Marks: 5 )
If:
· Opening stock Rs. 40,000
· Purchases Rs. 60,000
· Return Inwards Rs. 10,000
· Wages Rs. 5,000
· Salaries Rs. 10,000
· Rent Rs. 10,000
· Closing Stock Rs. 20,000
Then:
Calculate the cost of goods sold for Trading concern.
Solution/Answer:
Opening Stock 40000
Add : Purchases 60000
Less: closing Stock (20000)
Material avail for consuming 80000
Add: direct labour wages 5000
T. Factory Cost: 75000 Less: administrative expense
Salaries 5000
Rent 10000
Total 15000 15000
Cost of Goods Sold 60000
Question No: 37 ( Marks: 5 )
Calculate Profit / (loss) on disposal of asset with the help of given data.
Cost of asset
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Rs. 100,000
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Life of asset
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5 years
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Depreciation method
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Straight line
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Residual value
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Rs. 20,000
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Sale price after 5 years
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Rs. 25,000
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Answer:
Cost of assets 100,000
Deprecitation 1st year 20000
Deprecitation 2nd year 20000
Deprecitation 3rd year 20000
Deprecitation 4th year 20000
Deprecitation 5th year 20000
Less: deprication 100,000
Net value 0
Sale value 25000
Sale value 20000
Profit 5000
