FIN621 CURRENT QUIZ June 2010

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Just for Idea


Question # 1 of 15 ( Start time: 11:26:34 AM ) Total Marks: 1
Resources owned by a business are called:
Select correct option:
1. Owner equity
2. Assets (page# 18)
3. Reserves
4. Liabilities

Question # 2 of 15 ( Start time: 11:26:41 AM ) Total Marks: 1
Which of the following is deducted from the net income while preparing cash flow statement by indirect method?
Select correct option:
1. Decrease in inventories
2. Increase in accounts payable (not sure)
3. Depreciation
4. Increase in inventories

Question # 3 of 15 ( Start time: 11:27:53 AM ) Total Marks: 1
Which of the following represents the negative future cash flows for an enterprise?
Select correct option:
1. Assets
2. Ownerequity
3. Liabilities
4. Capital

Question # 4 of 15 ( Start time: 11:29:14 AM ) Total Marks: 1
Under which cost flow assumption is the ending inventory composed of the most recently purchased merchandise?
Select correct option:


1. FIFO
2. LIFO
3. Average cost
4. Specific identification

Question # 5 of 15 ( Start time: 11:29:45 AM ) Total Marks: 1
The information in statement cash flows assists the investors, creditors, and others in assessing:
Select correct option:
1. Enterprise ability to meet its obligations
2. Enterprise ability to pay dividends
3. Enterprise needs for external financing
4. Enterprise needs for external financing

Question # 6 of 15 ( Start time: 11:30:45 AM ) Total Marks: 1
Which of the following should NOT be called “Sales “?
Select correct option:
1. Goods sold for cash
2. Office fixtures sold
3. Goods sold on credit
4. Sale of item previously included in Purchasese

Question # 7 of 15 ( Start time: 11:31:04 AM ) Total Marks: 1
Which of the following account would NOT be closed to the income summary account at the end of a period?
Select correct option:


Rent expense
Revenue earned
Wages expense
Accumulated depreciation

Question # 8 of 15 ( Start time: 11:32:33 AM ) Total Marks: 1
A business has purchased a building on cash, how it would be recorded in the journal?
Select correct option:
1. Building - Debit; Cash - Credit
2. Cash - Debit; Building - Credit
3. Building - Debit; Owner equity - Credit
4. Building - Debit; Accounts Payable - Credit

Question # 9 of 15 ( Start time: 11:32:41 AM ) Total Marks: 1
All of the following accounts would be closed in Income Summery Account EXCEPT:
Select correct option:
1. Commission earned account
2. Prepaid insurance
3. Salaries Expense account
4. Wages account

Question # 10 of 15 ( Start time: 11:33:31 AM ) Total Marks: 1
In which of the following account, a credit balance would be an evidence for a mistake or an error?
Select correct option:
1. Mr. A Capital Account
2. Cash account
3. Notes payable account (page #6)
4. Drawings account

Question # 11 of 15 ( Start time: 11:34:53 AM ) Total Marks: 1
Which of the following principle is used for recording a revenue?
Select correct option:
1. Matching Principle
2. Cost Principle
3. Realization Principle
4. Objectivity Principle

Question # 12 of 15 ( Start time: 11:36:18 AM ) Total Marks: 1
Primary purpose of the cash flows statement is to provide the information about:
Select correct option:
1. Errors or discrepancies between cash book and income statement
2. Receipts and payments of cash in the period
3. Non cash adjustment that effect the income statement
4. Cash paid to the customers and creditors of the business

Question # 13 of 15 ( Start time: 11:37:43 AM ) Total Marks: 1
Using the following information calculate Net Income: Sales Revenue Rs.200, 000, Loss on Sale of Equipment Rs.10, 000, Amortization Expense Rs.20, 000 and Cost of Goods Sold Rs.50, 000.
Select correct option:
1. Rs. 170,000
2. Rs. 130,000
3. Rs. 120,000
4. Rs. 180,000

Question # 14 of 15 ( Start time: 11:39:10 AM ) Total Marks: 1
Audit opinions can NOT be classified as which of the following?
Select correct option:
1. Adverse opinion
2. Unqualified opinion
3. Qualified opinion
4. Disagreement of opinion

Question # 15 of 15 ( Start time: 11:39:54 AM ) Total Marks: 1
According to _______ the personal expenses paid by Mr. A from his own pocket would not be recorded in business books of account.
Select correct option:
1. Realization principle
2. Separate entity principle
3. Matching principle
4. Materiality principle

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Question # 1 of 15 ( Start time: 03:06:44 PM ) Total Marks: 1
Which of the following is NOT the part of the stockholder’s equity?
Select correct option:
1. Paid-in-Capital
2. Additional Paid-in-Capital
3. Gross profit
4. Retained Earnings

Question # 2 of 15 ( Start time: 03:07:31 PM ) Total Marks: 1
Which of the following would NOT represent the cash outflows for the business?
Select correct option:
1. Purchase of building for cash
2. The sale of land for cash
3. Retirement of long term debt
4. The payment of cash for dividends

Question # 3 of 15 ( Start time: 03:08:13 PM ) Total Marks: 1
Which of the following statement is NOT true?
Select correct option:
1. Financial statements may be prepared soon after the adjusted trail balance
2. The owner’s equity is not up to the date until the closing entries are posted
3. Adjusting entries are prepared before the financial statements are prepared
4. In the accounting cycle, closing entries are made before the adjusting entries page#36

Question # 4 of 15 ( Start time: 03:09:40 PM ) Total Marks: 1
Current assets are those assets which management intends to convert into cash or consume within:
Select correct option:
1. The operating cycle
2. One year
3. The longer of operating cycle or one year
4. The shorter of operating cycle or one year

Question # 5 of 15 ( Start time: 03:09:59 PM ) Total Marks: 1
Adjusting entries are required for which of the following accounts?
Select correct option:
1. Income Summary accounts
2. Revenue and expense accounts
3. All types of accounts
4. Assets and liabilities accounts

Question # 6 of 15 ( Start time: 03:10:22 PM ) Total Marks: 1
Which of the following is the proper journal entry to record Ransom Company's billing of clients for Rs. 500 of services rendered?
Select correct option:
1. Debit Cash 500; Credit Accounts Receivable 500
2. Debit Accounts Receivable 500; Service Revenue 500
3. Debit Accounts Receivable 500; Credit Capital Stock 500
4. Cash 500; Credit Service Revenue 500

Question # 7 of 15 ( Start time: 03:10:54 PM ) Total Marks: 1
How many types of audit certificate are there?
Select correct option:
1. Two
2. Three
3. Four
4. Five

Question # 8 of 15 ( Start time: 03:12:16 PM ) Total Marks: 1
Inventory accounts should be classified in which section of a balance sheet?
Select correct option:
1. Current assets
2. Investments
3. Property, plant, and equipment
4. Intangible assets

Question # 9 of 15 ( Start time: 03:12:49 PM ) Total Marks: 1
Which of the following is not true about the “Account”?
Select correct option:
1. Accounts are only prepared by the business entities
2. Account always reflects the amount of the single transaction only
3. Account is effected both by economic and non economic events
4. All of the given options

Question # 10 of 15 ( Start time: 03:13:30 PM ) Total Marks: 1
In simple words book value would be the amount of money that a holder of a common share would get if a company were to:
Select correct option:
1. Consolidate
2. Merged with another company
3. Acquired by another company
4. Liquidate

Question # 11 of 15 ( Start time: 03:14:32 PM ) Total Marks: 1
Which of the following is NOT the part of annual report?
Select correct option:
1. Financial statements
2. Auditor’s report
3. Five year summary
4. Future investments report

Question # 12 of 15 ( Start time: 03:15:18 PM ) Total Marks: 1
Equipment costing Rs. 3,000 with accumulated depreciation of Rs. 2,125 is exchanged for another asset with a fair value of Rs. 625. The exchange has commercial substance. How much is the gain or loss on this transaction?
Select correct option:
1. A gain of Rs. 250 should be recognized
2. A loss of Rs. 250 should be recognized
3. A loss of Rs. 500 should be recognized
4. No gain or loss should be recognized.

Question # 13 of 15 ( Start time: 03:15:50 PM ) Total Marks: 1
Which of the following is NOT a financial asset?
Select correct option:

1. Marketable securities
2. Receivables
3. Inventory
4. Short-term investments

Question # 14 of 15 ( Start time: 03:16:39 PM ) Total Marks: 1
The basic purpose of financial statements is to assist users in evaluating the________
Select correct option:
1. Financial position
2. Profitability of an organization
3. Future prospects
4. All of the given options

Question # 15 of 15 ( Start time: 03:17:03 PM ) Total Marks: 1
Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings?
Select correct option:
1. Net loss
2. Net income
3. Dividends
4. Investments by stockholders