latest MGT101 Financial Accounting final term paper July spring 2011

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Time: 90 min
Marks: 69
Question No: 1 ( 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: 2 ( Marks: 1 ) - Please choose one
Consider the following:


Beginning inventory

10 units @ Rs. 10 per unit
First purchase

35 units @ Rs. 11 per unit
Second purchase

40 units @ Rs. 12 per unit
Third purchase

20 units @ Rs. 13 per unit
Eighty-five units were sold, what is the value of the ending inventory using the FIFO method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
► Rs.268

Question No: 3 ( Marks: 1 ) - Please choose one
Consider the following data and identify the amount which will be shown in profit & loss account.
Particulars

Rs.
Bad debts

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: 4 ( Marks: 1 ) - Please choose one
Transaction that has been completely forgotten to enter is called:
► Error of principle
► Error of omission
► Error of commission
► Error of original entry

Question No: 5 ( 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: 6 ( Marks: 1 ) - Please choose one
Consider the following data and identify the amount which will be shown in profit & loss account.
Particulars

Rs.
Bad debts

1,600
Provision for doubtful debts (old)

2,000
Current year’s provision (new)

1,000

► Rs. 600
► Rs. 1,600
► Rs. 2,000
► Rs. 2,600

Question No: 7 ( Marks: 1 ) - Please choose one
Which one of the following is TRUE about provisions?
► It is necessary to prepare for showing true picture of balance sheet
► It is a reduction from assets
► It is prepared for specific purposes
► All of the given options

Question No: 8 ( 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: 9 ( Marks: 1 ) - Please choose one
The primary purpose of preparing a cash flow statement for an entity is to provide information about:
Its financial position at the end of an accounting period ►
Its cash receipts and cash payments during an accounting period ►
Its financial position at the start of an accounting period ►
None of the given options ►

Question No: 10 ( 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: 11 ( 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: 12 ( 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: 13 ( 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. C in distributable profit.
► Rs. 98,000
► Rs. 1, 47,000
► Rs. 2, 45,000
► Rs. 3, 43,000

Question No: 14 ( Marks: 1 ) - Please choose one
Which of the following will be credited, if cash is drawn by Proprietor?
► Proprietor’s drawing
► Proprietor’s cash
► Proprietor’s capital
► Proprietor’s income

Question No: 15 ( Marks: 1 ) - Please choose one
An asset cost Rs. 50,000, has an estimated residual value of Rs.1, 500, and an estimated useful life of 8 years. What is the depreciation rate under reducing balance method?


► 11.5%
► 20.0%
► 25.0%
► 35.5%

Question No: 16 ( Marks: 1 ) - Please choose one
Mr. B provided the following information at the end of the month:


Particulars

Rs.
Cash

100
Accounts Receivable

500
Accounts Payable

200
Bank Loans

1,000


Based on the information provided, what are the total assets of Mr. B?
► Rs.200
► Rs. 600
► Rs. 800
► Rs. 1,700

Question No: 17 ( Marks: 1 ) - Please choose one
When we close bad debt account, which of the following account is debited?
► Profit and loss account
► Bad debt account
► Debtor account
► Creditor account

Question No: 18 ( Marks: 1 ) - Please choose one
ABC Company received discount on its credit purchases, which of the following will be credited while entering in journal?
► Cash
► Discount received
► Creditors
► Bank

Question No: 19 ( Marks: 1 ) - Please choose one
Credit sales appear on the ____________ side of the Debtors control account.
► Left side or credit
► Left side or debit
► Right side or debit
► Right side or credit

Question No: 20 ( Marks: 1 ) - Please choose one
Bad debts belong to which one of the following class:
► Asset
► Revenue
► Expense
► Owner’s Equity

Question No: 21 ( Marks: 1 ) - Please choose one
Which of the following is used to convert accounting information from the cash basis of accounting to the accrual basis of accounting?
► Ledger
► Journal entries
► Adjusted entries
► Trial balance

Question No: 22 ( Marks: 1 ) - Please choose one
Adjusting entries are recorded in which of the following?
► Voucher
► General journal
► Ledger
► Trial balance

Question No: 23 ( Marks: 1 ) - Please choose one
Dillon Company sold marketable securities Costing Rs.60,000 for Rs.72,000 cash. In the company’s income statement and statement of cash flows, respectively, this will appear as:
► A Rs.72,000 gain and a Rs.6,000 cash receipt
► A Rs.12,000 gain and a Rs.72,000 cash receipt
► A Rs.12,000 gain and a Rs.60,000 cash receipt
► A Rs.72,000 sale and a Rs.72,000 cash receipt

Question No: 24 ( Marks: 1 ) - Please choose one
For which of the following share premium can be utilized?
► To write off preliminary expenses
► To meet the expenses of issue of shares
► To issue bonus shares
► All of the given options

Question No: 25 ( 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: 26 ( Marks: 1 ) - Please choose one
In statement of cash flows, a payment of cash dividends is related to:
► Investing activity
► Financing activity
► Operating activity
► Cash flows from operations

Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following is concerned with to maintain the books of accounts in a systematic way?
► Accounting
► Recording
► Book-keeping
► Summarizing

Question No: 28 ( 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: 29 ( 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: 30 ( Marks: 1 ) - Please choose one
Which of the following shows a debit balance under normal circumstances?
► Asset
► Expenses
► Both assets and expenses
► Revenue

Question No: 31 ( Marks: 1 ) - Please choose one
Which of the following is used to record the receipts of cash or cheque?
► Journal Voucher
► Receipt Voucher
► Payment Voucher
► Cash voucher

Question No: 32 ( Marks: 1 ) - Please choose one
Closing stock of the previous year becomes:
► Opening stock of the next year
► Opening stock of previous year
► Closing stock of the next year
► None of the given options

Question No: 33 ( Marks: 1 ) - Please choose one
If:
Ø Cost of machine= Rs. 200,000
Ø Rate of depreciation = 10% p.a.
Ø Sale price= Rs. 50,000
What will be book value of machine after two years using diminishing balance method?
► Rs. 150,000
► Rs. 162,000
► Rs. 160,000
► Rs. 180,000

Question No: 34 ( Marks: 1 ) - Please choose one
Which of the following is TRUE about capital receipt?
► It decreases value of property or increases value of liability
► It is shown in the income and expenditure account
► It is recurring in nature
► It is not shown in the statement of financial positions

Question No: 35 ( Marks: 1 ) - Please choose one
Bank reconciliation statement is a part of:
► Pass book
► Ledger account
► Cash book
► Journal

Question No: 36 ( Marks: 1 ) - Please choose one
When Bank Statement shows a debit balance it means:
► Favourable balance as per cash book
► Debit balance as per cash book
► Favourable balance as per bank statement
► Overdraft as per bank statement

Question No: 37 ( 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%, what amount of provision for doubtful debts will be shown in Profit & Loss Account?
► Rs. 2,240
► Rs. 2,425
► Rs. 1,925
► Rs. 3,025

Question No: 38 ( Marks: 1 ) - Please choose one
Which of the following is TRUE?
► Unearned revenue is an asset shown in balance sheet
► Unearned revenue is a liability shown in balance sheet
► Unearned revenue is a liability shown in profit and loss account
► Unearned revenue is revenue shown in profit and loss account

Question No: 39 ( Marks: 1 ) - Please choose one
Prepaid insurance will become an expense when the balance of prepaid amount is _________.
► Expired
► Collected
► Paid
► Earned

Question No: 40 ( Marks: 1 ) - Please choose one
Which of the following would be included in the cost of goods sold?
► Cost of materials used
► Sales
► Operating expenses
► Operating income

Question No: 41 ( Marks: 1 ) - Please choose one
Which of the following Legal Documents of a company contain(s) the rules and regulations framed for the internal management of the company?
► Memorandum of Association
► Articles of Association
► Both Memorandum of Association and Articles of Association
► Prospectus

Question No: 42 ( Marks: 1 ) - Please choose one
ABC Co. Ltd. has a paid up capital of Rs. 800,000 divided into 8,000 shares of Rs.100 each. Two bonus shares are issued for every four shares held in the company. Select the write answer for bonus shares from the options given below.
► 4,000 bonus shares
► 8,000 bonus shares
► 16,000 bonus shares
► 32,000 bonus shares

Question No: 43 ( Marks: 1 ) - Please choose one
XYZ Company has paid up capital of 20,000 shares of Rs. 100 each. The company offers to existing shareholders the right to buy 3 shares of Rs. 100 each at Rs. 125 for every 5 shares held. What would be the number of right shares?
► 120 right shares
► 12,000 right shares
► 15,000 right shares
► 25,000 right shares

Question No: 44 ( Marks: 1 ) - Please choose one
The amount of share premium can be utilized EXCEPT:
► To write off preliminary expenses
► To meet the expenses of issue of shares
► To distribute among the shareholders
► To issue bonus shares

Question No: 45 ( Marks: 1 ) - Please choose one
In converting from the cash to accrual basis of accounting, if a current asset account has decreased, the decrease:
► Should be added to net income
► Should be subtracted from net income
► Should be multiplied with net income
► Has no effect on net income

Question No: 46 ( Marks: 1 ) - Please choose one
If, Retain earning at the beginning Rs. 897, Net income Rs. 140, and Retain earning at the end Rs. 1,009. Then, which of the following figure represents the amount of dividend paid?
► Rs. 28
► Rs. 252
► Rs. 739
► Rs. 2,046

Question No: 47 ( Marks: 1 ) - Please choose one
Current ratio may be increased by:
► Overstating current Assets
► Overstating current Liabilities
► Understating current Assets
► Understating current assets and overstating current liabilities

Question No: 48 ( Marks: 1 ) - Please choose one
Which of the following is/are least important as a measure of short-term liquidity?
► Quick ratio
► Debt ratio
► Current ratio
► All of the given options

Question No: 49 ( Marks: 3 )
Differentiate between debtor’s turnover ratio and creditor’s turnover ratio.

Question No: 50 ( Marks: 3 )
Pass the journal entries if:
Ø Shares are issued against cash of Rs. 20,000.
Ø Shares are issued against transfer of asset amounting to Rs. 30,000.

Question No: 51 ( Marks: 5 )
What types of changes are made when a new partner joins partnership? Mention those situations in which partnership comes to an end.

Question No: 52 ( Marks: 5 )
Ø When closing stock is given in trial balance only, then what will be its effect in Profit & Loss account and Balance Sheet and why?
Ø When depreciation is given in trial balance only, then what will be its effect in Profit & Loss account and Balance Sheet and why?

Question No: 53 ( Marks: 5 )
What do you know about the Cash flow from investing activities? Explain with the help of examples.