mgt101 collection of old papers

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Largest Online Community of VU StudentsFINAL TERM EXAMINATION

SEMESTER Fall 2005

MGT101-Financial Accounting(Paper 2)

Total Marks: 60

Duration: 120min

Name: ………………………………………………………………………………………….

Student ID: …………………………………………………………………………………….

PVC Name & Code: …………………………………………………………………………..

INSTRUCTIONS:

Please read the following instructions carefully before attempting any question:

• The duration of this examination is 120 minutes.

• All questions are compulsory.

• This exam consists of 5 Multiple Choice Questions (MCQ’s) carrying 2 marks each, 6 Short questions

carrying 5 marks each and 2 Descriptive questions carrying 10 marks.

• You are required to show all the working of short questions as well as Descriptive questions.

• This examination is closed book, closed notes, closed neighbors.

• Do not ask any questions about the contents of this examination from anyone.

• The use of calculator is allowed.

• You may wish to pace yourself with your own watch, but the Supervisor will be the official timekeeper

of the test.

• Failure to comply with the Supervisor’s directions will result in your test being cancelled. Please comply

with supervisor’s directions to avoid any unpleasant event.

Question No: 1 Marks: 2

Debtors are:

1. The third persons/parties, from whom business owes money2. These are receivables of the business against sales of goods3. It is an asset of the business and is shown in the balance sheet under the heading of ‘current

assets’4. All of the given Options


Advance insurance is an example of1. Current Asset2. Administrative expense3. Insurance expense4. Current Liability


Which of the following is not a component of Financial Statement?

1. Balance Sheet2. Profit and Loss account3. Bank Reconciliation Statement4. Cash Flow statement


Cost of goods sold does not contain which of the following heads of Accounts:

1. Purchase of raw material/goods2. Wages paid to employees for manufacturing of goods3. Commission is paid on purchases from third parties4. Any expense incurred on carriage/transportation of purchased items


Paid up Capital is:

1. The amount raised by the company by the issue of its shares to general public2. The maximum amount with which a company gets Registration/Incorporation3. Amount collected on issuance of prospectus and debentures4. None of the given Options


What is meant by Prepaid expenses? Explain with example.


Ascertain the amount of Net Profit for the year ended 31st December by the following data:

Opening Capital 26,500Ending Capital 34,800Owner’s Drawings 9,000Additional Capital Introduced during the year 5,000


What do you mean by Current Ratio? How it is calculated? What should be its ratio for a businessOrganization?


Define SUBSIDIARY BOOKS.


Differentiate between Reserve and Provision.


Mr. Abdul Khaliq is a partner in a partnership firm. His capital on July 1, 2004 was Rs. 200,000. Heinvested further capital of Rs. 100,000 on March 1, 2005.You are required to calculate his total mark up on June 30 2005. Mark up rate is 5%.

Question No: 12 Marks : 10

Prepare a Creditors Control Account from the following data and work out the closing balance onApril 30, of creditors.

Apr. 1 Opening Balance 44,500

Totals for May:

Total Credit Purchases 32,000Purchase Return 6,200Cheques and Cash paid 28,800Discounts received 2,500

Question No: 13 Marks : 10

The following is the trial balance extracted from the books of Naeem & Sons as on 30/06/2002. Preparea profit & loss account & balance sheet for the year ended June 30, 2002.

ParticularsSalesPurchasespurchase returnSalariesRentDebtorsCreditorsCapitalPlant & machinery

Grand Total

Dr. Cr.

45,000

12,0005,000

25,000

400,000

100,000

3,000

16,000368,000

487,000 487,000

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FINALTERM EXAMINATION

FALL 2007

MGT101 - FINANCIAL ACCOUNTING (Session - 3 )

Marks: 60

Time: 150min

StudentID/LoginID:

Student Name:

Center Name/Code:

Exam Date: Friday, March 07, 2008

InstructionsPlease read the following instructions carefully before attempting any question:

• Write your student ID, Name and Centre Name /Code on the question paper as well as on answersheet; Failure to do so will result in paper cancellation.

• All questions are compulsory.• This exam consists of 10 Multiple Choice Questions carrying 1 mark each, 5 True/False carrying 1

mark each, 1 Short Question carrying 5 marks, and 3 Comprehensive Numerical Questionscarrying 10, 15, and 15 marks respectively.

• For each MCQ and T/F statement, read the choices available carefully and “Encircle” (don’t tickmark) one which you consider is the most suitable answer. Zero marks will be given if more thanone option is “Encircled”.

• Attempt all MCQs, True/False on the question paper, no credit will be given to the objectivequestions (MCQs, True/False) attempted on the answer sheet.

• Cutting and overwriting in objective type questions (MCQs, True/False statements) is not allowed;if done so, that particular question will be marked Zero.

• Remember not to spend too much time on Objective type questions. Since all MCQs and T/Fquestions carry equal marks, it is important to manage your time and response to test questionseffectively.

• Do not ask any questions about the contents of this examination from anyone.• If you believe that some essential piece of information is missing, make an appropriate assumption

and use it to solve the problem.• While solving your descriptive part on the answer sheet, question numbers must be written in

accordance with the number specified for each question in the question paper to avoid anyinconvenience.

• Students are advised to solve paper in blue and black ink and do not use red, green ink and ledpencil.

• Writing irrelevant/immoral material will be severely penalized.• This examination is closed book, closed notes, closed neighbors.• You may wish to pace yourself with your own watch but the Supervisor will be the official

timekeeper of the test.• Use of mobile phones is strictly prohibited; switch it off if it is in your custody.• Failure to comply with the Supervisor’s directions will result in your exam paper being cancelled.

Please comply with supervisor’s directions to avoid any unpleasant event.• Non-compliance of any of the instructions will be dealt severely.

For Teacher's use onlyQuestion 1 2 3 4 5 6 7 8 9 10 Total

MarksQuestion 11 12 13 14 15 16 17 18 19

MarksQuestion

Marks

Question No: 1 ( Marks: 1 ) - Please choose one

Which one of the following assets could be described as a current asset?

► Stock of goods for resale

► Machinery to manufacture goods for resale

► Buildings to house the machinery

► Land on which the buildings stand


Operating Profit is equal to:

► Sales - Gross Profit – Cost of goods sold – Operating expenses

► Sales – Cost of goods sold – Operating expenses

► Sales - Gross Profit

► None of the given options


The accounting equation represents:

► Resources in the business are equal to resources supplied by the owner andoutsiders

► Resources are allocated in the business on cost price

► Owners give money for the business

► Resources in the business are not equal to resources supplied by the ownerand outsiders


Credit signifies:

► Increase in asset account

► Increase in liability account

► Decrease in capital account



A business owned and run by one person is called:

► Sole Proprietorship

► Partnership

► Limited Company



Any expenditure that benefits the business for several accounting years is regarded as:

► Capital expenditure

► Revenue expenditure

► Revenue receipt



Which of the following option is true?

► Increase in expense is Debit

► Increase in asset is Debit

► Increase in income is credit

► All of the given options


The accounting equation is based on:

► Dual aspect concept

► Going concern concept

► Business entity concept



The discount allowed by manufacturer or wholesaler at the time of selling goods toretailer as a deduction from the listed-price or catalogue price, is called as:

► Trade discount

► Cash discount

► Commission



If the original cost of an asset is Rs. 2,000 then the written down value of asset after twoyears by using the diminishing balance method at the rate of 10% p.a. will be:

► Rs. 1,600

► Rs. 1,620

► Rs. 380



Sales = Cost of goods sold + Gross profit.

► True

► False


Balance Sheet discloses the financial position of the business.

► True

► False


Budget is an Organization’s plan of future period expressed in money terms.

► True

► False


Cash Accounting is the accounting system in which events are recorded as and when theyoccur.

► True

► False


In double entry system of book keeping, every business transaction affects the same sideof the same account.

► True

► False

Question No: 16 ( Marks: 5 )

If:• Original cost of an asset is Rs. 60,000• Scrape value is Rs. 10,000• Estimated useful life of an asset is 5 years

Then:Calculate the annual amount of depreciation using straight line method.


The following errors have been discovered in the books of a business concern:1. Wage of Rs. 500 paid for the installation of plant debited to Wages Account.2. Purchases of Office Equipment Rs. 2,000 were recorded as regular purchases of

business.3. Credit sale of Rs. 600 to Kareem was wrongly debited to Kamran.

Particulars 2006 2007AssetsCashAccounts receivable (Net)Merchandise InventoryPrepaid expensesBuilding and equipmentAllowance for deprecation---building and equipmentLand

Liabilities & CapitalAccounts payableAccrued expensesNotes payable---bankMortgage payableCapital stock, Rs.10 parRetain earnings ( deficit)

Rs. Rs.20,000 15,00045,000 50,00040,000 65,00010,000 5,00070,000 85,000(7,500) (17,500)45,000 80,000

222,500 282,500Rs. Rs.

40,000 50,00012,500 10,00030,000

30,000150,000 185,000(10,000) 7,500222,500 282,500

4. Rs. 200 drawn by the proprietor was treated as Trade Expenses.5. Rs. 300 received as a Commission was wrongly credited to Sales Account.

Required:Pass the rectifying entries only.


The Balance Sheets of the Rohr Company at the end of 2006 and 2007 are as follow:

Land was acquired for Rs. 35,000 in exchange for capital stock, par Rs. 35,000, during theyear; equipment of Rs. 15,000 was acquired for cash. Cash dividends of Rs. 10,000 werecharged to retained earnings during the year; the transfer of net income (Rs. 27,500) toretained earnings was the only other entry in this account.Required:

Prepare a statement of cash flow.


The following Trial Balance was extracted from the books of Naeem & Sons on 31st

December, 2007. You are required to prepare an Income Statement / Profit and LossAccount for the year ended on 31st December, 2007 and a Balance Sheet as at that date:

Particulars Debit CreditRs. Rs.

CashAccounts Receivable

5,0009,000

Merchandise Inventory on 1.1.2007Plant and MachineryLand and BuildingFurniture and FixturesCapitalAccounts PayablePurchasesPurchases returns and allowancesSalesSales returns and allowancesInsurance PrepaidAdvertisement expensesSalaries expenses

6,00024,00082,000

2,600

60,000

4,6003,4004,000

12,000

136,0003800

2,80070,000

Total 212,600 212,600

ADDIONAL INFORMATION:• Prepaid insurance on 31st December, 2007 is Rs. 1,400• Outstanding salaries Rs. 1,000• Depreciation on Plant and Machinery @ 10% p.a.• Merchandise inventory on 31st December, 2007 was valued at Rs. 6,000

FINALTERM EXAMINATIONFall 2008

MGT101- Financial Accounting (Session - 1)


Wages outstanding given in the trial balance will be treated as a (an):

► Asset► Liability► Revenue► Deferred expense


Prepaid interest given in the Trial Balance will be treated as a (an):

► Asset► Liability► Revenue► Deferred expense

Question No: 3 ( Marks: 1 ) - Please choose oneIf

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 distributableprofit.

► Rs. 98,000► Rs. 1, 47,000► Rs. 2, 45,000► Rs. 3, 43,000


the Capitals of partners are fixed then, at the end of financial year a partner’s drawingsare transferred to the:

► Credit side of the partner’s capital account► Credit side of the partner’s current account► Debit side of partnership bank account► Debit side of the partner’s current account


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Ifcompany has distributable profit of Rs. 490,000, Profit sharing share ratio of Mr. A, Mr.B and Mr. C is 2:3:5 respectively. What will be the share of profit for Mr. A indistributable profit?

► Rs. 98,000► Rs. 147,000► Rs. 245,000► Rs. 343,000

Question No: 6 ( Marks: 1 ) - Please choose oneIn

which situation(s) Partnership is dissolved?

► In case of death of partner► At the admission of new partner► If any partner resigned from partnership► All of the given options


calculating earning per share (EPS), the net profit is divided by which of the following?

► Number of ordinary shares► Number of preference shares► Paid up capital► Authorized capital


Which of the following statement in NOT TRUE about the limited company form ofbusiness?

► The limited company form of business allows ownership of the business to bespread amongst many people

► Shareholders can appoint professionals► Shareholders are personally liable for all the liabilities incurred by the

business► Regular filing of information about the affairs of the company is a legal

requirement

Question No: 9 ( Marks: 1 ) - Please choose oneA

private limited company can commence its business:

► Immediately on receiving a certificate of incorporation


►Without receiving a certificate of incorporation► Only when it receives certificate of commencement of business► Only when it receives both, the certificate of incorporation as well as

certificate of commencement of business

Question No: 10 ( Marks: 1 ) - Please choose oneAn

example of financing activities in the context of cash flow statement is:

► Capital expenditures on purchase of fixed assets► Long-term deposit► Financial charges paid► Dividend paid


firm may earn profit during an accounting period but have less money in the bank at theend of the period then it had at the beginning. Which of the followings, on its own, couldexplain this?

► Not paying invoices received from creditors► The sale of fixed assets during the period► An increase in trade debtors over the course of the period► An increase in the depreciation charge relative to the previous accounting period

Question No: 12 ( Marks: 1 ) - Please choose oneThe

primary purpose of preparing a cash flow statement for an entity is to provideinformation 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


Which of the following option(s) is TRUE about the Sales returns?

► Sales returns reduce the Gross sales of the firm► Sales returns affect the Net income of the firm► Sales returns affect the flow of cash► All of the given options



persons who sign articles and memorandum of the company and contribute in the initialshare capital of the company are called:

► Subscribers► Shareholders► Managers► Directors


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


Which of the following can offer its share to general public at large?

► A private limited company► A listed company► A partnership firm► A trust


Which of the following are the owners of a company?

► Proprietors► Partners► Shareholders► Managers


Current accounts of the partners should be opened when the capitals are:► Normal► Floating► Fixed► Fluctuating



Rent receivable (given in trial balance) is an item of .

► Balance Sheet► Profit & Loss Account► Trading Account► Both Balance Sheet and Profit & Loss Account


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


Which of the following account is affected from the Drawings of cash in sole-proprietorship business?

► Capital account► Shareholder account► Liability account► Expense account


asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used► It can be realized in cash or sold or consumed in the business within one

year► It is a piece of new machinery that is expected to last for at least ten years► All of the given options


General office expenses are charged to which of the following head:

► Administrative expenses► Marketing expenses► Selling expenses► Financial expenses



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


financial statement that indicates the success or failure of a business, over a period oftime is called:

► A cash flow statement► A retained earnings statement► An income statement► A balance sheet


Which of the following is NOT correct about income tax?► Different companies pay tax on different rates► It is treated as an expense and debited in Profit & Loss account►When financial statements are prepared, an estimate of expected tax liability is

made► It is treated as an expense and credited in Profit & Loss account


Following information are extracted from books of Mr. XYZ

Particulars Rs.Closing value of stock 40,000Write off Bad debts (given in adjustments) 2,400Sundry Debtors (given in trial balance) 33,200Provision 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


(Amount of new provision + Amount of bad debts) < Amount of old provision thenamount will be shown on:


► Debit side of P & L account► Credit side of P & L account► Asset side of Balance Sheet► Liability side of Balance Sheet


Which of the following rectifying entry will be recorded, if sales to Mr. “A” of Rs.336 havebeen debited to Mr. “B” account?

► A’s account (Dr.) and B’s account (Cr.)► B’s account (Dr.) and A’s account (Cr.)► Sales account (Dr.) and B’s account (cr.)► B’s account (Dr.) and Sales account (Cr.)


Which of the following account(s) will be affected, while rectifying the error of salesRs.100 to Mr. “A” recorded in the purchases book?

► Sales account► Purchase account► A’s account and Sales account► Sales account, purchase account and A’s account


Which of the following is shown on credit side of creditors control account?

► Bills Receivable► Return inwards► Credit purchases► Discount allowed


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



Which of the following is NOT based on the concept of double entry book keepingsystem?

► Subsidiary Ledgers► Creditors Control Accounts► Debtors Control Accounts► All of the given options


Bad Debts written off are given in adjustment, then which of the following entry for baddebts written off is CORRECT?

► Bad debts a/c (Dr) and Trading a/c (Cr)► Provision for Bad and Doubtful debts a/c (Dr) and Bad debts a/c(Cr)► Bad debts a/c (Dr) and debtors a/c (Cr)► Trading a/c (Dr) and Bad debts a/c (Cr)


Consider the following data:Provision created in 2006 Rs. 2,500Bad debts in 2007 Rs. 1,500Sundry debtors on 31-12- 2007 were Rs. 40,000 and provision is created @5%.Which journal entry is Correct for the provision for doubtful debts for the year2007.

(Cr)

► Provision for doubtful debts a/c Rs. 1,000 (Dr) & Profit & Loss a/c Rs. 1,000 (Cr)► 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)► Profit & Loss a/c Rs. 1,000 (Dr) & Provision for doubtful debts a/c Rs. 1,000

Question No: 36 ( Marks: 1 ) - Please choose oneParticulars Rs.

Opening written down value of machine 4,00,000Cost of machine purchased during the year 50,000Depreciation during the year 20,000closing written down value (WDV) of the Machines ?

► Rs. 4, 30,000► Rs. 4, 50,000► Rs. 4, 70,000


► Rs. 70,000


accounting accumulated depreciation is:

► Treated as a reserve► Treated as a contra asset► Treated as a surplus► Treated as an expense


Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs. 22,500Debtors Rs. 500Total Assets Rs. 80, 385Accounts payable Rs. 1,000Total liabilities Rs. 20,000

► Rs. 60,385 owner’s equity► Rs. 61,385 owner’s equity► Rs. 99,885 owner’s equity► Rs. 99,385 owner’s equity


Stock of Trading concern consists of:

► Raw material►Work in process► Merchandise inventory► All of the given options


Consider the following inventory record:

Date Item Quantity Cost/Unit Total2007Jan. 2 Opening

inventory100 Rs.18.00 Rs.1,800

Mar. 4 Purchase 400 19.00 7,600May 8 Purchase 800 20.00 16,000Nov. 3 Purchase 500 21.00 10,500


Four hundred units are unsold, Use the FIFO method of inventory costing anddetermine 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


Opening stock of raw material 100,000

Closing stock of raw material 85,000Purchases of raw material during theperiod

200, 000

Cost of Material Consumed ?

► Rs. 205,000► Rs. 215,000► Rs. 220,000► Rs. 225,000


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


What would be the value of total factory cost, if the cost of material consumed duringthe month is Rs. 6,000, labor cost incurred is Rs. 2,000 and the factory over head costis Rs. 2,500?

► Rs. 6,000► Rs. 8,000► Rs. 4,500► Rs. 10,500



Which of the following item appears in Trading Account of a business?

► Interest expenses► Wages and salaries► Depreciation expenses► Discount Allowed


the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs.20,000 during the year, what would be the value of Gross Profit?

► Rs. 15,000► Rs. 35,000► Rs. 55,000► Rs. 60,000


Identify that which of the following particular(s) would NOT be shown in the format of aCash Book?(1) Cheque number(2) Date of transaction(3) Amount of transaction

► (1) only► (1) & (2) only► (1) & (3) only► (2) & (3) only


process of transferring journal entry information to the ledger is called:

► Journalizing► Posting► Balancing► Analyzing


Which one of the following is a type of General Ledger?


► Book of original entry► ‘T’ Account► Source document► Day book


Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profitand loss account—Balance Sheet

► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit andloss account—Balance Sheet

► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit andloss account—Balance Sheet

► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit andloss account—Balance Sheet


Economic resources owned by a business and expected to benefit for the futureoperations are called:

► Expenses► Assets► Capital► Liabilities


With the help of given data prepare Capital account of a sole trader and calculateclosing balance of capital.

Rs.Balance b/f 550,000Drawings 50,000Profit & Loss (debit balance) 45,000

CAPITAL ACCOUNTDEBIT SIDE CREDIT SIDE

PARTICULARS AMOUNT PARTICULARS AMOUNTProfit and loss 45000 Balance b/f 550,000Drawings 50,000Balance c/f 455,000


TOTAL 550,000 TOTAL 550,000


Briefly explain the financial statements prepared by the organization. Why theseare important for manufacturing concern?

ANSWER: The financial statements prepared by any organization are as follows:1. Profit and loss account: It shows the performance of the business in a given

period. It shows the profitability of business which shows the success or failure ofthe business.

2. Balance sheet: Balance sheet shows the position of business at a given point. Itshows the resources available by the business and the resources invested by theowner and other loans.

3. Cash flow statements: Cash flow statements show the generation of cash andits usage over a given period.

IMPORTANCE OF FINANCIAL STATEMENTS FOR MANUFACTURINGCONCERN: These financial statements are important for manufacturing concernorganization as they provide information related to financial affairs of theorganization. The profitability and liquidity, the resources available to the companyand the generation of cash and its usage over a given period which providesreasonable information to the management to take decisions.

Question No: 53 ( Marks: 10 )The

comparative financial statement data for XYZ Company is given below:

December 31Assets: 2007 2006

Rs. Rs.Cash 4,000 7,000

Accounts receivable 36,000 29,000Inventory 75,000 61,000Plant and equipment 210,000 180,000Accumulated depreciation (40,000) (30,000)Total Assets 285,000 247,000Liabilities & Stockholder’s equity:Accounts payable 45,000 39,000Common stock 90,000 70,000Retain earnings 150,000 138,000Total liabilities & Stockholder’s equity 285,000 247,000


For 2007, the company reported net income as follows:

XYZ CompanyIncome Statement

For the year ended 31st December, 2007

Required:

Rs.Sales 500,000Less: Cost of goods sold 300,000Gross margin 200,000Less Operating expenses 180,000Net Income 20,000

Prepare a Statement of Cash Flows if dividend of Rs. 8,000 was declared and paidduring the year 2007. There were no sales of plant and equipment during the year.

ANSWER:

Starting balance:Net income 20,000

Add: adjustment for non cash itemsDepreciation 38,000

Operating profit before working capital changes: 58,000

Working capital changes:Add: cash 3,000Less: accounts receivable (7,000)Add: accounts payable 7,000Cash generated from operations 61,000Cash flow from investing activities

Cash flow from financing activities:Common Stock 20,000

Net decrease in cash 3,000Net cash flow 78,000


Write a note on legal documents required for the formation of company.

ANSWER:LEGAL DOCUMENTS REQUIRED FOR FORMATION OF COMPANY:

MEMORENDUM OF ASSOCIATION: It contains the following information


1. Name of company.2. Place of registered office3. Objective4. Amount of share capital with which company registers.

ARTICLES OF ASSOCIATION: It contains the following informationA document that contains all the policies and other matters necessary to run the

business of the company. It is signed by all the members of the company.


FINALTERM EXAMINATIONFall 2008


Question No: 1 ( Marks: 1 ) - Please choose oneIf company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio ofMr. A, Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. Bin distributable profit.

►Rs. 98,000►Rs. 1, 47,000 (Correct)►Rs. 2, 45,000►Rs. 3, 43,000

Question No: 2 ( Marks: 1 ) - Please choose oneWhat does a credit balance in a partner’s current account represent to abusiness?

►Current Assets►Current Liability► Long-term liability►Share of profit (Correct)

Question No: 3 ( Marks: 1 ) - Please choose oneWhich of the following ratio tells about “How a company would repays its loans”

►Mark up cover ratio (Correct)►Acid test ratio►Current ratio►Debt Equity ratio

Question No: 4 ( Marks: 1 ) - Please choose oneWhich of the following is CORRECT about Gross Profit Ratio?

► (Gross profit / Net Sales) x 100► (Gross profit / Operating Income) x 100► (Gross profit / Sales Return) x 100 (Correct)► (Gross profit / Net Income) x 100

Question No: 5 ( Marks: 1 ) - Please choose oneCurrent ratio may be increased by:

►Overstating current Assets►Overstating current Liabilities►Understating current Assets (Correct)►Understating current assets and overstating current liabilities


Question No: 6 ( Marks: 1 ) - Please choose oneWhich of the following is a type of business formed under the CompaniesOrdinance 1984?

►Sole-Proprietorship►Partnership► Joint Stock Company (Correct)►All of the given options

Question No: 7 ( Marks: 1 ) - Please choose oneWhen preparing cash flow statements, the repayments of a loan during the yearshould be included under which of the following heading?

►Operating activities► Financing activities► Investing activities►None of the given options

Question No: 8 ( Marks: 1 ) - Please choose oneIn cash flow statements, which of the following would appear as an inflow ofcash?

► The repayments of a bank loan►Dividend issue in the current year►Money received as result of selling fixed assets (Correct)► The difference between the valuations of old and new fixed assets

Question No: 9 ( Marks: 1 ) - Please choose oneWhat are the effects on financial statements, if Rs. 6,000 transfer to generalreserve is given in adjustment?

► It will be treated in Income Statement only► It will be treated as current liability in balance sheet only► It will be treated in profit and loss appropriation account only► it will be treated in both profit and loss appropriation account and in

the balance sheet (Correct)

Question No: 10 ( Marks: 1 ) - Please choose oneWhich of the following is the most important document of the company?

►Memorandum of Association (Correct)►Articles of Association►Prospectus►Annual Report

Question No: 11 ( Marks: 1 ) - Please choose onePreliminary Expenses of the company may write off against:

►Share premium account (Correct)


►Share holder account►Debtors control account►Creditor control account

Question No: 12 ( Marks: 1 ) - Please choose oneWhich of the following clause/s are discussed in Memorandum of Association ofCompanies?

►Name of company►Place of registered office of company►Objective of the company►All of the given options (Correct)

Question No: 13 ( Marks: 1 ) - Please choose oneThe Joint Stock Company is formed under the Companies Ordinance:

► 1984 (Correct)► I884► 1948► 1965

Question No: 14 ( Marks: 1 ) - Please choose oneWhen the capitals are fixed, which of the following account will be debited fordrawings made by a partner?

► Individual Partner’s Current Account►Partner’s Cash Account►Partner’s Bank Account►Partners Capital Account (Correct)

Question No: 15 ( Marks: 1 ) - Please choose oneWhich of the following account will be debited when the interest on drawings ischarged?

►Partner’s capital account► Interest account►Partner’s current account►Profit & Loss account (Correct)

Question No: 16 ( Marks: 1 ) - Please choose oneWhich of the following is CORRECT if depreciation is given in trial balance?

► It means depreciation has already been deducted from concerned assetaccount

► It will be shown as an expense in income statement only (Correct)► It will not be deducted from concerned asset in Balance Sheet►All of the given options are correct


Question No: 17 ( Marks: 1 ) - Please choose oneAn asset which is NOT easily convertible to cash or not expected to becomecash within a period of twelve months is called:

► Liquid asset►Current asset (Correct)► Fixed asset► Floating asset

Question No: 18 ( Marks: 1 ) - Please choose oneWhich 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 (Correct)►All of the given options

Question No: 19 ( Marks: 1 ) - Please choose oneThe Balance Sheet item that represents the resources invested by the owner isknown as:

►Accounts Receivable►Cash►Note Payable►Owner's Equity (Correct)

Question No: 20 ( Marks: 1 ) - Please choose oneWhich of the following is NOT an operating expense?

►Salaries and wages expense►Rent expense► Interest expense►Depreciation expense (Correct)

Question No: 21 ( Marks: 1 ) - Please choose oneA financial statement that indicates the success or failure of a business, over aperiod of time is called:

►A cash flow statement►A retained earnings statement►An income statement►A balance sheet (Correct)

Question No: 22 ( Marks: 1 ) - Please choose oneWhich of the following is the first phase of the typical operating cycle?


►Receive cash from customers►Pay cash to suppliers►Sell goods and services to customers►Purchase goods and services (Correct)

Question No: 23 ( Marks: 1 ) - Please choose oneFollowing information are extracted from books of Mr. XYZ

Particulars Rs.Closing value of stock 40,000Write off Bad debts (given in adjustments) 2,400Sundry Debtors (given in trial balance) 33,200Provision 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 (Correct)

Question No: 24 ( Marks: 1 ) - Please choose oneIt is supposed that on 31st December, 2007, the sundry debtors are amounted toRs. 40,000. On the basis of past experience, it is estimated that 10% of thesundry debtors are doubtful. Actual bad debts are Rs. 1600. What amount ofnew provision for doubtful debts will be deducted from Sundry debtors?

►Rs. 3,600►Rs. 4,000►Rs. 1,600►Rs. 2, 400 (Correct)

Question No: 25 ( Marks: 1 ) - Please choose oneWhen one or both aspects of a transaction are recorded in the wrong class orcategory of account, this is called:

►Error of principle (Correct)►Error of omission►Error of commission►Error of original entry

Question No: 26 ( Marks: 1 ) - Please choose oneWhich of the following account(s) will be affected, while rectifying the error ofsales Rs.100 to Mr. “A” recorded in the purchases book?

►Sales account►Purchase account


►A’s account and Sales account►Sales account, purchase account and A’s account (Correct)

Question No: 27 ( Marks: 1 ) - Please choose oneA receipt of cash Rs. 10,000 from Mr. Bilal is recorded as Rs. 1,000. Whatamount will be adjusted in rectifying entry?

►Rs. 1,000►Rs. 9,000 (Correct)►Rs. 10,000►Rs. 11,000

Question No: 28 ( Marks: 1 ) - Please choose oneare committed in those cases where proper distinction between revenue

and capital items is not made.

►Error of principle►Error of omission►Error of commission (Correct)►Error of original entry

Question No: 29 ( Marks: 1 ) - Please choose oneWhich of the following is (are) benefit/s of subsidiary ledger accounts tobusiness?

► It tells about customer attitude of payments► It can be checked against the control account to pick up recording errors► It tells about the complete history of transactions of business client►All of the given options (Correct)

Question No: 30 ( Marks: 1 ) - Please choose oneWhich of the following is NOT included in Debtors Control Account?

►Cash sales (Correct)►Credit sales►Bills receivable►Discount allowed

Question No: 31 ( Marks: 1 ) - Please choose oneWhich of the following is/are the item/s of a Control Account?

►Credit sale only►Cash sale only (Correct)►Credit purchase only►Both Credit sales and Credit purchase



It is supposed that on 31st December, 2007, the sundry debtors are amounted toRs. 40,000. On the basis of past experience, it is estimated that 5 % of thesundry debtors are doubtful. Actual bad debts are Rs. 1600. What amount ofnew provision for doubtful debts will be credited in profit & loss account.

►Rs. 3,600►Rs. 2,000►Rs. 1,600►Rs. 400 (Correct)

Question No: 33 ( Marks: 1 ) - Please choose oneWhich of the following is NOT a function of bank reconciliation statement?

► To reconcile the difference between the cash book and the bankstatement

► To check for errors in balance sheet (Correct)► To update omitted entries into the cash book► To update omitted entries into the bank statement

Question No: 34 ( Marks: 1 ) - Please choose oneWhich one of the following transactions will cause the balance in Mr. Terry'sCash Book to be greater than his Bank Statement balance?

►A cheque is drawn but not yet presented at the bank for payment► The bank has not yet notified to Mr. Terry about a dishonoured cheque►A credit transfer into Terry's Bank Account (Correct)►A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110

Question No: 35 ( Marks: 1 ) - Please choose oneThe following balance and discrepancies were found on 31 March 2008:

Particulars Rs.Cash book balance (Dr) 5 000Unpresented cheques 1 000Uncredited cheques 500

The Bank Statement balance on 31 March 2008 should be:►Rs. 5 500 (Dr)►Rs. 5 500 (Cr)►Rs. 4 500 (Dr)►Rs. 4 500 (Cr) (Correct)

Question No: 36 ( Marks: 1 ) - Please choose oneWhich of the following is NOT a characteristic of Joint Stock Company?

►Separate Legal Entity► Limited Liability►Easy Formation (Correct)


►Common Seal

Question No: 37 ( Marks: 1 ) - Please choose oneConsider the following data:

Particulars Rs.Assets 1,98,000Owner's equity 95,000Liabilities ?

►Rs. 49,000►Rs. 55,000►Rs. 1, 25,000►Rs. 1, 03,000 (Correct)

Question No: 38 ( Marks: 1 ) - Please choose oneThe basic purpose of depreciation is to achieve the:

►Matching principle (Correct)►Dual aspect principle►Separate entity concept►Money measurement concept

Question No: 39 ( Marks: 1 ) - Please choose oneAccountancy covers which of the following area(s):

►Book-keeping►Accounting►Auditing►All of the given options (Correct)

Question No: 40 ( Marks: 1 ) - Please choose oneBank Reconciliation Statement is prepared by:

►Bankers►Accountant of the business (Correct)►Statutory auditor►Manger

Question No: 41 ( Marks: 1 ) - Please choose oneUnder the reducing balance method, deprecation is calculated on:

►Scrap value of an asset►Original cost of an asset►Book value of an asset (Correct)► Fair value of an asset


Question No: 42 ( Marks: 1 ) - Please choose oneThe products that are ready for sale are known as:

►Raw material►Work in process► Finished goods (Correct)►Closing stock

Question No: 43 ( Marks: 1 ) - Please choose oneWhich of the following item appears in Trading Account of a business?

► Interest expenses►Wages and salaries (Correct)►Depreciation expenses►Discount Allowed

Question No: 44 ( Marks: 1 ) - Please choose oneWhich of the following financial statement DO NOT show the financial health of abusiness at a specific date?

►Profit and loss account (Correct)►Balance sheet►Statement of financial position►All of the given options

Question No: 45 ( Marks: 1 ) - Please choose oneWhich of the following account will be credited in the books of XYZ Co. Ltd, if thebusiness purchased a vehicle though cheque?

►Vehicle account►Cash account►Business account►Bank account (Correct)

Question No: 46 ( Marks: 1 ) - Please choose oneGross Profit > Operating Expenses=?

►Net Profit (Correct)►Cost of Goods Sold►Net Loss►Gross Loss

Visit vujannat.ning.Com For Video Lectures ,previous assigmnets ,Papers,Chat,Study discussions and many more.

Question No: 47 ( Marks: 1 ) - Please choose oneBank book is part of:

►Voucher►General Journal►General Ledger (Correct)► Trial Balance

Question No: 48 ( Marks: 1 ) - Please choose oneWhat would be the affect on the components of the accounting equation, ifgoods are purchased on cash?

► Increase in cash and decrease in equity► Increase in cash and increase in goods► Increase in goods and decrease in cash (Correct)► Increase in equipment and increase in equity

Question No: 49 ( Marks: 1 ) - Please choose oneWe can say that the business is in profit, when:

►Assets exceed Liabilities► Income exceeds Expenditure (Correct)► Income exceeds Liabilities►Assets exceed Expenditure

Question No: 50 ( Marks: 1 ) - Please choose oneA business event which can be measured in terms of money and must berecorded in books of accounts is called:

► Information►Condition► Transaction (Correct)►Record

Question No: 51 ( Marks: 5 )Calculate Net income with the help of given date for the year 2007 and alsoshow complete working to support your answer.

Rawmaterial Stocks on 1-1-2007 Rs. 30,000Work in process on 1-1-2007 35,600Finished Goods on 1-1-2007 35,400

Rawmaterial Stocks 31-12-2007 Rs. 31,000Work in process 31-12-2007 25,000Finished Goods 31-12-2007 53,900Total factory Cost 543,339


Additional datav Other income for the year is Rs. 5,000.v Operating expenses for the year Rs. 15,000.v Sale for the year Rs. 1,000,000.

Question No: 52 ( Marks: 10 )The following Trial Balance was extracted from the books of Naeem &Sons on 31st December, 2007. From this you are required to prepare anIncome Statement for the year ended on 31st December, 2007,


Cash 5,000Accounts Receivable 9,000Merchandise Inventory on 1.1.2007 6,000Plant and Machinery 24,000Land and Building 82,000Furniture and Fixtures 2,600Capital 136,000Accounts Payable 3800Purchases 60,000Purchases returns and allowances 2,800Sales 70,000Sales returns and allowances 4,600Insurance Prepaid 3,400Advertisement expenses 4,000Salaries expenses 12,000Total 212,600 212,600

ADDITIONAL INFORMATION:i Prepaid insurance on 31st December, 2007 is Rs. 1,400i Outstanding salaries Rs. 1,000i Depreciation on Plant and Machinery @ 10% p.a.i Merchandise inventory on 31st December, 2007 was valued at Rs. 6,000

Question No: 53 ( Marks: 10 )Prepare Profit and Loss Account for the year ending 31st December 2007from the Trial Balance and adjustments of MS Company given below:


Drawings 14,000Capital Account 80,000Opening Stock 55,000Purchases 485,000Sales 610,000Sundry Debtors 80,000

Sundry Creditors 60,500Sales Returns 5,000Carriage Inwards 6,000Salaries 28,000Rent, Rates, Taxes 15,000Insurance 4,000Machinery 50,000Furniture 5,000Cash in hand 3,500Total 750,500 750,500

Adjustments:i Depreciate machinery and furniture @20%p.a.i Outstanding Salaries Rs. 2,000i Insurance paid in advance Rs. 500i Maintain @5% reserve for doubtful debts on debtors.i Closing Stock was valued at Rs. 60,000


www.vujannat.ning.com

MGT101 Financial AccountingFinal Term Examination – Spring 2005

Time Allowed: 150 Minutes

INSTRUCTIONS:


• The duration of this examination is 150 minutes.• All questions are compulsory.• This exam consists of 5 Multiple Choice Questions (MCQ's) carrying 2 marks

each, 6 Short questions carrying 5 marks each and 2 Descriptive questionscarrying 10 marks.

• You are required to show all the working of short questions as well asDescriptive questions.

• This examination is closed book, closed notes, closed neighbors.• Do not ask any questions about the contents of this examination from anyone.• The use of calculator is allowed.• You may wish to pace yourself with your own watch, but the Supervisor will be

the official timekeeper of the test.• Failure to comply with the Supervisor's directions will result in your test being

cancelled. Please comply with supervisor's directions to avoid any unpleasantevent.

Total Marks: 60 Total Questions: 13

Question No. 1 Marks : 10


What is the difference between cash accounting and Accrual accounting?


Which is the best definition of Balance sheet?

o An account proving the Book balanceso A record of closing entrieso A listing of balanceso A statement of Assets


What is meant by Subsidiary ledgers?


What is meant by Prepaid expenses?


Depreciation is:

o The amount spent to buy a fixed asseto The salvage value of a fixed asseto The part of the cost of the fixed asset consumed during its period of use by

the firmo The amount of money spent on replacing asset


What are the major components of a cash flow statement?


From the particulars given below, find out the balance, by means of astatement that would appear in the Pass Book as on 30th June, 2005.

1. Bank overdraft as per Pass book (Dr.) Rs. 1,660.2. Amount deposited directly into bank by a debtor Rs. 200 in June but not

recorded in Cash Book.3. Interest on Overdraft Rs. 40 and the Bank charges Rs. 20 are debited in

the Pass Book only.4. Cheque deposited in June but credited by the bank in the month of

July, 2005 Rs. 800.5. Cheque drawn in June but presented in the month of August, 2005 Rs.

20,000, Rs. 1,200 and Rs. 400.


Differentiate between Return Inwards and Return Outwards?


Which of the following is not a Cash flow in Cash flow statement?

o A depreciation chargeo Dividend paid

o Proceeds on Sales of Fixed Assetso Tax paid


What is meant by Short term Assets or Current Assets?


Gross Profit is:

o Excess of sales over Cost of good soldo Sales less Purchaseso Cost of good sold plus Opening Stocko Net profit less expenses of the period


Which of the following is an intangible asset?

o Patentso Copyrightso Trade markso All of the given options

Student ID/LoginID

Name

PVC Name/Code

Date

vujannat.ning.comhttp://vujannat.ning.com

Largest Online Community of VU Students

MID TERM EXAMINATION

SEMESTER FALL 2005

MGT101-FINANCIAL ACCOUNTING(Paper 3)

Total Marks: 40

Duration: 60 min

INSTRUCTIONS:


• All questions are compulsory.

• This exam consists of 5 Multiple Choice Questions (MCQ’s) carrying 2 marks each, 4 Short

questions carrying 5 marks each and 1 Descriptive questions carrying 10 marks.

• You are required to show all the working of short questions as well as Descriptive question.

• This examination is closed book, closed notes, closed neighbors.

• Do not ask any questions about the contents of this examination from anyone.

• You may wish to pace yourself with your own watch, but the Supervisor will be the official

timekeeper of the test.

• Failure to comply with the Supervisor’s directions will result in your test being cancelled. Please

comply with supervisor’s directions to avoid any unpleasant event.

Question Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Total

Marks


Which of the following would not be categorized as current assets?

1. Stocks2. Debtors3. Plant and Machinery4. Cash in hand


Pak Motors buys a stock worth Rs. 30,000 on credit on the last day of his accounting period andincludes these items in Closing Stock. Which of the following figures in the Accounts would beincreased by Rs. 30,000?

1. Cost of Sales2. Working Capital3. Gross Profit4. Current Assets.


An account titled Unearned Fees would be classified as which of the following?

1. Asset account2. Liability account3. Revenue account4. Expense account


Asset depreciation is calculated to which of the nearest time periods?1. Day2. Week3. Month4. None of the Given Option


Capital expenditures are:

1. The extra Capital paid in by the proprietor2. The cost of running the business on day to day basis3. Money spend on buying Assets or adding value to them4. Money spent on selling Fixed Assets.


What do understand by the term Trial Balance?

Question No: 7 Marks:5

Differentiate between Single entry system and double entry system?

Question No:8 Marks: 5

What is Journal and what is the purpose of making a Journal?


What do you mean by Bank Reconciliation Statement?


The following is the trial balance extracted from the books of Naeem & Sons as on 30/06/2002. Prepare aprofit & loss account & balance sheet for the year ended June 30, 2002.

ParticularsSales Purchasespurchase returnSalariesRentDebtorsCreditorsCapitalPlant & machinery

Grand Total

Dr. Cr.

45,000

12,0005,000

25,000

400,000

100,000

3,000

16,000368,000

487,000 487,000

vujannat.ning.COMConnecting VU Students

MIDTERM EXAMINATION

FALL 2007


Marks: 40

Time: 120min

StudentID/LoginID:

Student Name:

Center Name/Code:

Exam Date: Friday, November 23, 2007

InstructionsPlease read the following instructions carefully before attempting any question:

ƒ All questions are compulsory.

ƒ This exam consists of 10 Multiple Choice Questions (MCQs) carrying one mark each, 5 true false carrying one mark each, 2 shortquestions carryi ng 5 marks each and one comprehensive numerical question carrying 15 marks.

ƒ For each MCQ and T/F, read the choices available and ENCIRCLE one which you consider is the most suitable answer.

Zero marks will be given if more than one option will be marked. Don’t make tick mark (√), only ENCIRCLE the correct option.

ƒAttempt all MCQs and True/False on the question paper, no credit will be given to the MCQs and True/False attempted on theanswer sheet.

ƒRemember not to spend too much time on any MCQ. Since all MCQs carry equal marks, it is important to manage your time andresponse to test questions effectively.

ƒ Do not ask any questions about the contents of this examination from anyone.

ƒ If you believe that some essential piece of information is missing, make an appropriate assumption and use it to solve the problem.

ƒ This examina tion is closed book, closed notes, closed neighbors.

ƒ You may wishto pace yourself with your own watch, but the Supervisor will be the official timekeeper of the test.

ƒ Use of calculator is allowed

ƒ Use of mobile phones is strictly prohibited; switch it off if it is in your custody.

ƒ Failure to comply with the Supervisor’s directions will result in your exam paper being cancelled. Please comply withsupervisor’s directions to avoid any unpleasant event.


MarksQuestion 11 12 13 14 15 16 17 18

MarksQuestion

Marks


A Balance Sheet discloses the financial position of a firm:

► For a given period

► On a particular point of time

► On quarterly basis



Cost of sales is equal to:

► Opening stock – Closing stock + Purchases – Return outwards

► Sales – Purchases

► Purchases – Return out + Closing stock



A loss will be considered as capital loss if it:

► Relates to fixed assets

► Arises due to abnormal reasons

► Represents the withdrawal of capital



An expenditure will be considered as capital expenditure if:

► The amount is paid in lump sum

► It is intended to benefit the current period

► It is intended to benefit the future period



A written evidence in support of a business transaction is called:

► A business letter

► Store ledger card

► Voucher



Under diminishing balance method, depreciation is calculated on:

► The original cost

► The scrap value

► Book value



The books of account in which business transactions are originally recorded inchronological order is known as:

► Ledger

► Journal

► Trial Balance

► Balance sheet


A firm purchased marketable securities for Rs. 10,000. What would its effect be onworking capital?

► Increased by Rs. 10,000

► Decreased by Rs. 10,000

► Increased by Rs. 20,000

► Remain unchanged


If the profit is 25% of the cost price then it would be:

► 25% of the sale price





Current liabilities are such obligations which must be paid within:

► One year

► Two years

► Three years

► Five years


Book-keeping and accounting are synonymous terms.

► True

► False


The Accounting Equation is based on going concern concept of Accounting.

► True

► False


The ledger is the book of original entry.

► True

► False


Balance Sheet is the other name of Profit and Loss Account.

► True

► False


Capital expenditures incurred irregularly.

► True

► False


If:• Opening inventory of Raw Material Rs. 20,000• Closing inventory of Raw Material Rs. 10,000• Purchases Rs. 40,000• Direct Labour Cost Rs. 10,000• Factory overhead Cost Rs. 20,000

Then find:1. Prime cost2. Conversion cost


If:• Original cost of machinery Rs. 140,000• Salvage Value Rs. 40,000• Estimated useful life is 10 years

Then:Find the annual value of depreciation using the straight line method and the

value of machinery at the end of 2nd year.


From the following Trial Balance extracted from the Rehman & Sons, prepare a Profit aLoss Account for the year ended 31st December, 2006 and a Balance Sheet as at that date.Particulars Rs. Rs.SalesCapitalBank over DraftSundry Creditors

204,120,103,120,

000000560000

nd

Stock 1.1.2006Purchases SundryDebtors ReturnsInward GeneralExpenses PlantWages & SalariesBuildingCash in HandCash at BankDrawingsMotive PowerDock & Clearing ChargesCoal, Gas, WaterSalariesInterest on Over Draft

60,400231,600109,660

3,6406,980

22,62016,74050,000

6808,720

16,9602,3001,3001,7009,8204,440

Total 547,560 547,560Closing Stock has been valued at Rs.40,000vujannat.ning

MIDTERM EXAMINATIONFall 2008



Opening written down value of machine 1,00,000Cost of new machine purchased during theyear

50,000

Depreciation during the year 21,000Closing written down value (WDV) ?

► Rs. 1, 29,000► Rs. 1, 50,000► Rs. 1, 21,000► Rs. 71,000


Find out the missing value of an Accounting Equation with the help of given data:

Owner’s equity Rs. 22,500Total Liabilities Rs. 80, 385Cash in hand Rs. 1,000Cash at bank Rs. 2,000Debtors Rs. 500

► Rs. 1, 02,885 other assets► Rs. 1, 02,885 other liabilities► Rs. 99,885 current liabilities► Rs. 99,385 other assets


Bank Reconciliation Statement is prepared by:

► Bankers► Accountant of the business► Statutory auditor► Manger


Bank Reconciliation Statement is:

► A memorandum statement

► A ledger account► A part of cash book► A part of journal


Expenditures incurred anually on renewal of patent are known as:

► Revenue Expenditures► Capital Expenditures► Financial Expenditures► Operating Expenditures


Opening stock of raw material 100,000Closing stock of raw material 85,000Purchases of raw material during theperiod

200, 000

Cost of Material Consumed ?

► Rs. 205,000► Rs. 215,000► Rs. 220,000► Rs. 225,000

Question No: 7 ( Marks: 1 ) - Please choose oneCost of asset Rs. 1,00,000

Life of asset 5 yearsDepreciation for the each year Rs. 5,000Sale price after 5 years Rs.15,000Written Down Value of Asset on 5th year Rs. 75,000Profit or loss on disposal of fixed asset ?

► Rs. 60,000 loss► Rs. 75,000 profit► Rs. 25,000 loss► Rs. 1, 00,000 profit


Which of the following account will be credited, when the goods are purchased oncash?

► Stock account► Cash account► Supplier account►Work in process account


the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs.20,000 during the year, what would be the value of Gross Profit?

► Rs. 15,000► Rs. 35,000► Rs. 55,000► Rs. 60,000


the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses areRs.20,000 during the year. What would be the Net Profit?

► Rs.15,000► Rs. 35,000► Rs. 55,000► Rs. 60,000


Which of the following account balance will be shown on debit side of Trial Balance? (Itis assumed that all account balances are shown on normal balance).

► Capital account► Sundry creditors account► Accounts payable account► Cash account


amount of salary paid to Mr. Sohail should be debited to:► Mr. Sohail account► Salaries account► Cash account► Drawings account


Which of the following account will be credited, if business bought goods on credit fromMr. Ali?

► Purchases account► Mr. Ali account► Cash account► Sales account


unfavorable balance of Profit and Loss account should be:► Added in liabi lities► Subtracted from current assets► Subtracted from liabilities► Subtracted from capital


Which of the following is NOT an example of Current Asset?► Bank Overdraft► Accounts Receivable► Notes Receivable► Prepaid Expenses


Which one of the following is NOT prepared by Non profit organizations?

► Profit & Loss account► Income & Expenditure account► Receipts & Payments account► Balance Sheet


informal accounting statement that lists the ledger account balances at a point in timeand compares the total of debit balances with the total of credit balances is known as:

► Income Statement► Balance Sheet► Trial Balance► Cash Book


Documentary evidence, in a specific format used to record the details of a transaction isknown as:

► Account► Voucher► Journal► Ledger


summarized record of transactions related to individuals or things is called a/an.

► Account► Voucher► Journal► Trial balance


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


What will be the effect on accounting equation, when payment is made to the creditor ofthe business?

► Decrease in an asset, decrease in a liability► Increase in an asset, increase in a liability► Decrease in an asset, decrease in owner's equity► Increase in an asset, increase in owner's equity


Commercial Accounting is based on:► Single entry book keeping► Double entry book keeping► Both single and double entry book keeping

► Cash basis of book keeping


Cost incurred for the maintenance of shop is considered as .► Deferred expense► Capital expense► Revenue expense► Preliminary expense

Question No: 24 ( Marks: 1 ) - Please choose oneMr.”

A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated asfor business.

► Revenue► Net profit► Gross profit► Operating profit


Double entry accounting system includes:

► Accrual accounting only► Cash accounting only► Both cash and accrual accounting► None of the given options


►►►►


►►►►


►►►►


►►►►


►►►►


►►►►


Recording of all financial transactions undertaken by an individual or organization is known as:► Summarizing► Book-keeping► Classification► Interpreting

Question No: 33 ( Marks: 1 ) - Please choose oneAny

cheque drawn to creditor but not paid by bank will effect as follows:

► Cash book will show less balance & bank book will show more► Cash book will show more balance & bank book will show less► Cash book will show double balance► Bank book will show double balance


no distribution is made between capital and revenue expenditure then:

► The figure of debtors and creditors will be incorrect

► Cash or bank figure will be incorrect

► Net profit will be incorrect

► Balance sheet will not balance


Policy for charging depreciation is selected by:► Manufacturer► Trader► Management► Accountant


►►►►


►►►►


►►►►


►►►►


►►►►


Calculate depreciation of the asset for five years by using written down valuemethod. Also show accumulated depreciation.

Cost of the asset Rs. 1,20,000Depreciation Rate 10%Expected Life 5 years

ANSWER

YR Written downvalue method

RS Accumulateddepreciation

1 cost 120,000Depreciation @10%...10%*120,000

12,000 12,000

WDV… 120,000-12,000

108,000

2 Dep @ 10%...10%*108000

10,800 22800

WDV= 108,000-10,800

97,200

3 Dep @ 10%...10%*97,200

9,720 32520

WDV= 97,200-9,720

87,480

4 Dep @10%...10%*87,480

8,748 41,268

WDV=87,480-8,748

78,732

5 Dep @10%...10%*78,732

7873.2 49,141.2

WDV=78,732-7873.2

70858.8

MIDTERM EXAMINATIONFall 2008



Opening written down value of machine 3,75,000Cost of machine 50,000Depreciation during the year 11,000Closing written down value (WDV) of the Machines ?

► Rs. 4, 14,000► Rs. 4, 25,000► Rs. 3, 86,000► Rs. 61,000


Opening written down value of machine 1,00,000Cost of new machine purchased during theyear

50,000

Depreciation during the year 21,000Closing written down value (WDV) ?

► Rs. 1, 29,000► Rs. 1, 50,000► Rs. 1, 21,000► Rs. 71,000


Firms charge depreciation each year:

► To ensure there is enough money in the firm to replace the asset► To spread the cost of the asset over its working life► To reduce the profit and thus reduce the dividends they can pay to share holders► Because the law states they must be reduced


Depreciation arises because of:

► Fall in the market value of an asset► Fall in the value of money► Physical wear and tear► All of the given options


assets which have a limited useful life are termed as:

► Limited assets► Depreciateable assets► Unlimited assets► None of the given options


Accountancy covers which of the following area(s):

► Book-keeping► Accounting► Auditing► All of the given options


Bank Reconciliation Statement is prepared by:

► Bankers► Accountant of the business► Statutory auditor► Manger


is the detail of transaction in one's account provided by the bank.

► Bank statement► Bank reconciliation statement► Income statement► Financial statement


you start with cash book favorable balance in Bank Reconciliation Statement, whichitem will be added?

► Cheque deposited but not credited by the bank► Cheques omitted to be deposited into bank► Any amount directly collected by bank on behalf of customer but not recorded in

cash book► Debit side of cash book was overcast


is the amount for which an asset could be exchanged betweenknowledgeable willing parties in an arm’s length transaction.

► Present value► Fair value► Book value► Residual value


Consider the following:

Beginning inventory 10 units @ Rs. 10 per unitFirst purchase 35 units @ Rs. 11 per unitSecondpurchase 40 units @ Rs. 12 per unitThird purchase 20 units @ Rs. 13 per unit

Eighty-five units were sold, what is the value of the ending inventory using the FIFOmethod of inventory costing?

► Rs.260► Rs.232► Rs.284► Rs.268

Question No: 12 ( Marks: 1 ) - Please choose oneIf,

Cost of machine = Rs.400, 000Useful life = 5 yearsRate of depreciation= 40%The book value of machine after one years using diminishing balance method is ?

► Rs.86, 400► Rs. 1, 44,000► Rs. 2, 40,000► Rs. 51,840

Question No: 13 ( Marks: 1 ) - Please choose oneCost of asset Rs. 1,00,000Life of asset 5 yearsDepreciation for each year Rs. 15,000Sale price after 5 years Rs.50,000Written down value of asset at the end of 5th year Rs.25,000Profit or loss on disposal of fixed assets ?

► Rs.25, 000 profit► Rs. 75,000 loss► Rs. 15,000 profit► Rs. 1, 00,000 profit


What would be the value of conversion cost, if the cost of material consumed during themonth is Rs. 5,000, labor cost incurred is Rs. 2,000 and the factory over head cost isRs. 1,000?

► Rs. 3,000► Rs. 8,000► Rs. 7,000► Rs. 5,000


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


Which of the following particulars are included in the specimen of a bank receiptvoucher?

1) Name of the organization2) Bank code

Date of transaction

► (1) & (2) only► (1) & (3) only► (2) & (3) only► (1), (2) & (3)


Which of the following is an alternate term which can be used for “Capital”?

► Liability

► Owner’s net worth►Working capital► Asset


Which of the following statement is TRUE about the positive working capital of acompany?

► It shows sound position of a company► It shows that company has sufficient current assets to meet current liabilities► It shows that current assets are greater than current liabilities► All of the given options


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


Which of the following is NOT an example of Current Asset?► Bank Overdraft► Accounts Receivable► Notes Receivable► Prepaid Expenses


Which of the following is NOT an item of a Balance Sheet?

► Accounts Receivable► Accounts Payable► Sales Revenue► Marketable Securities


Which of the following statement is NOT TRUE about Current liabilities?

► These are due within one year

► These are short-term loans► These are consist of all debts, payable after 12 months► In working capital, these are deducted from current assets


Which of the following shows summary of a company's financial position at a specificdate?

► Profit & Loss Account► Cash Flow Statement► Balance Sheet► Income & Expenditure Account


What type of expenses are paid out of Gross Profit?

► Selling Expenses► General Expenses► Financial Expenses► All of the given options


Which one of the following is NOT prepared by Non profit organizations?

► Profit & Loss account► Income & Expenditure account► Receipts & Payments account► Balance Sheet


Which of the following financial statement summarizes the profitability of an organizationfor a particular period?

► Trading and Profit & Loss account► Cash Flow Statement► Statement of Retained Earnings► Balance Sheet


Aninformal accounting statement that lists the ledger account balances at a point in timeand compares the total of debit balances with the total of credit balances is known as:

► Income Statement► Balance Sheet► Trial Balance► Cash Book


Which of the following essentials are shown in Bank Book?(1) Date of transaction(2) Narration of transaction(3) Cheque number

► (1) & (2) only► (2) & (3) only► (1) & (3) only► (1), (2) & (3)


book, in which receipts and payments are recorded, is known as:

► Pass Book► Cash Book► Purchase Book► Sales Book


an account, if credit side < debit side then the balance is known as:► Negative Balance► Debit Balance► Positive Balance► Credit Balance


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


What will be the effect on accounting equation, when payment is made to the creditor ofthe business?

► Decrease in an asset, decrease in a liability► Increase in an asset, increase in a liability► Decrease in an asset, decrease in owner's equity► Increase in an asset, increase in owner's equity


Asset that is NOT physical in nature is called .

► Intangible Asset► Liquid Asset► Current Asset► Fixed Asset


Assets total Rs.50, 000 and Liabilities total Rs.10, 000. What is the equity of thebusiness?

vujannat.ning► Rs. 40, 000► Rs. 60, 000► Rs. 10,000► Rs. 50,000


According to the double entry system of accounting, an account that obtains benefit is:► Debit► Credit► Income► No need to show as accounting record


time span in which financial statements of the business are prepared is known as:

► Financial Year► Accounting Period

► Business Life Cycle► Accounting Cycle


Income of the business includes:

► Cash sales only► Credit sales only► Credit purchases only► Both cash sales and credit sales

Question No: 38 ( Marks: 1 ) - Please choose oneIf a

business purchases machinery for Rs. 30,000 on 31st January 2008 having life of 10years, this expense will be realized under the concept of accrualaccounting

► For the year 2008 only► For the last day of 10th year only► Over 10 years► Nothing can be said about it

Question No: 39 ( Marks: 1 ) - Please choose oneNet

Profit =? - Expenses

► Liabilities► Assets► Capital► Income


price paid for an item, in terms of currency is called:► Sale► Cost► Debt► Revenue


Enter the following transactions in the Cash Book of Mr. Jamil.

2007 Transactions Rs.Jan. 1 Mr. Jamil stared business with cash 1000,000Jan. 3 Bought goods for cash 70,000

Jan. 5 Paid for stationary 1,000Jan. 7 Sold goods for cash 40,000Jan. 10 Paid for trade expenses 1,000Jan. 11 Sold goods for cash 10,000Jan. 14 Received cash from Mr. Asif 5,000Jan. 15 Paid cash to Mr. Qadir 10,000Jan. 18 Withdrew cash for personal use 3,000Jan. 22 Bought goods for cash 20,000Jan. 25 Sold goods for cash 45,000Jan. 22 Paid for electricity bill 2,000Jan. 31 Paid salary 5,000Jan. 31 Paid rent 1,500

vujannat.ning.comConnecting VU

Students

FINALTERM EXAMINATION

SPRING 2006


Marks: 60

Time: 120min

StudentID/LoginID:

Student Name:

Center Name/Code:

Exam Date: Monday, August 21, 2006

INSTRUCTIONS:Please read the following instructions carefully before attempting any question:

� All questions are compulsory.� This exam consists of 15 Multiple Choice Questions (MCQ’s), 5 fill in the blanks, 5 true

false, 5 short questions carry 3 marks each and 2 descriptive questions carry 10 marks

each.

� You should try to complete MCQ’s in 15 - 25 minutes in order to give yourself 120 - 125

minutes for descriptive questions.� For each MCQ question, read the choices available and select the choice which you

consider is the correct answer, by clicking on the appropriate check box.

� Save your answer before proceeding to the next question.� Do not click the “Finish button” while solving your paper. Once you clicked the

“Finish” button, you will not be able to access your paper again. Click it at the end of

your paper. That means you have submitted your complete paper.

� A clock is given in the exam software. Software will automatically be closed after due

time.

� Remember not to spend too much time on any one MCQ. Since all MCQ’s carry

equal marks, it is important to manage your time and responses to test questions

effectively.


Students

� Use of calculator is allowed.

� Failure to comply with the Supervisor’s directions will result in your test being

cancelled. Please comply with supervisor’s directions to avoid any unpleasant event.


MarksQuestion 11 12 13 14 15 16 17 18 19 20

MarksQuestion 21 22 23 24 25 26 27 28 29 30

MarksQuestion 31 32

Marks


is used to record transactions that do not affect cash or bank.

► Payment voucher

► Receipt voucher

► Journal voucher



Which one of the following item will appear on the balance sheet of a company as currentassets?


Students

► Prepaid expenses

► Outstanding expenses

► Furniture and equipment

► Provision for depreciation


If bank statement shows a credit balance, it means balance for bank book.

► Favorable

► Unfavorable

► Overdraft



Formula for Earning per Share is

► Market value per share / Earning per share


Students

► Net profit after tax before appropriation / Number of shares

► Operating Profit before financial charges / Financial charges



Liquidity is defined as:

► The amount of cash to liquidate

► The funds available for use

► The ability of business to receive its cash

► The ability of a business to pay its debts in time


Cash flow from operating activities is generated from:

► The cash receipts and payments that arise from Fixed and Long Term assetsof the organization.

► Cash generated from daily operations of organization


Students

► The cash receipts and payments that arise from Owners of the business andother long term liabilities of the organization



Accumulated Profit & Loss is an example of:

► Distributable reserves

► Non distributable reserves

► Both Distributive and non distributive reserve



According to , Fixed assets revaluation reserve is included in thestatement of changes in equity.

► International Accounting Standards

► Companies Ordinance


Students

► International Standards of Auditing



Share premium can be utilized:

► To create non distributive reserves

► To issue bonus shares

► To increase the Owners Capital

► To meet unexpected losses


Notes to the accounts explain which of the followings:

► Nature of business of the company

► Accounting Policies of the company

► Details and explanation of items given in the Profit and Loss Account andBalance Sheet



Students


Mark up ratio is better for:

►Bankers

► Debtors

► Creditors

► Owners


Debentures are a company’s:

► Assets

► Liability

► Expenses

► Investments


Subscribers / Sponsors are the persons who sign:

► Articles of Association


Students

► Memorandum of the company

► Contribute in the initial share capital of the company.



All expenses incurred up to the stage of incorporation of the company are called:

► Preliminary Expenses

► Installation expenses

► Accrued expenses

► Deferred expenses


The head of board of directors is called:

► Chief executive


Students

► Manager

► Subscriber

► Shareholder


The account through which surplus or deficit of a Non Trading Institution is ascertained,is called account.


Any money taken away by the Owner for his personal use is called


Creditors, accruals and provisions are shown under in the balance sheet.


If the gross profit is Rs.5000 and the net profit is 25% of the gross profit, the expensesmust be Rs.


There are two types of capital accounts in partnership; Fixed capital and


Article of association is a document that contains all the policies and other matters whichare necessary to run the business of the company.

► True

► False


Students


Revaluation Reserve is created when an asset is re-valued from market value to cost price.

► True

► False


Cash Flows from Investing Activities shows the investment trends of the business.

► True

► False


Net Profit ratio helps the management of the company to know about cost of productionof the company.

► True

► False


Factory utilities, supervisor salaries, equipment repairs etc. are example of factoryoverheads.

► True

► False


Why Cost of good sold statement is prepared?


Students


Write down the formula for debtor’s turnover ratio:• Calculate on the basis of number of days• Calculate on the basis of number of times


What is the importance of cash flow statement?


List down any three benefits of Subsidiary Ledgers.


How statement of changes in equity is prepared?


Rectify the following errors:1. Salaries paid Rs. 13,000 was wrongly recorded as Rs. 1,300.2. Purchase of goods from Mr. B worth of Rs. 5,500 was recorded at Rs. 4,500.3. Cash sale to Mr. C worth of Rs. 10,000 was debited to sale account and credited

to cash account.4. Cost of repair Rs. 500 has been charged to Machinery account.5. A sale of Rs. 3,000 to A was wrongly debited to the account of B.


The following Trial Balance is taken out from the books of Khalil & sons as on 31st

December, 2005.

DrRs.

CrRs.

Plant and Machinery 100,000


Students

Opening StockPurchasesBuildingCarriage InwardCarriage OutwardWagesSundry DebtorsSalariesFurnitureTrade ExpensesDiscount on salesAdvertisementBad DebtsDrawingsBills ReceivableInsuranceBank BalancesSalesInterest ReceivedSundry CreditorsBank LoanDiscount on PurchasesCapital

60,000160,000170,000

3,.4005,000

32,000100,000

24,00036,00012,000

1,9005,0001,800

10,00050,000

4,40020,000

480,0002,000

40,000100,000

2,000171,500

795,500 795,500

Closing stock is valued at Rs.90, 000.Prepare :

� Cost of good sold Statement� Income statement of the business for the year ended on December 31, 2005 and a

Balance Sheet as on that date.

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