FINALTERM EXAMINATION
Spring 2010
MGT101- Financial Accounting (Session - 4)
Ref No: 1418662
Time: 90 min
Marks: 69
| Student Info | |
| StudentID: | MC090402794 |
| Center: | OPKST |
| ExamDate: | 08 Aug 2010 |
| For Teacher's Use Only | |||||||||
| Q No. | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Total |
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| Q No. | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | |
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| Q No. | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | |
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| Q No. | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 | |
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| Q No. | 33 | 34 | 35 | 36 | 37 | 38 | 39 | 40 | |
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| Q No. | 41 | 42 | 43 | 44 | 45 | 46 | 47 | 48 | |
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| Q No. | 49 | 50 | 51 | 52 | 53 | | | | |
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Question No: 1 ( Marks: 1 ) - Please choose one
Liabilities of the members of the ________ is only limited to the capital introduce by member/s. ► Partnership
► Company
► Sole proprietorship
► None of the given options
Question No: 2 ( Marks: 1 ) - Please choose one
Fixed assets are also called: ► Depreciable assets
► Current assets
► Liquid assets
► Floating assets
Question No: 3 ( Marks: 1 ) - Please choose one
Stock of Trading concern consists of: ► Raw material
► Work in process
► Merchandise inventory
► All of the given options
Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following would be deducted from Sundry Debtors in Balance Sheet? ► Bad debts (Trial balance item)
► Old provision for doubtful debts
► New provision for doubtful debts
► Both Bad debts (given in adjustment) and new provision for doubtful debts
Question No: 5 ( Marks: 1 ) - Please choose one
Consider the following data and identify the amount which will be deducted from Sundry Debtors in Balance Sheet. | Particulars | Rs. |
| Bad debts (from trial balance) | 1,600 |
| Provision for doubtful debts (old) | 2,000 |
| Current year’s provision (new) | 800 |
► Rs. 400
► Rs. 800
► Rs. 2,000
► Rs. 2,400
Question No: 6 ( Marks: 1 ) - Please choose one
Which of the following is/are the item/s of a Control Account? ► Credit sale only
► Cash sale only
► Credit purchase only
► Both Credit sales and Credit purchase
Question No: 7 ( 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: 8 ( Marks: 1 ) - Please choose one
A receipt of cash Rs. 10,000 from Mr. Bilal is recorded as Rs. 1,000. What amount will be adjusted in rectifying entry? ► Rs. 1,000
► Rs. 9,000
► Rs. 10,000
► Rs. 11,000
Question No: 9 ( 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: 10 ( Marks: 1 ) - Please choose one
When the capitals are fixed, which of the following account will be debited for drawings made by a partner?►Individual Partner’s Current Account
►Partner’s Cash Account
►Partner’s Bank Account
►Partners Capital Account
Question No: 11 ( Marks: 1 ) - Please choose one
The Joint Stock Company is formed under the Companies Ordinance: ► 1984
► I884
► 1948
► 1965
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following is NOT a cash inflow? ► Sale of fixed asset
► Issue of debentures
► Cash from business operation
► Purchase of fixed asset
Question No: 13 ( Marks: 1 ) - Please choose one
Which of the following business publishes the Financial Statements? ► Sole-Proprietorship
► Partnership
► Trust
► Public Limited Company
Question No: 14 ( 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: 15 ( 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: 16 ( Marks: 1 ) - Please choose one
Which of the following indicates cash discount received? ► Discount in paying debt earlier
► Discount in receiving debt earlier
► Discount in purchasing huge goods
► Discount in selling huge goods
Question No: 17 ( Marks: 1 ) - Please choose one
In the heading of financial statement, ___________ is not required? ► Title of financial statement
► Name of the person who prepares financial statement
► Period for which financial statement is prepared
► Name of business entity
Question No: 18 ( Marks: 1 ) - Please choose one
A and B entered in partnership in capital ratio of 2:3. They earned a profit of Rs.6,600 during the year. What will be the share of profit of Mr. A? ► Rs.1,320
► Rs.2,640
► Rs.3,960
► Rs.6,600
Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following is the major benefit of a partnership over a sole proprietorship? ► Unlimited liability
► Single tax filing
► Difficult ownership resale
► Raising capital
Question No: 20 ( Marks: 1 ) - Please choose one
Interest expenses of Epler Corporation shows a debit balance of Rs.200 in its unadjusted trial balance and Rs.250 in adjusted trial balance. Which of the following account will be credited in adjusting entry? ► Interest expense
► Interest payable
► Prepaid interest
► Interest paid
Question No: 21 ( 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: 22 ( Marks: 1 ) - Please choose one
Which of the following statement is not true regarding the objective of statement of cash flows? ► It is helpful for decision making by management
► It is used for reporting the net profit of the period
► It can be used for estimations for cash flows in future
► It is used to determine the liquidity of the business
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following can maintain the secrecy in all business matters? ► Sole-proprietorship
► Partnership
► Public Limited Company
► Private Limited Company
Question No: 24 ( Marks: 1 ) - Please choose one
Expenditure is revenue in nature when it: ► Benefits the current period
► Benefits the future period
► Belong to the previous period
► None of the given options
Question No: 25 ( Marks: 1 ) - Please choose one
Which of the following is a process of transferring journal entry information to ledger account? ► Journalizing
► Posting
► Balancing
► Analyzing
Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following account would be debited when the owner of business sold machinery of Rs. 10,000 on cash? ► Sales a/c
► Machinery a/c
► Owner a/c
► Cash a/c
Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following account would be credited, when goods are sold on credit? ► Stock account
► Accounts receivable account
► Accounts payable account
► Sales account
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following account would be debited when Rs.5, 000 were paid to vendor? ► Cash
► Voucher payable-vendor payable
► Sundry debtors
► Personal account of customer
Question No: 29 ( Marks: 1 ) - Please choose one
Which of the following is TRUE during the periods of deflation? ► The use of FIFO will result in greater net income than LIFO
► The use of FIFO will result in a smaller cost of goods sold than LIFO
► The use of FIFO will result in a lower net income and higher ending inventory than LIFO
► The use of FIFO will result in a lower net income and lower ending inventory than LIFO
Question No: 30 ( Marks: 1 ) - Please choose one
Which one of the following is TRUE with respect to “LIFO” in inventory valuation? ► Last-In-First-Out
► Last-In-Freight-Out
► Last-In Frequent-Out
► Large inventory - First-Out
Question No: 31 ( Marks: 1 ) - Please choose one
Which one of the following is a fixed asset? ► Cash in hand
► Advanced payment
► Closing stock
► Leasehold vehicle
Question No: 32 ( Marks: 1 ) - Please choose one
Purpose of charging depreciation expense is the application of: ► Matching principle
► Dual aspect concept
► Separate entity concept
► Money measurement concept
Question No: 33 ( Marks: 1 ) - Please choose one
Which of the following is/are TRUE about fixed assets? ► Fixed assets have a long life
► Fixed assets are used in the business for future generation of income
► Fixed assets are not bought with the main purpose of resale
► All of the given options
Question No: 34 ( Marks: 1 ) - Please choose one
If:Ø Cost of machine= Rs. 425,000
Ø Useful life= 5 years
Ø Residual value = Rs. 25,000
Ø Sale price= Rs. 40,000
What will be book value of machine after four years using straight line method?
► Rs. 65,000
► Rs. 400,000
► Rs. 85,000
► Rs. 105,000
Question No: 35 ( Marks: 1 ) - Please choose one
It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of past experience, it is estimated that 5 % of the sundry debtors are doubtful. Actual bad debts are Rs. 1,600 appeared in trial balance. What is amount of new provision for doubtful debts? ► Rs. 3,600
► Rs. 2,000
► Rs. 1,600
► Rs. 400
Question No: 36 ( Marks: 1 ) - Please choose one
Which of the following statement is correct, if a company fails to record estimated bad debts expense? ► Net realizable value is understated
► Expenses are understated
► Revenues are understated
► Receivables are understated
Question No: 37 ( Marks: 1 ) - Please choose one
Insurance paid in advance would be treated as: ► Non current asset
► Current asset
► Intangible asset
► Deferred expense
Question No: 38 ( Marks: 1 ) - Please choose one
Which of the following is/are NOT included in the cost of goods sold? ► Distribution expenses
► Selling expenses
► Administrative expenses
► All of the given options
Question No: 39 ( Marks: 1 ) - Please choose one
Which of the following would be added in purchases in order to get the value of Net purchases? ► Purchases returns
► Carriage inwards
► Trade discount and rebates
► All of the given options
Question No: 40 ( Marks: 1 ) - Please choose one
The amount received in excess of the face value of the shares is transferred to: ► Share capital account
► Right shares
► Share premium account
► Shareholders account
Question No: 41 ( Marks: 1 ) - Please choose one
Preliminary Expenses of the company may write off against: ► Share premium account
► Shareholders account
► Debtors control account
► Creditors control account
Question No: 42 ( Marks: 1 ) - Please choose one
Which of the following can be utilized to issue bonus shares? ► Share premium
► Term finance certificates
► Bonds
► Debentures
Question No: 43 ( Marks: 1 ) - Please choose one
Which of the following is the new name of Sources and Application of Funds? ► Income Statement
► Cash Flow Statement
► Statement of Changes in Owners Equity
► Balance Sheet
Question No: 44 ( Marks: 1 ) - Please choose one
A corporation has retained earning of Rs. 100,000 and Rs. 150,000 for the year ended 2006 and 2007 respectively. The corporations had net profits after taxes of Rs. 80,000 in 2007. What will be the amount of dividend paid in the year 2007? ► Rs. 30,000
► Rs. 70,000
► Rs. 50,000
► Rs. 20,000
Question No: 45 ( Marks: 1 ) - Please choose one
Which of the following is the CORRECT statement with respect to the liquidity and profitability? ► Liquidity and Profitability is the same thing
► The importance of Liquidity > The importance of Profitability
► The importance of Liquidity < The importance of Profitability
► The liquidity and profitability is not the same thing but both have equal importance
Question No: 46 ( Marks: 1 ) - Please choose one
Which of the following is adjusted as working capital change in operating activities section of a cash flow statement? ► Decrease in trade receivable
► Repayment of dividend
► Payment of goodwill
► Investment in associated companies
Question No: 47 ( Marks: 1 ) - Please choose one
In statement of cash flows, which of the following would not be considered as an investing activity? ► Sales of fixed assets
► Purchase of long term securities
► Purchase of fixed assets
► Payments of dividends
Question No: 48 ( Marks: 1 ) - Please choose one
A company ABC purchased an asset for Rs. 40,000, paying Rs. 30,000 in cash and issuing a long term note payable for remaining balance. The amount will be recorded in statement of cash flows as: ► Rs. 40,000 cash outflow as an investing activity
► Rs. 30,000 cash outflow as an investing activity
► Rs. 10,000 cash inflow as an investing activity
► Rs. 70,000 cash inflow as an investing activity
Question No: 49 ( Marks: 3 )
What do you know about the Profit and loss appropriation account in case of partnership?Answer:
The profit account does not included the salary of partner nor the markup on capital or interest on drawing, this all we do after calculating the net income in profit and loss appropriation account to get to the distributable income/profit among the partners as per the profit/loss sharing ratio.
Question No: 50 ( Marks: 3 )
Assume that a company repays Rs. 300,000 loan taken from its bank and then later, in the same year company borrows Rs. 500,000. How will these items be treated on the current year’s Statement of Cash Flows?Answer : In the section of Financing Activities
300,000 will appear as (300,000) showing outflow/repayment of loan
500,000 will appear as 500,000 showing inflow of cash borrowed.
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.Answer:
In case of admission of any new partner all the assets and liabilities is revalued as well as the good will of the partnership company. The new ratio get sets for profit/loss sharing among the partner.
Usually In Case of death or retirement of partner from partnership, partnership comes to an end or in a state of dissolution.
Question No: 52 ( Marks: 5 )
Define cash flow from operating activities with some examples.Answer:
Extract from Cash Flow Statement.
Net profit 100,000
Add Back : Non Cash Transaction
Depreciation Exp 5000
Gain on Currency Exchange 10,000
Gain on Sale of Disposal of Asset 2,000
Cash from Opening Activities before working
Capital Change 117,000
Less: Increase in Assets -10,000
Add: Decrease in Assets 5,000
Add: Increase in Liabilities 6000
Less: Decrease in Liabilities -3000
Cash Generated from Operating Activities 115,000
Question No: 53 ( Marks: 5 )
Given the following data: Purchases Rs.26,000, Returns outwards Rs.1,470, Returns inwards Rs.2,100, Carriage outwards Rs.1,230, Carriage inwards Rs.890, Opening stock Rs.4,500, and closing stock Rs.6,130.
What would be the value of the cost of goods sold?
Solution:
| Cost of Good Sold | Amount |
| Opening Stock | 4,500 |
| Add: Purchases | 26,000 |
| Less: Return Outward | -1,470 |
| Add: Carriage Inward | 890 |
| Goods available for Sale | 29,920 |
| Less: Closing Stock | -6,130 |
| Cost of Good Sold | 23,790 |
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