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FINAL TERM

MGT101 - Financial Accounting

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

Double entry accounting system includes:
► Accrual accounting only
► Cash accounting only
► Both cash and accrual accounting
► None of the given options

Question No: 2 ( Marks: 1 ) - Please choose one

Which of the following is correct according to the double entry system of
book-keeping?
► Debit = Credit
► Debit > Credit
► Debit < Credit
► All of the given options

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

If the cost of sales is Rs. 60,000, sales are Rs. 90,000 and operating expenses
are Rs. 25,000 during the year. What would be the Net Profit?
► Rs. 5,000
► Rs. 25,000
► Rs. 55,000
► Rs. 60,000

Question No: 4 ( Marks: 1 ) - Please choose one

If the cost of sales is Rs. 95,000, sales are Rs. 100,000 and operating
expenses are Rs. 200,000 during the year, what would be the net result?
► Loss of Rs. 1, 95,000
► Profit of Rs. 1, 95,000
► Profit of Rs 5,000
► Loss of Rs 5,000

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

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

Consider the following data: Provision created in 2006 Rs. 2,500 Bad debts in
2007 Rs. 1,500 Sundry 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 year 2007.
► Profit & Loss a/c Rs. 1,000 (Dr) & Provision for doubtful debts a/c Rs.
1,000 (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)

Question No: 7 ( Marks: 1 ) - Please choose one

Which of the following account(s) will be affected, while rectifying the error of
sales 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

Question No: 8 ( 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: 9 ( Marks: 1 ) - Please choose one

Which of the following statement is TRUE about the Accounts receivable?
► Accounts receivable arises when a company buys goods or services from
another party on credit
► Accounts receivable is a miscellaneous category that may include loans to
employees ► Accounts receivable are more formal than notes receivable
► Accounts receivable are often called trade receivables

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

A, B, C are partners. Their profit sharing ratio is equal. Capital balance on July
1st of Partner A --- Rs. 40,000 Partner B --- Rs. 30,000 and Partner C--- Rs.
20,000.Their private property of Partner A is Rs.15,000, Partner B is Rs. 7,000
and Partner C is Rs. 1,500. What is the level of their liabilities under the
partnership firm?

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► Partner A—Rs. 40,000, Partner B---- Rs. 30,000, Partner C –

20,000
► Partner A—Rs. 40,000, Partner B---- Rs. 30,000, Partner C – 21,500
► Partner A—Rs. 40,000, Partner B---- Rs. 37,000, Partner C – 20,000
► Partner A—Rs. 55,000, Partner B---- Rs. 37,000, Partner C – 21,500

Question No: 11 ( Marks: 1 ) - Please choose one

In cash flow statements, which of the following would appear as a cash
outflow?
► The payments for purchases made during the year
► A decrease in trade debtors over the course of an accounting period
► Money received as a result of issuing new shares
► Money received as result of selling fixed assets

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

An 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

Question No: 13 ( Marks: 1 ) - Please choose one

The beginning balance of retained earnings was Rs. 7,500. The dividends paid
to stockholders' were Rs.1, 500. The ending balance of retained earnings is
Rs. 5,000. What was the net income or net loss for the accounting period?
► Net loss of Rs.1, 000
► Net income of Rs. 1,000
► Net loss of Rs. 2,000
► Net income of Rs. 2,500

Question No: 14 ( Marks: 1 ) - Please choose one

Normally the practice of Book Keeping under Single Entry System is followed
by:
► Small businesses only
► Governments only
► Large scale businesses only
► Both small businesses and governments

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following is(are) CORRECT for Doubtful Debt?
► It is shown in balance sheet
► It is a definite loss to the business
► No provision is necessary for it

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► All of the given option

Question No: 16 ( Marks: 1 ) - Please choose one

An uncollectible account receivable is also termed as: ► Asset
► Uncollectible asset
► Uncollectible accounts expense
► None of the given options

Question No: 17 ( Marks: 1 ) - Please choose one

Payment is made of a company’s purchases on credit, which of the following
is correct: ► Debit stock account and credit creditors account
► Debit creditors account and credit cash account
► Debit cash account and credit creditors account
► Debit stock account and credit cash account

Question No: 18 ( Marks: 1 ) - Please choose one

The amount owed by debtors at the end of a month appears on
the_________ side of the control account.
► Left side or debit
► Left side or credit
► Right side or debit
► Right side or credit

Question No: 19 ( Marks: 1 ) - Please choose one

Receipts from debtors appear on the ___________ side of the individual
debtors 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

Which of the following is usually not an accrued expense?
► Interest payable
► Wages payable
► Taxes payable
► Notes payable

Question No: 21 ( Marks: 1 ) - Please choose one

According to the rule of debit and credit for balance sheet accounts:
► Increase in asset, liability, and owners’ equity accounts are recorded by
debits.
► Decrease in asset and liability accounts are recorded by credits

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► Increase in asset and owners’ equity accounts are recorded by debits

► Decrease in liability and owners’ equity accounts are recorded by
debits

Question No: 22 ( Marks: 1 ) - Please choose one

Which of the following justifies when profit is earned?
► Assets exceed Expenditure
► Income exceeds Expenditure
► Cash Inflow exceeds Cash Outflow
► Income exceeds Liabilities

Question No: 23 ( Marks: 1 ) - Please choose one

Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with
an equal share in profit or loss. Markup on capital of Mr. A is Rs.2,000 and
markup on drawings of Mr. B is Rs.3,000. The net income for the year is
Rs.85,000. What will be the profit share of Mr. A?
► Rs.43,000
► Rs.45,000
► Rs.71,000
► Rs.133,000

Question No: 24 ( Marks: 1 ) - Please choose one

The value of a share as quoted on the stock exchange is known as:
► Book value
► Par value
► Market value
► Face value

Question No: 25 ( Marks: 1 ) - Please choose one

Which of the following value of the share is authorized by the memorandum
of association?
► Par value
► Face value
► Nominal value
► All of the given options

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following financial statement is helpful for the investors and
creditors to assess the cash and non cash aspects of operating, investing and
financing transactions on an entity’s financial position?
► Balance Sheet
► Income Statement
► Statement of cash flows

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► Statement of changes in equity

Question No: 27 ( Marks: 1 ) - Please choose one

Which of the following items of balance sheet are useful in evaluating a
company’s liquidity?
► Current assets and other assets
► Current liabilities and current assets
► Current liabilities and plant and equipment
► Non current liabilities and other assets

Question No: 28 ( 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: 29 ( Marks: 1 ) - Please choose one

Which of the following is used to record the payments of cash or cheque?
► Journal Voucher
► Receipt Voucher
► Payment Voucher
► Cash voucher

Question No: 30 ( Marks: 1 ) - Please choose one

If:
· Direct Material Cost is Rs. 20,000
· Direct labour cost is Rs. 10,000
· Manufacturing Cost is Rs. 45,000 Then: What is the amount of Factory
Overhead?
► Rs. 15,000
► Rs. 30,000
► Rs. 35,000
► Rs. 25,000

Question No: 31 ( 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

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Question No: 32 ( Marks: 1 ) - Please choose one

Which one of the following methods for inventory valuation is based on the
assumption that the first merchandise purchased is the first merchandise
sold?
► LIFO Method
► Weighted Average Method
► Specific Identification Method
► FIFO Method

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

Cost of asset Rs. 100,000 Life of asset 5 years Depreciation for each year Rs.
5,000 Sale price after 5 years Rs.15,000 Written Down Value of Asset on 5th
year Rs. 75,000 Profit or loss on disposal of fixed asset ?
► Rs. 60,000 loss
► Rs. 75,000 profit
► Rs. 25,000 loss
► Rs. 100,000 profit

Question No: 35 ( Marks: 1 ) - Please choose one

An asset costs Rs. 120,000 and has accumulated depreciation of Rs. 72,400.
The asset is sold for Rs. 46,500. What is the Profit or Loss on disposal?
► Loss of Rs. 1,100
► Loss of Rs. 73,500
► Profit of Rs. 1,100
► Profit of Rs. 73,500

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is TRUE?
► The entries in cash book are made by the bank
► The entries in cash book are made by the depositor himself
► The entries in cash book are made by the audit officer
► The entries in pass book are made by the manager

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Question No: 37 ( Marks: 1 ) - Please choose one

If (Amount of new provision + Amount of bad debts) < Amount of old
provision then amount will be shown on:
► Debit side of Profit & Loss account
► Credit side of Profit & Loss account
► Asset side of Balance Sheet
► Liability side of Balance Sheet

Question No: 38 ( Marks: 1 ) - Please choose one

General reserves are shown in:
► Balance sheet
► Income & expenditure account
► Cash flow statement
► Profit & loss account

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

Which of the following statement is TRUE about the partnership form of
business?
► Partners must have to share their profits in equal proportion
► Liabilities of the partners are limited up to the amount of their investment
► Partners are personally liable for the liabilities of the business
► Partnerships must make their accounts available to the general public

Question No: 40 ( Marks: 1 ) - Please choose one

Which of the following account will be debited when the interest on drawings
is charged in case of fluctuating capital?
► Partner’s capital account
► Interest expense account
► Partner’s current account
► Fluctuating capital account

Question No: 41 ( Marks: 1 ) - Please choose one

Which of the following would be included in the cost of goods sold?
► Direct labour cost
► Distribution expenses
► Selling expenses
► Administrative expenses

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Question No: 42 ( Marks: 1 ) - Please choose one

Authorized share capital is also known as:
► Nominal capital
► Issued capital
► Paid up capital
► Called up capital

Question No: 43 ( Marks: 1 ) - Please choose one

In which of the following type of company, shareholders have the right to
transfer their shares of ownership without the consent of other members?
► Public Limited Company
► Private Limited Company
► Single Member Company
► Joint Stock Company

Question No: 44 ( Marks: 1 ) - Please choose one

Which of the following is old name of Cash Flow Statement?
► Sources and Application of Funds
► Sources and Application of Liabilities
► Sources and Application of Activities
► Sources and Application of Income

Question No: 45 ( Marks: 1 ) - Please choose one

Which of the following is an example of cash flow from financing activity?
► Selling a product to the public
► Collecting cash from a customer
► Buying the stock of another company
► Issuing stock

Question No: 46 ( Marks: 1 ) - Please choose one

While preparing a statement of cash flows ________ must be added back to
the net profit after taxes to get cash flows from operations.
► Accounts receivables
► Fixed assets
► Depreciation and Amortization
► Net loss

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

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► Purchase of fixed assets

► Payments of dividends

Question No: 48 ( Marks: 1 ) - Please choose one

Nominal value of each share Rs.10 No. of shares outstanding 10,000 shares
Net profit Rs. 20,000 What is the EPS ?
► Rs. 1.00
► Rs. 2.00
► Rs. 0.20
► Rs. 20.00

Question No: 49 ( Marks: 3 )

What do you know about the Nominal Capital of company?

Question No: 50 ( Marks: 3 )

Write down the components of Cash Flow Statement.

Question No: 51 ( Marks: 5 )

You are required to pass rectifying entries of the following errors:
1. Received cash Rs. 500 from Mr. "B" entered as Rs. 300 in the cash book.
2. A cash sale of Rs. 600 has completely omitted to be recorded in the books.
3. Goods worth Rs. 200 were returned to Mr. Kamran but no entry was
passed in the books.

Question No: 52 ( Marks: 5 )

Write down the common contents of Memorandum of Association.?

Question No: 53 ( Marks: 5 )

Following information is extracted from the books of Abrar Ltd as on
December 31st, 2007.
Particulars Rs
Carriage inwards 8,000
Legal charges 6,500
Financial charges 223,500
Tax payable 30,000
Advances from customer 10,000
General reserve 40,000
Accumulated profit brought forward(credit balance ) 95,000
Long term loans 100,000

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Additional information
The authorized capital is Rs. 5,000,000 divided into 500,000 shares of Rs. 10
each. Issued and paid up capital is Rs. 2,500,000.

You are required to calculate Shareholder's equity

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