MGT101 Final

FINALTERM EXAMINATION
Spring 2010
MGT101- Financial Accounting (Session - 4)
Time: 90 min
Marks: 69
Student Info
StudentID:
Center: OPKST
ExamDate: 09 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
An organization operating with the objective of making profit from the sale of goods or services is called:

► Transaction
► Business
► Society
► Trust

Question No: 2 ( Marks: 1 ) - Please choose one
We can say that the business is in profit, when:


► Assets exceed Expenditure
► Assets exceed Liabilities
► Income exceeds Expenditure
► Income exceeds Liabilities

Question No: 3 ( Marks: 1 ) - Please choose one
Which of the following account balance will be shown on debit side of Trial Balance? (It is assumed that all account balances are shown on normal balance).

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

Question No: 4 ( Marks: 1 ) - Please choose one
If 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 Net Profit?


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

Question No: 5 ( Marks: 1 ) - Please choose one
In 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

Question No: 6 ( Marks: 1 ) - Please choose one
If, Cost of machine = Rs.400, 000
Useful life = 5 years
Residual value = Rs.25, 000
The depreciation of machine per year using straight line method is?

► Rs. 160,000
► Rs. 96,000
► Rs. 75,000
► Rs. 57,600

Question No: 7 ( Marks: 1 ) - Please choose one
Find out the missing value of an Accounting Equation with the help of given data:

Cash Rs.1, 00, 000
Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 1, 000


► Rs. 12,000 liabilities
► Rs. 11,000 liabilities
► Rs. 1, 10,000 liabilities
► Rs. 1, 11,000 liabilities

Question No: 8 ( Marks: 1 ) - Please choose one
Upon checking the Bank Statement against the Cash Book by Mr. A, It was discovered that an amount of Rs.120 for dividend from XYZ Co. had not been entered in the Cash Book. Which of the following entry should be recorded to rectify the mistake?
► Bank Account(Dr.) and Dividend Account (Cr.)
► XYZ Co. Account (Dr.) and Bank Account (Cr.)
► Dividend Account (Dr.) and Bank Account (Cr.)
► Bank Account (Dr.) and XYZ Co. Account (Cr.)

Question No: 9 ( Marks: 1 ) - Please choose one
Which one of the following transactions will cause the balance in Mr. Terry's Cash 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
► A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110

Question No: 10 ( Marks: 1 ) - Please choose one
If Bad Debts written off are given in adjustment, then which of the following entry for bad debts 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)

Question No: 11 ( Marks: 1 ) - Please choose one
Which of the following is (are) benefit/s of subsidiary ledger accounts to business?

► 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

Question No: 12 ( Marks: 1 ) - Please choose one
When one or both aspects of a transaction are recorded in the wrong class or category of account, this is called:

► Error of principle
► Error of omission
► Error of commission
► Error of original entry

Question No: 13 ( Marks: 1 ) - Please choose one
Which of the following is the first phase of the typical operating cycle?

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

Question No: 14 ( Marks: 1 ) - Please choose one
In which type of a business, the owner and his business are considered same in the eyes of law?
► Sole proprietorship
► Public companies
► Limited companies
► Listed companies

Question No: 15 ( Marks: 1 ) - Please choose one
Which of the following clause/s are discussed in Memorandum of Association of Companies?

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

Question No: 16 ( Marks: 1 ) - Please choose one
6% Debentures Account Rs. 3, 00,000. What amount of interest on debentures should be shown in profit and loss account?

► Rs. 6,000
► Rs. 3, 00,000
► Rs. 18,000
► Rs. 3, 18,000

Question No: 17 ( Marks: 1 ) - Please choose one
Which of the following is a type of business formed under the Companies Ordinance 1984?

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

Question No: 18 ( Marks: 1 ) - Please choose one
If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A, Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. C in distributable profit.

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

Question No: 19 ( Marks: 1 ) - Please choose one
When we close bad debts account, which of the following account is credited?
► Profit and loss account
► Bad debt account
► Debtor account
► Provision for bad debt account

Question No: 20 ( Marks: 1 ) - Please choose one
Stock account is credited and creditors account is debited, which of the following is reflecting the statement?
► Discount received
► Goods returned
► Purchase of goods on credit
► Payment of goods

Question No: 21 ( 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: 22 ( Marks: 1 ) - Please choose one
In a partnership of Mr. X and Mr. Y, the share of profit of Mr. X is Rs.3,840 and the share of profit of Mr. Y is Rs. 5,760. What will be the ratio of their share?
► 1:2
► 2:3
► 3:2
► 2:1

Question No: 23 ( 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: 24 ( Marks: 1 ) - Please choose one
Profits earned by partnerships compensate the owners for which of the following?
► Personal services rendered to the business
► Capital invested in the business
► Assuming the risks of ownership
► All of the given options

Question No: 25 ( Marks: 1 ) - Please choose one
For which of the following share premium can not be utilized?
► To meet the expenses of issue of shares
► To issue bonus shares
► None of the given options
► To write off preliminary expenses

Question No: 26 ( Marks: 1 ) - Please choose one
According to the statement of cash flows following are the examples of investing activities except:
► Sales of machinery
► Capital invested by the owners
► Purchase of building for the business use
► Cash received from the disposal of equipment

Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following is one of the major factors affecting the market value of a company’s shares?
► Current ratio
► Earning per share
► Return on investment
► Return on asset

Question No: 28 ( Marks: 1 ) - Please choose one
In statement of cash flows, a payment of cash dividends is related to:
► Investing activity
► Financing activity
► Operating activity
► Cash flows from operations

Question No: 29 ( Marks: 1 ) - Please choose one
Which of the following is the investment in business by the owners?
► Capital
► Liability
► Asset
► Profit

Question No: 30 ( Marks: 1 ) - Please choose one
Which of the following is an example of revenue in business enterprises?
► Accounts payable
► Accounts receivable
► Commission received
► Commission paid

Question No: 31 ( Marks: 1 ) - Please choose one
Which of the following system of recording transactions is based on dual aspect concept of accounting?
► Double entry system
► Cash accounting system
► Single entry system
► Management system

Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following is a book of original entry in which all the vouchers are recorded at first?
► General Journal
► General Ledger
► Trial Balance
► Balance Sheet

Question No: 33 ( Marks: 1 ) - Please choose one
What is the treatment of Accumulated depreciation in Balance Sheet?
► Treated as an expense
► Treated as an asset
► Treated as a contra asset
► Treated as an income

Question No: 34 ( 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: 35 ( Marks: 1 ) - Please choose one
Which one of the following cost is NOT attributable to the fixed assets?
► Costs of site preparation
► Administration and other general overhead cost
► Initial delivery and handling charges
► Installation and assembly costs

Question No: 36 ( Marks: 1 ) - Please choose one
Mr. B’s cash book shows a credit balance of Rs.68,000. He issued a cheque of Rs.7,000 but not yet presented by the bank. What will be the balance of bank statement?
► Rs. 61,000
► Rs. 75,000
► Rs. 68,000
► Rs. 7,000

Question No: 37 ( Marks: 1 ) - Please choose one
If cash purchase is the missing figure, it can be ascertained by the construction of:
► Cash Account
► None of the given options
► Creditors Control Accounts
► Debtors Control Accounts

Question No: 38 ( Marks: 1 ) - Please choose one
Depreciation expense is charged to which of the following head?
► Administrative expenses
► Selling expenses
► Cost of sales
► It depends on the nature of expense

Question No: 39 ( Marks: 1 ) - Please choose one
Which of the following is/are included in the cost of goods sold?
► Cost of materials used
► Direct labour cost
► Factory costs
► All of the given options

Question No: 40 ( Marks: 1 ) - Please choose one
A firm had sales of Rs. 200,000, cost of goods available for sale Rs. 120,000, and an ending finished goods inventory of Rs. 20,000. Selling and Administrative expenses are Rs. 55,000. Which of the following would be TRUE?
► Net income was 22.5% of sales
► The cost of goods sold was Rs. 100,000
► The gross profit was Rs. 100,000
► All of the given options

Question No: 41 ( Marks: 1 ) - Please choose one
Which of the following is TRUE about the Companies Limited by Shares?
► Company has limited shares to offer
► Shareholders of the Company are limited
► Liability of the shareholders is limited
► Liability of the shareholders is unlimited

Question No: 42 ( Marks: 1 ) - Please choose one
Which of the following is shown on the liability side of Balance Sheet?
► Discount on issue of shares a/c only
► Share capital a/c only
► Premium on issue of shares a/c only
► Both share capital and share premium a/c

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

Question No: 44 ( Marks: 1 ) - Please choose one
A company is said to have been registered when:

► It gets certificate of incorporation from registrar of Companies
► It gets certificate of commencement of business from registrar of Companies
► It actually starts its business
► It filed with the Registrar of Companies certain documents, like memorandum and articles of association

Question No: 45 ( Marks: 1 ) - Please choose one
Which of the following is considered as Non-cash item in cash flow statement?
► Depletion
► Accrued income
► Prepaid expenses
► Cash at bank

Question No: 46 ( 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: 47 ( Marks: 1 ) - Please choose one
If issuance of shares against cash is Rs. 2,000 and payment of dividend is Rs. 9,000 then which of the following is correct?
► Inflow of cash Rs. 11,000
► Outflow of cash Rs. 11,000
► Inflow of cash Rs. 7,000
► Outflow of cash Rs. 7,000

Question No: 48 ( Marks: 1 ) - Please choose one
Which 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
► (Gross profit / Net Income) x 100

Question No: 49 ( Marks: 3 )
ط Cash at bank Rs. 20,000
ط Closing stock Rs. 25,000
ط Sundry debtors Rs. 35,000

If provision for doubtful debts is Rs. 5,000, calculate the amount of current assets to be shown in balance sheet.

Question No: 50 ( Marks: 3 )
Particulars Rs.
Interest on loans 2,000
Interest on overdraft 4,000
Foreign exchange gain 6,000
Gain on disposal of fixed assts. 8,000
Sale of Scrap 1,000

Based on the above information, you are required to calculate the amount of following:
ط Financial charges
ط Other income

Question No: 51 ( Marks: 5 )
Briefly discuss the followings:
ط Issuance of shares at premium
ط Cash flow statement
ط Debentures
ط Notes to the accounts



Question No: 52 ( Marks: 5 )
Find the cost of goods sold by preparing a cost of goods sold statement with the help of given date for the year 2007.

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

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


Question No: 53 ( Marks: 5 )
Classify the followings whether these Entries are Operating, Investing or Financing activity by filling the appropriate boxes given below.


S. No.
ENTRIES

CLASSIFICATION

0
Change in Accounts receivable and Inventory

Operating activity

1
Change in Property, Buildings, and Equipment

?

2
Change in Accumulated depreciation and Amortization


?

3
Change in Accounts payable, Accrued wages and Salaries payable
?

4
Change in Note payable

?

5
Net income

?