MIDTERM EXAMINATION
Spring 2009
MGT101- Financial Accounting (Session - 5)
Time: 60 min
Marks: 50
Question No: 1 ( Marks: 1 ) - Please choose one
An accounting system is used by a business to:
► Analyze transactions
► Handle routine book-keeping tasks
► Classify and summarize financial information
► All of the given options
Question No: 2 ( Marks: 1 ) - Please choose one
The assets which have a limited useful life are termed as:
► Limited assets
► Depreciateable assets
► Unlimited assets
► None of the given options
Question No: 3 ( Marks: 1 ) - Please choose one
Accountancy covers which of the following area(s):
► Book-keeping
► Accounting
► Auditing
► All of the given options
Question No: 4 ( Marks: 1 ) - Please choose one
If a business pays rent in advance for 12 months, it will be treated as:
► Prepaid expenses of business
► Long term liability of business
► Fixed assets of business
► Current liability of business
Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following transaction have NO affect on stockholders' equity?
► Purchase of land on credit
► Dividends to stockholders
► Net loss
► Investment in cash by stockholders
Question No: 6 ( Marks: 1 ) - Please choose one
Which of the following account balance is shown on credit side of Trial Balance?
(It is assumed that all account balances are shown on normal balance)
► Cash account
► Furniture account
► Vehicle account
► Capital account
Question No: 7 ( Marks: 1 ) - Please choose one
If you start with cash book balance (Dr.), which of the following item will be
deducted in Bank Reconciliation Statement?
► Any cheque drawn to creditor but not paid by bank
► Interest credited by the bank in pass book
► Cheque deposited but not credited by the bank
► Dividend collected by bank on behalf of the customer
Question No: 8 ( Marks: 1 ) - Please choose one
The cost of moving plant and machinery to a new site will be treated as:
► Revenue expense
► Capital expense
► Administrative expense
► Operating expense
Question No: 9 ( Marks: 1 ) - Please choose one
Which one of the following is NOT true about Capital Expenditure?
► Creates future benefits
► Incurred to acquire fixed assets
► Incurred to increase the economic life of existing fixed assets
► Reduce the profit of the concern
Question No: 10 ( Marks: 1 ) - Please choose one
Consider the following:
Beginning inventory 10 units @ Rs. 10 per unit
First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
Third purchase 20 units @ Rs. 13 per unit
Sold 10 units @ 10
35 units @ 11
40 units @ 12
Balance
20 units @ 13 = 260
Eighty-five units were sold, what is the value of the ending inventory using the
FIFO method of inventory costing?
► Rs.260
► Rs.232
► Rs.284
► Rs.268
Question No: 11 ( Marks: 1 ) - Please choose one
Consider the following inventory record:
Cost/Unit Total
Date Item Quantity Rs. Rs.
Jan. 2 Beginning inventory 10 10 100
Mar. 4 Purchase 35 11 385
May 8 Purchase 40 12 480
Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225
Opening Stock 100
Add purchases 1125
Total material available
for sale 1225
Less closing ** 320
Cost of good sold 905
Detail of 80 units sold
10 @ 10
35 @ 11
35 @ 12
now remaining are
5 units @ 12 = 60
20 units@ 13 =260
closing stock = 25 units and value = 320
80 units were sold, Use the FIFO method of inventory costing and determine the
cost of goods sold.
► Rs. 1,225
► Rs. 1,015
► Rs. 965
► Rs. 905
Question No: 12 ( 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?
= 400,000-25000 / 5 = 75000
► Rs. 160,000
► Rs. 96,000
► Rs. 75,000
► Rs. 57,600
Question No: 13 ( Marks: 1 ) - Please choose one
Rs. 1,00,000
Cost of asset
Life of asset 5 years
Depreciation for each year Rs. 15,000
Sale price after 5 years Rs.50,000
Book value of Asset after 5 years ?
Asset year 1 = 100,000 - 15000 = 85000
Year 2 = 85000 - 15000 = 70000
Year 3 = 70000 – 15000 = 55000
Year 4 = 55000 – 15000 = 40000
Book value after year 5 = 40000 – 15000 = 25000
► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000
Question No: 14 ( Marks: 1 ) - Please choose one
A decrease in value of a fixed asset due to age, wear and tear is known as:
► Depreciation
► Accumulated Depreciation
► Appreciation
► Written Down Value
Question No: 15 ( Marks: 1 ) - Please choose one
In balance sheet fixed assets are shown at:
► Cost price
► Market value
► Fair value
► Written down value (WDV)
Question No: 16 ( Marks: 1 ) - Please choose one
In cost of goods sold statement, the ‘cost of material consumed’ is equal to:
► Opening raw material inventory + Purchases – Ending raw material
inventory
► Opening raw material inventory - Purchases + Ending raw material
inventory
► Ending raw material inventory + Opening raw material inventory -
Purchases
► Ending raw material inventory + Opening raw material inventory +
Purchases
Question No: 17 ( Marks: 1 ) - Please choose one
Rs.
Particulars
Direct materials costs 80,000
Direct labor costs 50,000
Manufacturing overhead costs 60,000
Prime cost = dm + dl 130000
► Rs.1 Rs.130, 000
► Rs.110, 000
► Rs.140, 000
► Rs.190, 000
Question No: 18 ( Marks: 1 ) - Please choose one
What would be the value of 'cost of goods manufactured' if the total factory cost
of the month is Rs. 6,000, opening work in process is Rs. 2,000 and the closing
work in process is Rs. 2,500?
► Rs. 5,500
► Rs. 8,000
► Rs. 4,500
► Rs. 8,500
Question No: 19 ( Marks: 1 ) - Please choose one
Following are the inventories of Manufacturing Concern EXCEPT:
► Raw material
► Work in process
► Finished goods
► Merchandise inventory
Question No: 20 ( Marks: 1 ) - Please choose one
If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating expenses are
Rs. 100,000. What will be the net result?
► Rs. 5,000 Loss
► Rs. 5, 000 Profit
► Rs.1, 95,000 Profit
► Rs.1, 95,000 Loss
Question No: 21 ( 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)
► Cash account
► Furniture account
► Vehicle account
► All of the given options
Question No: 22 ( Marks: 1 ) - Please choose one
The return of goods by a customer should be debited to:
► Customer’s account
► Sales return account
► Goods account
► Accounts receivable
Question No: 23 ( Marks: 1 ) - Please choose one
Which of the following account will be credited in the books of ABC Co. Ltd., if
furniture is purchased on cash?
► Furniture account
► Cash account
► Business account
► Bank account
Question No: 24 ( Marks: 1 ) - Please choose one
Which of the following account will be credited, If Mr. “A” started business with
cash
Rs. 2, 00,000?
► Capital account
► Cash account
► Mr. A’s account
► Business account
Question No: 25 ( Marks: 1 ) - Please choose one
Which of the following journal entry will be recorded, if the goods are sold on
credit to Mr. 'B'?
► Mr. “B” / Accounts Receivable account (Dr) and Sales account (Cr)
► Cash account (Dr) and sales account (Cr)
► Sales account (Dr) and Mr. B / Accounts Receivable account (Cr)
► Goods Sold account (Dr) and Mr. B / Accounts Receivable account (Cr)
Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following is NOT an item of a Balance Sheet?
► Accounts Receivable
► Accounts Payable
► Sales Revenue
► Marketable Securities
Question No: 27 ( Marks: 1 ) - Please choose one
Accounts Receivable & Inventory are the examples of:
► Liquid assets
► Current assets
► Fixed assets
► Capital assets
Question No: 28 ( Marks: 1 ) - Please choose one
Which of the following shows summary of a company's financial position at a
specific date?
► Profit & Loss Account
► Cash Flow Statement
► Balance Sheet
► Income & Expenditure Account
Question No: 29 ( Marks: 1 ) - Please choose one
Which of the following summarizes the cash movements during a specified
period?
► Trading account
► Profit & Loss account
► Receipts & Payments account
► Balance Sheet
Question No: 30 ( Marks: 1 ) - Please choose one
Which of the following financial statement summarizes the profitability of an
organization for a particular period?
► Balance Sheet
► Trading and Profit & Loss account
► Cash Flow Statement
► Statement of Retained Earnings
Question No: 31 ( Marks: 1 ) - Please choose one
In an account, if credit side < debit side then the balance is known as:
► Negative Balance
► Debit Balance
► Positive Balance
► Credit Balance
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the following is CORRECT about the flow of recording a transaction?
► Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit
and loss account—Balance Sheet
► Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit
and loss account—Balance Sheet
► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit
and loss account—Balance Sheet
► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit
and loss account—Balance Sheet
Question No: 33 ( Marks: 1 ) - Please choose one
Which of the following is used to record financial transactions in chronological
(day-to-day) order?
► Voucher
► General Journal
► General Ledger
► Trial balance
Question No: 34 ( Marks: 1 ) - Please choose one
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
Question No: 35 ( Marks: 1 ) - Please choose one
What is the nature of an expense account?
► Debit
► Credit
► Revenue
► None of the given options
Question No: 36 ( Marks: 1 ) - Please choose one
Economic resources owned by a business and expected to benefit for the future
operations are called:
► Expenses
► Assets
► Capital
► Liabilities
Question No: 37 ( Marks: 1 ) - Please choose one
Assets total Rs.50, 000 and Liabilities total Rs.10, 000. What is the equity of the
business?
► Rs. 40, 000
► Rs. 60, 000
► Rs. 10,000
► Rs. 50,000
Question No: 38 ( Marks: 1 ) - Please choose one
An expense incurred by the business for the purchase of land & building is an
example of:
► Capital Expense
► Revenue Expense
► Deferred Expense
► Preliminary Expense
Question No: 39 ( Marks: 1 ) - Please choose one
Which of the following is non- profit organization?
► Sole proprietorship
► Partnership
► Limited company
► Trust
Question No: 40 ( Marks: 1 ) - Please choose one
The area of accounting concerned with reporting financial information to the
interested parties is called:
► Cost Accounting
► Financial Accounting
► Management Accounting
► Tax Accounting
Question No: 41 ( Marks: 10 )
Prepare Cash and Capital Accounts with the help of given Journal entries.
journal
Date Particulars (Dr.) (Cr.)
Rs. Rs.
2008 jan1 Cash account 50,000
Capital account 50,000
(owner invested cash )
jan.2 Furniture account 10,000
Cash account 10,000
(purchased furniture for
cash)
Jan.3 Purchases account 30,000
Cash account 30,000
(goods purchased for
cash)
Jan.5 Cash account 40,000
Sales account 40,000
(sold goods for cash)
Jan. 6 Salaries account 5,000
Cash account 5,000
(Salaried paid)
CASH A/C (IN STATEMENT FORM)
Date V. No Detail Ref Debit Credit Balance
01/01/0 CAPITAL A/C 50000 0 50000 DR
8
02/01/0 FURNITURE A/C 0 10000 40000 DR
8
03/01/0 PURCHASES A/C 0 30000 10000 DR
8
05/01/0 SALES A/C 40000 0 50000 DR
8
06/01/0 SALARIES A/C 0 5000 45000 DR
8
TOTAL 90000 45000 45000 DR
