MGT101- Financial Accounting Complete Solved Past Midterm Paper

MIDTERM  EXAMINATION

Spring 2009

MGT101- Financial Accounting 

Time: 60 min

Marks: 50

Student Info
StudentID:
Center:
ExamDate:

For Teacher's Use Only

   

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

 Net Profit + Expenses= _________

       ► Liabilities

       ► Assets

       ► Capital

       ► Income

   

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

 The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the asset, is termed as:

       ► Appreciation

       ► Depreciation

       ► Fluctuation

       ► None of the given options

   

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

 The basic purpose of depreciation is to achieve the:

       ► Matching principle

       ► Dual aspect principle

       ► Separate entity concept

       ► Money measurement concept

   

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

 Cash book is a part of:

       ► Voucher

       ► General Journal

       ► General Ledger

       ► Trial Balance

   

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

 Bank Reconciliation Statement is:

       ► A memorandum statement

       ► A ledger account

       ► A part of cash book

       ► A part of journal

   

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 main goal of Bank Reconciliation Statement is to determine:

       ► If the discrepancy is due to error rather than timing

       ► If the discrepancy is due to timing rather than error

       ► If the discrepancy is due to error rather than amount

       ► If the discrepancy is due to amount rather than timing

   

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

 Which one of the following is NOT true about revenue expenditure?

       ► These are the running expenses of the business

       ► They improve the financial position of the business

       ► They reduce the profit of the concern

       ► They do not appear in the balance sheet

   

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

 Under the reducing balance method of depreciation:

       ► Amount of depreciation increases every year

       ► Amount of depreciation remains constant for every year

       ► Amount of depreciation decreases every year

       ► None of the given options

   

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

          Consider the following inventory record:

Date	Item	Quantity	Cost/Unit	Total
2007Jan. 2	Opening inventory	100	Rs.18.00	Rs.1,800
Mar. 4	Purchase	400	19.00	7,600
May 8	Purchase	800	20.00	16,000
Nov. 3	Purchase	500	21.00	10,500

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

   

Question No: 12    ( 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

Eighty 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.320

   

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

Particulars	Rs.
Opening stock of raw material	100,000
Closing stock of raw material	85,000
Purchases of raw material during the period	200, 000
Cost of Material Consumed	?

       ► Rs. 205,000

       ► Rs. 215,000

       ► Rs. 220,000

       ► Rs. 225,000

   

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

 The amount of depreciation charged on machinery will be debited to:

       ► Machinery account

       ► Depreciation account

       ► Cash account

       ► Capital account

   

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

 Under the straight line method of depreciation:

       ► Amount of depreciation increases every year

       ► Amount of depreciation remains constant for every year

       ► Amount of depreciation decreases every year

       ► None of the given options

   

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

Cost of asset	Rs. 1,00,000
Life of asset	5 years
Depreciation for each year	Rs. 5,000
Sale price after 5 years	Rs.50,000
Book value of Asset after 5 years	?

       ► Rs.25, 000

       ► Rs. 75,000

       ► Rs. 15,000

       ► Rs. 1, 00,000

   

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

Cost of asset	Rs. 1,00,000
Life of asset	5 years
Depreciation for each year	Rs. 5,000
Sale price after 5 years	Rs.50,000
Written down value of asset on 5th year	Rs.75,000
profit or loss on disposal of fixed assets	?

       ► Rs.25, 000 loss

       ► Rs. 75,000 loss

       ► Rs. 15,000 profit

       ► Rs. 1, 00,000 profit

   

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

Cost of asset	Rs. 1,00,000
Life of asset	5 years
Depreciation for the 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. 1, 00,000 profit

   

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

 In cost of goods sold statement the ‘total factory cost’ is equal to:

       ► Cost of material consumed + Labor cost

       ► Cost of material consumed + Conversion cost

       ► Cost of material consumed + Total factory cost

       ► Cost of material consumed + Factory overhead

   

Question No: 20    ( Marks: 1 )    - Please choose one

 Which of the following organization converts raw material into finished goods?

       ► Trading concern

       ► Manufacturing concern

       ► Merchandising concern

       ► Service concern

   

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

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

       ► Interest expenses

       ► Wages and salaries

       ► Depreciation expenses

       ► Discount Allowed

   

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

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

       ► Liability

       ► Owner’s net worth

       ► Working capital

       ► Asset

   

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

 If salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office building) is Rs. 300 during the year, what would be the total of "general & administrative expenses"?

       ► Rs. 300

       ► Rs. 2,500

       ► Rs. 2,800

       ► Rs.18, 800

   

Question No: 24    ( 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: 25    ( Marks: 1 )    - Please choose one

 The amount brought by the proprietor in the business should be credited to:

       ► Cash account

       ► Capital account

       ► Drawings account

       ► Proprietor account

   

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

 Which of the following account will be credited, if business sold goods for Rs.10,000 on credit?

       ► Cash account

       ► Sales account

       ► Accounts receivable account

       ► Purchases account

   

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

 Which of the following account will be credited, if business purchased a vehicle on cash?

       ► Vehicle account

       ► Cash account

       ► Business account

       ► Bank account

   

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

 Accrued expenses are the example of:

       ► Current liabilities

       ► Long term liabilities

       ► Deferred costs

       ► Capital expenses

   

Question No: 30    ( 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: 31    ( Marks: 1 )    - Please choose one

 What type of expenses are paid out of Gross Profit?

       ► Selling Expenses

       ► General Expenses

       ► Financial Expenses

       ► All of the given options

   

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

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

       ► Income Statement

       ► Balance Sheet

       ► Trial Balance

       ► Cash Book

   

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

 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)

   

Question No: 34    ( Marks: 1 )    - Please choose one

 Which of the following book(s) is(are) a part of General Ledger?

       ► Cash Book

       ► Purchase Return Book

       ► Purchase Book

       ► All of the given options

   

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

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

       ► Pass Book

       ► Cash Book

       ► Purchase Book

       ► Sales Book

   

Question No: 36    ( 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: 37    ( Marks: 1 )    - Please choose one

 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

   

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

 According to the double entry system of accounting, an account that obtains benefit is:

       ► Debit

       ► Credit

       ► Income

       ► No need to show as accounting record

   

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

 Mr. “A” sold goods to Mr. “B” for Rs. 3,000 on October 8, 2008 and Mr. “B” paid at the same time. It will be case of ______________ sales.

       ► Cash

       ► Credit

       ► Accrual based

       ► None of the given options

   

Question No: 41    ( Marks: 10 )

 State with reasons whether the following items of expenditure are capital or revenue in nature.

1.      Wages paid on the purchase of goods.

2.      Carriage paid on goods purchased.

3.      Transportation paid on purchase of machinery.

4.      Octroi duty paid on machinery.

5.      Octori duty paid on goods.

6.      A second hand car was purchased for Rs. 7,000 and Rs, 5,000 were spent for its repair and overhauling.

7.      Office building was whitewashed at a cost of Rs. 3,000.

8.      A new machinery was purchased for Rs. 80,000 and a sum of Rs. 1,000 was spent on its installation and erection

9.      Old furniture was repaired at a cost of Rs. 500.

10.  Land was purchased for Rs. 1, 00,000 and Rs. 5,000 was paid for legal expenses.