MGT101- Financial Accounting Complete Solved Midterm Paper

MIDTERM  EXAMINATION

Spring 2010

MGT101- Financial Accounting (Session - 3)

Ref No: 1415841

Time: 60 min

Marks: 47

Student Info
StudentID:
Center:	OPKST
ExamDate:	5/26/2010 12:00:00 AM

   

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

 Which of the following account/s will be affected under the rule of accrual accounting, when furniture is purchased on cash?

       ► Only Cash Account

       ► Only Furniture Account

       ► Cash & Furniture Account

       ► Only Purchases Account

   

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

 Obligations to pay cash or un-earned incomes by the business are the:

       ► Expenses

       ► Assets

       ► Liabilities

       ► Equities

   

Question No: 3    ( 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: 4    ( 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: 5    ( Marks: 1 )    - Please choose one

 While making Income & Expenditure account, Excess of income over expenses in a specified accounting period is called:

       ► Profit

       ► Loss

       ► Surplus

       ► Deficit

   

Question No: 6    ( 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: 7    ( Marks: 1 )    - Please choose one

 In which of the following condition a company will have positive working capital?

       ► If current assets > current liabilities

       ► If current Assets < current Liabilities

       ► If current assets = current liabilities

       ► If current assets < current liabilities

   

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

 Which one of the following is CORRECT about the closing stock?

       ► It appears in the assets side of a balance sheet

       ► It decreases the value of cost of goods sold

       ► It becomes opening stock of next year

       ► All of the given option

   

Question No: 9    ( 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: 10    ( 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: 11    ( Marks: 1 )    - Please choose one

 Increase in an asset is recorded on the:

       ► Left or credit side of the account

       ► Right or debit side of the account

       ► Left or debit side of the account

       ► Right or credit side of the account

   

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

 Which one of the following is NOT true about revaluation of fixed assets?

       ► Revaluation should be made after regular intervals

       ► Change in value should be permanent

       ► Only relevant asset should be revalued in the whole class of asset

       ► The profit or loss will be transferred to revaluation account

   

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

Particulars	Rs.
Direct materials costs	80,000
Direct labor costs	50,000
Manufacturing overhead costs	60,000
Prime cost	?

       ► Rs.130, 000

       ► Rs.110, 000

       ► Rs.140, 000

       ► Rs.190, 000 

   

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

 What would be the value of conversion cost, if the cost of material consumed during the month is Rs. 5,000, labor cost incurred is Rs. 2,000 and the factory over head cost is Rs. 1,000? 

       ► Rs. 3,000

       ► Rs. 8,000

       ► Rs. 7,000

       ► Rs. 5,000

   

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

 Which of the following is the recording phase of an accounting system?

       ► Financial Accounting

       ► Cost Accounting

       ► Management Accounting

       ► Book-keeping

   

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

 Which of the following are the obligations or debts of the business?

       ► Withdrawals

       ► Expenses

       ► Assets

       ► Liabilities

   

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

 The accounting equation is based on:

       ► Dual aspect concept

       ► Money measurement concept

       ► Going concern concept

       ► Separate entity concept

   

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

 The book in which accounts are maintained is called:

       ► Day book

       ► Journal

       ► Ledger

       ► Sales book

   

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

 Which one of the following is called the king of all books of account?

       ► The cash book

       ► Journal

       ► Ledger

       ► Trial balance

   

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

 Any mistake in ledger can easily be detected with the help of:

       ► Journal

       ► Compound entry

       ► Single entry

       ► Memorandum entry

   

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

 Which of the following account would be credited in case of loss of goods by fire?

       ► Purchase account

       ► Sales account

       ► Loss by fire account

       ► Capital account

   

Question No: 22    ( 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: 23    ( Marks: 1 )    - Please choose one

 The cash book in book-keeping records:

       ► All cash and credit purchase of goods

       ► Only cash payments

       ► All receipts and payments in cash

       ► All cash and credit sale of goods

   

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

 Which of the following journal entry will be recorded, if the cash is deposited in the bank?

       ► Bank account (Dr) and Cash account (Cr)

       ► Cash account (Dr) and Bank account (Cr)

       ► Bank account (Dr) and Profit & Loss account (Cr)

       ► Cost of goods Sold account (Dr) and Bank account (Cr)

   

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

 What is the best condition to finance a business?

       ► Fully financed from your own resource

       ► Fully relied on financial institutions

       ► Investment through own resources as well as rely on financial instructions

       ► None of the given options

   

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

 Which of the following is/are the method(s) for calculating the cost of inventory?

       ► FIFO Method

       ► Weighted Average Method

       ► LIFO Method

       ► All of the given options

   

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

 Which of the following account would be debited in case of depreciation charged to fixed assets?

       ► Accumulated depreciation – Fixes assets

       ► Fixed assets

       ► Depreciation expense

       ► Depletion

   

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

 Depreciation of office building is charged to:

       ► Cost of Goods Sold

       ► Administrative Expenses

       ► Selling Expenses

       ► Financial expenses

   

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

 Written down value of an asset = ----------------.

       ► Original cost – Accumulated depreciation

       ► Original cost – Appreciation

       ► Book value – Accumulated depreciation

       ► Original cost – Salvage value

   

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

 If Original cost is Rs. 100,000; Depreciation rate is 20% p.a. using straight line method; what would be the value of accumulated depreciation at the end of 2^nd year?

       ► Rs. 20,000

       ► Rs. 40,000

       ► Rs. 80,000

       ► Rs. 60,000

   

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

 If:

Ø      Cost of machine = Rs. 420,000

Ø      Useful life = 5 years

Ø      Residual value = Rs. 20,000

Ø      Sale price at the end of 5^th year = Rs. 40,000

What will be the profit or loss on disposal of machine using straight line method?

       ► Loss of Rs. 40,000

       ► Profit of Rs. 40,000

       ► Profit of Rs. 20,000

       ► Loss of Rs. 20,000

   

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

 Which of the following is TRUE about the revaluation of fixed assets?

       ► Revaluation should be carried out at a regular interval

       ► Revaluation should be carried out at irregular interval

       ► Revaluation should be carried out by stakeholders

       ► Revaluation should be carried out by stockholders

   

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

 Which of the following is/are TRUE about the revaluation of fixed assets?

       ► Revaluation should be carried out at a regular interval

       ► Revaluation should be carried out by an expert.

       ► The change in value should be permanent.

       ► All of the given options

   

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

 Favourable balance of the cash book means:

       ► Credit balance in cash book

       ► Debit balance in pass book

       ► Debit balance in cash book

       ► Unfavorable balance in pass book

   

Question No: 35    ( Marks: 3 )

 What do you know about the Profit or Loss on Disposal of a fixed asset in accounting?

  

 Answer:

                        In accounts sale/disposal of asset evaluated by preparing depreciation schedule, what is cost of purchase and how many years or month utilize the following asset. And evaluate the depleting cost by using straight line method or written down value (WMV). And compare with the  market value of that asset, whether to sold this asset is beneficial for organization/company or not. If the market value profitable than the books value then it should be sold. And most important think is that evaluate that the assets in future is valid or not valid for business and what wood be the value of assets.

Question No: 36    ( Marks: 5 )

 If:

·          Opening stock Rs. 40,000

·          Purchases Rs. 60,000

·          Return Inwards Rs. 10,000

·          Wages Rs. 5,000

·          Salaries Rs. 10,000

·          Rent Rs. 10,000

·          Closing Stock Rs. 20,000

 Then:

            Calculate the cost of goods sold for Trading concern.

   

Solution/Answer:  

Particular                                                                                          Amount

Opening Stock                                                                                40000

Add : Purchases                                                                            60000                                                

Less: closing Stock                                                                      (20000)         

Material avail for consuming                                                       80000

Add: direct labour wages                                                                        5000

T. Factory Cost:                                                                              75000               Less: administrative expense

Salaries                     5000

Rent                           10000

Total                           15000                                                             15000

Cost of Goods Sold                                                                       60000

Question No: 37    ( Marks: 5 )

 Calculate Profit / (loss) on disposal of asset with the help of given data.

Cost of asset	Rs. 100,000
Life of asset	5 years
Depreciation method	Straight line
Residual value	Rs. 20,000
Sale price after 5 years	Rs. 25,000

Answer:

                Cost of assets                                                                               100,000

Deprecitation  1^st year                                  20000

Deprecitation  2nd year                                20000

Deprecitation  3^rd  year                                 20000

Deprecitation  4th year                                 20000

Deprecitation  5th year                                 20000

Less: deprication                                                                                          100,000

 

Net value                                                                                                         0                    

Sale value    25000

Sale value    20000

Profit              5000