MGT101- Financial Accounting Solved MidTerm Papers

MIDTERM  EXAMINATION

2^nd dec 2009

MGT101- Financial Accounting 

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

 Depreciation arises because of:

       ► Fall in the market value of an asset

       ► Fall in the value of money

       ► Physical wear and tear

       ► All of the given options

Question No: 2    ( 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-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: 3    ( Marks: 1 )    - Please choose one

 Which of the following is NOT an example of Current Asset?

       ► Bank Overdraft

       ► Accounts Receivable

       ► Notes Receivable

       ► Prepaid Expenses

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

 Which of the following statement is NOT TRUE about Current liabilities?

       ► These are due within one year

       ► These are short-term loans

       ► These are consist of all debts, payable after 12 months

       ► In working capital, these are deducted from current assets

Question No: 5   ( 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: 6    ( Marks: 1 )    - Please choose one

 Income of the business includes:

       ► Cash sales only

       ► Credit sales only

       ► Credit purchases only

       ► Both cash sales and credit sales

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

Particulars	Rs.
Opening stock of raw material	100,000
Closing stock of raw material	80,000
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: 8    ( Marks: 1 )    - Please choose one

 Which of the following account will be credited, when the goods are purchased on cash?

       ► Stock account

       ► Cash account

       ► Supplier account

       ► Work in process account

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

 Which of the following account will be credited, if business bought goods on credit from Mr. Ali?

       ► Purchases account

       ► Mr. Ali account

       ► Cash account

       ► Sales account

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

 A summarized record of transactions related to individuals or things is called a/an  ___________.

       ► Account

       ► Voucher

       ► Journal

       ► Trial balance

Question No: 13    ( 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: 14    ( Marks: 1 )    - Please choose one

 Cost incurred for the maintenance of shop is considered as _________.

       ► Deferred expense

       ► Capital expense

       ► Revenue expense

       ► Preliminary expense

Question No: 15    ( 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: 16    ( 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: 17    ( 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: 18    ( 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: 19    ( 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: 20    ( 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: 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

       ► Motor Account

       ► All of the above

Question No: 22    ( 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: 23    ( 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: 24    ( 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: 25    ( 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: 26    ( Marks: 1 )    - Please choose one

Particulars	Rs.
Opening written down value of machine	Rs. 2,00,000
Cost of  new machine purchased during the year	Rs. 50,000
Depreciation during the year	Rs. 25,000
Closing written down value (WDV) of machines	?

       ► Rs. 2, 25,000

       ► Rs. 2, 50,000

       ► Rs. 2, 75,000

       ► Rs. 75,000

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

 Which of the following is an example of direct materials cost?

       ► Polish and finishing material for chair

       ► A piece of wood for the production of chair

       ► Production worker’s wages

       ► Depreciation expenses

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

 Which of the following account will be credited, when the goods are purchased on cash?

       ► Stock account

       ► Cash account

       ► Supplier account

       ► Work in process account

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

 Following are the inventories of Manufacturing Concern EXCEPT:

       ► Raw material

       ► Work in process

       ► Finished goods

       ► Merchandise inventory

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

 Word “Credit” is derived from ______ language.

       ► Latin

       ► English

       ► French

       ► Chinese

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

          Consider the following inventory record:

Date	Item	Quantity	Cost/Unit Rs.	Total 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

85 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: 32    ( 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

 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: 33    ( 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: 34    ( 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: 35    ( 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: 36    ( Marks: 1 )    - Please choose one

 Find out the missing value of an Accounting Equation with the help of given data:

Cash	Rs. 22,500
Debtors	Rs. 500
Total Assets	Rs. 80, 385
Accounts payable	Rs. 1,000
Total liabilities	Rs. 20,000

       ► Rs. 60,385 owner’s equity 

       ► Rs. 61,385 owner’s equity 

       ► Rs. 99,885 owner’s equity 

       ► Rs.  99,385 owner’s equity

Question No: 41    ( Marks: 10 )
 Show the effect of the following transactions upon the Accounting Equation.

2007 June1,	Mr. Salman started business with cash Rs. 1,00,000
5,	Purchased furniture for cash Rs. 4,000
6,	Purchased goods for cash Rs. 25,000
10,	Paid transportation on goods purchased Rs.1,000
12,	Sold goods for cash Rs. 15,000, costing 11,000
15,	Purchased goods on credit basis for Rs. 15,000
19,	Sold goods to Rashid on credit basis for Rs. 8,000, costing Rs. 6,500
25,	Received cash from Rashid Rs. 4,000
28,	Cash paid to creditor Rs. 9,000
30,	Paid rent and salaries for the month Rs. 4,000