Virtual University Solved Assignments Online Quiz Past Papers GDB VUsolutions VU solutions

1. The balance sheet is alternately known as :

(a) Assets statement

(b) Statement of financial position

(c) Statement of profit and loss

(d) None of the given options

2. Trading & Profit & loss account and balance sheet is prepared from:

(a) Ledger balance

(b) Ledger balances, cash and bank balances

(c) Cash book and bank book

(d) Trial balance

3. Interest on drawing is an:

(a) Expenditure for the business

(b) Expense for the business

(c) Gain for the business

(d) Loss for the business

4. The distinction between revenue account and capital account is necessary for the preparation of:

(a) Final accounts

(b) Receipt and payment account

(c) Cash flow statements

(d) Funds flow statements

5. Capital expenditure is that expenditure which is:

(a) Paid in lump-sum

(b) Large in amount

(c) Intended to benefit the future period

(d) Intended to benefit the current period

6. Calculate the gross profit /loss if:

Sales Rs. 60,000; Cost of sales Rs. 50,000; Opening stock Rs. 10,000; Purchases Rs. 40,000; Wages Rs. 20,000 and Office rent Rs. 10,000.

(a) Loss Rs. 10,000

(b) Loss Rs. 20, 000

(c) Profit Rs. 10,000

(d) None of the given options

7. Balance Sheet shows the:

(a) Profit earned by the business

(b) Total capital employed

(c) Financial position of the business

(d) Trading results of the business

8. Net profit is equal to:

(a) Sales less cost of sales and operating expenses

(b) Gross profit less operating expenses

(c) Sales less operating expenses

(d) Both (a) & (b)

9. Selling expenses are shown in:

(a) Trading account

(b) Profit and loss account

(c) Profit and loss appropriation account

(d) Manufacturing account

10. Current liabilities are such obligations which are to be satisfied within:

(a) One year

(b) Two years

(c) Three years

(d) All of the given options

1) Depreciation is charged on land in case of:

A. Leased hold land

B. Land purchased by the owner himself

C. Depreciation is never being charged on land

D. None of the given options

2) Which of the following does not affect the cash balance of a business?

A. Increases in inventory

B. Changes in accounts receivables

C. Depreciation

D. Seasonality

3) Ongoing expenditures, such as general and administrative expenses, which occur in the process of selling and managing a company are known as:

A. Cost of goods sold

B. Selling expenses

C. Gross margin

D. Operating expenses

4) Which of the following is not the same as the others?

A. Gain

B. Gross margin

C. Income

D. Revenue

5) The income statement records:

A. Sales

B. Cost of goods sold

C. Expenses

D. All of the above

6) The difference between assets and liabilities is called:

A. Balance sheet

B. Profit

C. Gross margin

D. Equity

7) Long-term liabilities are:

A. Debts or portions of debt due more than 12 months from the date of the balance sheet

B. Bills for inventory

C. Amounts due for renovations

D. Amounts due for supplies

8) Which of the following is not a category used for assets on the balance sheet?

A. Current

B. Fixed

C. Other

D. Accrued

9) The _____________ compares the possessions of a company and the debts that it owes on a specific day.

A. Income statement

B. Balance sheet

C. Cash flow projection

D. Completed-contract method

10) Which of the following accounting methods is the simplest and easiest to use?

A. Completed-contract method

B. Cash basis

C. Accrual basis

D. All of the above

1. If business purchases goods for resale purposes, such purchases are charged to _____________

1) Expenses account

2) Purchases account

3) Sales account

4) None of the given options

2. The amount of resources supplied by the owner in business is called:

1) Investments

2) Assets

3) Capital

4) Reserves

3. Excess of sales over cost of goods sold in an accounting period is termed as:

1) Net Profit

2) Gross Profit

3) Retained earnings

4) None of the given options

4. At the end of the year, goods that are unsold are deducted from:

1) Finished goods

2) Closing stock

3) Cost of goods sold

4) Opening stock

5. Conversion cost is:

1) Total factory cost

2) The cost incurred in converting raw material into finished goods

3) The cost incurred in converting raw material into work in process

4) None of the given options

6. The cost of the asset after the expiry of its useful life is called___________

1) Written down value

2) Residual value

3) Expired value

4) None of the given options

When bank statement shows a debit balance, it means:

1) Overdraft balance as per cash book

2) Favorable balance as per cash book

3) Un Favorable balance as per bank book

4) None of the above

7. Closing stock is credited in the:

1) Balance sheet

2) Profit & Loss account

3) Cost of good sold statement

4) None of the given option

8. Depreciation of machinery will be shown in the profit & loss account under the head of:

1) Selling expense

2) Administrative Expenses

3) Marketing expense

4) Financial expense

9. Assets and liabilities are presented in the balance sheet in the order of their:

1) Life

2) Classification

3) Maturity

4) None of the above

A Transaction caused a decrease of Rs. 10,000 in both total Assets and total Liabilities. This Transaction could be:

1. Purchase of delivery Truck for Rs. 10,000 Cash
2. An asset worth Rs. 10,000 was destroyed by fire
3. Repayment of Rs. 10,000 bank loan
4. Collection of Rs. 10,000 from Debtors

The following Journal entry was recorded in Dixy stores’ accounting records:

Cash ---------------------------------------------------------- 12,000

Notes Receivables ------------------------------------------48,000

Land ---------------------------------------------------------------------60,000

This transaction:

1. Involves the purchase of land for Rs. 60,000
2. Involves a Rs. 12,000 Cash payment
3. Involves the sales of Land for Rs. 60,000
4. Causes an increase in total assets for Rs. 12,000

Identify which of the following statements does not correctly describe the Net Income.

1. Net Income is computed in Income statement, appears in the statement of Owner’s equity and increases Owner’s equity in the balance sheet.
2. Net income is equal to Revenue minus expenses.
3. Net Income is computed in Income statement, appears in the statement of Owner’s equity and increases the amount of cash shown in the balance sheet.
4. Net Income can be determined using the account balances appearing in the adjusted Trial balance.

Which of the following can not be classified as Account?

1. Assets.
2. Liabilities.
3. Income.
4. Proprietor

Given the following, what is the amount of Capital?

Premises Rs. 20,000

Stock Rs. 8,500

Cash Rs. 100

Creditors Rs. 3,000

Loan from Saqib Rs. 4,000.

1. Rs. 21,000
2. Rs. 21,600
3. Rs. 32,400
4. None of the given options

Which of the following is not an example of a current liability as at Dec. 31, 2005?

1. Management fees collected in advance in 2005, to be earned during 2006.
2. The portion of long-term debt due in 2006.
3. Warranty liability for products carrying two-year warranty and sold during 2005.
4. The interest due to creditors and bond holders for 2006, to be paid in 2006.

"The firm must be treated as separate and distinct, in its financial terms, from its' owner(s)". This rule is known as:

1. The accounting equation

2. The dual aspect concept

3. The separate entity concept

4. The balance sheet

The system whereby we record dual effect of each transaction is known as:

1. Balance Sheet accounting
2. Double-entry book keeping
3. Dual aspects of transactions
4. Management accounting

Which of the following is an example of revenue expenditures?

1. Buying of a delivery van

2. Paying for a five-year lease on shop premises in city centre

3. Adding fuel to a delivery van

4. Re-paying a loan which was borrowed three years ago.

Which of the following statements is TRUE?
1. Assets = capital + liabilities

2. Capital = assets + liabilities

3.Assets + liabilities = capital

5. Assets = Liabilities - Capital

11) Depreciation is charged on land in case of:

E. Leased hold land

F. Land purchased by the owner himself

G. Depreciation is never being charged on land

H. None of the given options

12) Which of the following does not affect the cash balance of a business?

E. Increases in inventory

F. Changes in accounts receivables

G. Depreciation

H. Seasonality

13) Ongoing expenditures, such as general and administrative expenses, which occur in the process of selling and managing a company are known as:

E. Cost of goods sold

F. Selling expenses

G. Gross margin

H. Operating expenses

14) Which of the following is not the same as the others?

E. Gain

F. Gross margin

G. Income

H. Revenue

15) The income statement records:

E. Sales

F. Cost of goods sold

G. Expenses

H. All of the above

16) The difference between assets and liabilities is called:

E. Balance sheet

F. Profit

G. Gross margin

H. Equity

17) Long-term liabilities are:

E. Debts or portions of debt due more than 12 months from the date of the balance sheet

F. Bills for inventory

G. Amounts due for renovations

H. Amounts due for supplies

18) Which of the following is not a category used for assets on the balance sheet?

E. Current

F. Fixed

G. Other

H. Accrued

19) The _____________ compares the possessions of a company and the debts that it owes on a specific day.

E. Income statement

F. Balance sheet

G. Cash flow projection

H. Completed-contract method

20) Which of the following accounting methods is the simplest and easiest to use?

E. Cash basis

F. Accrual basis

G. Completed-contract method

H. All of the above

1) Depreciation of machinery will be shown in the profit & loss account under the heading of:

A. Selling expense

B. Administrative Expenses

C. Marketing expense

D. Financial expense

2) Advance insurance will be ___________ from Insurance expense.

A. Added

B. Deducted

C. Double charged

D. None of the given options

3) Money lying in our bank account is our:

A. Liability

B. Assets

C. Expense

D. None of the given option

4) Liquidity is:

A. The amount of cash to liquidate

B. The funds available for use

C. The ability of business to receive its cash

D. The ability of a business to pay its debts in time

5) If total liabilities decreased by $25,000 and stockholders’ equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same time period?

1. $20,000 increase
2. $20,000 decrease
3. $30,000 increase
4. $30,000 decrease

1) Rent receivable is our:

A. Income

B. Current Asset

C. Expense

D. Both A and B

2) Salaries and wages are our:

A. Direct expenses

B. Indirect expenses

C. Both direct and indirect expenses

D. None of the given options

3) Calculate the value of Cost of good sold if:

Rs.

Opening Stock 42,850

Purchases 137,190

Carriage inward 1,500

Closing Stock 51,060

A. Rs. 229600

B. Rs. 130,480

C. Rs. 232600

D. Rs. 146900

Calculation:

Cost of good sold= Opening stock + Purchases + Carriage Inward - Closing Stock

= 42,850 + 137,190 + 1,500 - 51,060

= 130,480

4) If Motor Van Costs Rs. 12,500, its accumulated depreciation is Rs. 4,200; depreciation charged for the year is Rs. 2,500. What will be its Book value at the end of the period?

A. Rs. 10,000

B. Rs. 8,300

C. Rs. 5,800

D. Rs. 10,800

Calculation

Book value = Cost - (Depreciation + Accumulated Depreciation)

= 12,500 – (4,200 + 2,500)

= 12,500 – 6,700 = 5,800

5) Mr. Abid is a partner in a partnership firm. His capital on July 1, 2001 was Rs. 150,000. He invested further capital of Rs. 50,000 on March 1, 2002. What will be the mark up on capital if Mark up rate is 5%? The financial year is from July to June.

A. Rs.5833

B. Rs. 8,333

C. Rs. 833

D. None of the given options.

Calculation:

=150,000 x 5% = 7,500

= 50,000 x 5% x 4/12 = 833

= 7,500 + 833 = 8,333

6) Which of the following is an example of Non commercial organization?

A. Sole proprietorship

B. Partnership

C. Limited Company

D. Trusts

7) In case where actual increase or decrease in capital such as Drawing and Profit is not recorded in capital account, such kind of account is called:

A. Fixed capital account

B. Fluctuating capital account

C. Current account

D. None of the given option

8) There should be a minimum of _________ members to form a public limited company.

A. Ten

B. Nine

C. Seven

D. Two

9) What amount of Provisions for bad debts will appear in Profit & Loss account if:

Total debtors Rs. 32,800

Bad debts Rs. 3,600

Provision for doubtful debts (old) Rs. 6,000

Current year provisions (New) Rs. 1,500

A. Rs. 11,100

B. Rs. 900

C. Rs. 8,100

D. Rs. 5,100

Calculation:

= New reserve - Old reserves +Old bad debts

= 1,500 – 6,000 + 3,600 = 900

10) Ascertain the amount of Current Assets from the following data.

Stock Rs. 51,060

Debtors Rs. 37,178

Provision for doubtful debts Rs. 870

Cash at bank Rs. 666

Advance rent Rs. 120

Rs. 88,154

A. Rs. 88,034

B. Rs. 88,238

C. Rs. 89108

Calculation:

Stock 51,060

Debtors 37,178

Less: Provision for doubtful debts (870)

Cash at bank 666

Advance rent 120

88,154

1. Memorandum of association contains which of the followings:

A. Place of registered office of the company

B. Objective of the company

C. Amount of registered share capital

D. All of the given options

2. The maximum amount with which a company gets registration/incorporation is called:

A. Authorized share capital

B. Issued share capital

C. Subscribed share capital

D. Paid up share capital

3. No entry is recorded for:

A. Issued share capital

B. Authorized share capital

C. Subscribed share capital

D. None of the given options

4. All preliminary expenses are incurred by _________ of the company.

A. Directors

B. Subscribers

C. Accountant

D. Managers

5. Share Premium Account account is used to:

A. Write off Preliminary Expenses of the company

B. Write off the balance amount, in issuing shares on discount

C. Issue fully paid Bonus Shares

D. All of the given options

6. Dividend is approved by the share holders in the __________at the recommendation of the directors.

A. Annual general meeting

B. Directors meeting

C. Statutory meeting

D. Special meeting

7. In Pakistan, Financial Statements of limited companies are prepared in accordance with:

A. International accounting standards adopted in Pakistan

B. Companies Ordinance 1984

C. Both A & B

D. None of the given options

8. Which of the following are explained in Notes to the accounts?

A. Nature of business of the company

B. Accounting Policies of the company

C. Details and explanation of items given in the Profit and Loss Account and Balance Sheet

D. All of the given options

9. Both Debentures and Term Finance Certificates are usually issued by:

A. Public Companies

B. Private Companies

C. Listed Companies

D. Non listed companies

10. Which of the following is not a Component of Financial statement?

A. Balance Sheet

B. Notes to the Accounts

C. Comparative figures of Previous Period

D. None of the given options

1. A large organization with separate legal status is known as:

a) Limited Company

b) Sole proprietorship

c) Partnership

d) None of the given options

2. Which one of the following concept may be stated as "for every debit, there is a credit"?

1. Separate Entity Concept
2. Dual Aspect Concept
3. Money Measurement Concept
4. Accounting Period Concept

3. The accounting system, in which accounting entries are made on the basis of amount having become due for payment or receipt, is known as:

a) Cash system of accounting

b) Current accounting period

c) Accrual system of accounting

d) None of the given options

4. Assets which have no physical existence and which cannot be seen, touched or felt are called:

a) Current assets

b) Tangible assets

c) Fictitious assets

d) Intangible assets

5. If the Gross profit is Rs. 5,000 and the net profit is 25% of the Gross profit. The expenses must be:

a) Rs.3,750

b) Rs.1,250

c) Rs.4,150

d) Rs.6,250

6. If the profit is 1/4 of the sales then it is:

a) 1/4 of the cost price

b) 1/3 of the cost price

c) 1/5 of the cost price

d) 1/2 of the cost price

7. Excess of debit over credit is called:

a) Opening balance

b) Closing balance

c) Debit balance

d) Credit balance

8. Those liabilities which arise only on the happening of some event, are called:

a) Current Liabilities

b) Outstanding Liabilities

c) Deferred Liabilities

d) Contingent Liabilities

9. Which one of the following system of recording transaction has a dual aspect concept of accounting?

a) Double entry system

b) Single entry system

c) Cash system of accounting

d) None of the given options

10. The arithmetical accuracy of books of account is verified through:

a) Journal

b) Trial Balance

c) Ledger

d) None of the given options

Mr. X, the sole proprietor of Company XY does not list his personal house on the

balance sheet of Company XY; Example shows which one of the following

concept?

a) Business Entity

b) Matching Concept

c) Going Concern Concept

d) Full Disclosure

2) Which one of the following is a current liability?

(a) Closing inventory

(b) Opening inventory

(c) Petty cash

(d) Bank overdraft

3) The primary purpose of the balance sheet is to

a) Report the financial position of the reporting entity at a particular

point of time

b) Measure the net income of a business up to a particular point in time

c) Determine cash flow for the period

d) Report the difference between cash inflows and cash outflows for the

period

4) In Accrual Accounting an expense is recorded when it is

a) Paid

b) Incurred

c) 15 days after receipt of invoice

d) Earned

5) Which one of the following items will appear on the balance sheet of a company

as current assets?

a) Prepaid expenses

b) Outstanding expenses

c) Furniture and equipment

d) Building

6) Which of the following is correct about the drawings?

They reduce the Gross profit

They reduce the capital & Net Profit

They increase in liabilities

They are treated as asset

7) For purposes of measuring business income, the life of a business is:

a) Divided into specific point of time

b) Divided into irregular cycles

c) Divided into discrete accounting periods

d) Considered to be a continuous cycle

8) Consider the following totals:

Revenues Rs. 100,000

Cost and expenses Rs. 45,000

Income taxes Rs. 18,000

Net income Rs. 42,000

What was the total of operating income?

a. Rs. 42,000

b. Rs. 55,000

c. Rs. 60,000

d. Rs. 37,000

9) Office salaries, insurance, advertising, sales commissions and rent are the

examples of:

a. Financial Expenses

b. Operating expenses

c. Marketing expenses

d. All of the given options

10) _______shows how much of a mark-up a company is achieving between the cost

of what it sells and the selling price

a. Cost of goods sold

b. Gross profit

c. Gross margin

d. Net profit

1. If Accumulated profit brought forward has credit nature, what will be its

treatment?

a. It will be added in net profit for the year

b. It will be subtracted from the net profit for the year

c. It will be deducted from current Assets

d. It will be added in current assets

2. Fixed Assets at WDV + working capital =?

a. Total shareholders equity

b. Net capital employed

c. Long term loan

d. Current liability

3. Keeping in view the following data, what will be Net Cash Flow from

Investing Activities?

Particulars Rs.

Purchases from short term borrowing 45,000

Purchases of marketable securities (65,000)

Proceeds from marketable securities 40,000

Loans made to borrowers (17,000)

Cash paid acquire plant assets (160,000)

Proceeds from sales of sales of plant Assets 75,000

Collection on loans 12,000

a. Rs. (115,000)

b. Rs. 100,000

c. Rs. 55,000

d. None of the given options

4. Keeping in view the following data, what will be Net cash provided by

operating activities?

Particulars Rs.

Net income 65,000

Depreciation expenses 40,000

Decrease in accrued interest receivable 1,000

Increase in accounts payable 15,000

Increase in accrued liabilities 7,000

Non operating loss on sales of marketable securities 4,000

Increase in accounts receivable 30,000

Increase in inventory 10,000

Decrease in accrued liabilities 8,000

Increase in prepayments 3,000

Non operating gain on sales of plant assets 31,000

Net cash provided by operating activities ?

a. Rs. 115,000

b. Rs. 100,000

c. Rs. 50,000

d. None of the given options

5. Advances from customers are shown in which of the following heads in

Balance Sheet?

a. Current Assets

b. Current liabilities

c. Fixed Assets

d. Long term liabilities

6. While preparing cash flow statements, the repayments of a loan during the

year should be included under the heading of:

a. Operating activities

b. Financing activities

c. Investing activities

d. None of the given options

7. Which of the following statement is also known as a source and use

statements?

a. Income Statements

b. Statement of Cash Flows

c. Balance Sheet

d. Statement of Retained Earnings

1. If Accumulated profit brought forward has credit nature, what will be its

treatment?

a. It will be added in net profit for the year

b. It will be subtracted from the net profit for the year

c. It will be deducted from current Assets

d. It will be added in current assets

2. Fixed Assets at WDV + working capital =?

a. Total shareholders equity

b. Net capital employed

c. Long term loan

d. Current liability

3. Keeping in view the following data, what will be Net Cash Flow from

Investing Activities?

Particulars Rs.

Purchases from short term borrowing 45,000

Purchases of marketable securities (65,000)

Proceeds from marketable securities 40,000

Loans made to borrowers (17,000)

Cash paid acquire plant assets (160,000)

Proceeds from sales of sales of plant Assets 75,000

Collection on loans 12,000

a. Rs. (115,000)

b. Rs. 100,000

c. Rs. 55,000

d. None of the given options

4. Keeping in view the following data, what will be Net cash provided by

operating activities?

Particulars Rs.

Net income 65,000

Depreciation expenses 40,000

Decrease in accrued interest receivable 1,000

Increase in accounts payable 15,000

Increase in accrued liabilities 7,000

Non operating loss on sales of marketable securities 4,000

Increase in accounts receivable 30,000

Increase in inventory 10,000

Decrease in accrued liabilities 8,000

Increase in prepayments 3,000

Non operating gain on sales of plant assets 31,000

Net cash provided by operating activities ?

a. Rs. 115,000

b. Rs. 100,000

c. Rs. 50,000

d. None of the given options

5. Advances from customers are shown in which of the following heads in

Balance Sheet?

a. Current Assets

b. Current liabilities

c. Fixed Assets

d. Long term liabilities

6. While preparing cash flow statements, the repayments of a loan during the

year should be included under the heading of:

a. Operating activities

b. Financing activities

c. Investing activities

d. None of the given options

7. Which of the following statement is also known as a source and use

statements?

a. Income Statements

b. Statement of Cash Flows

c. Balance Sheet

d. Statement of Retained Earnings

8. Calculate depreciation for the year.

Building at cost = Rs. 1, 00,000

Depreciation rate = 10%

a. Rs. 10,000

b. Rs. 1,000

c. Rs. 500

d. Rs. 0

9. Mr. A, Mr. B and Mr. C are three partners of a partnership firm. The profit

sharing ratio is 2:3:5. If company has distributable profit of Rs. 4, 90,000,

determine the profit of Mr. A.

a. Rs. 98,000

b. Rs. 1, 47,000

c. Rs. 2, 45,000

d. Rs. 3, 43,000

10. An example of financing activities in the context of cash flow statement is:

a. Fixed capital expenditure

b. Long-term deposit

c. Financial charges paid

d. Dividend paid

Advance insurance is an example of

1. Current Asset

2. Administrative expense

3. Insurance expense

4. Current Liability

Which of the following is not a component of Financial Statement?

1. Balance Sheet

2. Profit and Loss account

3. Bank Reconciliation Statement

4. Cash Flow statement

Cost of goods sold does not contain which of the following heads of Accounts:

1. Purchase of raw material/goods

2. Wages paid to employees for manufacturing of goods

3. Commission is paid on purchases from third parties

4. Any expense incurred on carriage/transportation of purchased items

Paid up Capital is:

1. The amount raised by the company by the issue of its shares to general public

2. The maximum amount with which a company gets Registration/Incorporation

3. Amount collected on issuance of prospectus and debentures

4. None of the given Options

Which one of the following assets could be described as a current asset?

Stock of goods for resale

Machinery to manufacture goods for resale

Buildings to house the machinery

Land on which the buildings stand

Operating Profit is equal to:

Sales - Gross Profit – Cost of goods sold – Operating expenses

Sales – Cost of goods sold – Operating expenses

Sales - Gross Profit

None of the given options

The accounting equation represents:

Resources in the business are equal to resources supplied by the owner and outsiders

Resources are allocated in the business on cost price

Owners give money for the business

Resources in the business are not equal to resources supplied by the owner and outsiders

Credit signifies:

Increase in asset account

Increase in liability account

Decrease in capital account

None of the given options

A business owned and run by one person is called:

Sole Proprietorship

Partnership

Limited Company

None of the given options

Any expenditure that benefits the business for several accounting years is regarded as:

Capital expenditure

Revenue expenditure

Revenue receipt

None of the given options

Which of the following option is true?

Increase in expense is Debit

Increase in asset is Debit

Increase in income is credit

All of the given option

The accounting equation is based on:

Dual aspect concept

Going concern concept

Business entity concept

None of the given options

The discount allowed by manufacturer or wholesaler at the time of selling goods to retailer as a deduction from the listed-price or catalogue price, is called as:

Trade discount

Cash discount

Commission

None of the given option

If the original cost of an asset is Rs. 2,000 then the written down value of asset after two years by using the diminishing balance method at the rate of 10% p.a. will be:

Rs. 1,600

Rs. 1,620

Rs. 380

None of the given options

Sales = Cost of goods sold + Gross profit.

True

False

Balance Sheet discloses the financial position of the business.

True

False

Budget is an Organization’s plan of future period expressed in money terms.

True

False

Cash Accounting is the accounting system in which events are recorded as and when they occur.

True

False

In double entry system of book keeping, every business transaction affects the same side of the same account.

True

False

Which is the best definition of Balance sheet?

o An account proving the Book balances

o A record of closing entries

o A listing of balances

o A statement of Assets

Depreciation is:

o The amount spent to buy a fixed asset

o The salvage value of a fixed asset

o The part of the cost of the fixed asset consumed during its period of use by

the firm

o The amount of money spent on replacing asset

Which of the following is not a Cash flow in Cash flow statement?

o A depreciation charge

o Dividend paid

o Proceeds on Sales of Fixed Assets

o Tax paid

Gross Profit is:

o Excess of sales over Cost of good sold

o Sales less Purchases

o Cost of good sold plus Opening Stock

o Net profit less expenses of the period

Which of the following is an intangible asset?

o Patents

o Copyrights

o Trade marks

o All of the given options

__________ is used to record transactions that do not affect cash or bank.

Payment voucher

Receipt voucher

Journal voucher

All of the given options

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

Which one of the following item will appear on the balance sheet of a company as current assets?

Prepaid expenses

Outstanding expenses

Furniture and equipment

Provision for depreciation

If bank statement shows a credit balance, it means __________balance for bank book.

Favorable

Unfavorable

Overdraft

None of the given options

Formula for Earning per Share is_______

Market value per share / Earning per share

Net profit after tax before appropriation / Number of shares

Operating Profit before financial charges / Financial charges

None of the given options

Liquidity is defined as:

The amount of cash to liquidate

The funds available for use

The ability of business to receive its cash

The ability of a business to pay its debts in time

Cash flow from operating activities is generated from:

The cash receipts and payments that arise from Fixed and Long Term assets of the organization.

Cash generated from daily operations of organization

The cash receipts and payments that arise from Owners of the business and other long term liabilities of the organization

None of the given options

Accumulated Profit & Loss is an example of:

Distributable reserves

Non distributable reserves

Both Distributive and non distributive reserve

None of the given options

According to________________, Fixed assets revaluation reserve is included in the statement of changes in equity.

International Accounting Standards

Companies Ordinance

International Standards of Auditing

None of the given options

Share premium can be utilized:

To create non distributive reserves

To issue bonus shares

To increase the Owners Capital

To meet unexpected losses

Notes to the accounts explain which of the followings:

Nature of business of the company

Accounting Policies of the company

Details and explanation of items given in the Profit and Loss Account and Balance Sheet

All of the given options

Mark up ratio is better for:

Bankers

Debtors

Creditors

Owners

Debentures are a company’s:

Assets

Liability

Expenses

Investments

Subscribers / Sponsors are the persons who sign:

Articles of Association

Memorandum of the company

Contribute in the initial share capital of the company.

All of the given options

All expenses incurred up to the stage of incorporation of the company are called:

Preliminary Expenses

Installation expenses

Accrued expenses

Deferred expenses

The head of board of directors is called:

Chief executive

Manager

Subscriber

Shareholder

Which of the following would not be categorized as current assets?

1. Stocks

2. Debtors

3. Plant and Machinery

4. Cash in hand

Pak Motors buys a stock worth Rs. 30,000 on credit on the last day of his accounting period and includes these items in Closing Stock. Which of the following figures in the Accounts would be increased by Rs. 30,000?

1. Cost of Sales

2. Working Capital

3. Gross Profit

4. Current Assets.

An account titled Unearned Fees would be classified as which of the following?

1. Asset account

2. Liability account

3. Revenue account

4. Expense account

Asset depreciation is calculated to which of the nearest time periods?

1. Day

2. Week

3. Month

4. None of the Given Option

Capital expenditures are:

1. The extra Capital paid in by the proprietor

2. The cost of running the business on day to day basis

3. Money spend on buying Assets or adding value to them

4. Money spent on selling Fixed Assets.

A Balance Sheet discloses the financial position of a firm:

For a given period

On a particular point of time

On quarterly basis

None of the given options

Cost of sales is equal to:

Opening stock – Closing stock + Purchases – Return outwards

Sales – Purchases

Purchases – Return out + Closing stock

None of the given options

A loss will be considered as capital loss if it:

Relates to fixed assets

Arises due to abnormal reasons

Represents the withdrawal of capital

None of the given options

Expenditure will be considered as capital expenditure if:

The amount is paid in lump sum

It is intended to benefit the current period

It is intended to benefit the future period

All of the given options

A written evidence in support of a business transaction is called:

A business letter

Store ledger card

Voucher

All of the given options

Under diminishing balance method, depreciation is calculated on:

The original cost

The scrap value

Book value

None of the given options

The books of account in which business transactions are originally recorded in chronological order is known as:

Ledger

Journal

Trial Balance

Balance sheet

A firm purchased marketable securities for Rs. 10,000. What would its effect be on working capital?

Increased by Rs. 10,000

Decreased by Rs. 10,000

Increased by Rs. 20,000

Remain unchanged

If the profit is 25% of the cost price then it would be:

25% of the sale price

33% of the sale price

20% of the sale price

None of the given options

Current liabilities are such obligations which must be paid within:

One year

Two years

Three years

Five years

Book-keeping and accounting are synonymous terms.

True

False

The Accounting Equation is based on going concern concept of Accounting.

True

False

The ledger is the book of original entry.

True

False

Balance Sheet is the other name of Profit and Loss Account.

True

False

Capital expenditures incurred irregularly.

True

False