MGT101 - Midterm Dec 2009

MIDTERM EXAMINATION
7th Dec 2009
MGT101- Financial Accounting
Question No: 1 ( 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: 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.320
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
We can say that the business is in profit, when:
► Assets exceed Expenditure
► Assets exceed Liabilities
► Income exceeds Expenditure
► Income exceeds Liabilities

Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following essentials are shown in Cash 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
Economic resources owned by a business and expected to benefit for the future operations are called:
► Expenses
► Assets
► Capital
► Liabilities
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 debited, if business bought goods on cash 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 assets is increased, 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
Profit or Loss ?
► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000
Question No: 20 ( Marks: 1 ) - Please choose one
In accounting accumulated depreciation is:
► Treated as a reserve
► Treated as a contra asset
► Treated as a surplus
► Treated as an expense
Question No: 21 ( Marks: 1 ) - Please choose one
Cash book is a part of:
► Voucher
► General Journal
► General Ledger
► Trial Balance
Question No: 22 ( 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: 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
A book, in which receipts and payments are recorded, is known as:
► Pass Book
► Cash Book
► Purchase Book
► Sales Book
Question No: 27 ( 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: 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 Trading 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

"Mr. “A” collected cash from debtors", the journal entry for this transaction is:
► Mr. "A" a/c Dr. and debtors a/c Cr.
► Mr. "A" a/c Dr. and cash a/c Cr.
► Cash a/c Dr. and debtors a/c Cr.
► None of the given options
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
Question No: 33 ( Marks: 1 ) - Please choose one
When Capital is increased by an amount, it 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: 34 ( Marks: 1 ) - Please choose one
Depreciable value of an asset is equal to:
► Cost + scrap value
► Cost + market price
► Cost – scrap value
► None of the given options
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
What would be the affect on the components of the accounting equation, if goods are purchased on cash?
► Increase in cash and decrease in equity
► Increase in cash and increase in goods
► Increase in goods and decrease in cash
► Increase in equipment and increase in equity
Question No: 41 ( Marks: 10 )
How you can distinguish between Sole proprietorship, Partnership and Joint Stock company?