Audit & ACOOUNTING MCQs PDF

1 Faisal Qureshi
ACOOUNTING MCQs
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
The cost of moving plant and machinery to a new site will be treated as:
► Revenue expense
► Capital expense
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► Administrative expense
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► Operating expense
Which one of the following is NOT true about Capital Expenditure?
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► Creates future benefits
► Incurred to acquire fixed assets
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► Incurred to increase the economic life of existing fixed assets
► Reduce the profit of the concern
or
.8 Consider the following:
Beginning inventory 10 units @ Rs. 10 per unit
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First purchase 35 units @ Rs. 11 per unit
Second purchase 40 units @ Rs. 12 per unit
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Third purchase 20 units @ Rs. 13 per unit
Sold 10 units @ 10
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35 units @ 11
40 units @ 12
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Balance
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Eighty-five units were sold, what is the value of the ending inventory using the
FIFO method of inventory costing?
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► Rs.260 20 units @ 13 = 260

► Rs.232 ► Rs.284 ► Rs.268
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.9 Consider the following inventory record:

Cost/Unit Total
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Date Item Quantity Rs. Rs.

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Jan. 2 Beginning inventory 10 10 100

Mar. 4 Purchase 35 11 385
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May 8 Purchase 40 12 480

Nov. 3 Purchase 20 13 260
De31 Merchandise available 105 1,225
Opening Stock 100

Add purchases 1125
Total material available
for sale 1225
Less closing ** 320
Cost of goods sold 905
2 Faisal Qureshi
Detail of 80 units sold

10 @ 10
35 @ 11
35 @ 12
now remaining are
5 units @ 12 = 60
20 units@ 13 =260
Closing stock = 25 units and value = 320
80 units were sold, Use the FIFO method of inventory costing and determine
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the cost of goods sold.
► Rs. 1,225
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► Rs. 1,015
► Rs. 965
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► Rs. 905
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If, Cost of machine = Rs.400, 000
Useful life = 5 years
Residual value = Rs.25,
or
000
The depreciation of machine per year using straight line method is?
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= 400,000-25000 / 5 = 75000
► Rs. 160,000
es
► Rs. 96,000
► Rs. 75,000
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► Rs. 57,600
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.10
Cost of asset Rs. 1,00,000
Life of asset 5 years
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Depreciation for each year Rs. 15,000

Sale price after 5 years Rs.50,000
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Book value of Asset after 5 years ?

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Asset year 1 = 100,000 - 15000 = 85000

Year 2 = 85000 - 15000 = 70000
Year 3 = 70000 – 15000 = 55000
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Year 4 = 55000 – 15000 = 40000

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Book value after year 5 = 40000 – 15000 = 25000

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► Rs.25, 000 ► Rs. 75,000 ► Rs. 15,000 ► Rs. 1, 00,000
.11 A decrease in value of a fixed asset due to age, wear and tear is known as:
► Depreciation
► Accumulated Depreciation
► Appreciation
► Written Down Value
.12 In balance sheet fixed assets are shown at:
► Cost price
► Market value
► Fair value
► Written down value (WDV)
.13
3 In cost of goods sold statement, the ‘cost of material consumed’Faisal
is equal
Qureshi
to:
► Opening raw material inventory + Purchases – Ending raw material inventory
► Opening raw material inventory - Purchases + Ending raw material inventory

► Ending raw material inventory + Opening raw material inventory - Purchases
► Ending raw material inventory + Opening raw material inventory + Purchases
Particulars Rs.
Direct materials costs 80,000
Direct labor costs 50,000
Manufacturing overhead costs 60,000
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Prime cost = dm + dl 130000
► Rs.1 Rs.130, 000
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► Rs.110, 000
► Rs.140, 000
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► Rs.190, 000
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.14 .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?
or
► Rs. 5,500
►R8,0
c
00
► Rs. 4,500
es
► Rs. 8,500
Following are the inventories of Manufacturing Concern EXCEPT:
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► Raw material
► Work in process
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► Finished goods
► Merchandise inventory
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.15 If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating
expenses are Rs. 100,000. What will be the net result?
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► Rs. 5,000 Loss

► Rs. 5, 000 Profit
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► Rs.1, 95,000 Profit

► Rs.1, 95,000 Loss
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Income of the business includes:

► Cash sales only
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► Credit sales only

► Credit purchases only
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► Both cash sales and credit sales
• Consider the
following:
Eighty-five units were sold, what is the value of the ending inventory using the FIFO
Method of inventory costing?
► Rs.260
4 ► Rs.232 Faisal Qureshi
► Rs.284
► Rs.320
.2 Which of the following is NOT an example of Current Asset?

► Bank Overdraft
► Accounts Receivable
► Notes Receivable
► Prepaid Expenses
.3 We can say that the business is in profit, when:
► Assets exceed Expenditure
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► Assets exceed Liabilities
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► Income exceeds Expenditure
► Income exceeds Liabilities
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.7 Economic resources owned by a business and expected to benefit for the future
operations are called:
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► Expenses
► Assets
► Capital
or
► Liabilities
.8 Which of the following account will be credited, when the goods are
purchased on cash?
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► Stock account
► Cash account
► Supplier account
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► Work in process account
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.9 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
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► Rs. 35,000
► Rs. 55,000
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► Rs. 60,000
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.10 0hich of the following account balance will be shown on debit side of
Trial Balance? (It is assumed that all account balances are shown on
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normal balance).
► Capital account
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► Sundry creditors account

► Accounts payable account
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► Cash account
.11 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
.12
A summarized record of transactions related to individuals or things is called a/an .
► Account
5 ► Voucher Faisal Qureshi
► Journal
► Trial balance
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
Cost incurred for the maintenance of shop is considered as .
► Deferred expense
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► Capital expense
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► Revenue expense
► Preliminary expense
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Double entry accounting system includes:
► Accrual accounting only
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► Cash accounting only
► Both cash and accrual accounting
► None of the given options
or
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:
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► Appreciation
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► Depreciation
► Fluctuation
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Under the reducing balance method of depreciation:
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► Amount of depreciation increases every year

► Amount of depreciation remains constant for every year
► Amount of depreciation decreases every year
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Consider the following:

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Eighty units were sold, what is the value of the ending inventory using the FIFO
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method of inventory costing?

► Rs.260
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► Rs.232
► Rs.284
► Rs.320
.13
Cost of asset Rs.
1,00,000
Profit or Loss ?
► Rs .2 5, 00 0
6 ► Rs. 75,000 Faisal Qureshi
► Rs. 15,000
► Rs. 1, 00,000
In accounting accumulated depreciation is:

► Treated as a reserve
► Treated as a contra asset
► Treated as a surplus
► Treated as an expense
Cash book is a part of:
► Voucher
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► General Journal
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► General Ledger
► Trial Balance
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Which of the following organization converts raw material into finished goods?
► Trading concern
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► Manufacturing concern
► merchandising concern
► Service concern
or
Which of the following account will be credited, if business purchased a vehicle on
cash?
c
► Vehicle account
► Cash account
es
► Business account
► Bank account
e
Which of the following essentials are shown in Bank Book?
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(1) Date of transaction

(2) Narration of transaction
(3) Cheque number
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► (1) & (2) only

► (2) & (3) only
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► (1) & (3) only

► (1), (2) & (3)
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Commercial Accounting is based on:

► Single entry book keeping
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► Double entry book keeping

► Both single and double entry book keeping
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► Cash basis of book keeping

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

► Pass Book
► Cash Book
► Purchase Book
► Sales Book
Which of the following account will be credited, when the goods are purchased on
cash?
7 ► Stock account ► Cash account Faisal Qureshi
► Supplier account ► Work in process account
Following are the inventories of Trading Concern EXCEPT:

► Raw material
► Work in process
► Finished goods
Word “Credit” is derived from language.
► Latin
► English
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► French
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► Chinese
"Mr.“A”collectedcashfromdebtors", the journal entry for this transaction is:
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► Mr. "A" a/c Dr. and debtors a/c Cr.
► Mr. "A" a/c Dr. and cash a/c Cr.
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► Cash a/c Dr. and debtors a/c Cr.
The assets which have a limited useful life are termed as:
or
► Limited assets
► Depreciate able assets
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► Unlimited assets
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When Capital is increased by an amount, it is recorded on the:
e
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Depreciable value of an asset is equal to:

► Cost + scrap value
► Cost + market price
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► Cost – scrap value

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The area of accounting concerned with reporting financial information to the
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interested parties is called:

► Cost Accounting
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► Financial Accounting
► Management Accounting
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► Tax Accounting
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
How
8 you can distinguish between Sole proprietorship, Partnership andFaisal
Joint Qureshi
Stock Company?
Answer:-
Sole Proprietorship:-
A sole proprietorship also known as a sole trader or simply proprietorship is a type of
business entity which is owned and run by one individual and where there is no legal
distinction between the owner and the business. All profits and all losses accrue to the
owner (subject to taxation). All assets of the business are owned by the proprietor and all
debts of the business are their debts and they must pay them from their personal resources.
This means that the owner has unlimited liability. It is a "sole" proprietorship in the sense that
the owner has no partners (partnership).
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A sole proprietor may do business with a trade name other than his or her legal
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name. This also allows the proprietor to open a business account with banking
institutions
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Partnership:-
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A partnership is a type of business entity in which partners (owners) share with each other
the profits or losses of the business. Partnerships are often favored over corporations for
or
taxation purposes, as the partnership structure does not generally incur a tax on profits
before it is distributed to the partners (i.e. there is no dividend tax levied). However,
depending on the partnership structure and the jurisdiction in which it operates, owners of a
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partnership may be exposed to greater personal liability than they would as shareholders of
a corporation.
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Joint Stock Company:-
e
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A joint stock company (JSC) is a type of business entity: it is a type of corporation or

partnership involving two or more legal persons. Certificates of ownership (or stocks) are
issued by the company in return for each financial contribution, and the shareholders are
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free to transfer their ownership interest at any time by selling their stockholding to others.
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In most countries, a joint stock company offers the protection of limited liability; a
shareholder is not liable for any of the company's debt beyond the face value of their
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shareholding.
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There are two kinds of Joint Stock Company: private and public companies. The shares of
the former are usually only held by the directors and Company Secretary. The shares of
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the latter are bought and sold on the open market

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The expenses that give benefit for a period of more than twelve months are
called.
► Capital expenses
► Revenue expenses
► Preliminary expenses
► None of the given options.
An expense incurred by the business for the purchase of land & building is an
example of:
► Capital Expense
► Revenue Expense
► Deferred Expense
9 ► Preliminary Expense Faisal Qureshi
Income of the business includes:
► Cash sales only
The basic accounting principle/concept according to which Business is
independent from its owner(s) is known as:
► Separate Entity Concept
► Matching Concept
► Going Concern Concept
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► Materiality Concept
nf
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ne
Obligations to pay cash or un-earned incomes by the business are the:
► Expenses
or
► Assets
► Liabilities
c
► Equities
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What would be the affect on the components of the accounting equation, if goods are
purchased on cash?
e
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pl

m

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Which of the following is also called "The original book of entry"?
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► General Journal
► General Ledger
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► Trial Balance
► Profit and Loss Account
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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
Which of the following is CORRECT for Trading account?
► It inculdes cost of goods sold and all the direct expenses related to sales
► It inculdes cost of goods sold and all the indirect expenses related to sales
► It inculdes cost of goods sold and all the direct and indirect expenses
10 Faisal Qureshi
► It inculdes cost of goods sold and all the direct and selling,
administrative expenses
Which one of the following is NOT prepared by Non-profit organizations?
► Profit & Loss account
► Income & Expenditure account
► Receipts & Payments account
► Balance Sheet
Which of the following is an example of a Current liability?
► Closing inventory
► Opening inventory
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► Petty cash
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► Bank overdraft
Identify the business transaction for given entry below.
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Vehicle Account XXX (Dr.)
Bank Account XXX (Cr.)
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► Paid for vehicle through cheque
► Paid for vehicle through cash
► Purchased vehicle on credit
or
"Mr. “A” collected cash from debtors", the journal entry for this
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transaction is
► Mr. "A" a/c Dr. and debtors a/c Cr.
es
► Mr. "A" a/c Dr. and cash a/c Cr.
► Cash a/c Dr. and debtors a/c Cr.
e
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Which of the following is an alternate term which can be used for “Capital”?
► Liability
► Owner’s net worth
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► Working capital
► Asset
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Which of the following organization converts raw material into finished goods?
► Trading concern
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► merchandising concern
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► Service concern
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The stock of manufacturing concern consists of:

► Work in Process Inventory
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► Raw Materials Inventory

► Finished Goods Inventory
► All of the given options
Direct materials costs Rs.70,000
Direct labor costs 30,000
Manufacturing overhead costs 60,000
conversion cost ?
► Rs. 20,000
► Rs.40, 000
► Rs.90, 000
► Rs.160, 000
11 Faisal Qureshi
In balance sheet fixed assets are shown at:
► Cost price
► Market value
► Fair value

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th
nf
Written down value of asset on 5 year Rs.75,000
profit or loss on disposal of fixed assets ?
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► Rs.25, 000 loss
► Rs. 75,000 loss
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► Rs. 15,000 profit
► Rs. 1, 00,000 profit
or
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Life of asset es 5 years
depreciation for each year Rs. 15,000
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► Rs.25, 000
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► Rs. 75,000
► Rs. 15,000
pl
► Rs. 1, 00,000
m
If you start with cash book balance (Dr.), which of the following item will be deducted in
Bank
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Reconciliation Statement?
► Any cheque drawn to creditor but not paid by bank
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► Interest credited by the bank in pass book

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► Dividend collected by bank on behalf of the customer
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If you start with cash book favorable balance in Bank Reconciliation Statement,
which item will be added?
► Cheques omitted to be deposited into bank
► Any amount directly collected by bank on behalf of customer but
not recorded in cash book
► Debit side of cash book was overcast
Bank Reconciliation Statement is:
► A memorandum statement
► A ledger account ► A part of cash book ► A part of
12 journal Faisal Qureshi
Bank Reconciliation Statement is prepared by:
► Bankers
► Accountant of the business
► statutory auditor ► Manger
Stock of Trading concern consists of:
► Raw material ► Work in process ► Merchandise
inventory
When the process of production is completed, all the costs must be charged to:
► Raw material account
o
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► Finished goods account
► Merchandise account
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Which of the following account balance is shown on credit side of Trial Balance? (It
is assumed that all account balances are shown on normal balance)
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► Cash account ► Furniture account ► Vehicle account
► Capital account
or
If a business pays rent in advance for 12 months, it will be treated as:
► Prepaid expenses of business
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► Long term liability of business
► Fixed assets of business ► Current liability of business
es
Accountancy covers which of the following area(s):
► Book-keeping ► Accounting ► Auditing
e
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► Limited assets
► Depreciateable assets
pl
m
Depreciable value of an asset is equal to:

► Cost + scrap value Cost + market price
.e
► Cost – scrap value

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Which one of the following is equal to the carrying cost of an asset?

► Original cost minus Accumulated depreciation
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► Original cost plus Accumulated depreciation

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► Original cost minus Residual value

► Written down value minus Accumulated depreciation
Which one of the following is another name of carrying cost of an asset?
► Book Value
► Residual Value ► Fair Value ► Break up Value
Which of the following fixed asset is shown at cost rather than book value?
► Machinery ► Furniture ► Vehicles
► Land
Which of the following statement is the detail of transaction in one’s account
13 Faisal Qureshi
provided by the bank?
► Bank statement
► Bank reconciliation statement
► Income statement ► Financial statement
When income exceeds expenses in a specific time period is known as:

► Savings ► Net profit
► Gross profit
► Operating profit
An asset cost Rs. 50,000, has an estimated residual value of Rs.1, 500, and
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an estimated useful life of 8 years. What is the depreciation rate under
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reducing balance method?
► 11.5% ► 20.0% ► 25.0%
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► 35.5%
1/n
Depreciation rate= 1- (residual value/ cost)
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Mr.” A” sold goods for Rs. 300,000 to Mr. Rs. 300,000 will be treated as
or
“B”,
for business of Mr. "A".
► Revenue
c
es
► Net profit ► Gross profit ► Operating profit
Differentiate between capital and revenue
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expenditure.
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CAPI
TAL
pl
The value invested in the business by the owner in whatever form is called
capital. The owner may introduce a capital of Rs. 250,000 which may be in the
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form of Rs. 200,000 cash and a machinery of Rs. 50,000. The capital of Rs.
250,000 is shown in Balance sheet as credit balance whereas cash and
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machinery being assets are shown in balance sheet as debit balance.

CAPITAL
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EXPENDITURE:-
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These are expenses whose benefits last for a longer period or the benefits are yet
to be enjoyed by the business. For example when a vehicle is purchased by the
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business, it will benefit the business for the current period and for the years to
come. Capital expenditure always results in increase in assets. Therefore amount
expended on vehicle is our capital expenditure and vehicle is shown in the balance
sheet as an asset.
REVENUE EXPENDITURE:-
These are expenses whose benefits do not last for longer period and are
restricted to current period only and no more benefits are to be enjoyed by the
business in the coming periods. For example Salaries, utility bills, fuel bills
paid, against which the organization enjoyed benefits for only current period.
We can say that the business is in profit, when:

► Assets exceed Expenditure
14 ► Assets exceed Liabilities Faisal Qureshi
► Income exceeds Expenditure
► Income exceeds Liabilities
► Capital expense
► Revenue expense
If a business purchases machinery for Rs. 30,000 on 31st January 2008 having
life of 10 years, this expense will be realized under the concept of accrual
accounting.
► For the year 2008 only
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th
► For the last day of 10 year only
nf
► Over 10 years
► Nothing can be said about it
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According to the double entry system of accounting, an account that obtains
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benefit is:
► Debit
► Credit
or
► Income
► No need to show as accounting record
c
An Asset that is NOT physical in nature is called .
► Intangible Asset
es
► Liquid Asset
► Current Asset
e
► Fixed Asset
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What would be the affect on the components of the accounting equation, if goods
are purchased on cash?
pl

m

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Which of the following is CORRECT about the flow of recording a transaction?

► Occurrence of event – voucher—Journal—Ledger—Trial Balance—
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profit and loss account—Balance Sheet

► Occurrence of event—Journal – voucher —Ledger—Trial Balance—
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profit and loss account—Balance Sheet

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► Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit

and loss account—Balance Sheet
► Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit
and loss account—Balance Sheet
In an account, if credit side < debit side then the balance is known as:
► Negative Balance
► Debit Balance
► Positive Balance
► Credit Balance
Bank book is part of:
► Voucher
15 ► General Journal Faisal Qureshi
► General Ledger
► Trial Balance
While making Income & Expenditure account, Excess of income over expenses in a
specified accounting period is called:
► Profit
► Loss ► Surplus ► Deficit
Gross Profit > Operating Expenses=?
► Net Profit
► Cost of Goods Sold ► Net Loss ► Gross Loss
Accrued expenses are the example of:
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► Current liabilities
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► Long term liabilities
► Deferred costs
► Capital expenses
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The favorable balance of Profit and Loss account should be:
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► Added in liabilities
► Subtracted from current assets
► Subtracted from liabilities
or
► Added in capital
Which of the following account balance will be shown on debit side of Trial
c
Balance? (It is assumed that all account balances are shown on normal balance).
► Capital account
es ► Sundry creditors account
► Cash account
e
Which of the following financial statement DO NOT show the financial health of a
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business at a specific date?

► Profit and loss account
pl
► Balance sheet ► Statement of financial position

m
In which of the following condition a company will have positive working capital?
► If current assets > current liabilities
.e
► If current Assets < current Liabilities

► If current assets = current liabilities
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► If current assets < current liabilities

Which of the following particular is NOT included in the specimen of a payment
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voucher?
► Name of organization ► Cash payment amount
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► Date of transaction
► Bank receipt
The stock of manufacturing concern consists of:
► Work in Process Inventory ► Raw Materials Inventory
► Finished Goods Inventory
Following are the inventories of Manufacturing Concern EXCEPT:
► Raw material ► Work in process ► Finished goods
The products that are ready for sale are known as:
► Raw material ► Work in process
16 ► Finished goods Faisal Qureshi
► Closing stock
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
The total of all costs incurred to convert raw material into finished goods is known as:
► Prime cost
► Conversion cost
► Sunk cost ► Opportunity cost
o
In balance sheet fixed assets are shown at:
nf
► Cost price ► Market value ► Fair value
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A decrease in value of a fixed asset due to age, wear and tear is known as:
► Depreciation
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► Accumulated Depreciation
► Appreciation
► Written Down Value
or
.6 ( Marks: 1 ) - .
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Life of asset
es 5 years
Sale price after 5 years
e
Rs.50,000
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Written down value of asset at the end of 5 year Rs.25,000
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Profit or loss on disposal of fixed assets ?
► Rs.25, 000 profit

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► Rs. 75,000 loss ► Rs. 15,000 profit ► Rs. 1, 00,000 profit

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All the costs incurred on the incomplete assets up to the balance sheet date must
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be transferred to:
► Capital account
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► Capital work in progress account

► Relevant asset account
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► Owner's equity account

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.7 ( Marks: 1 ) -.
Consider the following inventory record:
Cost/Unit Total
17 Faisal Qureshi
80 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
Date Item Quantity Cost/Unit Total
2007Jan. 2 Opening 100 Rs.18.00 Rs.1,800
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inventory
Mar. 4 Purchase 400 19.00 7,600
nf
May 8 Purchase 800 20.00 16,000
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Nov. 3 Purchase 500 21.00 10,500
Four hundred units are unsold, Use the FIFO method of inventory costing and
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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
or
c
► A ledger account ► A part of cash book
► A part of journal
es
Which of the following asset is NOT depreciated?
► Factory Buildings ► Office Equipment ► Plant & Machinery
e
► Land
oy
The basic purpose of depreciation is to achieve the:

► Matching principle
► Dual aspect principle ► Separate entity concept
pl
► Money measurement concept

m
Find out the missing value of an Accounting Equation with the help of given
data:
.e
Cash Rs. 22,500

Debtors Rs. 500
w
Total Assets Rs. 80, 385

Accounts payable Rs. 1,000
w
Total liabilities Rs. 20,000

► Rs. 82,385 owner’s equity
w
► Rs. 61,385 owner’s equity ► Rs. 99,885 owner’s equity

Firms charge depreciation each year:
► To ensure there is enough money in the firm to replace the asset
► To spread the cost of the asset over its working life
► To reduce the profit and thus reduce the dividends they can pay to
share holders
► Because the law states they must be reduced
Consider the following data:
18 Faisal Qureshi
Particulars Rs.
Assets 8,20,000
Owner's equity 3,80,000
Liabilities ?
► Rs. 1, 98,000 ► Rs. 49,000 ► Rs. 55,000

► Rs. 4, 40,000
Which one of the following is equal to the carrying cost of an asset?
► Original cost minus Accumulated depreciation
► Original cost plus Accumulated depreciation
o
► Original cost minus Residual value
nf
► Written down value minus Accumulated depreciation
An estimate of the income and expenses needed to carry out business plans for a
r.i
fiscal year is known as:
► Budgeting
ne
► Costing ► Management ► Auditing
Unfavorable balance of the cash book means:
► Credit balance in cash book
or
► Credit balance in pass book ► Debit balance in cash book
Net Profit + Expenses=
c
es
► Liabilities
► Assets
e
► Capital
oy
► Income
pl
.36 .
What would be the value of conversion cost, if the cost of material consumed
m
during the month is Rs. 5,000, labor cost incurred is Rs. 2,000 and the factory
over head cost is Rs. 1,000?
.e
► Rs. 3,000
► Rs. 8,000
w
► Rs. 7,000
► Rs. 5,000
w
.37 ( Marks: 10
w
)
The following are some of the causes of difference between the Cash Book
and the Pass Book balances. If you start with the Cash Book (Dr.) balance
in Bank Reconciliation Statement, will you add them or deduct?
Particulars Add/Less
1. Cheques issued but yet not paid by bank. less
2. Cheques deposited but not credited by bank. less
3. Amount directly deposited into bank by a customer but not
recorded in the Cash Book. add
4. Dividend collected by bank but not entered in Cash Book. add
19 5. Insurance premium paid by bank but not recorded in Cash Faisal Qureshi
Book. less
6. Cheque deposited but no entry was made in Cash Book. add
7. Bank charges debited by bank but not credited in the Cash
Book less
8. Interest on overdraft debited by bank but not recorded in Cash
Book. less
9. Cheque issued but wrongly debited in Cash Book less
10. Interest credited by bank but not recorded in cash book add
o
nf
Particulars Rs.
Opening written down value of machine 3,00,000
r.i
Cost of machine purchased during the year 50,000
Depreciation during the year 9,000
ne
closing written down value (WDV) of the Machine ?
or
► Rs. 3, 41,000
► Rs. 3, 50,000
c
► Rs. 3, 59,000
► Rs. 59,000
e es
Particulars Rs.
oy
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
pl
Closing written down value (WDV) of machines ?

m
► Rs. 2, 25,000
.e
► Rs. 2, 50,000
► Rs. 2, 75,000
w
► Rs. 75,000
w
.1 Consider the following data:

w
Particulars Rs.
Assets 1,98,000
Owner's equity 95,000
Liabilities ?
► Rs. 49,000
► Rs. 55,000
► Rs. 1, 25,000
► Rs. 1, 03,000
.2 20
.Find out the missing value of an Accounting Equation with the help Faisal
of given
Qureshi
data:
Cash Rs. 22,500

Debtors Rs. 500

o
nf
.3 Find out the missing value of an Accounting Equation with the help of given
r.i
data:
Furniture Rs. 90,000
ne
Cash Rs.1, 00, 000
Debtors Rs.10, 000
or
Other Assets Rs. 1,000
Owner’s equity Rs. 90, 000
► Rs. 2, 01,000 liabilities

c
es
► Rs. 1, 11, 000 liabilities
e
oy
pl

m
.e
.4 hich of the following assets are shown at written down value in balance
sheet?
w
► Current assets
w
► Liquid assets
► Floating assets
w
► Fixed assets
Which of the following asset is NOT depreciated?

► Factory Buildings
► Office Equipment
► Plant & Machinery
► Land
.5 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
21 ► If the discrepancy is due to error rather than amount Faisal Qureshi
► If the discrepancy is due to amount rather than timing
.6 Sale proceeds of goods are an example of:
► Revenue expense
► Capital expense
► Capital receipt
► Revenue receipt
Which one of the following is NOT true about revenue expenditure?
► These are the running expenses of the business
o
► They improve the financial position of the business
► They reduce the profit of the concern
nf
► They do not appear in the balance sheet
r.i
ne
or
► Rs.260 ► Rs.232
c ► Rs.284 ► Rs.320
es
e
Cost/Unit Total
oy

pl

m

.e

80 units were sold, Use the FIFO method of inventory costing and determine the cost
w
of goods sold.
► Rs. 1,225
w
► Rs. 1,015
w
► Rs. 965
► Rs. 905
► Rs.25, 000 ► Rs. 75,000 ► Rs. 15,000 ► Rs. 1, 00,000

22 Life of asset 5 years Faisal Qureshi
th
► Rs.25, 000 loss

► Rs. 75,000 loss ► Rs. 15,000 profit ► Rs. 1, 00,000 profit

o
Depreciation for the each year Rs. 5,000
nf
th
Written Down Value of Asset on 5 year Rs. 75,000
r.i
Profit or loss on disposal of fixed asset ?
► Rs. 60,000 loss
ne
► Rs. 75,000 profit ► Rs. 25,000 loss ► Rs. 1, 00,000 profit
The total of all costs incurred to convert raw material into finished goods is known
or
as:
► Prime cost ► Conversion cost
c
► Sunk cost ► Opportunity cost
es
e
oy
If the working capital and the current assets of company XYZ are Rs. 5,000 and
Rs.15,000 respectively, calculate the current liabilities.
pl
► Rs. 5,000
► Rs. 10,000
m
► Rs. 15,000
► Rs. 20,000
.e
Which of the following item appears in Trading Account of a business?

► Interest expenses
w
► Wages and salaries

w
► Discount Allowed
w
► Liability ► Owner’s net worth
► Working capital ► Asset
► Profit and loss account ► Balance sheet
► Statement of financial position ► All of the given options
.16 If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating
expenses are Rs. 100,000. What will be the net result?
► Rs. 5,000 Loss ► Rs. 5, 000 Profit
23 ► Rs.1, 95,000 Profit ► Rs.1, 95,000 Loss Faisal Qureshi
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
► Vehicle account ► All of the given options
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
.17 Which of the following journal entry will be recorded, if the payment
of furniture purchased is made through cheque?
o
► Furniture account (Dr) and Bank account (Cr)
nf
► Furniture account (Dr) and Profit & Loss account (Cr)
► Furniture account (Dr) and Cash account (Cr)
r.i
► Cash account (Dr) and Furniture account (Cr)
Which one of the following statement is CORRECT about Long term liabilities?
ne
► These are due within one year
► These are consist of all debts, payable after 12 months
► In working capital, these are deducted from current assets
or
What types of expenses are paid out of Gross Profit?
c
► Selling Expenses ► General Expenses
► Financial Expenses ► All of the given options
es
.18 While making Income & Expenditure account, Excess of income over
expenses in a specified accounting period is called:
e
► Deficit ► Surplus ► Profit ► Loss
oy
Which one of the following is NOT prepared by Non profit organizations?

► Profit & Loss account ► Income & Expenditure account
► Receipts & Payments account ► Balance Sheet
pl
Which of the following financial statement summarizes the profitability of an

m
organization for a particular period?

► Trading and Profit & Loss account
► Cash Flow Statement
.e
► Statement of Retained Earnings

► Balance Sheet
w
w
w
.Which of the following period is known as a fiscal Year of the Government of

Pakistan?
st st
► 1 January to 31 December
st st
► 1 June to 31 May
st th
► 1 July to 30 June
st th
► 1 October to 30 September
What would be the affect on the components of the accounting equation, if goods are
purchased on cash?
24 ► Increase in goods and decrease in cash Faisal Qureshi

► Assets
► Liabilities
► Equities
► Expenses
.19 Commercial Accounting is based on:
o
nf
► Latin
r.i
► English
► French
ne
► Chinese
or
c
es
.20 Double entry accounting system includes:
e
oy

pl

m
An accounting system is used by a business to:

► Analyze transactions
► Handle routine book-keeping tasks
.e
► Structure information
w
w
Record the following transactions in the General Journal.

w
Date: Transactions
Jan 1, 2007 Mr. Asghar started business with cash Rs. 1, 00,000.
Jan 2, 2007 Opened bank account with amount Rs. 50,000.
Jan 4, 2007 Purchased goods for cash Rs. 15,000.
Jan 9, 2007 Payment made to Karachi store (Creditor) Rs. 15,000 by cheque.
Jan14, 2007 Goods returned to Karachi store worth Rs. 1,500.
Jan22, 2007 Goods sold for cash Rs. 2,000.
.DR
Bank account 50,000
Purchased goods for cash Rs. 15,000
Payment made to Karachi store (Creditor) Rs. 15,000 by cheque
25 Faisal Qureshi
Goods returned to Karachi store worth Rs. 1,500
Credit balance 20500
Cr
Mr. Asghar started business with cash Rs. 1, 00,000
Goods sold for cash Rs. 2,000.
o
Net Profit + Expenses=
► Liabilities
nf
► Assets
► Capital
r.i
► Income
ne
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
or
► Depreciation
► Fluctuation
c
► None of the given options es
The basic purpose of depreciation is to achieve the:
► Matching principle
► Dual aspect principle
e
► Separate entity concept
oy
If a business pays rent in advance for 12 months, it will be treated as:

pl
► Prepaid expenses of business

► Long term liability of business
m
► Fixed assets of business

► Current liability of business
.e
Cash book is a part of:

► Voucher
w
► General Journal
w
► General Ledger
► Trial Balance
w
► A ledger account
► A part of cash book
The main goal of Bank Reconciliation Statement is to determine:
26 Faisal Qureshi
► If the discrepancy is due to error rather than amount
.8 .Which one of the following is NOT true about revenue expenditure?

► They do not appear in the balance sheet
o
Under the reducing balance method of depreciation:
nf
r.i
ne
Date Item Quantity Cost/Unit Total
or
2007Jan. 2 Opening 100 Rs.18.00 Rs.1,800
c
inventory
Mar. 4 Purchase
es
400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500
e
Four hundred units are unsold, Use the FIFO method of inventory costing and
oy
Determine the value assigned to the 400 units on hand at the end of the period.
►Rs. 7,500
pl
► Rs.7, 978
► Rs.8, 000
m
► Rs.8, 400
.e

w

w

w

► Rs .2 60
► Rs.232
► Rs.284
► Rs.320
27 Faisal Qureshi
.9 ( Marks: 1 ) - .
Particulars Rs.
Opening stock of raw material 100,000
Closing stock of raw material 85,000
Purchases of raw material during the 200, 000
period
Cost of Material Consumed ?
► Rs. 205,000
►Rs . 215 ,000
o
► Rs. 220,000
► Rs. 225,000
nf
The amount of depreciation charged on machinery will be debited to:
► Machinery account
r.i
► Depreciation account
ne
► Cash account ► Capital account
Under the straight line method of depreciation:
or
c
es
.10 .
e
oy

pl

m
► Rs.25, 000
► Rs . 75 ,00 0
.e
► Rs. 15,000
► Rs. 1, 00,000
w

w

w

th
► Rs.25, 000 loss
► Rs. 75,000 loss
► Rs. 1, 00,000 profit
.11 .
28 Faisal Qureshi
th
Written Down Value of Asset on 5 year Rs. 75,000
► Rs . 60 ,00 0 l os s
► Rs. 25,000 loss
► Rs. 1, 00,000 profit
o
In cost of goods sold statement the ‘total factory cost’ is equal to:
nf
► Cost of material consumed + Labor cost
► Cost of material consumed + Conversion cost
r.i
► Cost of material consumed + Total factory cost
► Cost of material consumed + Factory overhead
ne
Which of the following organization converts raw material into finished
goods?
or
► Trading concern
c
► merchandising concern ► Service concern
es
Which of the following item appears in Trading Account of a business?
e
► Depreciation expenses ► Discount Allowed
oy
► Liability
pl
► Working capital ► Asset

m
If salaries expense is Rs. 2,500, purchases are Rs. 16,000 and rent (office
.e
building) is Rs. 300 during the year, what would be the total of "general &
administrative expenses"?
w
► Rs. 300
► Rs. 2,500
w
► Rs . 2 ,8 00
w
► Rs.18, 800
.12
Balance? (It is assumed that all account balances are shown on normal
balance).
► Capital account
► Cash account
.The amount brought by the proprietor in the business should be credited to: Faisal Qureshi
.13 29
► Cash account ► Capital account
► Drawings account
► Proprietor account
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
Which of the following account will be credited, if business purchased a vehicle
on cash?
o
► Vehicle account
► Cash account
nf
► Business account ► Bank account
r.i
Which of the following journal entry will be recorded, if the goods are sold on credit to Mr.
'B'?
ne
► Mr. “B” / Acc ounts Re c e iv a ble ac c ount (Dr) a n d Sales account
(Cr)
► Cash account (Dr) and sales account (Cr)
or
► Sales account (Dr) and Mr. B / Accounts Receivable account (Cr)
► Goods Sold account (Dr) and Mr. B / Accounts Receivable account (Cr)
c
es
Accrued expenses are the example of:
► Current liabilities
► Long term liabilities
e
► Deferred costs ► Capital expenses
oy
Which of the following shows summary of a company's financial position at a specific

pl
date?
► Profit & Loss Account ► Cash Flow Statement
► Balance Sheet
m
► Income & Expenditure Account

.e
What types of expenses are paid out of Gross Profit?

► Selling Expenses ► General Expenses
► Financial Expenses
w

w
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
w
known as:
► Balance Sheet
► Trial Balance
► Cash Book
.14 .Which of the following essentials is shown in Bank Book?

(1) Date of transaction Narration of transaction
(2) Cheque number
► (1) & (2) only
30 ► (2 ) & (3 ) only Faisal Qureshi
► (1) & (3) only ►
(1), (2) & (3)
.15 .Which of the following book(s) is(are) a part of General Ledger?

► Cash Book ► Purchase Return Book
► Purchase Book
► Pass Book
► Cash Book
o
► Purchase Book ► Sales Book
nf
► Debit Balance
r.i
► Positive Balance ► Credit Balance
ne
or
c
According to the double entry system of accounting, an account that obtains benefit is:
► Debit
es
► Credit ► Income ► No need to show as accounting record
.16 Which of the following is nonprofit organization?
e
► Sole proprietorship
oy
► Partnership
► Limited company
► Trust
pl
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.
m
► Cash ► Credit ► Accrual based ► None of the given options

.e
State with reasons whether the following items of expenditure are capital or
revenue in nature.
w
1. Wages paid on the purchase of goods.

2. Carriage paid on goods purchased.
w
3. Transportation paid on purchase of machinery.

4. Octroi duty paid on machinery.
w
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.
31Question # 1 of 20 Faisal Qureshi
What should be credited, if salary is paid to Sohail?
Select correct option:
Sohail account
Salaries account
Cash account
Drawings account
Question # 2 of 20
Which of the following is NOT correct?
Decrease in Assets will be credit
Decrease in Liabilities will be debit
Decrease in Expenses will be
o
debit Decrease in Revenue will be
nf
debit
Question # 4 of 20
r.i
Which of the following is/are the example/s of Intangible Asset?
ne
Copy rights
Good will
Patent rights
or
All of the given options
Question # 5 of 20
Which of the following is a FIRST product of accounting cycle?
c
Voucher
es
General Journal
General Ledger
e
Financial Statements
oy
Question # 6 of 20
What will be debited, if Mohsin commenced business with cash?
pl
Cash account
Capital account
m
Drawings account
Proprietor account
Question # 7 of 20
.e
Assets are divided in which of the following categories in balance sheet.

w
Current assets, Long term assets and capital

assets Current assets, Long term assets and
w
fixed assets Current assets, Quick assets and

business debts Current assets, Fixed assets
w
and deferred cost

Question # 8 of 20
Find out the missing value of an Accounting Equation with the help of given data: Cash
Rs.100, 000 Debtors Rs.10, 000 Other Assets Rs. 1,000 Owner s equity Rs. 1, 000
Liabilities?
Rs. 12,000
Rs. 11,000
32
w
w
w
.e
m
pl
oy
ees
c or
ne
r.i
nf
o
Faisal Qureshi
Question # 9 of 20
33 Faisal Qureshi
Rs. 110,000
Rs. 111,000
What will be debited, if business purchased Vehicle on cash?
Vehicle account
Cash account
Business account
Bank account
Question # 10 of 20
Franchise rights, goodwill and patents are the examples of:
Liquid assets
o
Tangible assets
Intangible assets
nf
Current assets
Question # 11 of 20
r.i
Consider the following data: Particulars Rs. Assets ? Owner's equity 35,000 Liabilities 90,000
ne
Rs. 35,000
Rs. 55,000
Rs. 1, 25,000
or
Rs. 1, 05,000
Question # 12 of 20
What should be credited, if rent paid in cash?
c
Landlord s account
es
Rent account
Cash account
e
Accounts receivable account
Question # 13 of 20
oy
Consider the following data: Particulars Rs. Assets 75,500 Owner's equity ? Liabilities 40,200
Rs. 35,300
pl
Rs. 55,000
Rs. 125,000
m
Rs. 115,700
Question # 14 of 20
.e
Find out the missing value of an Accounting Equation with the help of given data: Total
Assets Rs. 34,500 Accounts payable Rs. 1, 000 Other liabilities Rs. 11,500 Owner s equity ?
w

Rs. 22,000
w
Rs.24, 000
Rs. 45,000
w
Rs. 46,000
Question # 15 of 20
Which of the following item is found in a Journal entry? (1) Date of each transaction (2)
Rupee amount of each debit and credit (3) Explanation of each transaction
34 Faisal Qureshi
1 only MGT101 Solved MCQs
1 & 2 only .
2 & 3 only
1, 2 & 3
Question # 16 of 20
Which one of the following will result in increase in revenues?
Purchased fixed asset
Received discount
Payment to creditors
Return of goods, sold on credit
Question # 17 of 20
o
Amount generated from sales in a business is called:
nf
Income
Net Income
r.i
Gross Profit
Operating profit
Question # 18 of 20
ne
The expenses which are NOT paid out of Gross Profit is classified as:
Direct Expenses
or
General Expenses
Financial Expenses
Selling Expenses
c
Question # 19 of 20
es
The process of transferring journal entry information to the ledger is called:
e
Journalizing
Posting
oy
Balancing
Analyzing
pl
Question # 20 of 20
m

Decrease in Liabilities will be credit
.e
Decrease in Expenses will be credit

Decrease in Revenue will be debit
w
MGT101 - Financial Accounting MCQ2 (Online quiz # 1)

w
Question # 1 of 20
w
Find out the missing value of an Accounting Equation with the help of given data: Furniture Rs.
90,000 Cash Rs.100, 000 Debtors Rs.10, 000 Other Assets Rs. 1,000 Owner s equity Rs. 90,
000 Liabilities?
Rs. 201,000
Rs. 111, 000
Rs. 290, 000
35 Faisal Qureshi
Rs. 291, 000
Question # 2 of 20
The expenses which are NOT paid out of Gross Profit is classified as:
Direct Expenses
General Expenses
Financial Expenses
Selling Expenses
Question # 3 of 20
Which of the following is NOT a characteristic of Joint Stock Company?
o
Separate Legal Entity
Limited Liability of shareholders
nf
Easy formation
Common Seal
r.i
Question # 4 of 20
Any expense that gives benefit for a period of less than twelve months is called .
ne
Capital Expense
Revenue Expense
or
Revenue Receipt
Deferred Expense
c
Question # 5 of 20 es
The process of transferring journal entry information to the ledger is called:
Journalizing
e
Posting
Balancing
oy
Analyzing
Question # 6 of 20
Total assets - Total liabilities =?
pl
Select correct option: Owner s

Equity
m
Expenses
Retained earnings
.e
Retained earnings
w
Question # 7 of 20
Net profit = Gross profit -
w

Operating Expenses
w
Product Cost
Deferred Expenses
Direct Cost
Question # 8 of 20
Debit signifies:
36 Faisal Qureshi
Increase in Asset account
Decrease in liability account
Decrease in capital account
Question # 9 of 20
The term "Debit" is drived from language.
Latin
English
French
Chinese
o
Question # 10 of 20
A book that keeps separate record for each account is known as:
nf
Trial Balance
r.i
Voucher
General Journal
ne
General Ledger
Question # 11 of 20
Which one of the following is called the book of primary Entry?
or
General Journal
c
General Ledger
Trial Balance
es
Profit and loss account
Question # 12 of 20
e
In an account if credit side > debit side, the balance is known
oy
as: Select correct option:

Negative Balance
Debit Balance
pl
Credit Balance
Positive Balance
Question # 13 of 20
m
Normally single entry book keeping is followed by the:

.e
Small businesses only

Governments only
Large scale businesses only
w
Both Small businesses and Governments

w
Question # 14 of 20
What will be debited, if business sold goods for Rs.10, 000 on credit?
w

Cash account
Sales account
Accounts receivable account
Purchases account
37 Faisal Qureshi
Question # 15 of 20
An expenditure whose benefit is finished or enjoyed immediately is called:
Expense
Liability
Cost
Income
Question # 16 of 20
What should be debited, if Sales made to Mahmood for cash?
Cash account
Mahood account
o
Sales account
Purchases account
nf
Question # 17 of 20
Which of the following is NOT a characteristic of Journal?
r.i
Transactions are recorded in chronological order
Transaction is first recorded in Journal from Voucher
ne
It is also called "The original book of entry"
None of the given options
or
Question # 18 of 20
Consider the following data: Particulars Rs. Assets 1,05,000 Owner's equity 70,000 Liabilities ?
c
Rs. 35,000
Rs. 1, 75,000
es
Rs. 7, 35,000
Rs. 1, 05,000
e
Question # 19 of 20
Which of the following is Not a part of General Ledger?
oy

Activity Book
Purchase Return Book
pl
Purchase Book
Sales Book
m
Question # 20 of 20
What will be debited, if business bought goods on credit from Mr. Ali?
.e
Purchases account
Mr. Ali account
w
Cash account
Sales account
w
Find out the missing value of an Accounting Equation with the help of given data:
w
Total Assets Rs. 34,500 Accounts payable Rs. 1, 000 Other liabilities Rs. 11,500
Owner’s equity ?
Rs. 22,000
Rs.24, 000
Rs. 45,000
Rs. 46,000
38 Faisal Qureshi
Consider the following data: Particulars Rs. Assets 99,500 Owner's equity
50,500 Liabilities ?
Rs. 49,000
Rs. 55,000
Rs. 125,000
Rs. 115,700
o
Consider the following data: Particulars Rs. Assets 1,05,000 Owner's equity
70,000 Liabilities ?
nf
Rs. 35,000
r.i
Rs. 1, 75,000
ne
Rs. 7, 35,000
Rs. 1, 05,000
or
c
Decrease in Assets will be debit
Decrease in Liabilities will be debit
es
e
Which of the following is NOT considered a part of financial statements?
oy

General Journal
pl
Balance Sheet
Profit and Loss account
m
None of the given options

.e
Which one of the following will result in increase in

revenues? Select correct option:
w
Purchased fixed asset

Received discount
w
Payment to creditors
Return of goods, sold on credit
w
.
39 The basic accounting principle/concept according to which business record
Faisalmust
Qureshi
be kept separate from the personal records of the owner is known as:
Select correct option: Going-
concern concept Separate
entity principle Realization
principle Objectivity principle
In an account if debit side > credit side, the balance is known as the:
Negative Balance
Debit balance
o
Positive Balance
nf
Credit balance
r.i
Cash Rs.100, 000 Debtors Rs.10, 000 Other Assets Rs. 1,000 Owner’s equity
ne
Rs. 1, 000 Liabilities ?
or
Rs. 12,000
Rs. 11,000
c
Rs. 110,000
Rs. 111,000
es
e
Owner’s equity Rs. 22,500 Total Liabilities Rs. 80, 385 Cash Rs. 1,000 Bank Rs.
oy
2,000 Debtors Rs. 500

pl
Rs. 102,885 other assets

Rs. 102,885 current liabilities
m
Rs. 99,885 current liabilities

Rs. 99,385 other assets
.e
If Gross profit Rs.16,500 and Cost of goods sold Rs.183,500, what will be the
w
amount of Net Sales?

w
w
Rs. 183, 500

Rs. 167, 000
Rs. 200, 000
Rs. 230, 000
40 Which of the following is NOT correct? Faisal Qureshi
Decrease in Liabilities will be credit
Debit signifies:
o
Decrease in liability account
nf
Decrease in capital account
r.i
When total liabilities are subtracted from total assets the remaining amount is
known as:
ne
Equity or net assets
or
Net income or net loss
Total expenses
c
Total revenue es
Cash Rs. 22,500 Debtors Rs. 500 Total Assets Rs. 80, 385 Accounts payable
e
Rs. 1,000 Total liabilities Rs. 20,000
oy
Rs. 60,385 owner’s equity

pl

m
Which one of the following cannot be classified as Revenue Income?

.e

Goods sold for cash
w
Goods sold on credit

Income from the sale of services
w
Income from the sale of fixed assets

w
41 What will be debited, If Mr. “A” started business with Rs. 2, Faisal Qureshi
00,000. Select correct option:
Capital account
Cash account Mr.
A’s account
Business account
If Salaries Rs. 12, 000, Rent Rs. 5,000, Gross profit Rs. 58,000 and
Discount received Rs. 10, 000. What will be the amount of Net Profit?
Rs. 41,000
Rs. 51,000
o
Rs. 61,000
nf
Rs. 65,000
r.i
Which of the following is / are the particular/s of a cash book? (1) Date
of transaction (2) Account title (3) Amount
ne
1 only
1 & 2 only
or
1 & 3 only
1, 2 & 3
c
Question # 1 of 20
es
Find out the missing value of an Accounting Equation with the help
of given data: Furniture Rs. 90,000 Cash Rs.100, 000 Debtors
e
Rs.10, 000 Other Assets Rs. 1,000 Owner’s equity Rs. 90, 000
Liabilities?
oy
Select correct
option: Rs.
201,000
pl
Rs. 111, 000

Rs. 290, 000
m
Rs. 291, 000

Question # 3 of 20
.e
Which of the following is NOT a characteristic of Joint

Stock Company?
w

Limited Liability of
w
shareholders Easy
formation Common Seal
w
Question # 4 of 20
Any expense that gives benefit for a period of less than
twelve months is called .
Capital Expense
Revenue
Expense
Revenue Receipt
Deferred
Expense
42 Faisal Qureshi
Question # 5 of 20
The process of transferring journal entry information to the
ledger is called:
Journalizing
Posting
Balancing
Analyzing
Question # 6 of 20
Total assets - Total liabilities
=? Select correct option:
Owner’s Equity
o
Expenses
Retained
nf
earnings
Retained
r.i
earnings
ne
Question # 8 of 20
Debit signifies:
Select correct
or
option:
Decrease in liability
c
account Decrease in
capital account All of the
es
given options
e
Question # 9 of 20
The term "Debit" is drived from
oy
language
. Select correct option:
pl
Latin
English
m
French
Chinese
Question # 10 of 20
.e
A book that keeps separate record for each account is

known as: Select correct option:
w
Trial Balance
Voucher
w
General
Journal
w
General
Ledger
Question # 11 of 20
Which one of the following is called the book of primary
Entry? Select correct option:
General
Journal
General
Ledger Trial
Balance
Profit and loss account
Question # 12 of 20
43 In an account if credit side > debit side, the balance is Faisal Qureshi
known as: Select correct option:
Negative Balance
Debit Balance
Credit Balance
Positive Balance
Normally single entry book keeping is followed by the:

Small businesses only
Governments only
Large scale businesses only
o
Both Small businesses and Governments
nf
Question # 14 of 20
What will be debited, if business sold goods for Rs.10, 000 on
r.i
credit? Select correct option:
Cash account
ne
Sales account
Accounts receivable
account Purchases account
or
Question # 15 of 20
An expenditure whose benefit is finished or enjoyed immediately
c
is called:
Select correct
es
option: Expense
Liability
e
Cost
Incom
oy
e
Question # 16 of 20
What should be debited, if Sales made to Mahmood for
pl
cash? Select correct option:

Cash account
m
Mahood account
Sales account
.e
Purchases account
Question # 17 of 20
w
Which of the following is NOT a characteristic of

Journal? Select correct option:
w
Transactions are recorded in chronological

order Transaction is first recorded in Journal
w
from Voucher It is also called “The original

book of entry” None of the given options
Question # 18 of 20
Consider the following data: Particulars Rs. Assets 1,05,000
Owner's equity 70,000 Liabilities ?
Select correct
option: Rs. 35,000
Rs. 1, 75,000
Rs. 7, 35,000
Rs. 1, 05,000
44 Question # 4 of 20 Faisal Qureshi
Which of the following is/are the example/s of Intangible
Asset? Select correct option:
Copy rights
Good will
Patent rights
o
nf
r.i
ne
c or
e es
oy
pl
m
.e
w
w
w
Question # 7 of
45 20 Faisal Qureshi
Assets are divided in which of the following categories in balance
sheet. Select correct option:
Current assets, Long term assets and capital assets Current
assets, Long term assets and fixed assets Current assets,
Quick assets and business debts Current assets, Fixed
assets and deferred cost
Question # 8 of 20
Find out the missing value of an Accounting Equation with the help of
given data: Cash Rs.100, 000 Debtors Rs.10, 000 Other Assets Rs. 1,000
Owner’s equity Rs. 1, 000 Liabilities ?
o
Rs. 12,000
nf
Rs. 11,000
Rs. 110,000
r.i
Rs. 111,000 Question # 9
of 20
What will be debited, if business purchased Vehicle on cash?
ne
Vehicle account Cash
account Business
or
account Bank account
c
Question # 10 of 20
Franchise rights, goodwill and patents are the examples of:
es
Liquid assets
e
Tangible
assets
oy
Intangible
assets Current
assets
pl
m
Question # 19 of 20
The process of transferring journal entry information to the ledger is
.e
called: Select correct option:

Journalizing
Posting
w
Balancin
g
w
Analyzin
g
w
Question # 20 of 20
Which of the following is NOT
correct? Select correct option:
Decrease in Assets will be
credit Decrease in Liabilities will
be credit
46
w
w
w
.e
.
m
pl
oy
ees
c or
ne
r.i
nf
o
Faisal Qureshi
47 Faisal Qureshi
Profit
Loss Surplus
Deficit
Question # 2 of 20
Analyze transactions
Handle routine bookkeeping tasks
o
Structure information
nf
r.i
Question # 3 of 20
Which of the following is NOT a characteristic of Joint Stock Company?
ne
or
Limited Liability of shareholders
Easy formation
Common Seal
c
es
Question # 4 of 20
What should be debited, if Sales made to Mahmood for cash?
e
oy
Cash account Mahood

account Sales account
pl
Purchases account
m
Question # 5 of 20
Consider the following data: Particulars Rs. Assets 99,500 Owner's equity 50,500
.e
Liabilities ?
Select correct option: Rs.
w
49,000
w
Rs. 55,000
w
Rs. 125,000
Rs. 115,700
Question # 6 of 20
When income is reduced or decreased, that amount is recorded on:
.
48 Faisal Qureshi
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 ccount
Question # 7 of 20
Which of the following expenses are called financial expenses?
Payment of rent & Salary expense
o
Markup on loan& Bank Charges
nf
Interest & advertisement expense
r.i
Wages and Depreciation expense
Question # 8 of 20
ne
An expenditure whose benefit is finished or enjoyed immediately is called:
or
Expense
Liability Cost
Income
c
es
Question # 9 of 20
In which of the following all vouchers are first recorded .
e
oy
General Journal
General Ledger
pl
Balance Sheet
m
Trial Balance
Question # 10 of 20
.e
The main purpose of is to ascertain true result of the business operation

during particular period of time.
w
Select correct option: Cost

w
Accounting
w
Financial Accounting
Managerial Accounting
Tax Accountin
49 .1 Faisal Qureshi
Particulars Rs.
Cost of machine purchased during the year 50,000
closing written down value (WDV) of the Machine ?
► Rs. 3, 41,000
► Rs. 3, 50,000
► Rs. 3, 59,000
► Rs. 59,000
o
.Particular Rs.
nf
Opening written down value of machine Rs. 2,00,000
Cost of new machine purchased during the year Rs. 50,000
r.i
Depreciation during the year Rs. 25,000
Closing written down value (WDV) of machines ?
ne
► Rs. 2, 25,000
► Rs. 2, 50,000
or
► Rs. 2, 75,000
► Rs. 75,000
c
es
Consider the following data:
Particulars
e
Rs.
Assets 1,98,000
oy
Owner's equity 95,000

Liabilities ?
pl
► Rs. 49,000
► Rs. 55,000
m
► Rs. 1, 25,000
► Rs. 1, 03,000
.e
data:
w
Cash Rs. 22,500

w
Debtors Rs. 500

w


50 Faisal Qureshi
data:
Furniture Rs. 90,000

Cash Rs.1, 00, 000
Debtors Rs.10, 000
Other Assets Rs. 1,000
Owner’s equity Rs. 90, 000
o
► Rs. 2, 01,000 liabilities
nf
r.i
ne
or
c
es
.2 .Which of the following assets are shown at written down value in balance
sheet?
► Current assets
e
► Liquid assets
oy
► Floating assets
► Fixed assets
pl
.3 Which of the following asset is NOT depreciated?

► Factory Buildings
m
► Office Equipment
► Plant & Machinery
.e
► Land
The main goal of Bank Reconciliation Statement is to determine:
w

w
► If the discrepancy is due to error rather than amount

w

.4 Sale proceeds of goods are an example of:
► Revenue expense
► Capital expense
► Capital receipt
► Revenue receipt
.5 .Which one of the following is NOT true about revenue expenditure?
51 ► They do not appear in the balance sheet Faisal Qureshi

o
Eighty units were sold, what is the value of the ending inventory using the
nf
► Rs.260
► Rs.232
r.i
► Rs.284
► Rs.320
ne
or
Cost/Unit Total
c
Mar. 4 Purchase
es 35 11 385
e
oy
80 units were sold, Use the FIFO method of inventory costing and determine the
pl
cost of goods sold.

► Rs. 1,225
m
► Rs. 1,015
► Rs. 965
.e
► Rs. 905
If, Cost of machine = Rs.400,
w
000 Useful life = 5 years

Rate of depreciation= 40%
w
The book value of machine after one year’s using diminishing balance method is
?
w
► Rs.86, 400
► Rs. 1, 44,000
► Rs. 2, 40,000
► Rs. 51,840

52 Faisal Qureshi
► Rs.25, 000
► Rs. 75,000
► Rs. 15,000
► Rs. 1, 00,000
.6 .
o
Written down value of asset on 5th year Rs.75,000
nf
r.i
ne
c or
e es
oy
pl
m
.e
w
w
w
53 ► Rs.25, 000 loss Faisal Qureshi
► Rs. 75,000 loss
► Rs. 1, 00,000 profit
.7 .
Written Down Value of Asset on 5th year Rs. 75,000
o
nf
► Rs. 60,000 loss
r.i
► Rs. 25,000 loss
► Rs. 1, 00,000 profit
ne
.8 .
or
The total of all costs incurred to convert raw material into finished
goods is known as:
► Prime cost
c
es
► Conversion cost
► Sunk cost
► Opportunity cost
e
.9 .
oy

pl

m

.e
.10 .
w
If the working capital and the current assets of company XYZ are Rs.
w
5,000 and Rs.15,000 respectively, calculate the current liabilities.

► Rs. 5,000
w
► Rs. 10,000
► Rs. 15,000
► Rs. 20,000
.11 .Which of the following item appears in Trading Account of a business?

► Discount Allowed
.12 .
54 Faisal Qureshi
► Liability
► Working capital
► Asset
.13 .
► Profit and loss account
o
► Balance sheet
nf
► Statement of financial position
r.i
.14 .
ne
If cost of sales is Rs. 95,000, sales are Rs. 200,000 and operating expenses are
Rs. 100,000. What will be the net result?
or
► Rs. 5,000 Loss
► Rs. 5, 000 Profit
c
► Rs.1, 95,000 Profit
► Rs.1, 95,000 Loss
es
.15 .
e
oy
Balance? (It is assumed that all account balances are shown on normal balance)
pl
► Cash account
► Furniture account
m
► Vehicle account
.e
.16 .
w
w
► Capital account
w

► Cash account
.17 .
Which of the following journal entry will be recorded, if the payment of furniture
purchased is made through cheque?
► Furniture account (Dr) and Bank account (Cr)

► Furniture account (Dr) and Profit & Loss account (Cr)
► Furniture account (Dr) and Cash account (Cr)
55 ► Cash account (Dr) and Furniture account (Cr) Faisal Qureshi
.18 .
Which one of the following statement is CORRECT about Long term liabilities?

.19 .
What type of expenses are paid out of Gross Profit?
► Selling Expenses
o
► General Expenses
nf
r.i
.20 .
While making Income & Expenditure account, Excess of income over expenses
ne
in a specified accounting period is called:
► Deficit
or
► Surplus
► Profit
► Loss
c
es
.21 .
e
oy

pl

► Balance Sheet
m
.22 .
.e

w
w

w

► Balance Sheet
.23 .
Which of the following period is known as a fiscal Year of the Government of
Pakistan?
► 1st January to 31st December

► 1st June to 31st May
► 1st July to 30th June
56 ► 1st October to 30th September Faisal Qureshi
.24 .
What would be the affect on the components of the accounting equation, if
goods are purchased on cash?

o
.25 .
nf
► Assets
r.i
► Liabilities
► Equities
ne
► Expenses
or
.26 .
c
es
e
.27 .
oy

pl
► Latin
► English
m
► French
► Chinese
.e
.28 .
w

w

w
.29 .

57 ► None of the given options Faisal Qureshi
.30 .
► Analyze transactions
► Handle routine book-keeping tasks
► Structure information
.31 ( Marks: 10 )
Record the following transactions in the General Journal.
o
Date: Transactions
nf
Jan 1, 2007 Mr. Asghar started business with cash Rs. 1, 00,000.
r.i
Jan 2, 2007 Opened bank account with amount Rs. 50,000.
Jan 4, 2007 Purchased goods for cash Rs. 15,000.
ne
Jan 9, 2007 Payment made to Karachi store (Creditor) Rs. 15,000 by cheque.
Jan14, 2007 Goods returned to Karachi store worth Rs. 1,500.
Jan22, 2007 Goods sold for cash Rs. 2,000.
or
DR
c
Bank account 50,000
es
Purchased goods for cash Rs. 15,000
Payment made to Karachi store (Creditor) Rs. 15,000 by
cheque Goods returned to Karachi store worth Rs. 1,500
e
Credit balance 20500
oy
Cr
Mr. Asghar started business with cash Rs. 1, 00,000
pl
Goods sold for cash Rs. 2,000.

m
.1 .
Particulars Rs.
.e

Cost of new machine purchased during the 50,000
w
year
w

Closing written down value (WDV) ?
w
► Rs. 1, 29,000
► Rs. 1, 50,000
► Rs. 1, 21,000
► Rs. 71,000
58 Faisal Qureshi
.2 .
data:
Owner’s equity Rs. 22,500

Total Liabilities Rs. 80, 385
Cash in hand Rs. 1,000
Cash at bank Rs. 2,000
Debtors Rs. 500
o
► Rs. 1, 02,885 other assets
► Rs. 1, 02,885 other liabilities
nf
► Rs. 99,885 current liabilities
► Rs. 99,385 other assets
r.i
.3 .
ne
► Bankers
or
► Statutory auditor
► Manger
c
es
.4 .
e
oy
pl
m
.5 .
Expenditures incurred anually on renewal of patent are known as:
.e
► Revenue Expenditures
w
► Capital Expenditures
w
► Financial Expenditures
► Operating Expenditures
w
.6 .
Particulars Rs.
period
59 Faisal Qureshi
► Rs. 205,000
► Rs. 215,000
► Rs. 220,000
► Rs. 225,000
.7 .
o
nf
r.i
► Rs. 60,000 loss
► Rs. 25,000 loss
ne
► Rs. 1, 00,000 profit
or
.8 .
c
cash?
► Stock account
es
► Cash account
e
oy
.9 .
If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are
pl
Rs. 20,000 during the year, what would be the value of Gross Profit?
m
► Rs. 15,000
► Rs. 35,000
.e
► Rs. 55,000
► Rs. 60,000
w
.10 .
w
w
Rs.20,000 during the year. What would be the Net Profit?

► Rs.15,000
► Rs. 35,000
► Rs. 55,000
► Rs. 60,000
.11 .
► Capital account ► Sundry creditors account
► Cash account
60 Faisal Qureshi
.12 .
The amount of salary paid to Mr. Sohail should be debited to:
► Mr. Sohail account
► Salaries account
► Cash account
.13 .
Which of the following account will be credited, if business bought goods on
o
credit from Mr. Ali?
nf
► Mr. Ali account
r.i
► Cash account
► Sales account
ne
.14 .
The unfavorable balance of Profit and Loss account should be:
or
c
► Subtracted from capital
.15 .
es
Which of the following is NOT an example of Current Asset?
► Bank Overdraft
e
oy
pl
.16 .
m

.e
► Balance Sheet
w
.17 .
w
known as:
w
► Balance Sheet
► Trial Balance
► Cash Book
.18 .
Documentary evidence, in a specific format used to record the details of a
transaction is known as:
► Account
► Voucher
► Journal
► Ledger
61 Faisal Qureshi
.19 .
A summarized record of transactions related to individuals or things is called
a/an .
► Account
► Voucher
► Journal
► Trial balance
o
.20 .
nf
When a Liability is reduced or decreased, it is recorded on the:
r.i
ne
.21 .
or
What will be the effect on accounting equation, when payment is made to the
creditor of the business?
c
► Decrease in an asset, decrease in a liability
es
► Increase in an asset, increase in a liability
► Decrease in an asset, decrease in owner's equity
► Increase in an asset, increase in owner's equity
e
.22 .
oy

pl

m
.23 .
.e

► Capital expense
w
► Revenue expense
w
.24 .
w
Mr.” A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated as
for business.
► Revenue
► Net profit
► Gross profit
► Operating profit
.25 .
62 ► Both cash and accrual accounting Faisal Qureshi
.26 .
Which of the following financial statement shows the financial health of an
Organization at a stated period of time?
► Balance sheet
o
► Cash Flow statement
► Statement of retained earnings
nf
.27 .
r.i
The records that are kept for the individual asset, liability, equity, revenue, expense, and
dividend components are known as:
ne
► Accounts
► Vouchers
► Journals
or
► Statements
.28 .
c
Revenue should be recognized or recorded when the goods are sold or services are rendered
es
to the customer, this concept is known as:
► Consistency concept
► Realization Concept
e
► Materiality concept
► Matching concept
oy
.29 .
A record maintained which is measurable in the form of money, this concept of accounting
pl
is known as:
m
.e
.30 .
w
The cost of goods and services used up in the process of obtaining revenue is known as:
► Revenue
w
► Expense
► Liability
w
► Expenditure
.31 .
Which of the following is an accounting system in which events are recorded as and when
they occur?
► Cash Accounting
► Accrual Accounting
► Both Accrual Accounting and Cash Accounting
► None of the above
63 Faisal Qureshi
.32 .
Recording of all financial transactions undertaken by an individual or organization is
known as:
► Summarizing
► Book-keeping
► Classification
► Interpreting
.33 .
Any cheque drawn to creditor but not paid by bank will effect as follows:
► Cash book will show less balance & bank book will show more
o
► Cash book will show more balance & bank book will show less
nf
► Cash book will show double balance
► Bank book will show double balance
r.i
.34 .
If no distribution is made between capital and revenue expenditure then:
► The figure of debtors and creditors will be incorrect
ne
► Cash or bank figure will be incorrect
► Net profit will be incorrect
or
► Balance sheet will not balance
.35 .
c
The Policy for charging depreciation is selected by:
es
► Manufacturer
► Trader
► Management
e
► Accountant
oy
.36 .
The estimated value at which an asset is expected to be sold after the end of its useful life
pl
is called:
► Residual value
► Salvage Value
m
► Scrap Value
.e
.37 .
w
Mr. “A” borrowed money from bank; this transaction involves which one of the following
accounts:
w
► Cash & Mr. A

► Bank & Mr. A
w
► Drawing & Mr. A

► Cash & Bank
.38 .
The beginning balance of Owner’s Equity was Rs.7,500. The dividends paid to
stockholders were Rs.1,500. The ending balance of Owner’s Equity is Rs.5,000. What
was the Net Income or Net Loss for the accounting period?
► Net Loss of Rs. 1,000
► Net Income of Rs. 1,000
64 Faisal Qureshi
.39 .
A company sold Rs. 400,000 of merchandise for cash and Rs.120,000 of merchandise to
credit customers who will pay for the merchandise in a later time period. How much
revenue should be reported on the income statement of the current time period under
Cash Basis of Accounting?
► Rs. 280,000 ► Rs. 520,000
► Rs. 400,000 ► Rs. 120,000
.40 .
Which one of the following statement is wrong about Current liabilities?
► These are short-term loans
o
► A vague term for loans to be repaid by an enterprise after twelve months
nf
► In working capital, these are deducted from assets
Calculate depreciation of the asset for five years by using written down
r.i
value method. Also show accumulated depreciation.
Cost of the asset Rs. 1,20,000
ne
Depreciation Rate 10%
Expected Life 5 years
or
ANSWER
YR Written down RS Accumulated
c
value method depreciation
es
1 cost 120,000
Depreciation @ 12,000 12,000
e
10%...
10%*120,000
oy
WDV… 120,000- 108,000

pl
12,000
2 Dep @ 10%... 10,800 22800
m
WDV= 108,000- 97,200

3 Dep @ 10%... 9,720 32520
.e
WDV= 97,200- 87,480

4 Dep @ 8,748 41,268
w
WDV=87,480- 78,732
5 Dep @ 7873.2 49,141.2
w
WDV=78,732- 70858.8
w
65 .1 . Faisal Qureshi
Particulars Rs.
year
► Rs. 1, 29,000
► Rs. 1, 50,000
► Rs. 1, 21,000
o
► Rs. 71,000
nf
.2 .Find out the missing value of an Accounting Equation with the help
r.i
of given data:
Owner’s equity Rs. 22,500
ne
Total Liabilities Rs. 80, 385
Cash in hand Rs. 1,000
or
Cash at bank Rs. 2,000
Debtors Rs. 500
c
► Rs. 1, 02,885 other assets
► Rs. 1, 02,885 other liabilities
es
► Rs. 99,885 current liabilities
► Rs. 99,385 other assets
e
.3 .
oy
► Bankers
pl

m
► Manger
.e
.4 .Bank Reconciliation Statement is:

w
w

w
.5 .Expenditures incurred anually on renewal of patent are known as:

► Revenue Expenditures
► Capital Expenditures
► Financial Expenditures
► Operating Expenditures
66 Faisal Qureshi
.6 .
Particulars Rs.
period
► Rs. 205,000
o
► Rs. 215,000
nf
► Rs. 220,000
► Rs. 225,000
r.i
.7 .
ne
or
► Rs. 60,000 loss
c
es
► Rs. 25,000 loss
► Rs. 1, 00,000 profit
e
.8 .
oy
cash?
pl
► Stock account
► Cash account
m
.e
.9 .
w
Rs. 20,000 during the year, what would be the value of Gross Profit?
► Rs. 15,000
w
► Rs. 35,000
► Rs. 55,000
w
► Rs. 60,000
.10 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
.11 .
67 ► Capital account Faisal Qureshi
► Cash account
.12 .
The amount of salary paid to Mr. Sohail should be debited to:
► Mr. Sohail account
► Salaries account
► Cash account
.13 .
o
Which of the following account will be credited, if business bought goods on
credit from Mr. Ali?
nf
► Mr. Ali account
r.i
► Cash account
► Sales account
ne
.14
The unfavorable balance of Profit and Loss account should be:
or
c
► Subtracted from capital
es
.15 .
► Bank Overdraft
e
oy
pl
.16 .
m

.e

► Balance Sheet
w
.17 .
w
known as:
w
► Balance Sheet
► Trial Balance
► Cash Book
.18 .
Documentary evidence, in a specific format used to record the details of a
transaction is known as:
► Account
► Voucher
68 ► Journal Faisal Qureshi
► Ledger
.19 .
A summarized record of transactions related to individuals or things is called
a/an .
► Account
► Voucher
► Journal
► Trial balance
.20 .
o
When a Liability is reduced or decreased, it is recorded on the:
nf
r.i
ne
.21 .
or
c
es
.22 .
e
oy

pl
.23 .
m

► Capital expense
.e
► Revenue expense
w
.24 .
w
Mr.” A” sold goods for Rs. 3, 00,000 to Mr. “B”, Rs. 3, 00,000 will be treated as
for business.
w
► Revenue
► Net profit ► Gross profit ► Operating profit
.25 .
► Accrual accounting only ► Cash accounting only
.26 .
Which of the following financial statement shows the financial health of an Organization at
a stated period of time?
69 ► Balance sheet Faisal Qureshi
► Cash Flow statement
► Statement of retained earnings
.27 .
The records that are kept for the individual asset, liability, equity, revenue, expense, and
dividend components are known as:
► Accounts
► Vouchers
► Journals
o
► Statements
nf
.28 .
Revenue should be recognized or recorded when the goods are sold or services are rendered
r.i
to the customer, this concept is known as:
► Realization Concept
ne
or
.29 .
A record maintained which is measurable in the form of money, this concept of accounting
c
is known as:
es
e
.30 .
oy
The cost of goods and services used up in the process of obtaining revenue is known as:
► Revenue
pl
► Expense
► Liability
m
► Expenditure
.31 .
.e
Which of the following is an accounting system in which events are recorded as and when
they occur?
w
► Cash Accounting
► Accrual Accounting
w
► Both Accrual Accounting and Cash Accounting

► None of the above
w
.32 .
Recording of all financial transactions undertaken by an individual or organization is known
as:
► Summarizing
► Book-keeping
► Classification
► Interpreting
70.33 . Faisal Qureshi
Any cheque drawn to creditor but not paid by bank will effect as follows:
► Cash book will show less balance & bank book will show more
► Cash book will show more balance & bank book will show less
► Cash book will show double balance
► Bank book will show double balance
.34 .
If no distribution is made between capital and revenue expenditure then:
► The figure of debtors and creditors will be incorrect

► Cash or bank figure will be incorrect
► Net profit will be incorrect
o
► Balance sheet will not balance
nf
.35 .
r.i
The Policy for charging depreciation is selected by:
► Manufacturer
► Trader
ne
► Management
► Accountant
or
.36 .
The estimated value at which an asset is expected to be sold after the end of its useful
c
life is called:
► Residual value
es
► Salvage Value
► Scrap Value
e
oy
.37 .
Mr. “A” borrowed money from bank; this transaction involves which one of the
pl
following accounts:
► Cash & Mr. A
m
► Bank & Mr. A

► Drawing & Mr. A
.e
► Cash & Bank

w
.38.
The beginning balance of Owner’s Equity was Rs.7,500. The dividends paid to
w
stockholders were Rs.1,500. The ending balance of Owner’s Equity is Rs.5,000. What
w
was the Net Income or Net Loss for the accounting period?
.39 .
A company sold Rs. 400,000 of merchandise for cash and Rs.120,000 of merchandise to
credit customers who will pay for the merchandise in a later time period. How much
revenue should be reported on the income statement of the current time period under
Cash Basis of Accounting?
71 ► Rs. 280,000 ► Rs. 520,000 Faisal Qureshi
► Rs. 400,000 ► Rs. 120,000
.40 .
Which one of the following statement is wrong about Current liabilities?
► A vague term for loans to be repaid by an enterprise after twelve months
► In working capital, these are deducted from assets
.41 ( Marks: 10 )
Calculate depreciation of the asset for five years by using written down
o
value method. Also show accumulated depreciation.
nf
Cost of the asset Rs. 1,20,000
Depreciation Rate 10%
r.i
Expected Life 5 years
ne
ANSWER
YR Written down RS Accumulated
or
value method depreciation
1 cost 120,000
Depreciation @ 12,000 12,000
c
10%...
es
10%*120,000
WDV… 120,000- 108,000
e
12,000
2 Dep @ 10%... 10,800 22800
oy
10%*108000
WDV= 108,000- 97,200
pl
3 Dep @ 10%... 9,720 32520

WDV= 97,200- 87,480
m
4 Dep @ 8,748 41,268

WDV=87,480- 78,732
.e
5 Dep @ 7873.2 49,141.2

WDV=78,732- 70858.8
w
w
w
72 Faisal Qureshi
.1 .
Particulars Rs.
Cost of machine 50,000
Closing written down value (WDV) of the Machines ?
► Rs. 4, 14,000
► Rs. 4, 25,000
o
► Rs. 3, 86,000
nf
► Rs. 61,000
r.i
.2 .
Particulars Rs.
ne
year
or
c
► Rs. 1, 29,000
es
► Rs. 1, 50,000
► Rs. 1, 21,000
► Rs. 71,000
e
oy
.3 .
Firms charge depreciation each year:
pl
► To ensure there is enough money in the firm to replace the asset

► To spread the cost of the asset over its working life
m
► To reduce the profit and thus reduce the dividends they can pay to share
.e
holders
► Because the law states they must be reduced
w
.4 .
Depreciation arises because of:
w
► Fall in the market value of an asset

w
► Fall in the value of money

► Physical wear and tear
.5 .
► Limited assets
► Depreciateable assets
73 Faisal Qureshi
.6 .
Accountancy covers which of the following area(s):
► Book-keeping
► Accounting
► Auditing
.7 .
► Bankers
o
nf
► Manger
r.i
.8 . is the detail of transaction in one's account provided by the bank.
ne
► Bank statement
► Bank reconciliation statement
or
► Income statement
► Financial statement
c
.9 .
If you start with cash book favorable balance in Bank Reconciliation Statement,
es
which item will be added?
e
► Cheques omitted to be deposited into bank
► Any amount directly collected by bank on behalf of customer but not
oy
recorded in cash book

► Debit side of cash book was overcast
pl
.10 .
m
is the amount for which an asset could be exchanged between

knowledgeable willing parties in an arm’s length transaction.
.e
► Present value
► Fair value
w
► Book value
► Residual value
w
.11 .
w

Eighty-five units were sold, what is the value of the ending inventory using the
► Rs.260
74 ► Rs.232 Faisal Qureshi
► Rs.284
► Rs.268
.12 .
If, Cost of machine = Rs.400, 000
Useful life = 5 years
Rate of depreciation= 40%
The book value of machine after one years using diminishing balance method is
?
► Rs.86, 400
o
► Rs. 1, 44,000
► Rs. 2, 40,000
nf
► Rs. 51,840
r.i
.13 .
ne
or
Written down value of asset at the end of 5 th year Rs.25,000
c
Profit or loss on disposal of fixed assets
es ?
► Rs.25, 000 profit

► Rs. 75,000 loss
e
► Rs. 1, 00,000 profit
oy
.14 .
pl
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
m
over head cost is Rs. 1,000?

► Rs. 3,000
.e
► Rs. 8,000
► Rs. 7,000
w
► Rs. 5,000
w
.15 .
Which one of the following is CORRECT about the closing stock?
w
► 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
75 Faisal Qureshi
.16 .
Which of the following particulars are included in the specimen of a bank receipt
voucher?
1) Name of the organization
2) Bank code
3) Date of transaction
► (1) & (2) only
► (1) & (3) only
► (2) & (3) only
► (1), (2) & (3)
o
.17 .
nf
r.i
► Liability
ne
► Working capital
► Asset
.18 .
or
Which of the following statement is TRUE about the positive working capital of a
company?
c
► It shows sound position of a company
► It shows that company has sufficient current assets to meet current
es
liabilities
► It shows that current assets are greater than current liabilities
e
oy
.19 .
In which of the following condition a company will have positive working capital?
► If current assets > current liabilities
pl
► If current Assets < current Liabilities

► If current assets = current liabilities
m
► If current assets < current liabilities

.e
.20 .
w
► Bank Overdraft
w
w
.21 .
Which of the following is NOT an item of a Balance Sheet?
► Accounts Payable
► Sales Revenue
► Marketable Securities
76 Faisal Qureshi
.22 .
Which of the following statement is NOT TRUE about Current liabilities?

.23 .
Which of the following shows summary of a company's financial position at a
o
specific date?
► Profit & Loss Account
nf
► Balance Sheet
r.i
► Income & Expenditure Account
.24 .
ne
What type of expenses are paid out of Gross Profit?
► Selling Expenses
► General Expenses
or
c
es
.25 .
Which one of the following is NOT prepared by Nonprofit organizations?
e
oy

► Balance Sheet
pl
.26 .
m

.e

w
► Balance Sheet
.27 .
w
An informal accounting statement that lists the ledger account balances at a

w
point in time and compares the total of debit balances with the total of credit
balances is known as:
► Balance Sheet
► Trial Balance
► Cash Book
.28 .
Which of the following essentials are shown in Bank Book?
(1) Date of transaction
(2) Narration of transaction
77Cheque number Faisal Qureshi
► (1) & (2) only
► (2) & (3) only
► (1) & (3) only
► (1), (2) & (3)
.29 .
► Pass Book
► Cash Book
► Purchase Book
► Sales Book
o
.30 .
nf
► Debit Balance
r.i
► Positive Balance
► Credit Balance
ne
.31 .
or
c
es
.32 .
e
oy

pl

.33 .
m
An Asset that is NOT physical in nature is called .

► Intangible Asset
.e
► Liquid Asset
► Current Asset
w
► Fixed Asset
.34 .
w
Assets total Rs.50, 000 and Liabilities total Rs.10, 000. What is the equity of the
business?
w
► Rs. 40, 000

► Rs. 60, 000
► Rs. 10,000
► Rs. 50,000
.35 .
According to the double entry system of accounting, an account that obtains
benefit is:
► Debit ► Credit ► Income
► No need to show as accounting record
.36 .
78 The time span in which financial statements of the business are prepared
Faisal
is Qureshi
known as:
► Financial Year
► Accounting Period
► Business Life Cycle
► Accounting Cycle
.37 .
Income of the business
includes:
► Cash sales only
o
nf
.38 .
If a business purchases machinery for Rs. 30,000 on 31st January 2008 having
r.i
life of 10 years, this expense will be realized under the concept of
accrual accounting.
ne
► For the year 2008 only
► For the last day of 10th year only
► Over 10 years
or
► Nothing can be said about it
c
.39 .
Net Profit =? -
es
Expenses
► Liabilities
► Assets
e
► Capital
oy
► Income
.40 .
pl
The price paid for an item, in terms of currency is

called:
m
► Sale
► Cost
.e
► Debt
► Revenue
w
w
w

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1 Faisal Qureshi

► Rs.260 20 units @ 13 = 260

.9 Consider the following inventory record:

Date Item Quantity Rs. Rs.

Jan. 2 Beginning inventory 10 10 100

May 8 Purchase 40 12 480

Opening Stock 100

Detail of 80 units sold

Depreciation for each year Rs. 15,000

Book value of Asset after 5 years ?

Asset year 1 = 100,000 - 15000 = 85000

Year 4 = 55000 – 15000 = 40000

Book value after year 5 = 40000 – 15000 = 25000

► Rs.25, 000 ► Rs. 75,000 ► Rs. 15,000 ► Rs. 1, 00,000

► Opening raw material inventory - Purchases + Ending raw material inventory

► Rs. 5,000 Loss

► Rs.1, 95,000 Profit

Income of the business includes:

► Credit sales only

► Both cash sales and credit sales

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

► Sundry creditors account

When a assets is increased, it is recorded on the:

► Amount of depreciation increases every year

► None of the given options

Consider the following:

First purchase 35 units @ Rs. 11 per unit

Third purchase 20 units @ Rs. 13 per unit

method of inventory costing?

In accounting accumulated depreciation is:

(1) Date of transaction

► (1) & (2) only

► (1) & (3) only

Commercial Accounting is based on:

► Double entry book keeping

► Cash basis of book keeping

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

Following are the inventories of Trading Concern EXCEPT:

► Left or debit side of the account

Depreciable value of an asset is equal to:

► Cost – scrap value

► None of the given options

interested parties is called:

A joint stock company (JSC) is a type of business entity: it is a type of corporation or

the latter are bought and sold on the open market

► Increase in goods and decrease in cash

When Capital is increased by an amount, it is recorded on the:

► Right or debit side of the account

► Right or credit side of the account

The stock of manufacturing concern consists of:

► Raw Materials Inventory

Cost of asset Rs. 1,00,000

► Interest credited by the bank in pass book

► Cheque deposited but not credited by the bank

Depreciable value of an asset is equal to:

► Cost – scrap value

Which one of the following is equal to the carrying cost of an asset?

► Original cost plus Accumulated depreciation

► Original cost minus Residual value

When income exceeds expenses in a specific time period is known as:

machinery being assets are shown in balance sheet as debit balance.

We can say that the business is in profit, when:

► Increase in cash and increase in goods