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Define "Cash flow from financing activities" in the context of cash flow statement with some examples.
Financial year decided by partnership agreement is 1st July to 30th June. Mr. Ali is partner and having a capital of Rs. 1,500,000 on July 1st 2007 and he introduced more capital on August 1st 2007 Rs. 10,000, on April 1st 2008, Rs. 500,000 and on June 1st 2008 , Rs. 5,000. Mark up rate is 10% p.a.
Calculate mark up on Mr. Ali’s capital for the year ending on 30th June 2008.
With the help of given data below, calculate the value of closing stock by using the weighted average method of stock valuation.
Feb. 01
Beginning balance: 800 units @ Rs. 6 / unit.
Feb. 10
Received 200 units @ Rs.8/ unit.
Feb. 11
Issued 800 units.
Indicate in which section of the Balance Sheet each of the following accounts is classified. Use the symbols CA for current assets, NCA for non current assets, CL for current liabilities, LTL for long term liabilities, and SHE for stockholders’ equity.
AccountsPrepaid rentSection
Dividends payable
Salaries payable
Prepaid insurance
Retained earnings
Mortgage payable (due in 15 years)
Unearned service revenue
Accounts receivable
Land
Office supplies
Write down the components of Cash Flow Statement.
If the capitals of the partners are fixed, Pass Journal Entries for the following:
v Drawings made by partner
v Excess drawn amount is returned by partner
v Profit distribution among partner
What does the term “Rectification of Error” mean?
Which of the following would be a suitable head for short term advances from customers in Balance Sheet?
Current liability
Intangible asset
Tangible asset
Which of the following is adjusted as working capital change in operating activities section of a cash flow statement?
Decrease in trade receivable
Repayment of dividend
Payment of goodwill
Investment in associated companies
Which of the following is considered as outflow of cash?
Issuance of shares
Loan taken from bank
Issuance of debentures
Payment of dividend
Which of the following is TRUE?
Sale of equipment for cash is considered as inflow of cash
Sale of equipment on account is considered as inflow of cash
Purchases of equipment for cash is considered as inflow of cash
Sale of equipment for cash is considered as outflow of cash
What would be the effects on financial statements, if Rs. 6,000 transferred to general reserves out of undistributed profit given in adjustment?
It will be treated in both profit and loss appropriation account and in the balance sheet
It will be treated in income statement only
It will be treated in profit and loss appropriation account only
It will be treated as current liability in balance sheet only
Which of the following is shown on the liability side of Balance Sheet?
Share capital a/c only
Premium on issue of shares a/c only
Both share capital and share premium a/c
Discount on issue of shares a/c only
Which of the following is an example of liability account?
Accounts receivable account
Losses account
Prepaid insurance account
Unearned revenue account
In which of the following situation/s a partnership would be dissolved?
In case of death of partner
At the admission of new partner
If any partner resigned from partnership
All of the given options
Which of the following item will be credited in capital account of sole proprietor?
Cash
Drawings
Debtors
Profit
Which of the following would be occurred in a transaction, but will not be expensed until a future accounting period?
Capital work in progress
Deferred cost
Provision
Unearned revenue
Which one of the following would NOT be included in creditors Control account?
Credit Purchases
Cash Purchases
Cheques / Cash paid
Purchase returns
Which of the following is INCORRECT about subsidiary account?
It is not a summary account
It reduces the burden of control account
It provides detailed information about individual accounts
It summarizes the total of related items from other accounts
Which of the following is an item of a debtors control account?
Cash sale
Credit sale
Credit purchase
Cash purchase
A Bank Reconciliation Statement is prepared to:
Ascertain the difference between the Cash Book balance and the Bank
Statement balance.
Correct errors in the Cash Book or errors in the Bank Statement.
Amend the balance of the Bank Statement of the firm.
Amend the balance in the Cash Book of the firm
Which of the following is TRUE about revenue receipt?
It has long term effects
It does not occur again and again
It is shown in balance sheet
It is shown in income statement
ParticularsWritten down value of asset at the time of saleRs.
Original cost of asset10,000
Depreciation expense during the year20,000
Disposal value of asset700
Loss on disposal of asset?
1,000
Rs. 9,000
Rs. 19,000
Rs. 8,300
Rs.10,000
A fixed asset cost Rs. 8,000; it is sold for Rs. 4,800. At the date of its disposal, its net book value is Rs. 3,000. What is the profit or loss on disposal?
Profit Rs. 3,200
Loss Rs. 3,200
Loss Rs. 1,800
Profit Rs. 1,800
Which of the following would be classified as a fixed asset?
Marketable securities
Prepaid expenses
Accounts receivable
Tools and Equipment
Which of the following account would be debited, when goods are sold on cash?
Goods account
Cash account
Stock account
Sales account
Which of the following entry will be recorded in the books of accounts for the goods returned to Mr. 'A'?
Purchases return account (Dr) and Trading account (Cr)
Mr.” A”–creditor account (Dr) and purchases return account (Cr)
Purchases return account (Dr) and Mr.” A” –creditor account (Cr)
Mr.” A”–creditor account (Dr) and Profit & Loss account (Cr)
If,
Ø Cash Rs. 5,000
Ø Accounts receivable Rs. 2,000
Ø Stock Rs. 1,000
Ø Accounts payable Rs. 3,000
What is the amount of working capital?
Rs. 5,000
Rs. 3,000
Rs. 11,000
Rs. 10,000
Which of the following statement is FALSE about a Balance sheet?
It is prepared at a particular point of time
It is prepared for a particular period of time
It is prepared to show the financial health of a business
None of the given options
Expenditure is revenue in nature when it:
Benefits the current period
Benefits the future period
Belong to the previous period
None of the given options
Which of the following ratio cannot be computed for a period in which the company incurs a net loss?
Acid-test ratio
Return on investment
Return on investment
None of the given options
Which of the following is one of the major factors affecting the market value of a company’s shares?
Current ratio
Earning per share
Earning per share
Return on asset
With reference to the statement of cash flows the transactions involving production and delivering goods or providing services must be classified as:
Business activities
Operating activities
Financing activities
Investing activities
Statement of cash flows helps the stakeholders to assess:
The ability to generate future cash flows
The liquidity of the business
Ability to pay cash dividends in the future
All of the given options
Which of the following value of the share is authorized by the memorandum of association?
Par value
Face value
Nominal value
All of the given options
Mr. A & B entered into a partnership invested Rs.65,000 and Rs.50,000 with an equal share in profit or loss. Markup on drawings of Mr. A is Rs.1,000 and of Mr. B is Rs.1,500. The net income for the year is Rs.55,000. What will be the amount of distributable profit?
Rs.52,500
Rs.56,000
Rs.56,500
Rs.57,500
Puget Sound Co. sold marketable securities Costing Rs.80,000 for Rs.92,000 cash. In the company’s income statement and statement of cash flows, respectively, this will appear as:
A Rs.12,000 gain and a Rs.92,000 cash receipt
A Rs.92,000 gain and a Rs.8,000 cash receipt
A Rs.12,000 gain and a Rs.80,000 cash receipt
A Rs.92,000 sale and a Rs.92,000 cash receipt
Ladd Company sold a plant asset that originally cost Rs.50,000 for Rs.22,000 cash. If Ladd correctly reports a Rs.5,000 gain on this sale, the accumulated depreciation on the asset at the date of sale must have been:
Rs.33,000
Rs.28,000
Rs.23,000
Some other amount
Which of the following is decreased when an asset is converted into expense in adjustment?
Revenue
Net income
Expense
Liability
Which of the following is a major disadvantage of corporate form of organization?
Double taxation of dividends
Inability of the firm to raise large sums of additional capital
Limited liability of shareholders
Limited life of the corporate form
Which of the following statement is true regarding the income statement?
The income statement is sometimes called the statement of operations
The income statement reports revenues, expenses, and liabilities
The income statement reports only revenue for which cash was received at the point of sale
The income statement reports the financial position of a business at a particular point in time
The valuation of closing stock is at:
Cost price
Market price
Cost or market price, whichever is lower
Cost or market price, whichever is higher
Which of the following is usually not an accrued expense?
Interest payable
Wages payable
Taxes payable
Notes payable
We usually allow the customer to deduct a certain amount from the invoice value for prompt payment. In doing so we are granting a:
Commission
Allowance
Discount
Rebate
Subsidiary ledgers are maintained for:
Debtors
Creditors
Stock
All of the given options
An overdraft will appear as:
A debit balance in both the bank statement and the cash book
A credit balance in the bank statement but as a debit balance in the cash book
A credit balance in the cash book but as a debit balance in the bank statement
A credit balance in both the bank statement and the cash book
ParticularsDirect materials costsRs.
Direct labor costs80,000
Manufacturing overhead costs50,000
Prime cost60,000
?
Rs.130, 000
Rs.110, 000
Rs.140, 000
Rs.190, 000
ParticularsDebenturesRs.
Equity Capital1, 50, 000
General Reserve2, 00,000
Accumulated profit90, 000
What is debt equity ratio60,000
?
15: 20 (or 3:4)
15:24 (or 5: 8)
15:29
15:35 (or 3: 7)
An example of financing activities in the context of cash flow statement is:
Capital expenditures on purchase of fixed assets
Long-term deposit
Financial charges paid
Dividend paid
Which of the following is the most important document of the company?
Memorandum of Association
Articles of Association
Prospectus
Annual Report
In which of the following interim dividend is treated?
In profit and Loss account
In profit and Loss appropriation account
On the asset side of the Balance Sheet
In trading account
Which of the following account will be debited if shares issued against cash?
Share premium account
Cash account
Share capital account
Profit and loss account
Fixed Assets (WDV) + Working Capital =?
Total assets employed
Total liabilities
Total assets
Current assets
General office expenses are charged to which of the following head:
Administrative expenses
Marketing expenses
Selling expenses
Financial expenses
Sale of goods to Mr. Amir is wrongly debited to Umair A/c(debtor) instead of Amir A/c(debtor), this is an example of:
Error of principle
Error of omission
Error of commission
Error of original entry
Which of the following account(s) will be affected, while rectifying the error of sales to Rahim of Rs. 500 were omitted to record in books of accounts?
Sales account
Rahim’s account
Cash account
Both sales and Rahim’s Account
Which of the following entry will be passed to record discount received in control account?
Discount Received (Dr) and Creditors Control A/c (Cr)
Discount Received(Dr) and Creditors A/c (Cr)
Creditors Control A/c (Dr) and Discount Received (Cr)
Creditors A/c (Dr) and Discount Received(Cr)
Which of the following entry is passed to record discount allowed in control account?
Discount Allowed (Dr) and Debtors Control A/c (Cr)
Discount Allowed (Dr) andDebtors A/c (Cr)
Debtors Control A/c (Dr) andDiscount Allowed (Cr)
Debtors A/c (Dr) andDiscount Allowed (Cr)’
Control account tells about:
Picture collectively instead of individually
Details of loyal clients
Customer attitude of payments
Complete history of transactions of business clients
Bad debts written off (given in adjustment) always affect the:
Debtors account
Creditors account
Cash account
Capital account
Consider the following inventory record:
Date
Item
Quantity
Cost/UnitRs.TotalJan. 2Rs.
Beginning inventory
1010Mar. 4100
Purchase
3511May 8385
Purchase
4012Nov. 3480
Purchase
2013De31260
Merchandise available
105
1,225
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
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 unfavorable balance of Profit and Loss account should be:
Added in liabilities
Subtracted from current assets
Subtracted from liabilities
Subtracted from capital ‘
Which of the following statement is NOT TRUE about Current liabilities?
These are due within one year
These are short-term loans
These are consist of all debts, payable after 12 months
In working capital, these are deducted from current assets
Accrued expenses are the example of:
Current liabilities
Long term liabilities
Deferred costs
Capital expenses
Which of the following are the components of General Ledger?
1) Title of account
2) Amount of transaction
3) Date of transaction
(1) & (2) only
(2) (2) & (3) only
(1) & (3) only
(1), (2) & (3)
Vehicles which are used to supply finished products are called business ________.
Tangible assets
Intangible assets
Capital
Liabilities
Cost incurred for the maintenance of shop is considered as _________.
Deferred expense
Capital expense
Revenue expense
Preliminary expense
Liabilities of the members of the ________ is only limited to the capital introduce by member/s.
Partnership
Company
Sole proprietorship
None of the given options
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