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Thread: MGT101 current subjective and objective paper fall 2010 on 19-02-2011

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    MGT101 current subjective and objective paper fall 2010 on 19-02-2011

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    MGT101
    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.

    Accounts
    Section
    Prepaid rent

    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
    Particulars
    Rs.
    Written down value of asset at the time of sale
    10,000
    Original cost of asset
    20,000
    Depreciation expense during the year
    700
    Disposal value of asset
    ?
    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
    Particulars
    Rs.
    Direct materials costs
    80,000
    Direct labor costs
    50,000
    Manufacturing overhead costs
    60,000
    Prime cost
    ?

    Rs.130, 000
    Rs.110, 000
    Rs.140, 000
    Rs.190, 000
    Particulars
    Rs.
    Debentures
    1, 50, 000
    Equity Capital
    2, 00,000
    General Reserve
    90, 000
    Accumulated profit
    60,000
    What is debt equity ratio
    ?

    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/Unit
    Rs.
    Total
    Rs.
    Jan. 2
    Beginning inventory
    10
    10
    100
    Mar. 4
    Purchase
    35
    11
    385
    May 8
    Purchase
    40
    12
    480
    Nov. 3
    Purchase
    20
    13
    260
    De31
    Merchandise available
    105

    1,225

    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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