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Definition of accounting: the art of recording, classifying and summarizing in a significant manner and in terms

of money, transactions and events which are, in part at least of a financial character and interpreting the results
there of.
2. Book keeping: It is mainly concerned with recording of financial data relating to the business operations in a
significant and orderly manner.
3. Concepts of accounting:
A. Separate entity concept
B. Going concern concept
C. Money measurement concept
D. Cost concept
E. Dual aspect concept
F. Accounting period concept
G. Periodic matching of costs and revenue concept
H. Realization concept.
4 Conventions of accounting:
A. Conservatism
B. Full disclosure
C. Consistency
D. Materiality
5. Systems of book keeping:
A. single entry system
B. double entry system
6. Systems of accounting:
A. Cash system accounting
B. Mercantile system of accounting.
7. Principles of accounting:
A. Personal a/c: Debit the receiver
Credit the giver
B. Real a/c: Debit what comes in
Credit what goes out
C. Nominal a/c: Debit all expenses and losses
Credit all gains and incomes
8. Meaning of journal: Journal means chronological record of transactions.
9. Meaning of ledger: Ledger is a set of accounts. It contains all accounts of the business enterprise whether
real, nominal, personal.
10. Posting: It means transferring the debit and credit items from the journal to their respective accounts in the
11. Trial balance: Trial balance is a statement containing the various ledger balances on a particular date.
12. Credit note: The customer when returns the goods get credit for the value of the goods returned. A credit
note is sent to him intimating that his a/c has been credited with the value of the goods returned.
13. Debit note: When the goods are returned to the supplier, a debit note is sent to him indicating that his a/c
has been debited with the amount mentioned in the debit note.
14. Contra entry: Which accounting entry is recorded on both the debit and credit side of the cashbook is
known as the contra entry.
15. Petty cash book: Petty cash is maintained by business to record petty cash expenses of the business, such
as postage, cartage, stationery, etc.
16. Promissory note: an instrument in writing containing an unconditional undertaking signed by the maker, to
pay certain sum of money only to or to the order of a certain person or to the barer of the instrument.
17. Cheque: A bill of exchange drawn on a specified banker and payable on demand.
18. Stale Cheque: A stale cheque means not valid of cheque that means more than six months the cheque is
not valid.

20. Bank reconciliation statement: It is a statement reconciling the balance as shown by the bank passbook
and the balance as shown by the Cash Book. Obj: to know the difference & pass necessary correcting,
adjusting entries in the books.
21. Matching concept: Matching means requires proper matching of expense with the revenue.
22. Capital income: The term capital income means an income which does not grow out of or pertain to the
running of the business proper.
23. Revenue income: The income, which arises out of and in the course of the regular business transactions of
a concern.
24. Capital expenditure: It means an expenditure which has been incurred for the purpose of obtaining a long
term advantage for the business.
25. Revenue expenditure: An expenditure that incurred in the course of regular business transactions of a
26. Differed revenue expenditure: An expenditure, which is incurred during an accounting period but is
applicable further periods also. Eg: heavy advertisement.
27. Bad debts: Bad debts denote the amount lost from debtors to whom the goods were sold on credit.
28. Depreciation: Depreciation denotes gradually and permanent decrease in the value of asset due to wear
and tear, technology changes, laps of time and accident.
29. Fictitious assets: These are assets not represented by tangible possession or property. Examples of
preliminary expenses, discount on issue of shares, debit balance in the profit And loss account when shown on
the assets side in the balance sheet.
30. Intangible Assets: Intangible assets mean the assets which is not having the physical appearance. And its
have the real value, it shown on the assets side of the balance sheet.
31. Accrued Income: Accrued income means income which has been earned by the business during the
accounting year but which has not yet been due and, therefore, has not been received.
32. Outstanding Income: Outstanding Income means income which has become due during the accounting
year but which has not so far been received by the firm.
33. Suspense account: The suspense account is an account to which the difference in the trial balance has
been put temporarily.
34. Depletion: It implies removal of an available but not replaceable source, Such as extracting coal from a coal
35. Amortization: The process of writing of intangible assets is term as amortization.
36. Dilapidation: The term dilapidation to damage done to a building or other property during tenancy.
37. Capital employed: The term capital employed means sum of total long term funds employed in the
business. i.e.
(Share capital+ reserves & surplus +long term loans (non business assets + fictitious assets)
38. Equity shares: Those shares which are not having pref. rights are called equity shares.
39. Pref.shares: Those shares which are carrying the pref.rights are called pref. shares Pref.rights in respect of
fixed dividend. Pref.right to repayment of capital in the event of company winding up.
40. Leverage: It is a force applied at a particular work to get the desired result.
41. Operating leverage: the operating leverage takes place when a changes in revenue greater changes in
42. Financial leverage: it is nothing but a process of using debt capital to increase the rate of return on equity
43. Combine leverage: It is used to measure of the total risk of the firm = operating risk + financial risk.
44. Joint venture: A joint venture is an association of two or more the persons who combined for the execution
of a specific transaction and divide the profit or loss their of an agreed ratio.
45. Partnership: Partnership is the relation b/w the persons who have agreed to share the profits of business
carried on by all or any of them acting for all.
46. Factoring: It is an arrangement under which a firm (called borrower) receives advances against its
receivables, from financial institutions (called factor)
47. Capital reserve: The reserve which transferred from the capital gains is called capital reserve.
48. General reserve: the reserve which is transferred from normal profits of the firm is called general reserve

49. Free Cash: The cash not for any specific purpose free from any encumbrance like surplus cash.
50. Minority Interest: Minority interest refers to the equity of the minority shareholders in a subsidiary company.
51. Capital receipts: Capital receipts may be defined as non-recurring receipts from the owner of the business
or lender of the money crating a liability to either of them.
52. Revenue receipts: Revenue receipts may defined as A recurring receipts against sale of goods in the
normal course of business and which generally the result of the trading activities.
53. Meaning of Company: A company is an association of many persons who contribute money or moneys
worth to common stock and employs it for a common purpose. The common stock so contributed is denoted in
money and is the capital of the company.
54. Types of a company:
1. Statutory companies
2. Government company
3. Foreign company
4. Registered companies:
A. Companies limited by shares
B. Companies limited by guarantee
C. Unlimited companies
D. private company
E. public company
55. Private company: A private co. is which by its AOA: Restricts the right of the members to transfer of shares
Limits the no. Of members 50. Prohibits any Invitation to the public to subscribe for its shares or debentures.
56. Public company: A company, the articles of association of which does not contain the requisite restrictions
to make it a private limited company, is called a public company.
57. Characteristics of a company:
> Voluntary association
> Separate legal entity
> Free transfer of shares
> Limited liability
> Common seal
> Perpetual existence.
58. Formation of company:
> Promotion
> Incorporation
> Commencement of business
59. Equity share capital: The total sum of equity shares is called equity share capital.
60. Authorized share capital: It is the maximum amount of the share capital, which a company can raise for the
time being.
61. Issued capital: It is that part of the authorized capital, which has been allotted to the public for subscriptions.
62. Subscribed capital: it is the part of the issued capital, which has been allotted to the public
63. Called up capital: It has been portion of the subscribed capital which has been called up by the company.
64. Paid up capital: It is the portion of the called up capital against which payment has been received.
65. Debentures: Debenture is a certificate issued by a company under its seal acknowledging a debt due by it
to its holder.
66. Cash profit: cash profit is the profit it is occurred from the cash sales.
67. Deemed public Ltd. Company: A private company is a subsidiary company to public company it satisfies the
following terms/conditions Sec 3(1)3:
1. Having minimum share capital 5 lakhs
2. Accepting investments from the public
3. No restriction of the transferable of shares
4. No restriction of no. of members.
5. Accepting deposits from the investors

68. Secret reserves: Secret reserves are reserves the existence of which does not appear on the face of
balance sheet. In such a situation, net assets position of the business is stronger than that disclosed by the
balance sheet.
These reserves are created by:
1. Excessive depot an asset, excessive over-valuation of a liability.
2. Complete elimination of an asset, or under valuation of an asset.
69. Provision: provision usually means any amount written off or retained by way of providing depreciation,
renewals or diminutions in the value of assets or retained by way of providing for any known liability of which
the amount cannot be determined with substantial accuracy.
70. Reserve: The provision in excess of the amount considered necessary for the purpose it was originally
made is also considered as reserve Provision is charge against profits while reserves is an appropriation of
profits Creation of reserve increase proprietors fund while creation of provisions decreases his funds in the
71. Reserve fund: The term reserve fund means such reserve against which clearly investment etc.,
72. Undisclosed reserves: Sometimes a reserve is created but its identity is merged with some other a/c or
group of accounts so that the existence of the reserve is not known such reserve is called an undisclosed
73. Finance management: Financial management deals with procurement of funds and their effective utilization
in business.
74. Objectives of financial management: financial management having two objectives that Is:
1. Profit maximization: The finance manager has to make his decisions in a manner so that the profits of the
concern are maximized.
2. Wealth maximization: Wealth maximization means the objective of a firm should be to maximize its value or
wealth, or value of a firm is represented by the market price of its common stock.
75. Functions of financial manager:
> Investment decision
> Dividend decision
> Finance decision
> Cash management decisions
> Performance evaluation
> Market impact analysis
76. Time value of money: The time value of money means that worth of a rupee received today is different from
the worth of a rupee to be received in future.
77. Capital structure: It refers to the mix of sources from where the long-term funds required in a business may
be raised; in other words, it refers to the proportion of debt, preference capital and equity capital.
78. Optimum capital structure: Capital structure is optimum when the firm has a combination of equity and debt
so that the wealth of the firm is maximum.
79. Wacc: It denotes weighted average cost of capital. It is defined as the overall cost of capital computed by
reference to the proportion of each component of capital as weights.
80. Financial break-even point: It denotes the level at which a firms EBIT is just sufficient to cover interest and
preference dividend.
81. Capital budgeting: Capital budgeting involves the process of decision making with regard to investment in
fixed assets. Or decision making with regard to investment of money in long term projects.
82. Payback period: Payback period represents the time period required for complete recovery of the initial
investment in the project.
83. ARR: Accounting or average rates of return means the average annual yield on the project.
84. NPV: The Net present value of an investment proposal is defined as the sum of the present values of all
future cash inflows less the sum of the present values of all cash out flows associated with the proposal.
85. Profitability index: Where different investment proposal each involving different initial investments and cash
inflows are to be compared.
86. IRR: Internal rate of return is the rate at which the sum total of discounted cash inflows equals the

discounted cash out flow.

87. Treasury management: It means it is defined as the efficient management of liquidity and financial risk in
88. Concentration banking: It means identify locations or places where customers are placed and open a local
bank a/c in each of these locations and open local collection canter.
89. Marketable securities: Surplus cash can be invested in short term instruments in order to earn interest.
90. Ageing schedule: In an ageing schedule the receivables are classified according to their age.
91. Maximum permissible bank finance (MPBF): It is the maximum amount that banks can lend a borrower
towards his working capital requirements.
92. Commercial paper: A cp is a short term promissory note issued by a company, negotiable by endorsement
and delivery, issued at a discount on face value as may be determined by the issuing company.
93. Bridge finance: It refers to the loans taken by the company normally from commercial banks for a short
period pending disbursement of loans sanctioned by the financial institutions.
94. Venture capital: It refers to the financing of high-risk ventures promoted by new qualified entrepreneurs who
require funds to give shape to their ideas.
95. Debt securitization: It is a mode of financing, where in securities are issued on the basis of a package of
assets (called asset pool).
96. Lease financing: Leasing is a contract where one party (owner) purchases assets and permits its views by
another party (lessee) over a specified period
97. Trade Credit: It represents credit granted by suppliers of goods, in the normal course of business.
98. Over draft: Under this facility a fixed limit is granted within which the borrower allowed to overdraw from his
99. Cash credit: It is an arrangement under which a customer is allowed an advance up to certain limit against
credit granted by bank.
100. Clean overdraft: It refers to an advance by way of overdraft facility, but not back by any tangible security.

1) Double entry book-keeping was fathered by:

(a) F.W.Taylor
(b) Henry Fayol
(c) Lucas Pacioli.
(2) Funds Flow Statement and sources and application statement are:
(a) Synonymous
(b) Antagonistic
(c) None of these.
(3) Depreciation in spirit is similar to:
(a) Depletion
(b) Amortization
(c) Depression.
4) Balance Sheet is always prepared:
(a) for the year ended.
(b) As on a specified date.
(c) None of these.
(5) In Insurance, the following Profit and Loss Accounts are prepared:
(a) Separate for Fire, Marine, and Accidents etc.
(b) Consolidated for Fire, Marine, and Accidents etc.(c) None of these.

(6) Partners in Pakistan can today be fixed at the following numbers:

(a) 20
(b) 50
(c) 75.
(7) Flexible budget is a budget with the following features:
(a) Changes with volume of production.
(b) Changes with variable expenses
(c) Changes in Direct material.
(8) Break Even can be calculated as under:
(a) ______VC_______
(b) FC
I- VC TR(c) None of these.
(9) Quick Ratio can be computed as under:
(a) Quick . Assets/Quick Liabilities
(b) Quick . Liabilities Current Assets
(c) Current Assets/ Current Liabilities
(10) In straight line method of depreciation, the written down value of a fixed asset will be
at the end of the life of the asset as under:
(a) Rupee one
(b) Rupee zero (c) None of these.
(11) Sales budget must be prepared:
(a) Independently
(b) Depending on production capacity
(c) Based on Sales forecasts of market.
(12) Consolidation of subsidiary accounts in the balance sheet of a unlisted Holding
company is at present in Pakistan:
(a) Compulsory
(b) Voluntary
(c) Required.
(13) Retained earning is synonymous to:
(a) Accumulated profit and loss account
(b) Profit for the year
(c) None of these.
(14) The requirements of an audit report for a Banking Company in Pakistan is under:
(a) Under the Banking Companies Ordinance, 1962.
(b) Under the Companies Ordinance, 1984.
(c) Under (a) and (b) above.
(15) Deferred Taxation is:
(a) Fixed asset
(b) Fixed liabilities
(c) Part of Owners Equity.

(16) Investment Corporation of Pakistan follows:

(a) Open-end mutual funds
(b) Closed-end mutual funds
(c) None of these.
(17) Directors Report is ---- in respect of financial report constituent.
(a) Mandatory for a limited Company
(b) Voluntary for a limited Company
(c) None of these.
(18) Every limited Company in Pakistan is required by law to include the following along
with financial reports:
(a) Ratio Analysis
(b) Chairmans Review
(c) None of these.
(19) Cash budget excludes the following:
(a) Non-Cash items
(b) Cash items
(c) Purchase on Credit items.
(20) NGOs are legally required to:
(a) Prepare accounts in a prescribed manner under the law.(b) Prepare accounts as
desired by donors.
(c) None of these.

Accounting & Auditing Paper -II (2000)

1. Fixed Cost:
a. Changes with production
b. Never changes even if production capacity is doubled
c. None of the above
2. Conversion cost is:
a. Material Cost + Overhead Cost
b. Direct Labour + Material Cost
c. Labour Cost + Overhead Cost
3. Process Costing is relevant to:
a. Cement industry
b. Job Order cost oriented Projects
c. None of the above
4. Operating Profit is:
a. Profit after deducting financial costs
b. Profit after deducting taxes
c. Profit after deducting normal operating expenses including depreciation

5. A good Cost Accounting System is:

a. If it computes estimated cost only
b. If it cannot be reconciled with financial accounts
c. If it enables management to increase productivity and rationalize cost
6. Verification includes:
a. Checking Vouchers
b. Examining audit report
c. None of the above
7. Stratified audit sample means:
a. Randomly selected items for audit
b. Purposively selected items for audit
c. Items carefully selected from each group
8. Internal Control is totally synonymous with:
a. Internal check
b. Internal audit
c. None of above
9. Audit of a bank is generally conducted through:
a. Routine checking
b. Couching
c. Balance sheet audit
10. An auditor is liable for his annual audit of accounts o:
a. Creditors
b. Bankers
c. Owners
11. Income Tax is levied on:
a. Agricultural Income
b. Presumptive Income
c. None of above
12. If a firm has paid super-tax, its partners may follow any one of the following
a. No need to pay income tax, even if the income exceeds the taxable limit.
b. Pay income tax, even if the income does not exceed the taxable income.
c. Pay income tax as required under the law.
13. A resident multinational company need not:
a. Pay income tax, if it s caused under Double Taxation agreement.
b. If it is not enjoying tax exemption under the Income Tax Ordinance, 1979 (Second
c. None of above
14. Income Tax rates are the same for:
a. Limited Companies
b. Banking Companies
c. None of above

15. Super Tax on companies is:

a. In vogue in Pakistan
b. Not in vogue in Pakistan
c. None of above
16. Current Ratio is calculated as:
a. Fixed Assets/Current Liabilities
b. Current Liabilities/Current Assets
c. Current Assets/Current Liabilities
17. Short-term loan can be described as:
a. If the period is three years
b. If the period is less than one year
c. If the period is over one year
18. A partnership, in todays Pakistan, under the current law can have the following
number of partners:
a. 50
b. 20
c. 100
19. Combination can be best described as:
a. Restructuring of Capital of a Company
b. Reduction of Capital of a Company
c. Amalgamation of two different types of businesses
20. Sources of funds can be increased by:
a. Describing selling prices
b. Increasing expenditure
c. None of above

Accounting & Auditing paper-I (2001)

Write only the correct answer in the Answer Book. Do not reproduce the questions.
(1) Books of original entry are called:
(a) Ledger
(b) Work sheets
(c) Journal
(d) None of these

(2) For preparing balance sheets prepaid expenses are shown as part of:
(a) Liability
(b) Equities
(c) Assets
(d) None of these
(3) Unpaid and unrecorded expenses are called:
(a) Prepaid expenses
(b) Accrued expenses
(c) Additional expenses
(d) None of these
(4) Amount, cash, or other assets removed from business by owner is:
(a) Capital
(b) Drawings
(c) Assets
(d) None of these
(5) Under the diminishing balance method, depreciation amount is:
(a) Payment
(b) Receipt
(c) Expenditure
(d) None of these
(6) Users of accounting information include:
(a) The tax authorities
(b) Investors
(c) Creditors
(d) All of these
(7) The business form(s) in which the owner(s) is (are) personally liable is (are) the:
(a) Partnership only
(b) Proprietorship
(c) Corporation only
(d) Partnership and proprietorship
(e) None of these
(8) The investment of personal assets by the owner:
(a) Increases total assets and increases owners equity
(b) Increases total assets only
(c) Has no effect on assets but increases owners equity
(d) Increase assets and liabilities
(e) None of these
(9) All of the following are forms of organizations except:
(a) Proprietorship
(b) Corporation
(c) Retailer
(d) Partnership
(e) None of these
(10) Economic resources of a business that are expected to be of benefit in the future are

referred to as:
(a) Liabilities
(b) Owners equity
(c) Withdrawals
(d) Assets
(e) None of these
(11) An owner investment of land into the business would:
(a) Decrease withdrawals
(b) Increase liabilities
(c) Increase owners equity
(d) Decrease assets
(e) None of these
(12) A cash purchase of supplies would:
(a) Decrease owners equity
(b) Increase liabilities
(c) Have no effect on total assets
(d) None of these
(13) An owner investment of each into the business would:
(a) Increase assets
(b) Decrease liabilities
(c) Increase withdrawals
(d) Decrease owners equity
(e) None of these
(14) The payment of rent each month for office space would:
(a) Decrease total assets
(b) Increase liabilities
(c) Increase owners equity
(d) None of these
(15) Real accounts are related to:
(a) Assets
(b) Expenses and incomes
(c) Customers and Creditors etc.
(d) None of these
(16) Which one of the following accounts would usually have a debit balance?
(a) Cash
(b) Creditors
(c) Accounts payable
(d) Salaries Expenses
(e) None of these
(17) Quick assets include which of the following?
(a) Cash
(b) Accounts Receivable
(c) Inventories
(d) Only (a) and (b)
(e) None of these

(18) Net income plus operating expenses is equal to:

(a) Net sales
(b) Cost of goods available for sale
(c) Cost of goods sold
(d) Gross profit
(e) None of these
(19) The maximum number of partners in Pakistan can be fixed at the following:
(a) 20
(b) 50
(c) 75
(d) None of these
(20) Balance sheet is always prepared:
(a) For the year ended
(b) As on a specific date
(c) None of these

Accounting & Audting Paper-II (2001)

Write only the correct answer in the Answer Book. Do not reproduce the questions.
(1) The measureable value of an alternative use of resources is referred to as:
(a) An opportunity cost
(b) An imputed cost
(c) A different cost
(d) A sunk cost
(e) None of these
(2) A quantitative expression of management objectives is an:
(a) Organizational chart
(b)Management chart
(c) Budget
(d) Procedural chart
(e) None of these
(3) A cost center is:
(a) A unit of production in relation to which costs are ascertained
(b) A location which is responsible for controlling direct costs
(c) Part of the factory overhead system by which costs are gathered
(d) Any location or department which incurs cost
(e) None of these
(4) At break-even point of 400 units sold the variable costs were Rs. 400 and the fixed
costs were Rs.200. What will be the 401 units sold contributing to profit before income
(a) Rs. 0.00
(b) Rs. 0.50
(c) Rs. 1.00

(d) Rs. 1.50

(e) None of these
(5) In considering a special order situation that will enable a company to make use of
currently idle capacity, which of the following cost will be irrelevant:
(a) Materials
(b) Depreciation
(c) Direct labour
(d) Variable factory overhead
(e) None of these
(6) A fixed cost:
(a) May change in total when such change is not related to changes in production
(b) Will not change in total because it is not related to changes in production
(c) Is constant per unit for each unit of change in production
(d) May change in total, depending on production with the relevant range
(e) None of these
(7) Completion of a job is result in:
(a) DR finished goods .. CR WIP
(b) DR Cost of goods ... CR finished goods
(c) DR WIP ..... CR FOH control
(d) DR FOH control ... CR FOH applied
(e) None of these
(8) Operating cost in often named as:
(a) Manufacturing cost plus commercial expenses
(b) Prime cost plus factory overheads
(c) Direct material plus direct labour
(d) Selling plus administrative expenses
(e) None of these
(9) Expenses such as rent and depreciation of a building are shared by several
departments these are:
(a) Indirect expenses
(b) Direct expenses
(c) Joint expenses
(d) All of the above
(e) None of these
(10) If under applied FOH is closed to cost of goods sold, the journal entry is:
(a) DR Cost of goods sold .. CR FOH control
(b) DR FOH control .... CR Cost of goods sold
(c) DR FOH control .... CR Profit % loss account
(d) None of these
(11) Re-order quantity 3600 units
Maximum consumption ... 900 units per week
Minimum comsumption ....300 units per week
Re-order period ..5 weeks
Based on this data Re-order level is:
(a) 4500 units

(b) 3900 units

(c) 1200 units
(d) 400 units
(e) None of these
(12) The time lag between indenting and receiving material is called:
(a) Lead time
(b) Idle time
(c) Stock out time
(d) None of these
(13) A credit balance remaining in FOH Control account is called:
(a) Over-applied overhead
(b) Under-applied overhead
(c) Actual overhead
(d) None of these
(14) Direct material cost plus direct labour cost is called:
(a) Prime cost
(b) Conversion cost
(c) Product cost
(d) All of these
(e) None of these
(15) Productivity means:
(a) The ability to produce
(b) All units produced
(c) Good units produced
(d) None of these
(16) A segment of the business that generates both revenue and cost is called:
(a) Profit Center
(b) Cost Center
(c) Cost driver
(d) All of these
(e) None of these
(17) Verification includes:
(a) Checking vouchers
(b) Examining audit report
(c) None of these
(18) Audit of a bank is generally conducted through:
(a) Routine checking
(b) Vouching
(c) Balance sheet audit
(d) None of these
(19) Economics resources of a business that are expected to be of benefit in the future are
referred to as:
(a) Liabilities
(b) Owners equity

(c) Withdrawals
(d) Assets
(e) None of these
(20) Short term Loan can be best described as:
(a) If the period is three years
(b) If the period is less than one year
(c) If the period is over one year
(d) None of these
Last edited by marwatone; Wednesday, January 04, 2012 at 11:00 AM. Reason: Corrections.

Accounting & Auditing Paper-I (2002)

(1) Maximum number of partners in a partnership firm set up in Pakistan under
Partnership Act, 1932 is:
(a) 5
(b) 25
(c) 20
(d) None of these
(2) Preparation of final financial reports is governed in Pakistan under:
(a) No law
(b) Companies Ordinance 1984
(c) None of these
(3) Depreciation is based on:
(a) Economic life of asset
(b) Declared life of asset by supplier
(c) Normal life of asset
(d) None of these
(4) Inventory turnover is calculated as under:
(a) Cost of Goods sold/Closing Inventory
(b) Gross profit/Closing Inventory
(c) Sales/Opening Inventory
(d) None of these
(5) There is a difference between:
(a) Worksheet and Balance Sheet
(b) Worksheet and profit and loss account
(c) Worksheet as combination of results of profits and financial positions
(d) None of these

(6) Deferred Revenue is:

(a) Liability
(b) Asset
(c) None of these
(7) Preparation of annual report of a firm is governed under:
(a) Partnership Act 1932
(b) Under partnership Deed
(c) None of these
(8) Deferred Taxation amount be treated as:
(a) Foot note
(b) An item in the Balance Sheet on asset side
(c) None of these
(9) Return of Equity will be calculated as under:
(a) Operating Profit x 100/Equity
(b) Net profit x 100/Paid up Capital only
(c) None of these
(10) Current maturity of long term loan is:
(a) Current Liability
(b) Long Term Liability
(c) None of these

Accounting & Auditing Paper-II (2002)

Write only the correct answer in the Answer Book. Do not reproduce the questions.
(1) Prime cost is calculated as under:
(a) Manufacturing Cost/Cost of Goods Sold
(b) Direct Method plus factory overheads
(c) Direct labour + Direct Material
(d) None of these
(2) Process Cost is very much applicable in:
(a) Construction Industry
(b) Pharmaceutical Industry
(c) Air line company
(d) None of these
(3) The latest computation of variances of manufacturing overheads is in one the following
(a) Two variance approaches
(b) Three variance approaches
(c) Four variance approaches
(d) None of these
(4) Random sampling in auditing means:

(a) Selection through convenience sampling

(b) Selection through scientific sampling approach
(c) None of these
(5) Expenditure incurred in procuring machinery is:
(a) An admissible expenditure for tax purposes
(b) No admissible for tax purposes
(c) None of these
(6) Increase in income constitutes:
(a) Inflows
(b) Outflows
(c) None of these
(7) M & A stands for:
(a) Mergers & Analysis
(b) Mergers & Acquisitions
(c) Mergers & Allocation
(d) None of these
(8) An endowment insurance policy can be taken in respect of:
(a) Fire insurance
(b) Accident insurance
(c) Life insurance
(d) None of these
(9) Audit and special audit are the same:
(a) In Insurance Company
(b) In Banking Company
(c) None of these
(10) Acid test is the same as:
(a) Quick test
(b) Liquid test
(c) None of these

(8) Deferred Taxation amount be treated as:

(a) Foot note
(b) An item in the Balance Sheet on asset side
(c) None of these
None of these may be the answer because deferred taxation is what you have recognized
in your financial statement but not paid to tax authorities, so it should be a liability. But I
am not sure.

(9) Return of Equity will be calculated as under:

(a) Operating Profit x 100/Equity
(b) Net profit x 100/Paid up Capital only
(c) None of these
Return on Equity is calculated as Net Profit/Shareholders' Equity x 100
Wednesday, January 04, 2012

Accounting & Auditing Paper-I (2003)

(1) Acid Test Ratio is calculated as under:
(a) Current Assets/Current Liabilities
(b) Fixed Assets/Current Liabilities
(c) Liquid Assets/Current Liabilities
(d) None of these
(2) Deferred cost is a:
(a) Liability
(c) None of these
(3) Work Sheet is:
(a) Balance Sheet
(b) Fund Flows Statement
(c) A combination of Profit and Loss Account and Balance Sheet items
(d) None of these
(4) Banks, for the preparation of financial statements, are governed under:
(a) Banking Companies Ordinance, 1962
(b) State Bank of Pakistan Act
(c) None of these
(5) Return on investment is computed:
(a) Investment/Profit x 100
(b) Profit x 100/Investment
(c) None of these

Accounting & Auditing Paper-II (2003)

Write only the correct answer in the Answer Book. Do not reproduce the questions.
(1) Rent of the premises constitutes variable expenses for cost allocation:
(a) True
(b) False
(2) Sugar used in a sugarcane company is:
(a) Variable cost

(b) Fixed cost

(c) None of these
(3) An auditor is liable under the following circumstances:
(a) Third Party Liabilities
(b) Fraud perpetrated in highly sophisticated circumstances
(c) None of these
(4) Agricultural income is taxable under the Income Tax Laws of Pakistan:
(a) True
(b) False
(5) Principal and markup payment within one year constitutes long term liability for disclosure in the
balance sheet of a company.
(a) True
(b) False
(6) Ordinarily one can have the following partners in a partnership in Pakistan under the Partnership
Act 1932.
(a) 10
(b) 20
(c) 30
(d) None of these
(7) Working Capital finance can be termed as Running Finance in a limited company.
(a) True
(b) False
(8) Income from Capital gains arising out of trading on a stock strange in Pakistan is taxable these
(a) True
(b) False
(9) Conversion Cost is calculated as under:
(a) Labour Plus Materials
(b) Labour plus overheads
(c) None of these
(10) Current Ratio can be calculated as under:
(a) Current Liabilities/Current Assets
(b) Current Assets/Current Liabilities
(c) None of these