MBA 134 Financial Accounting

For Managers - B
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MBA 134 Financial Accounting For Managers - B /
27 June - 3 July /
CIA 1 Accounting Equation

Question text
A firm has reported a profit of Rs.1,47,000 for the year ended 31-3-
2014 after taking into consideration the following items.
(i) The cost of an asset Rs.23,000 has been taken as an expense
(ii) The firm anticipated a profit of Rs.12,000 on the sale of an old
furniture
(iii) Salary of Rs.7,000 outstanding for the year has not been taken
into account.
(iv) An asset of Rs.85,000 was purchased for Rs.75,000 and was
recorded in the books at Rs.85,000.
What is the correct amount of profit to be reported in the books?
Select one:
a. Rs. 1,51,000
b. Rs.1,47,000
c. Rs.1,63,000
d. Rs.1,41,000

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The correct answer is: Rs. 1,51,000
Question 2
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A trader has made a sale of Rs.75,500 out of which cash sales
amounted to Rs.25,500. He showed trade receivables on 31-3-2014 at
Rs.25,500.
Which concept is followed by him?
Select one:
a. Going concern
b. Cost
c. Accrual
d. Money measurement
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The correct answer is: Accrual
Question 3
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A trader purchases goods for Rs. 2500000, of these 70% of goods
were sold during the year. At the end of 31st December 2009, the
market value of such goods were Rs. 500000.
But the trader recorded in his books for Rs. 750000. Which of the
following concept is violated.
Select one:
a. None of these
b. Consistency
c. Conservatism
d. Money measurement

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The correct answer is: Conservatism
Question 4
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According to the double entry system of accounting, an account that
obtains benefit is:
Select one:
a. Debit
b. Income
c. No need to show as accounting record
d. Credit

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The correct answer is: Credit
Question 5
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An asset was purchased for Rs.1000000 with the down payment of
Rs.200000 and bills accepted for Rs.800000/-.
What would be the effect on the total asset and total liabilities in the
balance sheet?
Select one:
a. Assets increased by Rs.1000000 and liabilities increased by
Rs.800000
b. Assets increased by Rs.800000 and liabilities increased by
Rs.800000
c. Assets decreased by Rs.800000 and liabilities increased by
Rs.800000
d. Assets increased by Rs.800000 and liabilities decreased by
Rs.800000
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The correct answer is: Assets increased by Rs.800000 and liabilities
increased by Rs.800000
Question 6
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Calculate the amount of cash if: Total assets=$10,000 Total
liabilities=$10,000 Total Capital=$5000
Select one:
a. $1000
b. $10,000
c. $5000
d. $6000

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The correct answer is: $5000
Question 7
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Capital increases if ______ increases
 Select one:
a. Drawings
b. Interest on capital
c. Expenses
d. Revenue

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The correct answer is: Revenue
Question 8
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Cash received for services rendered will
Select one:
a. Increase cash and equity
b. Increase equity and liability
c. Increase fixed assets and cash
d. Increase cash and liability

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The correct answer is: Increase cash and equity
Question 9
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Collection of account receivable will
Select one:
a. Increase assets and increase cash
b. Increase assets and increase capital
c. Increase assets and decrease liabilities
d. Increase assets and decrease assets

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The correct answer is: Increase assets and decrease assets
Question 10
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Depreciation decreases
Select one:
a. Bank
b. Cash
c. Capital
d. Liabilities

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The correct answer is: Capital
Question 11
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Fixed assets are double the current assets and half the capital. The
current assets are Rs.3,00,000 and investments are Rs.4,00,000.
Then the current liabilities recorded in balance sheet will be
Select one:
a. 4,00,000
b. 1,00,000
c. 3,00,000
d. 2,00,000

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The correct answer is: 1,00,000
Question 12
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If the business's owner withdraws cash for his/her personal use what
will be the effect on capital?
 Select one:
a. No effect on capital
b. Increase in capital
c. Decrease in capital
d. Remain the same

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The correct answer is: Decrease in capital
Question 13
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Net income equal to Revenues minus
Select one:
a. Expenses
b. Depreciation
c. Gains
d. Capital expenditures

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The correct answer is: Expenses
Question 14
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The comparison of financial statement of one year with that of another
is possible only when ----------------concept is followed
Select one:
a. Materiality
b. Consistency
c. Going concern
d. Accrual

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The correct answer is: Consistency

Question 15
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The proprietor of the business is treated as creditor for the capital
introduced by him due to_____ concept.
Select one:
a. Entity
b. Cost
c. Money measurement
d. Dual aspect
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The correct answer is: Entity
Question 16
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The unfavorable balance of Profit and Loss account should be:
Select one:
a. Subtracted from capital
b. Subtracted from liabilities
c. Subtracted from current assets
d. Added in liabilities

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The correct answer is: Subtracted from capital
Question 17
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When a Liability is reduced or decreased, it is recorded on the:
Select one:
a. Right or credit side of the account
b. Right or debit side of the account
c. Left or credit side of the account
d. Left or debit side of the account

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The correct answer is: Left or debit side of the account
Question 18
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Which of following best describes the increase in equity
expands_______

Select one:
a. Appropriation expenses

b. Inflows of cash
c. Business operations
d. cash outflows

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The correct answer is: Business operations
Question 19
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Which of the following is the practical implementation of the
accounting equation?
Select one:
a. Statement of changes in equity
b. Statement of financial position
c. Income statement
d. Cash flow statement

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The correct answer is: Statement of financial position

Question 20
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Which of the following shows summary of a company's financial
position at a specific date?
Select one:
a. Balance Sheet
b. Profit & Loss Account
c. Cash Flow Statement
d. Income & Expenditure Account
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The correct answer is: Balance Sheet
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