FOR MORE PAPERS | LOGON TO WWW.VUSSS.

COM
FINAL TERM

MGT101 - Financial Accounting

Q # 1: If Mr. ABC purchased Car Rs. 250,000; Furniture Rs. 25,000

and Office Equipment Rs. 5,000 for cash. Then he should credit Cash
account by:

Rs. 250,000

Rs. 25,000

Rs. 5,000

Rs. 280,000

Q # 2: Mr. Businessman takes out goods worth Rs. 10,000 from his
business and used them for his personal use. This will:

Increase Mr. Purchaser’s stock by Rs. 10,000

Increase Mr. Purchaser’s capital by Rs. 10,000

Have no effect on Mr. Purchaser’s total assets by Rs. 10,000

Be debited to drawings account

Q # 3: If the raw material consumed accounts for Rs. 150,000; labor

incurred Rs. 75,000 and other overhead incurred was Rs. 50,000.
The conversion cost would be:

Rs. 200,000

Rs. 125,000

Rs. 275,000

Rs. 175,000

Q # 4: Which of the following is NOT a type of voucher?

► Journal Voucher
► Receipt Voucher
► Payment Voucher
► Drawings Voucher

Q # 5: When the process of production is completed, all the costs

must be charged to:
► Raw material account
► Work in process account
► Finished goods account
► Merchandise account

Q # 6: 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) and Debtors A/c (Cr)
► Debtors Control A/c (Dr) and Discount Allowed (Cr)

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 1 of 11
 FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM
FINAL TERM

► Debtors A/c (Dr) and Discount Allowed (Cr)

Q # 7: Which of the following account(s) will be affected, while

rectifying the error of a purchase return of Rs.200 to Mr. “A” entered
in sales book instead of purchase return book?
► A’s account only
► Sales account only
► Purchase returns account and sales account
► Purchases account only

Q # 8: Consider the following table:

Financial statement Classification
item
A. Inventory Current asset
B. Tangible assets Non-current asset
C. Accrued expenses Current asset
D. Bonds payable Long-term liabilities
Identify the row above, showing an INCORRECT financial-statement
classification?

Row A

Row B

Row C

Row D

Q # 9: An asset is considered to be a current asset if:

► It has been bought recently and was bought new and not used
► It can be realized in cash or sold or consumed in the business within
one year
► It is a piece of new machinery that is expected to last for at least ten
years
► All of the given options

Q # 10: Share premium account is used for what?

► Write off Preliminary Expenses of the company.
► Write off the balance amount, in issuing shares on discount.
► Issue fully paid Bonus Shares.
► All of the given options

Q # 11: 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

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 2 of 11
 FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM
FINAL TERM

Q # 12: Which one of the following is another name of carrying cost

of an asset?
► Book Value
► Residual Value
► Fair Value
► Break up Value

Q # 13: To settle the balances of cash book and pass book

___________ is prepared.
► Balance sheet
► Profit and loss account
► Bank reconciliation statement
► Cash flow statement

Q # 14: Mr. Ali’s bank book shows a debit balance of Rs.68,000. He

issued a cheque of Rs.7,000 but not yet paid by the bank. What will
be the balance of bank statement?
► Rs. 61,000
► Rs. 75,000
► Rs. 68,000
► Rs. 30,000

Q # 15: Receipts from debtors appear on the ___________ side of

the individual debtors account.
► Left side or credit
► Left side or debit
► Right side or debit
► Right side or credit

Q # 16: According to the rule of debit and credit for balance sheet
accounts:
► Increase in asset, liability, and owners’ equity accounts are recorded
by debits.
► Decrease in asset and liability accounts are recorded by credits
► Increase in asset and owners’ equity accounts are recorded by debits
► Decrease in liability and owners’ equity accounts are recorded by
debits

Q # 17: Stockholder’s equity would not be affected by:

Dividends to stockholders

Net loss

Purchase of land from the proceeds of bank loan

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 3 of 11
 FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM
FINAL TERM

Investments of cash by stockholders

Q # 18: Which of the following is increased when an asset is

converted into expense in adjustment?
► Revenue
► Net income
► Expense
► Liability

Q # 19: Profit and loss sharing in partnership must be based on

which of the following:
► Capital contribution
► Service to the partnership
► Any profit-and-loss-sharing method partners desire
► A stated fraction

Q # 20: Profits earned by partnerships compensate the owners for

which of the following?
► Personal services rendered to the business
► Capital invested in the business
► Assuming the risks of ownership
► All of the given options

Q # 21: Which of the following can be utilized to meet the expenses

of issue of shares?
► Reserves
► Debentures
► Share premium
► Term finance certificate

Q # 22: 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

Q # 23: Which of the following is also called acid-test ratio?

► Current ratio
► Debt ratio
► Quick ratio
► Liquidity ratio

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 4 of 11
 FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM
FINAL TERM

Q # 24: Which of the following is one of the major factors affecting

the market value of a company’s shares?
► Current ratio
► Earning per share
► Return on investment
► Return on asset

Q # 25: Which of the following entities is profit oriented entity?

NGOs

Trust

Societies

Sole – proprietorship

Q # 26: Which of the following are the obligations or debts of the

business?

Withdrawals

Expenses

Assets

Liabilities

Q # 27: Which of the following is an example of revenue in business

enterprises?

Accounts payable

Accounts receivable

Commission received

Commission paid

Q # 28: Which of the following is the process of equalizing two sides

of an account?

Balancing

Posting

Journalizing

None of the given options

Q # 29: Which of the following is NOT an item of a Balance Sheet?

► Accounts Receivable
► Accounts Payable
► Sales Revenue
► Marketable Securities

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 5 of 11
 FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM
FINAL TERM

Q # 30: What types of transactions are recorded in journal

vouchers?

Cash transactions

Bank transactions

Both Cash & Bank transactions

None of the given options

Q # 31: Which one of the following is a fixed asset?

Cash in hand

Advanced payment

Closing stock

Leasehold vehicle

Q # 32: Which of the following contains a complete and satisfactory

explanation of the difference in balances as per cash book and bank
statement?

Bank statement

Bank reconciliation statement

Cash statement

Balance statement

Q # 33: The following balance and discrepancies were found on 31

March 2008:
Particulars Rs.
Cash book balance (Dr) 5 000
Unpresented cheques 1 000
Uncredited cheques 500
The Bank Statement balance on 31 March 2008 should be:
► Rs. 5 500 (Dr)
► Rs. 5 500 (Cr)
► Rs. 4 500 (Dr)
► Rs. 4 500 (Cr)

Q # 34: Consider the following data and identify the amount which
will be shown in profit & loss account.
Particulars Rs.
Bad debts 3,600
Provision for doubtful debts (old) 6,000
Current year’s provision (new) 1,500

Rs. 5,100 as an expense

Rs. 5,100 as an income

Rs. 900 as an income

Rs. 900 as an expense

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 6 of 11
 FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM
FINAL TERM

Q # 35: Which of the following is TRUE, if sales book is understated?

Net profit would be increased

Net profit would be decreased

Fixed assets would be increased

Fixed assets would be decreased

Q # 36: It is supposed that on 31-12-2007, the sundry debtors are

amounted to Rs. 40,000. On the basis of past experience, it is
estimated that 15 % of the sundry debtors are doubtful. What entry
would be passed to transfer the bad debts to provision for doubtful
debts?

Profit & Loss a/c Rs. 34,000 (Dr) & Provision for doubtful debts a/c Rs.
34,000 (Cr)

Profit & Loss a/c Rs. 6,000 (Dr) & Provision for doubtful debts a/c Rs.
6,000 (Cr)

Provision for doubtful debts a/c Rs. 6,000 (Dr) & Profit & Loss a/c Rs.
6,000 (Cr)

Provision for doubtful debts a/c Rs. 34,000 (Dr) & Bad Debts a/c Rs.
34,000 (Cr)

Q # 37: Which of the following is FALSE?

Revenue – Cost of sales = Gross profit

Cost of sales + Gross profit = sales

Gross profit – Operating expenses = Operating profit

Gross profit – Operating expenses = Net profit

Q # 38: Which of the following is TRUE about the changes due to

issuance of bonus shares?

Decrease in reserves and surpluses

Increase in reserves and surpluses

Increase in working capital

Decrease in working capital

Q # 39: Which type of shares benefits the existing shareholders to

receive the shares lower than the market price offered by the
company?

Right shares

Bonus shares

Preference shares

Equity shares

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 7 of 11
 FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM
FINAL TERM

Q # 40: In converting from the cash to accrual basis of accounting, if

a current asset account has decreased, the decrease:

Should be added to net income

Should be subtracted from net income

Should be multiplied with net income

Has no effect on net income

Q # 41: A company issues a long-term notes payable for the amount

of Rs. 18,500. When preparing the cash flow statement, this amount
would:

Be considered to be a use of cash in future accounting periods

Not be considered to be a cash item as no cash has been paid out in
this transaction

Be considered to be an investing activity

Be considered to be a source (or inflow) of cash

Q # 42: A company pays cash to purchase the stock of another

company in an unrelated industry. The cash outflow can be
considered as an:

Operating activity that will appear on the statement of cash flows

Operating activity that will not appear on the statement of cash flows
due to the fact of stock from a company in an unrelated industry

Investing activity that will appear on the statement of cash flows

Investing activity that will not appear on the statement of cash flows
due to the fact of stock from a company in an unrelated industry

Q # 43: Which of the flowing activity of cash flow statement shows

the principal portion of lease rentals as payments towards the
addition(purchase) of fixed assets?

Operating activities

Investing activities

Financing activities

None of the given options

Q # 44: Mr. A received a TV set (fair market value of Rs. 15,000) as

birthday gift from one of his friends and brought that set into the
business. For the purpose of accounting, the amount of set should
be treated as:

An asset.

Capital.

A gift.

Both an asset and capital.

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 8 of 11
 FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM
FINAL TERM

Q # 45: Mr. ABC purchased a motor car on installments to be paid as

follows:
(i) on signing of the contract Rs. 150,000.
(ii) five annual instalments of Rs. 50,000 each to be paid at the end of
each year.
Required: Determine the amount of liability at the end of first year.

Rs. 50,000

Rs. 250,000

Rs. 200,000

Rs. 150,000

Q # 46: Which of the following assets cannot be categorized as a

tangible fixed asset?

Computer Hardware

Electric Fans

500 pages International Brand Selling License

Office Furniture

Q # 47: Mr. Entreprenuer borrows Rs. 100,000 (interest free) from

his wife for his busienss for a period of 3 years. In the books of
accounts, Mr. A will credit:

Capital Account.

Cash Account.

Business Loan Account.

Loan from Wife Account.

Q # 48: 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
► For the last day of 10th year only
► Over 10 years
► Nothing can be said about it

Q # 49: Which of the following particular is NOT included in the

specimen of a payment voucher?
► Name of organization
► Cash payment amount
► Date of transaction
► Bank receipt

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 9 of 11
 FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM
FINAL TERM

Q # 50: If the provision for doubtful debts is not created, which of

the following entry is passed to record the bad debts in control
account?
► Debtors Control A/c (Dr) and Allowance for doubtful debts (Cr)
► Bade debts (Dr) and Debtors Control A/c (Cr)
► Allowance for doubtful debts (Dr) and Debtors Control A/c (Cr)
► Allowance for doubtful debts (Dr) and Debtors A/c (Cr)

Questions 51: (Marks: 03)

Calculate the amount of Current Liabilities to be shown in Balance Sheet from
the information given below:

Cash at bank Rs. 10,000

Cash at bank Rs. 30,000

Salaries payable Rs. 1,000

Accounts payable Rs. 2,000

Accrued expenses Rs. 3,000

Bills payable Rs. 4,000

Long term borrowings 250,000

Land and buildings Rs. 100,000

Questions 52: (Marks: 03)

Calculate Cash flow from investing activities.
Particulars Rs.
Purchases of marketable securities 65,000
Proceeds from marketable securities 40,000
Cash paid to acquire plant assets 160,000
Proceeds from sales of plant Assets 75,000

Questions 53: (Marks: 03)

You are given the following data relating to a public limited company:
Gross profit, Rs. 125,000; Indirect expenses, Rs. 80,000; other income, Rs.
5,000; and net profit Rs. 35,000.
Required:
Calculate interest expense of the company.

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 10 of 11
 FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM
FINAL TERM

Questions 54: (Marks: 05)

Calculate total Cash Flow from Investing Activities.
Particulars Rs.
Purchases from short term borrowing 45,000
Purchases of marketable securities 65,000
Proceeds from marketable securities 40,000
Loans made to borrowers 17,000
Cash paid acquire plant assets 160,000
Proceeds from sales of sales of plant Assets 75,000
Collection on loans 12,000

Questions 55: (Marks: 05)

Identify which of the following activities are operating, investing or financing
in the context of cash flow statement.
1. Payment to owners, such as cash dividends
2. Cash proceeds from collecting principal amounts on loans
3. Payments of interest
4. Payments to acquire investments and plant and intangible assets
5. Payments of income taxes
6. Amounts advanced to borrowers
7. Collections from customers for sales of goods and services
8. Interest and dividends received
9. Proceeds from both short-term and long-term borrowing
10. Cash received from owners

FOR MORE PAPERS | LOGON TO WWW.VUSSS.COM

Page 11 of 11