Mgt401 Collection of Old Papers

http://vujannat.ning.
com
BEST SITE TO HELP STUDENTS
FINALTERM EXAMINATION
FALL 2006 Marks: 60
MGT401 - FINANCIAL ACCOUNTING II (Session - 1 ) Time: 120min
StudentID/LoginID: ______________________________
Student Name: ______________________________
Center Name/Code: ______________________________
Exam Date: Monday, February 19, 2007
VIRTUAL UNIVERSITY OF PAKISTAN
Financial Accounting II (MGT401)

FINAL TERM EXAM (1) (Fall 2006)
Total Marks: 60
Please read the following instructions carefully before attempting any question:
All questions are compulsory.
This exam consists of 15 Multiple Choice Questions (MCQs) of 1 mark each, 5 True/False of 1
mark each, 5 fill in the blanks of 1 mark each, 3 Short questions carry 5 marks each and 2
Descriptive questions carry 10 marks each.
For each Multiple Choice Question, read the options available and select which you consider is the
correct option.
This examination is closed book, closed notes and closed neighbours.
Do not ask question about the contents of this examination from anyone.
You may wish to pace yourself with your own watch, but the Supervisor will be the official
timekeeper of the test.
Failure to comply with the Supervisor’s directions will result in your test being cancelled. Please
comply with supervisor’s directions to avoid any unpleasant event.
For Teacher's use only

Question 1 2 3 4 5 6 7 8 9 10 Total
Marks
Question 11 12 13 14 15 16 17 18 19 20
Marks
Question 21 22 23 24 25 26 27 28 29 30
Marks
Question No: 1 ( Marks: 1 ) - Please choose one
Issuance of shares at discount is the inverse of:
► Issuance of Bonus
► Issuance at Premium
► Right Shares Issue
► Further Issue
A private company is not required to issue a _________ as it is prohibited by its articles from inviting
general public to subscribe for its shares.
► Cash flow statement
► Prospectus
► Income statement
► Balance sheet
Risks and rewards associated with the ownership related to:
► Finance Lease
► Operating Lease
► Hire Purchase Agreement
► Installments
Minimum lease payment(MLP) includes from lessor point of view:
► Total payment
► Residual value guaranteed by lessee
► Party related to him or third party
► All of the given options
In operating lease, rental expenses should be charged to:
► Balance sheet
► Profit and loss account
► Income of lessee
► None of the given options
Fair presentation means:
► Application of Companies Ordinance, 1984

► Income Tax Ordinance, 2001
► IAS with additional disclosure
Rendering of services, revenue associated with the transaction can be estimated reliably when, which
of the following conditions are satisfied:
► The amount of revenue cannot be measured reliably
► It is doubtful that economic benefits associated with the transaction will flow to the
entity
► The stage of completion of the transaction at the balance sheet date can be measured
reliably
► The cost incurred for the transaction and the cost to complete the transaction cannot be
measured reliably
Which transaction will cause an increase in capital employed:
► Receipt of payment from account receivables in cash
► Increasing the provision for bad debts
► Receipt of a loan
► Disposal of a fixed asset for more than its book value

Income statement formats based on classification of:
► Expenses
► Incomes
► Revenues
Preliminary expenses are an example of:
► Revenue expenditure
► Deferred revenue expenditure
► Capital expenditure
The stock sheet for the previous year was incorrectly undercasted by Rs. 200,000, whether it is:
► Changes in accounting policy
► Change in accounting estimate
► Prior period error

An example of cash flows from operating activities is:
► Cash receipt from sale of goods and rendering of services
► Cash payment to acquire property plant and equipment
► Proceed from short term financing
► Cash payment and receipt from acquisition and disposal other long term assets
Inventories are carried in the books of accounts according to the methods of valuation given in:
► IAS 28
► IAS 2
► IAS 4
► IAS 29
A public company is required to file a _____________with SECP before allotment of shares.
► Prospectus
► Statement in lieu of prospectus

► Articles of Association
According to the International Accounting Standards any decrease in the value of goodwill is made
with the help of:
► Amortization
► Impairment
► Depreciation
Fractional shares shall not be offered and all fractions less than a share shall be consolidated and
disposed of by the company.
► True
► False
IAS 20 “Employee Benefits” – specifies calculation, recording and reporting of retirement benefit
related costs of the entity.
► True
► False
Lease payments are recognized as expense and sublease payments received are recognized as income,
in the books of lessee.
► True
► False
Creditors (long and short term) are more interested in profitability rather than an entity’s ability to
repay them.
► True
► False
An entity shall not present any items of income and expense as extraordinary items, either on the face
of the income statement or in the notes.
► True
► False
Question No: 21 ( Marks: 1 )
_______________ in the lease is the discount rate that, causes the aggregate present value of
minimum lease payments to be equal to the fair value of the leased asset.
IAS 1 suggest certain order for the notes to the account, these notes are helpful for users when
comparing different _________ of different entities.
__________ include expense incurred on administration and management of the business.
___________ is the current estimate of discounted value of future cash flows.

______________ are those liabilities that depend on happening of an event.
Briefly describe major classifications of expenses that are to be presented on the face of balance sheet.
An organization with a called up and paid up capital of 200,000 ordinary shares of Rs. 10/- each and
also 20,000, 10% Preference shares of Rs. 10/- each. The organization manufactures spare parts. The
gross profit was Rs. 600,000. The organization paid the required preferred share dividend and declared
@ Rs. 1/- per share.
Required:
Assuming an income tax rate 20% show the trading results and EPS of the organization.
Differentiate between: (2.5+2.5)

1. Wholly Owned and Partially Owned Subsidiaries.
2. Direct and Indirect Subsidiaries
Under what conditions a Company can buy its own shares, what is the mode for such purchase and if
the company make default in compliance with this section what are the penalties?(6+4)
Briefly explain the following terms: (2.5x4)

a. Inception of lease
b. Lease term
c. Guaranteed residual value
d. Interest rate implicit
http://vujannat.ning.com Best Website To Help VUStudents
MGT401 Financial Accounting II

Final Term Examination – Spring 2005
Time Allowed: 150 Minutes
INSTRUCTIONS:

This exam consists of 10 Multiple Choice Questions (MCQ's), 10 True False and 6
descriptive questions.
Each MCQ and True False carry 2 Marks each and Descriptive Questions carry 5
Marks each.
You should try to complete MCQ's in 25 - 30 minutes in order to give yourself 120 -
125 minutes for descriptive questions.
For each MCQ question, read the choices available and select the choice which you
consider is the correct answer, by clicking on the appropriate check box.
Save your answer before proceeding to the next question.
Do not click the "Finish button" while solving your paper. Once you clicked the
"Finish" button, you will not be able to access your paper again. Click it at the end of
your paper. That means you have submitted your complete paper.
A clock is given in the exam software. Software will automatically be closed at the end
of 150 minutes.
Remember not to spend too much time on any one MCQ. Since all MCQ's carry equal
marks, it is important to manage your time and responses to test questions effectively.
Failure to comply with the Supervisor's directions will result in your test being
cancelled. Please comply with supervisor's directions to avoid any unpleasant event.
Total Marks: 50 Total Questions: 26
Question No. 1 Marks : 01
Contingent assets are:

o Recognized as asset in the balance sheet
o Disclosed in the financial statements
o Any of the given options depending upon certain condition
o None of the given options
A reduction of share capital can be effected through an ordinary resolution.
o True
o False
According to IAS 2 Inventories are assets that are not held for sale in the
ordinary course of business.
o True
o False
Which assets are specifically excluded from Financial Assets:
o a: Investments
o b: Prepaid Expenses
o c: Physical Assets
o d: Both (b) and (c)
A supplier sends you a statement showing a balance outstanding of Rs.

14,350. Your own records show a balance outstanding of Rs. 14,500/-
o The supplier sent an invoice for Rs. 150 which you have not yet
received.
o The supplier has allowed you Rs. 150 cash discount which you
had omitted to enter in your ledgers
o You have paid the supplier Rs. 150 which he has not yet
accounted for
o You have returned goods worth Rs. 150 which the supplier has
not yet accounted for
Repurchased shares can be reissued by Public Unlisted Companies.

o True
o False
How is a surplus on revaluation of assets treated?
Contingent liabilities are:
o a: possible obligation that arises from past events and

whose existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not
wholly within the control of the entity
o b: liabilities to pay for goods or services that have been
received or supplied and have been invoiced or formally agreed
with the supplier
o Both (a) and (b)
o None of the given options
The capital maintenance concept implies that:
o The capital of a business should be kept intact by not paying

out dividends.
o A business should invest its profits in the purchase of capital
assets.
o Fixed assets should be properly maintained.
o Profit is earned only if the value of an organization's net assets
or its operating capability has increased during the accounting
period.
Accounting policy once selected can never be changed.
o True
o False

Briefly explain the following methods for measurement of elements of
financial statement:
• Historical cost
• Current cost
• Realizable value
• Present value
Minimum Lease Payments are:
o The lease rentals payable by the lessee to the lessor

o The contingent rent payable by lessee
o All the payments that the lessee can be required to pay to the
lessor
o None of the given options.
The premium collected by a company on issue of shares can be distributed

among its existing shareholders only.
o True
o False
Question No. 1 4 Marks : 01
According to IAS 38 an intangible asset should be measured initially at

cost.
o True
o False
What conditions are to be satisfied for recognition of revenue from sale of

goods?
Stock is valued using FIFO. Opening stock was 10 units at 2 each.

Purchases were 30 units at Rs. 3 each, then issues of 12 units were made,
followed by issues of 8 units. Closing stock is valued at:
o 50
o 58
o 60
o 70
Private Limited companies are not required to issue prospectus for issue of
shares.
o True
o False
What are the disclosure requirements of the Companies Ordinance 1984 for
Contingent Liabilities?
Discount allowed on issue of shares is:
o a: Shown as reduction in share capital.

o b: Written off as expense
o c: Charged to share premium account
o Both (a) and (b)
o Both (b) and (c)
The historical cost convention:
o Fails to take account of changing price levels over time.

o Records only past transactions.
o Values all assets at their cost to the business, without any
adjustment for depreciation.
o Has been replaced in accounting records by a system of current
cost accounting.
IAS 23, "Borrowing Cost" requires capitalization of borrowing cost as a

benchmark treatment.
o True
o False
What is the method of recognition in case of exchange of similar assets?
Liquidity is:
o Excess of income over expenditure

o Income generating capability of the business
o Ability of a business to pay its debts in time
o Excess of expenditure over income
While preparing a cash flow principal payment made under a lease finance
arrangement is shown under financing activities.
o True
o False
A revaluation loss is charged to profit and loss account in the period in

which the revaluation is carried out.
o True
o False
Explain in light of IAS 7 "Cash Flows" what is meant by Cash Flow from
Investing Activities? Give examples.
WWW.VUJannat.ning.Com
Connecting VU Students
MGT401
Final Term Examination – Spring 2006
Finance cost includes ___________ paid on loan, lease and other costs paid to obtain
financial services.
The issue of the shares at discount must be authorized by resolution passed in

_______________of the company and must be sanctioned by the Commission.
1. General Meeting
2. Extra Ordinary Meeting
3. Statutory Meeting
4. None of the given options
Property, plant and equipment are carried in the books of accounts in accordance with
the requirements of :
1. IAS 2
2. IAS 4
3. IAS 16
4. IAS 28
______________is not required to issue a prospectus as it is prohibited by its article from

inviting general public to subscribe for its shares.
1. A private company
2. A public company
3. A listed company
4. A non listed company
Interest and other costs incurred by an enterprise in connection with the borrowing of
funds is known as:
1. Borrowing cost
2. Historical cost
3. Conventional cost
4. Current cost
The amount in excess of the face value of the share is called:
1. Premium
2. Discount
3. Rebate
4. Interest
Cash flow statement is divided into four components: Operating, Financing, Investing,
and Leasing Activities.
1. True
2. False
Example of Non-Current Liabilities under 4th schedule is:
1. Debentures
2. Liabilities against assets subject to finance lease
3. Long term Murabaha
4. All of the given options
Basic EPS should be calculated by:
1. = Net profit or loss for the period /Weighted average number of ordinary shares
2. = Net profit or loss for the period x Weighted average number of ordinary shares
3. = Weighted average number of ordinary shares / Net profit or loss for the period
4. = Earnings – Profit attributable to Preference Shareholders /Net profit or loss for
the period

What is the importance of Prospectus under section 2 (1) 29 in an organization? Explain
its content as per lay down under section 53 of Companies Ordinance 1984.
A legal obligation is an obligation that derives from:

1. A Contract
2. A Legislation
3. The Operation of law
In lease agreement, minimum lease payments include:
1. Initial payment or down payment

2. All lease rentals
3. Any amount that is guaranteed to be paid during or at the end of the lease term
The aggregate amount or the value of the premium on shares shall be transferred to an
account, called ________________

Following are the examples of the cash flows. Write the names of components of cash
flow to which they are directly related:
¾ Cash receipt from sale of Property, Plant and Equipment

¾ Cash payments to Owners i.e. dividend, drawings etc
¾ Cash receipt from sale of goods and rendering of services
Royalties shall be recognized on an accrual basis in accordance with the substance of

the relevant agreement.
1. True
2. False
A Furnace has a lining that needs to be replaced every 5 years due to technical reasons.
At the balance sheet date, the lining has been in use for 3 years.
Comments the above example in accordance to IAS 37, should there any legislative
requirement or provision be recognized or not?
If the closing balance is lower than the difference of the opening balance and
depreciation for the Year, it shows:
1. An addition of fixed assets has been taken place

2. A disposal of fixed assets
3. Fixed assets are installed under finance lease
In case of tangible non-current assets, if a policy of revaluation is adopted for the first
time, then this is treated as:
1. No change in Accounting Policy under IAS 8

2. A change in Accounting Policy
3. A revaluation under IAS 16 Property, Plant and Equipment
An asset has been leased on July 01, 2005 at a cost of Rs. 871,000. The security deposit
Rs. 300,000 and lease rentals include 4 annual installments of Rs. 200,000 each, starting
from June 30, 2006. The implicit rate of return (IRR) is 15% p.a. Depreciation is to be
charged at 20% on written down method and Residual value is Rs. 200,000.
Draw the entries for the following:

1. Recording of asset at the inception of lease
2. Recording of current maturity at the inception of lease
3. Payment of security deposit
4. Payment of first rental installment as on June 30, 2006
5. Recording of current maturity as on June 30, 2006
Recording and disclosure on gains / losses arising from foreign currency transactions is
included in IAS 21 titled as ________________________ .
Right shares are issued when accumulated profit is being capitalized by the issuance of
shares.
1. True
2. False
__________________ is the estimated selling price in the ordinary course of business less
the estimated cost of completion and the estimated cost necessary to make the sale.
Liquidity is defined as:
1. Excess of income over expenditures

2. Income generating capability of the business
3. Ability of a business to pay its debts in time
4. Excess of expenditures over income
If an entity declares dividends to the holders of equity instruments after the balance
sheet date, the entity shall not recognize those dividends as a :
1. Equity
2. Deferred Liability
3. Liability
4. Asset
The information as to profitability is provided by the balance sheet of the entity.
1. True
2. False
Differentiate between Profit Oriented and Non-Profit Oriented entities.

How many ways are there to reduce the share capital of a company? Write down their
names with sections.
Under IAS 33 ______________________is widely used by investors as a measure of a

company’s performance.
Which of the following asset is specifically excluded from Financial Assets:
1. Investments
2. Prepaid Expenses
3. Physical Assets
4. Both Prepaid Expenses & Physical Assets
Lease accounting is regulated by __________which was introduced because of abuses in

the use of lease accounting by companies.
1. IAS 17
2. IAS 12
3. IAS 39
4. IAS 32
Question No. 31 Marks :1
Differentiate between Finance Lease and Operating Lease.

A contractual arrangement whereby, two or more parties undertake, an economic
activity which is subject to join control, is called Subsidiary Companies.
1. True
2. False
http://vujannat.ning.com
BEST SITE TO HELP STUDENTS
FINALTERM EXAMINATION
FALL 2006 Marks: 60
Student Name: ______________________________
Center Name/Code: ______________________________
Exam Date: Monday, February 19, 2007
VIRTUAL UNIVERSITY OF PAKISTAN

FINAL TERM EXAM (1) (Fall 2006)
Total Marks: 60
This exam consists of 15 Multiple Choice Questions (MCQs) of 1 mark each, 5 True/False of 1
mark each, 5 fill in the blanks of 1 mark each, 3 Short questions carry 5 marks each and 2
Descriptive questions carry 10 marks each.
correct option.
This examination is closed book, closed notes and closed neighbours.
comply with supervisor’s directions to avoid any unpleasant event.

Question 1 2 3 4 5 6 7 8 9 10 Total
Marks
Question 11 12 13 14 15 16 17 18 19 20
Marks
Question 21 22 23 24 25 26 27 28 29 30
Marks
Issuance of shares at discount is the inverse of:
► Issuance of Bonus
► Issuance at Premium
► Right Shares Issue
► Further Issue
A private company is not required to issue a _________ as it is prohibited by its articles from inviting
general public to subscribe for its shares.
► Prospectus
► Balance sheet
Risks and rewards associated with the ownership related to:
► Finance Lease
► Operating Lease
► Hire Purchase Agreement
► Installments
Minimum lease payment(MLP) includes from lessor point of view:
► Total payment
► Residual value guaranteed by lessee
► Party related to him or third party
In operating lease, rental expenses should be charged to:
► Balance sheet
► Profit and loss account
► Income of lessee
Fair presentation means:
► Application of Companies Ordinance, 1984

► Income Tax Ordinance, 2001
► IAS with additional disclosure
Rendering of services, revenue associated with the transaction can be estimated reliably when, which
of the following conditions are satisfied:
► The amount of revenue cannot be measured reliably
► It is doubtful that economic benefits associated with the transaction will flow to the
entity
► The stage of completion of the transaction at the balance sheet date can be measured
reliably
► The cost incurred for the transaction and the cost to complete the transaction cannot be
measured reliably
Which transaction will cause an increase in capital employed:
► Receipt of payment from account receivables in cash
► Increasing the provision for bad debts
► Receipt of a loan
► Disposal of a fixed asset for more than its book value

Income statement formats based on classification of:
► Expenses
► Incomes
► Revenues
Preliminary expenses are an example of:
► Revenue expenditure
► Deferred revenue expenditure
► Capital expenditure
The stock sheet for the previous year was incorrectly undercasted by Rs. 200,000, whether it is:
► Changes in accounting policy
► Change in accounting estimate
► Prior period error

An example of cash flows from operating activities is:
► Cash receipt from sale of goods and rendering of services
► Cash payment to acquire property plant and equipment
► Proceed from short term financing
► Cash payment and receipt from acquisition and disposal other long term assets
Inventories are carried in the books of accounts according to the methods of valuation given in:
► IAS 28
► IAS 2
► IAS 4
► IAS 29
A public company is required to file a _____________with SECP before allotment of shares.
► Prospectus
► Statement in lieu of prospectus
► Articles of Association

According to the International Accounting Standards any decrease in the value of goodwill is made
with the help of:
► Amortization
► Impairment
► Depreciation
Fractional shares shall not be offered and all fractions less than a share shall be consolidated and
disposed of by the company.
► True
► False
IAS 20 “Employee Benefits” – specifies calculation, recording and reporting of retirement benefit
related costs of the entity.
► True
► False
Lease payments are recognized as expense and sublease payments received are recognized as income,
in the books of lessee.
► True
► False
Creditors (long and short term) are more interested in profitability rather than an entity’s ability to
repay them.
► True
► False
An entity shall not present any items of income and expense as extraordinary items, either on the face
of the income statement or in the notes.
► True
► False
_______________ in the lease is the discount rate that, causes the aggregate present value of
minimum lease payments to be equal to the fair value of the leased asset.
IAS 1 suggest certain order for the notes to the account, these notes are helpful for users when
comparing different _________ of different entities.
__________ include expense incurred on administration and management of the business.
___________ is the current estimate of discounted value of future cash flows.
______________ are those liabilities that depend on happening of an event.

Briefly describe major classifications of expenses that are to be presented on the face of balance sheet.
An organization with a called up and paid up capital of 200,000 ordinary shares of Rs. 10/- each and
also 20,000, 10% Preference shares of Rs. 10/- each. The organization manufactures spare parts. The
gross profit was Rs. 600,000. The organization paid the required preferred share dividend and declared
@ Rs. 1/- per share.
Required:
Assuming an income tax rate 20% show the trading results and EPS of the organization.
Differentiate between: (2.5+2.5)

1. Wholly Owned and Partially Owned Subsidiaries.
2. Direct and Indirect Subsidiaries
Under what conditions a Company can buy its own shares, what is the mode for such purchase and if
the company make default in compliance with this section what are the penalties?(6+4)
Briefly explain the following terms: (2.5x4)

a. Inception of lease
b. Lease term
c. Guaranteed residual value
d. Interest rate implicit
WWW.VUjannat.ning.com
Largest Online Community of VU Students
MIDTERM EXAMINATION
FALL 2006 Marks: 40
Student Name: ______________________________
Center Name/Code: ______________________________
Exam Date: Saturday, November 25, 2006
• All questions are compulsory.

• This exam consists of 10 Multiple Choice Questions (MCQs), 5 true false, 5 short
questions and 1 descriptive question.
• Time management is very important. MCQs and fill in the blanks may be solved first
to secure enough time for remaining descriptive question.
• The use of notes, handouts, books or any other helping material is strictly prohibited
in the centre during the exam.
• Please reply the short descriptive question and long descriptive question keeping in
view the marks allocated for each question.
• For each MCQ question, read the choices available and select the choice which you
consider is the correct answer, by clicking on the appropriate check box.
• Save your answer before proceeding to the next question.
• Do not click the “Finish button” while solving your paper. Once you clicked the
“Finish” button, you will not be able to access your paper again. Click it only at the
end after attempting the whole paper, which will be an indication that you have
submitted your complete paper.
• A clock has been given in the exam software. Software will automatically be closed
after 90 minutes.
• It is your responsibility to manage time and responses to test questions effectively.
• Failure to comply with the supervisor’s directions will result in your test being
cancelled. Please comply with supervisor’s directions to avoid any unpleasant event.

Question 1 2 3 4 5 6 7 8 9 10 Total
Marks
Question 11 12 13 14 15 16 17 18 19 20
Marks
Question 21
Marks
Which one of the following is the example of non-profit oriented organization:
► NGO’s
► Trusts
► Societies
Annual General Meeting (AGM) is required to be held within _________ of incorporation.
► 06 months
► 12 months
► 15 months
► 18 months
The amount by which the carrying amount of an asset exceeds its recoverable amount is called as:
► Impairment loss
► Residual value
► Depreciation
► Fair value
Which of the following are the examples of development activities?
► Design, construction and testing of pre-production models
► Design of tools, jigs moulds dies, involving new technology
► Design, construction and operation of pilot plant
Investments made for long term in associated companies, is recorded using _______method of
recognition and shown separately in the balance sheet as long-term assets.
► Equity
► Cost
► Both Cost and Equity
Costs of purchase of Inventories comprising which of the following:
► Purchase price
► Import duties and other taxes
► Transport less trade discount, rebate and other similar amounts
Under Benchmark Treatment IAS-2, does not recommend the following method of stock valuation
for incorporating its value in financial statement.
► FIFO method
► The weighted average cost method
► LIFO method
A contractual arrangement whereby, two or more parties undertake, an economic activity which is
subject to joint control is called ________.
► Joint Venture
► Subsidiary Companies
► Associated Companies
An intangible asset with indefinite useful life shall:
► Be amortized using straight line method
► Not to be amortized
► Be amortized using reducing balance method
► Either be amortized using straight line method OR be amortized using reducing balance
method
A complete set of financial statement includes which of the followings:
► A Balance sheet and Income statement
► A statement of changes in financial position
► Notes, other statements and explanatory material

In the first step of formation of a Company the availability of name is checked from SECP, that is at
least two companies with same name can registered.
► True
► False
An increase in economic benefits during the accounting period in the form of increase of assets and
decrease in liabilities is termed as Expenses.
► True
► False
An item of property plant and equipment that qualifies for recognition should be initially measured at
its cost.
► True
► False
In IAS 23 Qualifying asset is an asset that necessarily takes a substantial period of time to get ready for
its intended use.
► True
► False
Cash discounts are usually received on bulk purchase and are agreed at the time of negotiation of cost.
The cost of inventory is recorded net of these discounts.
► True
► False

What is the main objective for the preparation of Financial Statements?
Differentiate between Depreciation and Impairment.
How many types of relations exist among different companies?
Who is responsible for the preparation and maintenance of financial statements of a

company?
What is the effect of revaluation of asset and how it is adjusted?
Explain different types of financial risks that an entity may transfer to another party while
undertaking transactions in Financial Instruments?
www.VUjannat.ning.com
MGT401 Financial Accounting II

Mid Term Examination – Spring 2006

This exam consists of 10 Multiple Choice Questions (MCQ’s), 5 fill in the blanks,
5 short questions and 1 descriptive question.
Each MCQ carries 1 Mark each, each fill in the blank carries 1 mark each, each
short Question carry 3 Marks each and descriptive questions carry 10 marks
each.
You should try to complete MCQ’s in 10 - 15 minutes in order to give yourself 75
- 80 minutes for descriptive questions.
For each MCQ question, read the choices available and select the choice which
you consider is the correct answer, by clicking on the appropriate check box.
Save your answer before proceeding to the next question.

Do not click the “Finish button” while solving your paper. Once you clicked the
“Finish” button, you will not be able to access your paper again. Click it at the
end of your paper. That means you have submitted your complete paper.
A clock is given in the exam software. Software will automatically be closed at

the end of 90 minutes.
Remember not to spend too much time on any one MCQ. Since all MCQ’s carry
equal marks, it is important to manage your time and responses to test questions
effectively.
Use of calculator is allowed.
Failure to comply with the Supervisor’s directions will result in your test being
cancelled. Please comply with supervisor’s directions to avoid any unpleasant
event.
Generally there are two types of discounts; __________ and _____________ .
IAS 2 ___________are assets:

• Held for sale in the ordinary course of business;
• In the process of production for sale.
There is no concept of capital in:
Sole proprietorship
NGO’s / NPO’s
Partnership
Public Limited Company
A contractual arrangement whereby, two or more parties undertake, an economic

activity which is subject to joint control is called _________

The surplus arising from revaluation of fixed assets of an entity is shown:
Separately in the balance sheet.

As indirect income in income statement
Added in the fixed asset
None of the given options
A Company uses FIFO method to evaluate its stock. The information for the stock is
as follows:
• Opening stock was 10 units at 2 each.
• Purchases were 30 units at Rs. 3 each, and
• Then issues of 12 units were made, followed by issues of 8 units.
Closing stock is valued at:
Rs. 50
Rs. 58
Rs. 60
Rs. 70
What is balance sheet? Describe its contents.
_________ is the net balance of the total assets of the business less third party’s
liabilities.
__________ is an asset that necessarily takes a substantial period of time to get ready
for its intended use.
The capital maintenance concept implies that:
The capital of a business should be kept intact by not paying out dividends.
A business should invest its profits in the purchase of capital assets.
Fixed assets should be properly maintained.
Profit is earned only if the value of an organization’s net assets or its operating
capability has increased during the accounting period.
The cost of inventories of a service provider does not consist of:
Costs of personnel directly engaged in providing the service

Supervisory personnel
Attributable overheads.
Labour and other costs relating to sales
Statuary Meeting is required to be held within:
3 to 6 months
1 to 3 months
6 to 9 months
9 to 12 months

Explain Accounting treatment of Capital in Companies.
Define Authorized Capital.
Goodwill is most appropriately classified as:
A fixed asset
An intangible asset
A fictitious liability
A semi-fixed asset
How many methods are there for Recognition of Investment in Associated

Companies? Explain each method in detail.
If a Company purchased an Asset for Rs.20, 000. The estimated useful life of asset is
ten years. After five years the Book Value of the Asset will be: (using straight line
method of depreciation and no residual value)
16,000
10,000
8,000
5,000
How many types of Financial Risk are there in a business?
A complete set of financial statements include:
A balance sheet
A statement of changes in financial position & Notes, other statements and
explanatory material.
An income statement
All of the given options.
The main aim of accounting is to:
Maintain ledger accounts for every transaction.

Provide financial information to users of such information.
Produce a Trial balance.
Record every financial transaction individually.
What do you understand by the term Contingent Liabilities?

WWW.VUjannat.ning.com
Largest Online Community of VU Students
MIDTERM EXAMINATION
SPRING 2007 Marks: 40
Student Name: ______________________________
Center Name/Code: ______________________________
Exam Date: Tuesday, May 08, 2007

Midterm Examination (Spring 2007)
TIME ALLOWED: 90 Minutes
TOTAL MARKS : 40
INSTRUCTIONS:
This exam consists of 10 Multiple Choice Questions (MCQs) of 1 mark each, 5 True False of 1
mark each, 3 Short questions of 5 marks each and one Descriptive question of 10 marks.
correct one.
This examination is closed book, closed notes and closed neighbors.
comply with supervisor’s directions to avoid any unpleasant event
Question 1 2 3 4 5 6 7 8 9 10 Total
Marks
Question 11 12 13 14 15 16 17 18 19
Marks
Question
Marks
In case of a single member company _______ person(s) is (are) required to be nominated

to takeover the company in case of a death of the member.
► One
► Two
► Three
► Four
Company should be termed as a __________ of another company if other company holds

more than 50% of its shares or has the power to appoint more than 50% of its directors.
► Associated
► Subsidiary
► Joint Venture
Directors or shareholders having ______ voting power can call for Extraordinary General
Meetings (EOGM).
► 10%
► 15%
► 20%
► 25%
Quality control during commercial production cost Rs. 10,000/- will be charged to:
► Research expenses
► Development cost
► Profit and Loss account
Which one of the following is an example of Conversion Cost?
► Labour and factory overheads
► Labour and work in process
► Work in process and finished goods
► Factory overhead and work in progress
Which of the followings are among the non-current assets?

► Tangible and intangible assets
► Operating assets
► Financial assets of a along term nature
Which one of the following is the concept of the capital maintenance?
► Financial capital maintenance
► Physical capital maintenance
► Both Physical and Financial capital maintenance
Movement of capital issued and reserves are presented through which of the following
statement?
► Statement of changes in equity
► Balance sheet
A maximum limit of the amount of the capital that a company can issue is mentioned in
the Memorandum of Association and Article of Association of the company is called:
► Authorized capital
► Issued capital
► Subscribed capital
► Paid up capital
Cost of inventories will consist of which of the following costs?
► Purchase cost
► Costs of conversion
► Installation costs
Cash discounts are received on early payment of the outstanding amount. These
discounts are conditional and are not reduced from the value of the inventory.
► True
► False

In the rare cases of conflict between an IAS and the Framework, the Framework will
prevail.
► True
► False
Current assets will also include marketable securities if they are expected to be realized
within twelve months of the Balance Sheet date.
► True
► False
Significant influence is the ability to participate and to control the financial and
management affairs of the enterprise.
► True
► False
International Accounting Standards (IAS) are issued by International Accounting

Standard Board (IASB).
► True
► False
State different objectives of International Accounting Standard (IAS)?
Differentiate between legal obligation and constructive obligation.
What are the effects of revaluation of asset and how it is adjusted?

State the different methods of recognition of Investment in Associate.

Mgt401 Collection of Old Papers

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Mgt401 Collection of Old Papers

Hochgeladen von

Copyright:

Verfügbare Formate

http://vujannat.ning.

Student Name: ______________________________

Center Name/Code: ______________________________

Exam Date: Monday, February 19, 2007

VIRTUAL UNIVERSITY OF PAKISTAN

Financial Accounting II (MGT401)

For Teacher's use only

Question No: 1 ( Marks: 1 ) - Please choose one

Issuance of shares at discount is the inverse of:

► Right Shares Issue

Question No: 2 ( Marks: 1 ) - Please choose one

► Cash flow statement

Question No: 3 ( Marks: 1 ) - Please choose one

Risks and rewards associated with the ownership related to:

Question No: 4 ( Marks: 1 ) - Please choose one

Minimum lease payment(MLP) includes from lessor point of view:

► Residual value guaranteed by lessee

► Party related to him or third party

► All of the given options

Question No: 5 ( Marks: 1 ) - Please choose one

In operating lease, rental expenses should be charged to:

► Profit and loss account

► None of the given options

Question No: 6 ( Marks: 1 ) - Please choose one

Fair presentation means:

► Application of Companies Ordinance, 1984

► IAS with additional disclosure

► None of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

► The amount of revenue cannot be measured reliably

Question No: 8 ( Marks: 1 ) - Please choose one

Which transaction will cause an increase in capital employed:

► Receipt of payment from account receivables in cash

► Increasing the provision for bad debts

► Disposal of a fixed asset for more than its book value

Income statement formats based on classification of:

► All of the given options

Question No: 10 ( Marks: 1 ) - Please choose one

Preliminary expenses are an example of:

► Deferred revenue expenditure

► None of the given options

Question No: 11 ( Marks: 1 ) - Please choose one

► Changes in accounting policy

► Change in accounting estimate

► Prior period error

Question No: 12 ( Marks: 1 ) - Please choose one

An example of cash flows from operating activities is:

► Cash receipt from sale of goods and rendering of services

► Cash payment to acquire property plant and equipment

► Proceed from short term financing

Question No: 13 ( Marks: 1 ) - Please choose one

Question No: 14 ( Marks: 1 ) - Please choose one

A public company is required to file a _____________with SECP before allotment of shares.

► Statement in lieu of prospectus

► None of the given options

Question No: 15 ( Marks: 1 ) - Please choose one

► None of the given options

Question No: 16 ( Marks: 1 ) - Please choose one

Question No: 17 ( Marks: 1 ) - Please choose one

Question No: 18 ( Marks: 1 ) - Please choose one

Question No: 19 ( Marks: 1 ) - Please choose one

Question No: 20 ( Marks: 1 ) - Please choose one

Question No: 21 ( Marks: 1 )

Question No: 22 ( Marks: 1 )