MGT101 2010

Question No: 1 ( Marks: 1 ) - Please choose one
Double entry accounting system includes:


► Accrual accounting only
► Cash accounting only
► Both cash and accrual accounting
► None of the given options

Question No: 2 ( Marks: 1 ) - Please choose one
What will be the effect on accounting equation, when payment is made to the creditor of the business?

► Increase in an asset, increase in owner's equity
► Increase in an asset, increase in a liability
► Decrease in an asset, decrease in owner's equity
► Decrease in an asset, decrease in a liability

Question No: 3 ( Marks: 1 ) - Please choose one
Which of the following financial statement summarizes the profitability of an organization for a particular period?


► Balance Sheet
► Trading and Profit & Loss account
► Cash Flow Statement
► Statement of Retained Earnings

Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following account balance will be shown on debit side of Trial Balance? (It is assumed that all account balances are shown on normal balance)

► Cash account
► Furniture account
► Vehicle account
► All of the given options

Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following is NOT a type of voucher?


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

Question No: 6 ( Marks: 1 ) - Please choose one
What would be the value of total factory cost, if the cost of material consumed during the month is Rs. 6,000, labor cost incurred is Rs. 2,000 and the factory over head cost is Rs. 2,500?


► Rs. 6,000
► Rs. 8,000
► Rs. 4,500
► Rs. 10,500

Question No: 7 ( Marks: 1 ) - Please choose one
All the costs incurred on the incomplete assets up to the balance sheet date must be transferred to:

► Capital account
► Capital work in progress account
► Relevant asset account
► Owner's equity account

Question No: 8 ( Marks: 1 ) - Please choose one
Accounting is the language of:

► Business
► School
► Proprietor
► Management

Question No: 9 ( Marks: 1 ) - Please choose one
An accounting system is used by a business to:
► Analyze transactions
► Handle routine book-keeping tasks
► Classify and summarize financial information
► All of the given options

Question No: 10 ( Marks: 1 ) - Please choose one
Mr.” A” sold goods for Rs. 300,000 to Mr. “B”, Rs. 300,000 will be treated as _____________ for business of Mr. "A".
► Revenue
► Net profit
► Gross profit
► Operating profit

Question No: 11 ( Marks: 1 ) - Please choose one
Normally the practice of Book Keeping under Single Entry System is followed by:
► Small businesses only
► Governments only
► Large scale businesses only
► Both small businesses and governments

Question No: 12 ( Marks: 1 ) - Please choose one
The amount brought by the proprietor in the business should be credited to:

► Cash account
► Capital account
► Drawings account
► Assets account

Question No: 13 ( Marks: 1 ) - Please choose one
Which of the following shows a debit balance under normal circumstances?
► Asset
► Capital
► Liability
► Profit

Question No: 14 ( Marks: 1 ) - Please choose one
Which of the following is/are TRUE with respect to the rules of Debit & Credit?
► Increase in capital is Credit
► Decrease in capital is Debit
► Increase in expense is Debit
► All of the given options

Question No: 15 ( Marks: 1 ) - Please choose one
Wages of workmen employed for setting up new machinery should be debited to:
► Expenses account
► Wages account
► Salaries account
► Machinery account

Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following account would be debited in case of goods given away as charity?
► Charity account
► Purchases account
► Sales account
► Assets account

Question No: 17 ( Marks: 1 ) - Please choose one
Which of the following is the process of equalizing two sides of an account?
► Balancing
► Posting
► Journalizing
► None of the given options

Question No: 18 ( Marks: 1 ) - Please choose one
Trial balance shows:
► Both debit and credit balance
► Only debit balance
► Only credit balance
► Debit or Credit balance

Question No: 19 ( Marks: 1 ) - Please choose one
What is the objective of a Balance sheet?
► To ascertain the true profit or loss of business
► To ascertain the true financial position of business
► To make the SWOT analysis of business
► To check the arithmetic accuracy for books of accounts

Question No: 20 ( Marks: 1 ) - Please choose one
Which of the following account would be debited when the owner of business sold machinery of Rs. 10,000 on cash?
► Sales a/c
► Machinery a/c
► Owner a/c
► Cash a/c

Question No: 21 ( Marks: 1 ) - Please choose one
Which of the following is TRUE for Company’s negative working capital?
► Current Asset > Current Liability
► Current Asset = Current Liability
► Current Asset < Current Liability
► None of the given options

Question No: 22 ( Marks: 1 ) - Please choose one
What will be the effect of decrease in closing stock on gross profit?
► Gross profit increased
► Gross profit decreased
► No effect on Gross profit
► Gross profit will become positive

Question No: 23 ( Marks: 1 ) - Please choose one
What is the value of closing raw material inventory based on the following information?
Ø Opening stock Rs. 1,000
Ø Cost of material used Rs. Rs. 9,500
Ø Cost of material available for use Rs. 10,000
► Rs. 9,000
► Rs. 500
► Rs.11,500
► Rs. 8,500

Question No: 24 ( Marks: 1 ) - Please choose one
If:
• Direct Material Cost is Rs. 15,000
• Factory overhead is Rs. 5,000
• Manufacturing Cost is Rs. 30,000
Then:
What is the amount of Prime Cost?
► Rs. 25,000
► Rs. 20,000
► Rs. 35,000
► Rs. 45,000

Question No: 25 ( Marks: 1 ) - Please choose one
If:
• Direct Material Cost is Rs. 15,000
• Factory overhead is Rs. 5,000
• Prime Cost is Rs. 30,000

Then:
What is the amount of Manufacturing Cost?
► Rs. 20,000
► Rs. 10,000
► Rs. 35,000
► Rs. 45,000

Question No: 26 ( Marks: 1 ) - Please choose one
If:
• Manufacturing Cost is Rs. 30,000
• Closing Work in Process Inventory is Rs. 10,000
• Cost of Goods Manufactured is Rs. 35,000
Then:
What is the amount of opening Work in Process inventory?
► Rs. 40,000
► Rs. 15,000
► Rs. 25,000
► Rs. 20,000

Question No: 27 ( Marks: 1 ) - Please choose one
Which of the following would be required for the calculation of depreciation under Reducing Balance method?
► Cost of asset
► Expected Life of asset
► Depreciation rate
► All of the given options

Question No: 28 ( Marks: 1 ) - Please choose one
Firms charge depreciation each year:
► To ensure that there is enough money in the firm to replace the asset
► To spread the cost of the asset over its working life
► To reduce the profit and thus reduce the dividends they can pay to shareholders
► Because the law states they must be reduced

Question No: 29 ( Marks: 1 ) - Please choose one
Which of the following is another name of salvage value?
► Face value
► Fair value
► Break up value
► Book value

Question No: 30 ( Marks: 1 ) - Please choose one
What is the treatment of Depreciation in accounting?
► Written in balance sheet under the head of fixed assets
► Charged to profit and loss account
► Written in balance sheet under the head of current assets
► Written in balance sheet under the head of liabilities

Question No: 31 ( Marks: 1 ) - Please choose one
If:
• Cost of machine = Rs. 400,000
• Useful life = 5 years
• Sale price at the end of 4th year = Rs. 40,000
What will be the profit or loss on disposal of machine using straight line method?
► Loss of Rs. 40,000
► Profit of Rs. 40,000
► Profit of Rs. 80,000
► Loss of Rs. 80,000

Question No: 32 ( Marks: 1 ) - Please choose one
Which one of the following is NOT the component of cost?
► Import duty
► Installation cost
► Cost of site preparation
► Transportation outwards

Question No: 33 ( Marks: 1 ) - Please choose one
Which of the following is TRUE about the revaluation of fixed assets?
► Revaluation should be carried out at a regular interval
► Revaluation should be carried out at irregular interval
► Revaluation should be carried out by stakeholders
► Revaluation should be carried out by stockholders

Question No: 34 ( Marks: 1 ) - Please choose one
When Pass Book shoes a debit balance it means:
► Favourable balance as per cash book
► Unfavorable balance as per bank statement
► Debit balance as per cash book
► Favourable balance as per bank statement

Question No: 35 ( Marks: 3 )
Calculate the rate of depreciation for the asset with the help of given data.

Cost of the asset Rs. 1,20,000
Residual Value Rs. 40,000
Expected Life 5 years


Solution:

120,000-40,000= 80,000

80,000/5 = 16000
Rate= 16,000/80,000= 20%


Question No: 36 ( Marks: 5 )
How the stock valuation is made under the following methods?
• FIFO
• LIFO
Under FIFO we assumed that stock purchased first is used out first so the closing stock consist of stock purchased last the rate shows approximately the latest of last purchases price .

Under LIFO bases : stock purchase last is used first so the items present in the stock are the item old once and thus it represent older prices , lifo is not used in industry now and accounting standards prohibit using them.

Question No: 37 ( Marks: 5 )
If:
• Original cost of fixed asset Rs. 500,000
• Accumulated Depreciation Rs. 166,667
• Revalued amount of fixed asset Rs. 600,000

Required:
Calculate the Written down value and Surplus on revaluation of fixed asset



Solution :


• Revalued amount 600,000-(500000-166667)=266667

WDV= 500,000-166667=333333

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

Your browser may not support display of this image. Which of the following account/s will be affected under the rule of accrual accounting, when furniture is purchased on cash?

► Only Cash Account

► Only Furniture Account

► Cash & Furniture Account

► Only Purchases Account



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

Your browser may not support display of this image. Obligations to pay cash or un-earned incomes by the business are the:

► Expenses

► Assets

► Liabilities

► Equities



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

Your browser may not support display of this image. Which of the following is used to record financial transactions in chronological (day-to-day) order?

► Voucher

► General Journal

► General Ledger

► Trial balance



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

Your browser may not support display of this image. Which of the following financial statement summarizes the profitability of an organization for a particular period?


► Balance Sheet

► Trading and Profit & Loss account

► Cash Flow Statement

► Statement of Retained Earnings



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

Your browser may not support display of this image. While making Income & Expenditure account, Excess of income over expenses in a specified accounting period is called:

► Profit

► Loss

► Surplus

► Deficit



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

Your browser may not support display of this image. If the cost of sales is Rs. 60,000, sales are Rs. 90,000 and operating expenses are Rs. 25,000 during the year. What would be the Net Profit?




► Rs. 5,000

► Rs. 25,000

► Rs. 55,000

► Rs. 60,000



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

Your browser may not support display of this image. In which of the following condition a company will have positive working capital?

► If current assets > current liabilities

► If current Assets < current Liabilities

► If current assets = current liabilities

► If current assets < current liabilities



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

Your browser may not support display of this image. Which one of the following is CORRECT about the closing stock?

► It appears in the assets side of a balance sheet

► It decreases the value of cost of goods sold

► It becomes opening stock of next year

► All of the given option



Question No: 9 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. In cost of goods sold statement the 'total factory cost' is equal to:


► Cost of material consumed + Labor cost

► Cost of material consumed + Conversion cost

► Cost of material consumed + Total factory cost

► Cost of material consumed + Factory overhead



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

Your browser may not support display of this image. Consider the following inventory record:
Date Item Quantity Cost/Unit Total
2007Jan. 2 Opening inventory 100 Rs.18.00 Rs.1,800
Mar. 4 Purchase 400 19.00 7,600
May 8 Purchase 800 20.00 16,000
Nov. 3 Purchase 500 21.00 10,500

Four hundred units are unsold, Use the FIFO method of inventory costing and determine the value assigned to the 400 units on hand at the end of the period.

► Rs.7, 500

► Rs.7, 978

► Rs.8, 000

► Rs.8, 400



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

Your browser may not support display of this image. Increase in an asset is recorded on the:

► Left or credit side of the account

► Right or debit side of the account

► Left or debit side of the account

► Right or credit side of the account



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

Your browser may not support display of this image. Which one of the following is NOT true about revaluation of fixed assets?

► Revaluation should be made after regular intervals

► Change in value should be permanent

► Only relevant asset should be revalued in the whole class of asset

► The profit or loss will be transferred to revaluation account



Question No: 13 ( Marks: 1 ) - Please choose one
Your browser may not support display of this image.
Particulars Rs.
Direct materials costs 80,000
Direct labor costs 50,000
Manufacturing overhead costs 60,000
Prime cost ?


► Rs.130, 000

► Rs.110, 000

► Rs.140, 000

► Rs.190, 000



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

Your browser may not support display of this image. What would be the value of conversion cost, if the cost of material consumed during the month is Rs. 5,000, labor cost incurred is Rs. 2,000 and the factory over head cost is Rs. 1,000?


► Rs. 3,000

► Rs. 8,000

► Rs. 7,000

► Rs. 5,000



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

Your browser may not support display of this image. Which of the following is the recording phase of an accounting system?

► Financial Accounting

► Cost Accounting

► Management Accounting

► Book-keeping



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

Your browser may not support display of this image. Which of the following are the obligations or debts of the business?

► Withdrawals

► Expenses

► Assets

► Liabilities



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

Your browser may not support display of this image. The accounting equation is based on:

► Dual aspect concept

► Money measurement concept

► Going concern concept

► Separate entity concept



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

Your browser may not support display of this image. The book in which accounts are maintained is called:

► Day book

► Journal

► Ledger

► Sales book



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

Your browser may not support display of this image. Which one of the following is called the king of all books of account?

► The cash book

► Journal

► Ledger

► Trial balance



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

Your browser may not support display of this image. Any mistake in ledger can easily be detected with the help of:

► Journal

► Compound entry

► Single entry

► Memorandum entry



Question No: 21 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. Which of the following account would be credited in case of loss of goods by fire?

► Purchase account

► Sales account

► Loss by fire account

► Capital account



Question No: 22 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. Which of the following is a book of original entry in which all the vouchers are recorded at first?

► General Journal

► General Ledger

► Trial Balance

► Balance Sheet



Question No: 23 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. The cash book in book-keeping records:

► All cash and credit purchase of goods

► Only cash payments

► All receipts and payments in cash

► All cash and credit sale of goods



Question No: 24 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. Which of the following journal entry will be recorded, if the cash is deposited in the bank?

► Bank account (Dr) and Cash account (Cr)

► Cash account (Dr) and Bank account (Cr)

► Bank account (Dr) and Profit & Loss account (Cr)

► Cost of goods Sold account (Dr) and Bank account (Cr)



Question No: 25 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. What is the best condition to finance a business?

► Fully financed from your own resource

► Fully relied on financial institutions

► Investment through own resources as well as rely on financial instructions

► None of the given options



Question No: 26 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. Which of the following is/are the method(s) for calculating the cost of inventory?

► FIFO Method

► Weighted Average Method

► LIFO Method

► All of the given options



Question No: 27 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. Which of the following account would be debited in case of depreciation charged to fixed assets?

► Accumulated depreciation - Fixes assets

► Fixed assets

► Depreciation expense

► Depletion



Question No: 28 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. Depreciation of office building is charged to:

► Cost of Goods Sold

► Administrative Expenses

► Selling Expenses

► Financial expenses



Question No: 29 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. Written down value of an asset = ----------------.

► Original cost - Accumulated depreciation

► Original cost - Appreciation

► Book value - Accumulated depreciation

► Original cost - Salvage value



Question No: 30 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. If Original cost is Rs. 100,000; Depreciation rate is 20% p.a. using straight line method; what would be the value of accumulated depreciation at the end of 2nd year?

► Rs. 20,000

► Rs. 40,000

► Rs. 80,000

► Rs. 60,000



Question No: 31 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. If:

* Cost of machine = Rs. 420,000
* Useful life = 5 years
* Residual value = Rs. 20,000
* Sale price at the end of 5th year = Rs. 40,000

What will be the profit or loss on disposal of machine using straight line method?

► Loss of Rs. 40,000

► Profit of Rs. 40,000

► Profit of Rs. 20,000

► Loss of Rs. 20,000



Question No: 32 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. Which of the following is TRUE about the revaluation of fixed assets?

► Revaluation should be carried out at a regular interval

► Revaluation should be carried out at irregular interval

► Revaluation should be carried out by stakeholders

► Revaluation should be carried out by stockholders



Question No: 33 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. Which of the following is/are TRUE about the revaluation of fixed assets?

► Revaluation should be carried out at a regular interval

► Revaluation should be carried out by an expert.

► The change in value should be permanent.

► All of the given options



Question No: 34 ( Marks: 1 ) - Please choose one

Your browser may not support display of this image. Favourable balance of the cash book means:

► Credit balance in cash book

► Debit balance in pass book

► Debit balance in cash book

► Unfavorable balance in pass book



Question No: 35 ( Marks: 3 )

Your browser may not support display of this image. What do you know about the Profit or Loss on Disposal of a fixed asset in accounting?



Answer:

In accounts sale/disposal of asset evaluated by preparing depreciation schedule, what is cost of purchase and how many years or month utilize the following asset. And evaluate the depleting cost by using straight line method or written down value (WMV). And compare with the market value of that asset, whether to sold this asset is beneficial for organization/company or not. If the market value profitable than the books value then it should be sold. And most important think is that evaluate that the assets in future is valid or not valid for business and what wood be the value of assets.





Question No: 36 ( Marks: 5 )

Your browser may not support display of this image. If:

* Opening stock Rs. 40,000
* Purchases Rs. 60,000
* Return Inwards Rs. 10,000
* Wages Rs. 5,000
* Salaries Rs. 10,000
* Rent Rs. 10,000
* Closing Stock Rs. 20,000

Then:

Calculate the cost of goods sold for Trading concern.




Solution/Answer:



Particular Amount


Opening Stock 40000

Add : Purchases 60000

Less: closing Stock (20000)

Material avail for consuming 80000


Add: direct labour wages 5000

T. Factory Cost: 75000 Less: administrative expense


Salaries 5000

Rent 10000

Total 15000 15000


Cost of Goods Sold 60000





Question No: 37 ( Marks: 5 )

Your browser may not support display of this image. Calculate Profit / (loss) on disposal of asset with the help of given data.

Cost of asset Rs. 100,000
Life of asset 5 years
Depreciation method Straight line
Residual value Rs. 20,000
Sale price after 5 years Rs. 25,000


Answer:


Cost of assets 100,000

Deprecitation 1st year 20000


Deprecitation 2nd year 20000


Deprecitation 3rd year 20000


Deprecitation 4th year 20000

Deprecitation 5th year 20000


Less: deprication 100,000





Net value 0




Sale value 25000

Sale value 20000

Profit 5000