Senior Auditors

8/11/2019 Senior Auditors

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Net realizable value is ____ minus the cost of making the sale.

sales price

The inventory account is a ______ account for the inventory subsidiary ledger.

controlling

We use the _____ to decide how much of the cost of the goods available for sale is

deducted from sales and how much is carried forward as inventory and matched againstfuture sales.

matching principle

The four inventory and COGS costing methods are ____, ____, ____, and _____.

specific identification, FIFO, LIFO, weighted average

____ assumes costs flow in the order incurred.

FIFO

____ assumes costs flow in the reverse order incurred.

LIFO

____ assumes costs flow at an average of the costs available.

Weighted average

Beginning inventory plus net purchases equals____.merchandise available for sale

Cost of good sold plus ____ equal cost of goods available for sale.

ending inventory

When each item in inventory can be identified with a specific purchase and invoice, we can

use ____ to assign costs.

specific identification

Specific identification is also called ____.

specific invoice inventory pricing

Three key variables determine the dollar value of ening inventory: ___, ____, and ____.

inventory quantity, costs of inventory, cost flow assumptions

Weighted average cost per unit at the time of each sales equals the _____ divided by theunits available.

cost of goods available for sale

When purchase costs regularly rise ____ assigns the lowest amount to cost of goods sold-

yielding the highest gross profit and net income.

FIFO

When purchase costs regularly rise ____ assigns the highest amount to cost of goods sold-

yielding the lowest gross profit and net income.

LIFO

When purchase costs regularly rise ____ yields results between FIFO and LIFO.

weighted average

Managers prefer ____ when costs are rising and incentives exist to report higher income forreasons such as bonus plans, job security and reputation.

LIFO

When costs regularly decline ____ gives the highest cost of goods sold.

FIFO

When costs regularly decline ____ gives the lowest cost of goods sold.

LIFO

____ assigns an amount to inventory on the balance sheet that approximates its curren


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cost; it also mimics the actual flow of goods for most businesses.

FIFO

____ assigns an amount to cost of goods sold on the income statement that approximates

its current cost; it also better matches current costs with revenues in computing gross

profit.

LIFO____ tends to smooth out erratic changes in costs.

Weighted average

When LIFO is used for tax reporting the IRS requires that it also be used in financial

statements. This is called the ____.

LIFO conformity rule

Accounting principles require that inventory be recorded at the market value (cost) of

replacing inventory when market value is ____ than cost.

lower

Inventory must be adjusted ____ when market is less than cost.

downward

If LCM is applied to items in inventory the ____ is debited and the ____ is credited.cost of goods sold, Merchandise Inventory

The ____ prescribes the use of the less optimistic amount when more than one estimate of

the amount to be received or paid exists and these estimates are about equally likely.

conservatism constraint

Understating inventory ____ cost of goods sold.

overstates

If beginning inventory is understated, the cost of goods sold is ____.

understated

A lower cost of goods sold yields a ____ income.

higher

Inventory turnover equals cost of goods sold divided by ____.average inventory

A ____ inventory turnover ratio compared to that of competitors suggests inefficient use of

assets.

low

Days' sales in inventory equals _____ divided by _____, multiplied by 365.

Ending inventory, cost of goods sold

In the retail inventory method, ending inventory at retail is multiplied by the _____ to reach

estimated ending inventory at cost.

cost-to-retail ratio

The _____ method estimates the cost of ending inventory by applying the gross profit ratio

to net sales (at retail).gross profit

The ____ method uses the historical relation between the cost of goods sold and net sales

to estimate the proportion of cost of goods sold making up current sales.

gross profit

In the gross profit method the ____ is subtracted from _____ to estimate the ending

inventory at cost.

cost of goods sold, cost of goods available for sale.


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(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_______FC- TR TC(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


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(c) Based on Sales forecasts of market.

(12) Consolidation of subsidiary accounts in the balance sheet of a unlisted Holdingcompany 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 alongwith 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.


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1. Fixed Cost:a. Changes with production

b. Never changes even if production capacity is doubledc. None of the above

2. Conversion cost is:

a. Material Cost + Overhead Costb. Direct Labour + Material Cost

c. Labour Cost + Overhead Cost

3. Process Costing is relevant to:

a. Cement industry

b. Job Order cost oriented Projectsc. None of the above

4. Operating Profit is:

a. Profit after deducting financial costs

b. Profit after deducting taxesc. 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 structure

6. Verification includes:

a. Checking Vouchersb. Examining audit reportc. None of the above

7. Stratified audit sample means:a. Randomly selected items for auditb. Purposively selected items for audit

c. Items carefully selected from each group

8. Internal Control is totally synonymous with:

a. Internal check

b. Internal auditc. None of above

9. Audit of a bank is generally conducted through:a. Routine checking

b. Couchingc. Balance sheet audit

10. An auditor is liable for his annual audit of accounts o:

a. Creditors

b. Bankersc. Owners

11. Income Tax is levied on:


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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 followingbehaviours:

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

Schedule).

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 Pakistanb. Not in vogue in Pakistan

c. None of above

16. Current Ratio is calculated as:a. Fixed Assets/Current Liabilities

b. Current Liabilities/Current Assetsc. Current Assets/Current Liabilities

17. Short-term loan can be described as:a. If the period is three yearsb. If the period is less than one yearc. If the period is over one year

18. A partnership, in todays Pakistan, under the current law can have the following numberof partners:

a. 50

b. 20c. 100

19. Combination can be best described as:a. Restructuring of Capital of a Company

b. Reduction of Capital of a Companyc. Amalgamation of two different types of businesses

20. Sources of funds can be increased by:

a. Describing selling prices

b. Increasing expenditurec. None of above

(1) Books of original entry are called:


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(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


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(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


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(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

(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 tax?(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:


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(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 arereferred 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


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(c) If the period is over one year

(d) None of these

(1) Maximum number of partners in a partnership firm set up in Pakistan under PartnershipAct, 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


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(10) Current maturity of long term loan is:(a) Current Liability

(b) Long Term Liability

(c) None of theseWrite 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 followingways:(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


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(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 inyour financial statement but not paid to tax authorities, so it should be a liability. But I amnot 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

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(b)Asset(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


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(b) Profit x 100/Investment

(c) None of these

(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 fordisclosure 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 thePartnership 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 days:

(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


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(9) Quick Ratio can be computed as under:

(a) Quick . Assets/Quick Liabilities

(b) Quick . Liabilities Current Assets(c) Current Assets/ Current Liabilities

(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.

6. Verification includes:a. Checking Vouchers

b. Examining audit report

c. None of the aboveConsider the following data: Particulars Rs. Assets ? Owner's equity 35,000 Liabilities 90,000

Rs. 35,000

Rs. 55,000

Rs. 1, 25,000Rs. 1, 05,000 (Right Answer)

The totals of return inwards Journal (day book) are

credited to the trade receivables control account

debited to the trade payables control account (Right Answer)

debited to the trade receivable control account

credited to the trade payables control account

ABC co. has a capital of Rs. 100,000, Long Term Liabilities Rs. 50,000, net profit during the year

Rs. 15,000 and the amount of total liabilities is Rs 175,000. What will be the amount of Current

Liabilities?

Rs. 20,000

Rs. 150,000

Rs. 10,000 (Right Answer)

Rs. 25,000

The third party who owes money to the business is called:

Debtor

Creditor

Stakeholder (Right Answer)

stockholder

Which of the following voucher is used to record receipt of cash?

Journal Voucher

Receipt Voucher (Right Answer)Payment Voucher

Nominal Voucher

The allocation of the cost of a tangible plant asset to expense in the periods, in which services

are received from the asset, is termed as:

Appreciation

Depreciation (Right Answer)


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Fluctuation

None of the given options

The minimum number of members that can form a public limited company are:

1

2(Not Sure) (Right Answer)

3

7

Budget is a plan of income, expenses & other financial operations for:

Current period

Future period (Right Answer)

Past period

Find out the missing value of an Accounting Equation with the help of given data: Furniture Rs.

90,000 Cash Rs.100, 000 Debtors Rs.10, 000 Other Assets Rs. 1,000 Owners equity Rs. 90, 000

Liaibilities ?

Rs. 201,000Rs. 111, 000 (Right Answer)

Rs. 290, 000

Rs. 291, 000

From the given particulars, calculate the rate of depreciation under the fixed installment

method of depreciation:

Cost of Asset = Rs. 2,000

Residual Value = Rs. 400

Useful Life = 4 years

20 % (Right Answer)30% 25% 33%

Which of the following formula is used to calculate the cost of goods sold?

Cost of goods available for sale minus net purchases plus ending inventory

Beginning inventory plus net purchases plus freight in minus ending inventory (Right Answer)

Beginning inventory minus net purchases minus ending inventory

Beginning inventory minus ending inventory

The investment of Rs. 10,000 made by the owner in business will have an effect on which of the

following accounts?

Cash Account & Capital Account (Right Answer)

Cash Account & Expense Account

Capital Account & Revenue Account

Capital Account & Expense Account

Goods sold to Mr. Naeem for Rs. 5,000 are wrongly recorded in sales journal at Rs. 500 and

same amount is posted in Mr. Naeems account, this is an example of:

Compensating errors

Error of Commission

Error of Principle

Error of Original entry (Right Answer)


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Which of the following is the first book to record a transaction?

Trial Balance

Journal (Right Answer)

Trial Balance

Balance Sheet

Which of the following would NOT be considered as a component of 'cost' of stock?

Salaries of selling staff (Right Answer)

Transportation inward costs

Import duties

Purchase price

Which of the following is (are) characteristic(s) of Bad Debt?

It is a definite loss to the business

It must be shown in Profit & loss account

No provision is necessary for it

All of the given options (Right Answer)

The difference between Management Accounting and Financial Accounting is that:

Financial accounting is used by managers to plan strategies in the area of company growth

Financial accounting is used by external investors to gain information about the company

Managerial accounting is used by the internal managers to plan for daily business activities

Both 2 and 3 (Right Answer)

If Current Assets Rs. 100,000, Current Liability Rs. 50,000 and Fixed Assets Rs. 2, 00,000.

Calculate working capital.


Rs. 1, 00,000Rs. 1, 50,000

Rs. 3, 00,000

Which of the following is NOT a revenue expenditure?

Petrol consumed in motor vehicles (Right Answer)

Cost of saleable goods

Bad debts

Premium given on lease

The Amount changed to deprecation goes on declining in:

Depreciation fixed method

Annuity method

Written-down value method (Right Answer)

Straight line depreciation method

If Cost of sales in Rs. 90,000, income from sales Rs. 200,000 and operating expenses Rs.100,000,.

What will be net results?

Rs. 5,000 Losses

Rs. 10,000 Profits (Right Answer)


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Rs. 1,95,000 Profits

Rs. 1,95,000 Losses

The main purpose of ______________ is to as certain true result of the business operation

during particular period of time.

Cost Accounting

Financial Accounting (Right Answer)

Managerial Accounting

Tax Accounting

The bank loan or the bank charges are called:

Cost of good expenses

Selling expenses

Financial expenses (Right Answer)

Administrative expenses

Question No. 1 of 20Which of the following item is found in a Journal entry? (1) Date of each transaction (2) Rupee

amount of each debit and credit (3) Explanation of each transaction

1 only

1 & 2 only

2 & 3 only

1, 2 & 3 (Right Answer)

Question No. 2 of 20

If Purchase price of machine = 400,000 Profit on disposal = Rs. 5,000 Residual value = Rs. 10,000

Useful life of machine = 5 years Find Sale price at the time of disposal =?

Rs. 15,000 (Right Answer)Rs. 10,000

Rs. 20,000

Rs. 5,000


Which of the following is the main cause of depreciation?

Fall in the market value of money

Fall in the market value of an asset (Right Answer)

Physical wear and tear


The estimated value of an asset after the expiry of its useful life is called as:

Written Down value

Residual Value (Right Answer)

Accumulated depreciation

Sales value


In the creditors control account, all of the below exist execept:


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credit purchases

purchase returns

cash purchases (Right Answer)

cash/cheques paid


Franchise rights, goodwill and patents are the examples of:

Liquid assets

Tangible assets

Intangible assets (Right Answer)

Current assets


In which of the following statement opening stock is shown?

Profit and loss account (Right Answer)

Balance sheet

Cash flow statement

Owners equity


On the receipts side of the cash and bank book, a column is added in which the receipts from

debtors are seperately noted, this type of cash/bank book is also called:

single column cash/bank book

cash/bank book

multi column cash/bank book (Right Answer)

none of the above


If you start with cash book favorable balance in Bank Reconciliation Statement, which item willbe added?

Cheque deposited but not credited by the bank

Cheques omitted to be deposited into bank

Any amount directly collected by bank on behalf of customer but not recorded in cash

book (Right Answer)

Debit side of cash book was overcast


Which of the following is NOT a characteristic of Cash Book?

It has two identical sidesleft hand side, the debit side and right hand side, the credit side

It verifies the arithmetic accuracy of posting of entries from the Journal to the Ledger

The difference between the total of two sides of cash book shows cash in hand

It always shows debit balance. It can never show credit balance (Right Answer)


Which of the following is NOT a rule for revaluation of fixed assets?

The change in the value should be permanent

Revaluation has to be carried out at regular intervals

Whole class of asset has to be revalued


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The profit on revaluation should be credited to revaluation reserve account (Right Answer)


A transaction in which Cash A/c and Bank A/c are involved, is recorded on both the sides of

Double Column Cash Book, it is called______________.

Rectifying Entry

Adjusting Entry

Contra Entry (Right Answer)

Closing Entry


What would conversion costs if costs of raw materials, direct labor costs, and manufacturing

overhead costs Rs.80,000, Rs.50,000, and Rs.60,000, respectively?

Rs.130, 000

Rs.110, 000 (Right Answer)

Rs.140, 000

Rs.190, 000


The Sales Returns Day Book would include:

Goods bought on credit

Fixed Assets bought that are inappropriate for business

Stock that customers have returned (Right Answer)

Goods bought on credit that are returned to the original supplier


Loss on the sale of plant and machinery should be written off against:

Sales premium account

Depreciation fund accountSales account

Plant and machinery (Right Answer)


In an account if debit side > credit side, the balance is known as the:

Negative Balance

Debit balance (Right Answer)

Positive Balance

Credit balance


Any expense that becomes a source of income generation for a long time period is called

__________

Capital Expense (Right Answer)

Revenue Expense

Revenue Receipt

Capital Receipt



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Which one of the following is NOT a feature of sole proprietorship business.

Easy Formation

Easy Dissolution

Unlimited Liability

Separate Legal Entity (Right Answer)


Carriage paid Rs. 50 for the newly purchased machinery if debited to carriage account will

effect:

Only carriage account

Only machinery account

Both carriage and machinery account


Which of the following is(are) TRUE about the sole trader form of business?

A sole trader is liable to pay income tax on his/her earnings

Sole traders must have to prepare books of accounts by law

Sole traders must register the name of their business with the Registrar of CompaniesAll of the given options (Right Answer)

In which depreciation method Depreciation remains constant?

Reducing balance method (Right Answer)

Reducing balance method



Goods returned by Mr. B amount to Rs. 4,000. The entry in the books will be:

Mr. B is Debit (Right Answer)

Sales Returns is Credit111Sales Returns is Debit Mr. B is Credit

Mr. B is Debit Accounts Receivable Credit

Which of the following Organization converts raw material into finished goods?

Trading concern

Manufacturing concern (Right Answer)

Merchandising concern

Service concern

Find out the missing value of an Accounting Equation with the help of given data: Cash Rs.100,

000 Debtors Rs.10, 000 Other Assets Rs. 1,000 Owners equity Rs. 1, 000 Liabilities ?

Rs. 12,000


Rs. 110,000

Rs. 111,000


________ is the art of recording monetary transactions in the books of Accounts in a proper

manner:


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Accounting

Book Keeping (Right Answer)

Posting

Vouching


Which of the following Journal entry will be recorded when the bad debts are recovered?

Cash account (Dr.) & Bad Debts recovered account (Cr.) (Right Answer)

Accounts Receivable (Dr.) & Bad Debts recovered account (Cr.)

Bad debts recovered account (Dr.) and profit & loss account (Cr.)

Provision for doubtful debts account (Dr.) & cash account (Cr.)

Which of the following is/are the example/s of Intangible Asset?

Copy rights

Good will

Patent rights

All of the given options (Right Answer)


Under the straight line method of depreciation:

Amount of depreciation increases every year (Right Answer)

Amount of depreciation remains constant for every year

Amount of depreciation decreases every year



If, Cost of machine = Rs.400, 000 Useful life = 5 years Residual value = Rs.25, 000Saleprice =

Rs.40, 000 Rate of depreciation = 40% What will be the amount of depreciation charged on 3rd

year using straight line method?Rs. 35,000

Rs. 57,600


Rs. 96,000

Loss on revaluation of fixed asset should be charged to:

Profit and loss account (Right Answer)

Balance sheet

Revaluation Reserve account

Accumulated depreciation account


Debts that are not collectible and worthless to the creditor are known as:

Bad debts (Right Answer)

Good debts

Doubtful debts

Provision for doubtful debts



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Which of the following would NOT be considered as a component of 'cost' of stock?

Salaries of selling staff (Right Answer)

Transportation inward costs

Import duties

Purchase price

Total depreciation of an asset can not exceed its:

Scrap value (Right Answer)

Residual value

Market value

Depreciable value


A company uses straight line method of depreciation for an item of equipment that cost Rs.

28,000, has salvage value of Rs. 3,000, and has a five year useful life. What will be the book

value of asset at the end of third year?

Rs. 15,000

Rs. 10,000Rs. 18,000



Which of the following is / are the particular/s of a cash book? (1) Date of transaction (2)

Account title (3) Amount

1 only

1 & 2 only

1 & 3 only

1, 2 & 3 (Right Answer)

Question No. 18 of 20At the end of the accounting period, the balance which is showing on the debit side of ledger

account is called as:

Credit Balance

Debit Balance (Right Answer)

Contra account

None of the above


The amount charged to depreciation goes on declining in:

Depreciation fixed method

Annuity method

Written-down value method (Right Answer)

Straight line depreciation method


Which of the following is NOT a revenue expenditure?

Petrol consumed in motor vehicles (Right Answer)

Cost of saleable goods

Bad debts

Premium given on lease


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Share capital: The sum total of the nominal value of the shares of a company is called share

capital.

102. Funds flow statement: It is the statement deals with the financial resources for running

business activities. It explains how the funds obtained and how they used.

103. Sources of funds: There are two sources of funds internal sources and external sources.

Internal source: Funds from operations is the only internal sources of funds and some

important points add to it they do not result in the outflow of funds

(a) Depreciation on fixed assets

(b) Preliminary expenses or goodwill written off, Loss on sale of fixed assets Deduct the

following items, as they do not increase the funds:

Profit on sale of fixed assets, profit on revaluation Of fixed assets

External sources: (a) Funds from long-term loans

(b)Sale of fixed assets

(c) Funds from increase in share capital

104. Application of funds: (a) Purchase of fixed assets (b) Payment of dividend (c)Payment of

tax liability (d) Payment of fixed liability

105. ICD (Inter corporate deposits): Companies can borrow funds for a short period. For

example 6 months or less from another company which have surplus liquidity? Such deposits

made by one company in another company are called ICD.

106. Certificate of deposits: The CD is a document of title similar to a fixed deposit receipt

issued by banks there is no prescribed interest rate on such CDs it is based on the prevailingmarket conditions.

107. Public deposits: It is very important source of short term and medium term finance. The

company can accept PD from members of the public and shareholders. It has the maturity

period of 6 months to 3 years.

108. Euro issues: The euro issues means that the issue is listed on a European stock

Exchange. The subscription can come from any part of the world except India.

109. GDR (Global depository receipts): A depository receipt is basically a negotiable

certificate, dominated in us dollars that represents a non-US company publicly traded in local

currency equity shares.

110. ADR (American depository receipts): Depository receipts issued by a company in the USA

are known as ADRs. Such receipts are to be issued in accordance with the provisions

stipulated by the securities Exchange commission (SEC) of USA like SEBI in India.

111. Commercial banks: Commercial banks extend foreign currency loans for international

operations, just like rupee loans. The banks also provided overdraft.112. Development banks: It offers long-term and medium term loans including foreign

currency loans

113. International agencies: International agencies like the IFC,IBRD,ADB,IMF etc. provide

indirect assistance for obtaining foreign currency.

114. Seed capital assistance: The seed capital assistance scheme is desired by the IDBI for

professionally or technically qualified entrepreneurs and persons possessing

relevantexperience and skills and entrepreneur traits.

115. Unsecured loans: It constitutes a significant part of long-term finance available to an

enterprise.

116. Cash flow statement: It is a statement depicting change in cash position from one period

to another.

117. Sources of cash:

Internal sources(a)Depreciation

(b)Amortization

(c)Loss on sale of fixed assets

(d)Gains from sale of fixed assets

(e) Creation of reserves

External sources-

(a)Issue of new shares

(b)Raising long term loans

(c)Short-term borrowings


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(d)Sale of fixed assets, investments

118. Application of cash:

(a) Purchase of fixed assets

(b) Payment of long-term loans

(c) Decrease in deferred payment liabilities

(d) Payment of tax, dividend

(e) Decrease in unsecured loans and deposits

119. Budget: It is a detailed plan of operations for some specific future period. It is an

estimate prepared in advance of the period to which it applies.

120. Budgetary control: It is the system of management control and accounting in which all

operations are forecasted and so for as possible planned ahead, and the actual results

compared with the forecasted and planned ones.

121. Cash budget: It is a summary statement of firms expected cash inflow and outflow over

a specified time period.

122. Master budget: A summary of budget schedules in capsule form made for the purpose of

presenting in one report the highlights of the budget forecast.

123. Fixed budget: It is a budget, which is designed to remain unchanged irrespective of the

level of activity actually attained.

124. Zero- base- budgeting: It is a management tool which provides a systematic method for

evaluating all operations and programmes, current of new allows for budget reductions and

expansions in a rational inner and allows reallocation of source from low to high priorityprograms.

125. Goodwill: The present value of firms anticipated excess earnings.

126. BRS: It is a statement reconciling the balance as shown by the bank pass book and

balance shown by the cash book.

127. Objective of BRS: The objective of preparing such a statement is to know the causes of

difference between the two balances and pass necessary correcting or adjusting entries in the

books of the firm.

128. Responsibilities of accounting: It is a system of control by delegating and locating the

Responsibilities for costs.

129. Profit centre: A centre whose performance is measured in terms of both the expense

incurs and revenue it earns.

130. Cost centre: A location, person or item of equipment for which cost may be ascertained

and used for the purpose of cost control.

131. Cost: The amount of expenditure incurred on to a given thing.132. Cost accounting: It is thus concerned with recording, classifying, and summarizing costs

for determination of costs of products or services planning, controlling and reducing such costs

and furnishing of information management for decision making.

133. Elements of cost:

(A) Material

(B) Labour

(C) Expenses

(D) Overheads

134. Components of total costs: (A) Prime cost (B) Factory cost

(C)Total cost of production (D) Total c0st

135. Prime cost: It consists of direct material direct labour and direct expenses. It is also

known as basic or first or flat cost.

136. Factory cost: It comprises prime cost, in addition factory overheads which include cost ofindirect material indirect labour and indirect expenses incurred in factory. This cost is also

known as works cost or production cost or manufacturing cost.

137. Cost of production: In office and administration overheads are added to factory cost,

office cost is arrived at.

138. Total cost: Selling and distribution overheads are added to total cost of production to get

the total cost or cost of sales.

139. Cost unit: A unit of quantity of a product, service or time in relation to which costs may

be ascertained or expressed.

140.Methods of costing: (A)Job costing (B)Contract costing (C)Process costing (D)Operation


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costing (E)Operating costing (F)Unit costing (G)Batch costing.

141. Techniques of costing: (a) marginal costing (b) direct costing (c) absorption costing (d)

uniform costing.

142. Standard costing: standard costing is a system under which the cost of the product is

determined in advance on certain predetermined standards.

143. Marginal costing: it is a technique of costing in which allocation of expenditure to

production is restricted to those expenses which arise as a result of production, i.e., materials,

labour, direct expenses and variable overheads.

144. Derivative: derivative is product whose value is derived from the value of one or more

basic variables of underlying asset.

145. Forwards: a forward contract is customized contracts between two entities were

settlement takes place on a specific date in the future at todays pre agreed price.

146. Futures: A future contract is an agreement between two parties to buy or sell an asset at

a certain time in the future at a certain price. Future contracts are standardized exchange

traded contracts.

147. Options: An option gives the holder of the option the right to do something. The option

holder option may exercise or not.

148. Call option: A call option gives the holder the right but not the obligation to buy an asset

by a certain date for a certain price.

149. Put option: A put option gives the holder the right but not obligation to sell an asset by a

certain date for a certain price.150. Option price: Option price is the price which the option buyer pays to the option seller. It

is also referred to as the option premium.

151. Expiration date: The date which is specified in the option contract is called expiration

date.

152. European option: It is the option at exercised only on expiration date itself.

153. Basis: Basis means future price minus spot price.

154. Cost of carry: The relation between future prices and spot prices can be summarized in

terms of what is known as cost of carry.

155. Initial margin: The amount that must be deposited in the margin a/c at the time of first

entered into future contract is known as initial margin.

156 Maintenance margin: This is somewhat lower than initial margin.

157. Mark to market: In future market, at the end of the each trading day, the margin a/c is

adjusted to reflect the investors gains orloss depending upon the futures selling price. This is

called mark to market.158. Baskets: basket options are options on portfolio of underlying asset.

159. Swaps: swaps are private agreements between two parties to exchange cash flows in the

future according to a pre agreed formula.

160. Impact cost: Impact cost is cost it is measure of liquidity of the market. It reflects the

costs faced when actually trading in index.

161. Hedging: Hedging means minimize the risk.

162. Capital market: Capital market is the market it deals with the long term investment

funds. It consists of two markets 1.primary market 2.secondary market.

163. Primary market: Those companies which are issuing new shares in this market. It is also

called new issue market.

164. Secondary market: Secondary market is the market where shares buying and selling. In

India secondary market is called stock exchange.

165. Arbitrage: It means purchase and sale of securities in different markets in order to profitfrom price discrepancies. In other words arbitrage is a way of reducing risk of loss caused by

price fluctuations of securities held in a portfolio.

166. Meaning of ratio: Ratios are relationships expressed in mathematical terms between

figures which are connected with each other in same manner.

167. Activity ratio: It is a measure of the level of activity attained over a period.

168. Mutual fund: A mutual fund is a pool of money, collected from investors, and is invested

according to certain investment objectives.

169. Characteristics of mutual fund: Ownership of the MF is in the hands of the of the

investors MF managed by investment professionals The value of portfolio is updated every day


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170. Advantage of MF to investors: Portfolio diversification Professional management

Reduction in risk Reduction of transaction casts Liquidity Convenience and flexibility

171. Net asset value: the value of one unit of investment is called as the Net Asset Value

172. Open-ended fund: open ended funds means investors can buy and sell units of fund, at

NAV related prices at any time, directly from the fund this is called open ended fund.

173. Close ended funds: close ended funds means it is open for sale to investors for a specific

period, after which further sales are closed. Any further transaction for buying the units or

repurchasing them, happen, in the secondary markets.

174. Dividend option: investors who choose a dividend on their investments, will receive

dividends from the MF, as when such dividends are declared.

175. Growth option: investors who do not require periodic income distributions can be choose

the growth option.

176. Equity funds: equity funds are those that invest pre-dominantly in equity shares of

company.

177. Types of equity funds: Simple equity funds Primary market funds Sectoral funds Index

funds

178. Sectoral funds: Sectoral funds choose to invest in one or more chosen sectors of the

equity markets.

179. Index funds: The fund manager takes a view on companies that are expected to perform

well, and invests in these companies

180. Debt funds: the debt funds are those that are pre-dominantly invest in debt securities.181. Liquid funds: the debt funds invest only in instruments with maturities less than one

year.

182. Gilt funds: gilt funds invests only in securities that are issued by the GOVT. and therefore

does not carry any credit risk.

183. Balanced funds: Funds that invest both in debt and equity markets are called balanced

funds.

184. Sponsor: sponsor is the promoter of the MF and appoints trustees, custodians and the

AMC with prior approval of SEBI.

185. Trustee: Trustee is responsible to the investors in the MF and appoint the AMC for

managing the investment portfolio.

186. AMC: the AMC describes Asset Management Company; it is the business face of the MF,

as it manages all the affairs of the MF.

187. R & T Agents: the R&T agents are responsible for the investor servicing functions, as they

maintain the records of investors in MF.188. Custodians: Custodians are responsible for the securities held in the mutual funds

portfolio.

189. Scheme takes over: if an existing MF scheme is taken over by another AMC, it is called

as scheme take over.

190. Meaning of load: Load is the factor that is applied to the NAV of a scheme to arrive at the

price.

192. Market capitalization: market capitalization means number of shares issued multiplied

with market price per share.

193. Price earnings ratio: The ratio between the share price and the post tax earnings of

company is called as price earnings ratio.

194. Dividend yield: The dividend paid out by the company, is usually a percentage of the face

value of a share.

195. Market risk: It refers to the risk which the investor is exposed to as a result of adversemovements in the interest rates. It also referred to as the interest rate risk.

196. Re-investment risk: It the risk which an investor has to face as a result of a fall in the

interest rates at the time of reinvesting the interest income flows from the fixed income

security.

197. Call risk: Call risk is associated with bonds have an embedded call option in them. This

option hives the issuer the right to call back the bonds prior to maturity.

198. Credit risk: Credit risk refers to the probability that a borrower could default on a

commitment to repay debt or band loans

199. Inflation risk: Inflation risk reflects the changes in the purchasing power of the cash flows


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resulting from the fixed income security.

200. Liquid risk: It is also called market risk, it refers to the ease with which bonds could be

traded in the market.

Our destination is far, will have to move gradually and with stability: Ishaq Dar1) Revenue collection is estimated at Rs3.943 trillion for FY 2014-15, 10up

compared to FY 2013-14.2) The incumbent government saved the fast declining foreign reserves: Dar3) We will achieve target of $ 15 billion forex reserve in July4) Economy grown by 4.14 per cent: Dar5) Current inflation rate is 8.6 per cent as compared to more than 12 per cent in the

tenure of previous govt: Ishaq Dar6) PML-N govt achieved economic targets which could not be achieved in past 7

years: Dar7) Total expenditure for fiscal year 2014-15 is estimated at Rs3,937 billion8) During past 8 months, either prices reduced or maintained: Dar9) Added 1700MW electricity in the national grid: Dar10)Fiscal deficit would be brought at 4 pc till 2015-16: Dar11)Received $1.4 billion loan from International Organizations for energy sector:

Dar12)Rs118 billion has been allocated for Benazir Income Support Programme: Dar13)The monthly stipend for Benazir Income Support Programme has been raised by

Rs300 to 1500 per month.14)Rs15bn earmarked for the construction of Diamer-Basha dam: Dar15)Rs30 billion allocated for Karachi-Lahore Motorway16)Public Sector Development Programme (PSDP) is being increased to Rs525

billion.

17)Rs26.8 billion allocated for Health sector18)Rs20 billion allocated for Higher Education Commission projects19)Funds have been allocated for Karachi Circular Railway20)500 locomotives will be added to Pakistan Railways21)Rs77 billion has been earmarked for uplift schemes, salaries and pension in

railway sector.22)Government has decided to set up Pakistan Land Development Authority Board.

23)Credit availability to agriculture sector to be increased from Rs.380 billion to Rs.500 billion.

24)Federal government is working with provinces for eradication of polio

25)The federation would have Rs2225 billion in its hands after providing funds to provinces

26)The government is allocating Rs205 billion for investment in various power projects to

overcome the energy crises

27)Through the auction of 3G and 4G technologies as many as 900,000 people will getemployment opportunities.

28)Tax collection increased by 16.4 per cent during the current fiscal year.

29)The federal government is introducing health insurance in collaboration with provinces.

30)The Minister proposed to raise the salaries of government employees by 10 percent and the

minimum monthly wage to Rs11,000 from Rs10,000.

31)The Minimum pension is being raised from Rs5000 to Rs6000

Documents

Senior Auditors