b. Long-term deposit c. Financial charges paid d. Dividend paid
Advance insurance is an example of 1. Current Asset
2. Administrative expense 3. Insurance expense 4. Current Liability
Which of the following is not a component of Financial Statement? 1. Balance Sheet
2. Profit and Loss account
3. Bank Reconciliation Statement 4. Cash Flow statement
Cost of goods sold does not contain which of the following heads of Accounts: 1. Purchase of raw material/goods
2. Wages paid to employees for manufacturing of goods 3. Commission is paid on purchases from third parties
4. Any expense incurred on carriage/transportation of purchased items Paid up Capital is:
1. The amount raised by the company by the issue of its shares to general public 2. The maximum amount with which a company gets Registration/Incorporation 3. Amount collected on issuance of prospectus and debentures
4. None of the given Options
Which one of the following assets could be described as a current asset? Stock of goods for resale
Machinery to manufacture goods for resale Buildings to house the machinery
Land on which the buildings stand Operating Profit is equal to:
Sales - Gross Profit – Cost of goods sold – Operating expenses Sales – Cost of goods sold – Operating expenses
Sales - Gross Profit None of the given options
The accounting equation represents:
Resources in the business are equal to resources supplied by the owner and outsiders Resources are allocated in the business on cost price
Owners give money for the business
Resources in the business are not equal to resources supplied by the owner and outsiders Credit signifies:
Increase in asset account Increase in liability account Decrease in capital account None of the given options
A business owned and run by one person is called: Sole Proprietorship
Partnership Limited Company
None of the given options
Any expenditure that benefits the business for several accounting years is regarded as: Capital expenditure
Revenue expenditure Revenue receipt
None of the given options
Which of the following option is true? Increase in expense is Debit
Increase in income is credit All of the given option
The accounting equation is based on: Dual aspect concept
Going concern concept Business entity concept None of the given options
The discount allowed by manufacturer or wholesaler at the time of selling goods to retailer as a deduction from the listed-price or catalogue price, is called as:
Trade discount Cash discount Commission
None of the given option
If the original cost of an asset is Rs. 2,000 then the written down value of asset after two years by using the diminishing balance method at the rate of 10% p.a. will be:
Rs. 1,600 Rs. 1,620 Rs. 380
None of the given options
Sales = Cost of goods sold + Gross profit. True
False
Balance Sheet discloses the financial position of the business. True
False
Budget is an Organization’s plan of future period expressed in money terms. True
False
Cash Accounting is the accounting system in which events are recorded as and when they occur.
True False
In double entry system of book keeping, every business transaction affects the same side of the same account.
True False
Which is the best definition of Balance sheet? o An account proving the Book balances
o A record of closing entries o A listing of balances o A statement of Assets Depreciation is:
o The amount spent to buy a fixed asset o The salvage value of a fixed asset
o The part of the cost of the fixed asset consumed during its period of use by the firm
o The amount of money spent on replacing asset
o A depreciation charge o Dividend paid
o Proceeds on Sales of Fixed Assets o Tax paid
Gross Profit is:
o Excess of sales over Cost of good sold o Sales less Purchases
o Cost of good sold plus Opening Stock o Net profit less expenses of the period
Which of the following is an intangible asset? o Patents
o Copyrights o Trade marks
o All of the given options
__________ is used to record transactions that do not affect cash or bank. Payment voucher
Receipt voucher Journal voucher
All of the given options
Question No: 2 ( Marks: 1 ) - Please choose one
Which one of the following item will appear on the balance sheet of a company as current assets?
Prepaid expenses Outstanding expenses
Furniture and equipment Provision for depreciation
If bank statement shows a credit balance, it means __________balance for bank book. Favorable
Unfavorable Overdraft
None of the given options
Formula for Earning per Share is_______ Market value per share / Earning per share
Net profit after tax before appropriation / Number of shares Operating Profit before financial charges / Financial charges None of the given options
Liquidity is defined as:
The amount of cash to liquidate The funds available for use
The ability of business to receive its cash The ability of a business to pay its debts in time Cash flow from operating activities is generated from:
The cash receipts and payments that arise from Fixed and Long Term assets of the organization.
Cash generated from daily operations of organization
The cash receipts and payments that arise from Owners of the business and other long term liabilities of the organization
Accumulated Profit & Loss is an example of: Distributable reserves
Non distributable reserves
Both Distributive and non distributive reserve None of the given options
According to________________, Fixed assets revaluation reserve is included in the statement of changes in equity.
International Accounting Standards Companies Ordinance
International Standards of Auditing None of the given options
Share premium can be utilized: To create non distributive reserves To issue bonus shares
To increase the Owners Capital To meet unexpected losses
Notes to the accounts explain which of the followings: Nature of business of the company
Accounting Policies of the company
Details and explanation of items given in the Profit and Loss Account and Balance Sheet All of the given options
Mark up ratio is better for: Bankers
Creditors Owners
Debentures are a company’s: Assets
Liability Expenses Investments
Subscribers / Sponsors are the persons who sign: Articles of Association
Memorandum of the company
Contribute in the initial share capital of the company. All of the given options
All expenses incurred up to the stage of incorporation of the company are called: Preliminary Expenses
Installation expenses Accrued expenses Deferred expenses
The head of board of directors is called: Chief executive
Manager Subscriber Shareholder
1. Stocks 2. Debtors
3. Plant and Machinery 4. Cash in hand
Pak Motors buys a stock worth Rs. 30,000 on credit on the last day of his accounting period and includes these items in Closing Stock. Which of the following figures in the Accounts would be increased by Rs. 30,000?
1. Cost of Sales 2. Working Capital 3. Gross Profit 4. Current Assets.
An account titled Unearned Fees would be classified as which of the following? 1. Asset account
2. Liability account 3. Revenue account 4. Expense account
Asset depreciation is calculated to which of the nearest time periods? 1. Day
2. Week 3. Month
4. None of the Given Option Capital expenditures are:
1. The extra Capital paid in by the proprietor
3. Money spend on buying Assets or adding value to them 4. Money spent on selling Fixed Assets.
A Balance Sheet discloses the financial position of a firm: For a given period
On a particular point of time On quarterly basis
None of the given options Cost of sales is equal to:
Opening stock – Closing stock + Purchases – Return outwards Sales – Purchases
Purchases – Return out + Closing stock None of the given options
A loss will be considered as capital loss if it: Relates to fixed assets
Arises due to abnormal reasons Represents the withdrawal of capital None of the given options
Expenditure will be considered as capital expenditure if: The amount is paid in lump sum
It is intended to benefit the current period It is intended to benefit the future period All of the given options
A business letter Store ledger card Voucher
All of the given options
Under diminishing balance method, depreciation is calculated on: The original cost
The scrap value Book value
None of the given options
The books of account in which business transactions are originally recorded in chronological order is known as:
Ledger Journal Trial Balance Balance sheet
A firm purchased marketable securities for Rs. 10,000. What would its effect be on working capital?
Increased by Rs. 10,000 Decreased by Rs. 10,000 Increased by Rs. 20,000 Remain unchanged
If the profit is 25% of the cost price then it would be: 25% of the sale price
20% of the sale price None of the given options
Current liabilities are such obligations which must be paid within: One year
Two years Three years Five years
Book-keeping and accounting are synonymous terms. True
False
The Accounting Equation is based on going concern concept of Accounting. True
False
The ledger is the book of original entry. True
False
Balance Sheet is the other name of Profit and Loss Account. True
False
Capital expenditures incurred irregularly. True