Financial Management Mcqs

NOTE: SOME OF MCQs ARE SOLVED AND SOME ARE NOT, SOLVED ARE FROM ASSIGNMENTS SOLUTIONS. THANKS

1. The balance sheet is alternately known as : (a) Assets statement (b) Statement of financial position (c) Statement of profit and loss (d) None of the given options 2. Trading & Profit & loss account and balance sheet is prepared from: (a) Ledger balance (b) Ledger balances, cash and bank balances (c) Cash book and bank book (d) Trial balance 3. Interest on drawing is an: (a) Expenditure for the business (b) Expense for the business (c) Gain for the business (d) Loss for the business 4. The distinction between revenue account and capital account is necessary for the preparation of: (a) Final accounts (b) Receipt and payment account (c) Cash flow statements

(d) Funds flow statements 5. Capital expenditure is that expenditure which is: (a) Paid in lump-sum (b) Large in amount (c) Intended to benefit the future period (d) Intended to benefit the current period 6. Calculate the gross profit /loss if: Sales Rs. 60,000; Cost of sales Rs. 50,000; Opening stock Rs. 10,000; Purchases Rs. 40,000; Wages Rs. 20,000 and Office rent Rs. 10,000. (a) Loss Rs. 10,000 (b) Loss Rs. 20, 000 (c) Profit Rs. 10,000 (d) None of the given options 7. Balance Sheet shows the: (a) Profit earned by the business (b) Total capital employed (c) Financial position of the business (d) Trading results of the business 8. Net profit is equal to: (a) Sales less cost of sales and operating expenses (b) Gross profit less operating expenses (c) Sales less operating expenses (d) Both (a) & (b) 9. Selling expenses are shown in:

(a) Trading account (b) Profit and loss account (c) Profit and loss appropriation account (d) Manufacturing account 10. Current liabilities are such obligations which are to be satisfied within: (a) One year (b) Two years (c) Three years (d) All of the given options 1) Depreciation is charged on land in case of: A. Leased hold land B. Land purchased by the owner himself C. Depreciation is never being charged on land D. None of the given options 2) Which of the following does not affect the cash balance of a business? A. Increases in inventory B. Changes in accounts receivables C. Depreciation D. Seasonality 3) Ongoing expenditures, such as general and administrative expenses, which occur in the process of selling and managing a company are known as: A. Cost of goods sold B. Selling expenses C. Gross margin

D. Operating expenses 4) Which of the following is not the same as the others? A. Gain B. Gross margin C. Income D. Revenue 5) The income statement records: A. Sales B. Cost of goods sold C. Expenses D. All of the above 6) The difference between assets and liabilities is called: A. Balance sheet B. Profit C. Gross margin D. Equity 7) Long-term liabilities are: A. Debts or portions of debt due more than 12 months from the date of the balance sheet B. Bills for inventory C. Amounts due for renovations D. Amounts due for supplies 8) Which of the following is not a category used for assets on the balance sheet? A. Current

B. Fixed C. Other D. Accrued 9) The _____________ compares the possessions of a company and the debts that it owes on a specific day. A. Income statement B. Balance sheet C. Cash flow projection D. Completed-contract method 10) Which of the following accounting methods is the simplest and easiest to use? A. Completed-contract method B. Cash basis C. Accrual basis D. All of the above 1. If business purchases goods for resale purposes, such purchases are charged to _____________ 1) Expenses account 2) Purchases account 3) Sales account 4) None of the given options 2. The amount of resources supplied by the owner in business is called: 1) Investments 2) Assets 3) Capital

4) Reserves 3. Excess of sales over cost of goods sold in an accounting period is termed as: 1) Net Profit 2) Gross Profit 3) Retained earnings 4) None of the given options 4. At the end of the year, goods that are unsold are deducted from: 1) Finished goods 2) Closing stock 3) Cost of goods sold 4) Opening stock 5. Conversion cost is: 1) Total factory cost 2) The cost incurred in converting raw material into finished goods 3) The cost incurred in converting raw material into work in process 4) None of the given options 6. The cost of the asset after the expiry of its useful life is called___________ 1) Written down value 2) Residual value 3) Expired value 4) None of the given options When bank statement shows a debit balance, it means: 1) Overdraft balance as per cash book

2) Favorable balance as per cash book 3) Un Favorable balance as per bank book 4) None of the above 7. Closing stock is credited in the: 1) Balance sheet 2) Profit & Loss account 3) Cost of good sold statement 4) None of the given option 8. Depreciation of machinery will be shown in the profit & loss account under the head of: 1) Selling expense 2) Administrative Expenses 3) Marketing expense 4) Financial expense 9. Assets and liabilities are presented in the balance sheet in the order of their: 1) Life 2) Classification 3) Maturity 4) None of the above A Transaction caused a decrease of Rs. 10,000 in both total Assets and total Liabilities. This Transaction could be: 1. 2. 3. 4.

Purchase of delivery Truck for Rs. 10,000 Cash An asset worth Rs. 10,000 was destroyed by fire Repayment of Rs. 10,000 bank loan Collection of Rs. 10,000 from Debtors

The following Journal entry was recorded in Dixy stores’ accounting records:

Cash ---------------------------------------------------------- 12,000 Notes Receivables ------------------------------------------48,000 Land ---------------------------------------------------------------------60,000 This transaction: 1. 2. 3. 4.

Involves the purchase of land for Rs. 60,000 Involves a Rs. 12,000 Cash payment Involves the sales of Land for Rs. 60,000 Causes an increase in total assets for Rs. 12,000

Identify which of the following statements does not correctly describe the Net Income. 1. Net Income is computed in Income statement, appears in the statement of Owner’s equity and increases Owner’s equity in the balance sheet. 2. Net income is equal to Revenue minus expenses. 3. Net Income is computed in Income statement, appears in the statement of Owner’s equity and increases the amount of cash shown in the balance sheet. 4. Net Income can be determined using the account balances appearing in the adjusted Trial balance. Which of the following can not be classified as Account? 1. 2. 3. 4.

Assets. Liabilities. Income. Proprietor

Given the following, what is the amount of Capital? Premises Rs. 20,000 Stock Rs. 8,500 Cash Rs. 100 Creditors Rs. 3,000 Loan from Saqib Rs. 4,000. 1. Rs. 21,000 2. Rs. 21,600 3. Rs. 32,400

4. None of the given options Which of the following is not an example of a current liability as at Dec. 31, 2005? 1. Management fees collected in advance in 2005, to be earned during 2006. 2. The portion of long-term debt due in 2006. 3. Warranty liability for products carrying two-year warranty and sold during 2005. 4. The interest due to creditors and bond holders for 2006, to be paid in 2006. "The firm must be treated as separate and distinct, in its financial terms, from its' owner(s)". This rule is known as: 1. The accounting equation 2. The dual aspect concept 3. The separate entity concept 4. The balance sheet The system whereby we record dual effect of each transaction is known as:

1. Balance Sheet accounting 2. Double-entry book keeping 3. Dual aspects of transactions 4. Management accounting Which of the following is an example of revenue expenditures? 1. Buying of a delivery van 2. Paying for a five-year lease on shop premises in city centre 3. Adding fuel to a delivery van 4. Re-paying a loan which was borrowed three years ago.

Which of the following statements is TRUE? 1. Assets = capital + liabilities 2. Capital = assets + liabilities 3.Assets + liabilities = capital 5. Assets = Liabilities - Capital 11) Depreciation is charged on land in case of: E. Leased hold land F. Land purchased by the owner himself G. Depreciation is never being charged on land H. None of the given options 12) Which of the following does not affect the cash balance of a business? E. Increases in inventory F. Changes in accounts receivables G. Depreciation H. Seasonality 13) Ongoing expenditures, such as general and administrative expenses, which occur in the process of selling and managing a company are known as: E. Cost of goods sold F. Selling expenses G. Gross margin H. Operating expenses 14) Which of the following is not the same as the others? E. Gain

F. Gross margin G. Income H. Revenue 15) The income statement records: E. Sales F. Cost of goods sold G. Expenses H. All of the above 16) The difference between assets and liabilities is called: E. Balance sheet F. Profit G. Gross margin H. Equity 17) Long-term liabilities are: E. Debts or portions of debt due more than 12 months from the date of the balance sheet F. Bills for inventory G. Amounts due for renovations H. Amounts due for supplies 18) Which of the following is not a category used for assets on the balance sheet? E. Current F. Fixed G. Other H. Accrued

19) The _____________ compares the possessions of a company and the debts that it owes on a specific day. E. Income statement F. Balance sheet G. Cash flow projection H. Completed-contract method 20) Which of the following accounting methods is the simplest and easiest to use? E. Cash basis F. Accrual basis G. Completed-contract method H. All of the above 1) Depreciation of machinery will be shown in the profit & loss account under the heading of: A. Selling expense B. Administrative Expenses C. Marketing expense D. Financial expense 2) Advance insurance will be ___________ from Insurance expense. A. Added B. Deducted C. Double charged D. None of the given options 3) Money lying in our bank account is our: A. Liability

B. Assets C. Expense D. None of the given option 4) Liquidity is: A. The amount of cash to liquidate B. The funds available for use C. The ability of business to receive its cash D. The ability of a business to pay its debts in time 5) If total liabilities decreased by $25,000 and stockholders’ equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same time period? A. B. C. D.

$20,000 increase $20,000 decrease $30,000 increase $30,000 decrease

1) Rent receivable is our: A. Income B. Current Asset C. Expense D. Both A and B 2) Salaries and wages are our: A. Direct expenses B. Indirect expenses C. Both direct and indirect expenses D. None of the given options 3) Calculate the value of Cost of good sold if:

Rs. Opening Stock 42,850 Purchases 137,190 Carriage inward 1,500 Closing Stock 51,060 A. Rs. 229600 B. Rs. 130,480 C. Rs. 232600 D. Rs. 146900 Calculation: Cost of good sold= Opening stock + Purchases + Carriage Inward - Closing Stock = 42,850 + 137,190 + 1,500 - 51,060 = 130,480 4) If Motor Van Costs Rs. 12,500, its accumulated depreciation is Rs. 4,200; depreciation charged for the year is Rs. 2,500. What will be its Book value at the end of the period? A. Rs. 10,000 B. Rs. 8,300 C. Rs. 5,800 D. Rs. 10,800 Calculation Book value = Cost - (Depreciation + Accumulated Depreciation) = 12,500 – (4,200 + 2,500) = 12,500 – 6,700 = 5,800

5) Mr. Abid is a partner in a partnership firm. His capital on July 1, 2001 was Rs. 150,000. He invested further capital of Rs. 50,000 on March 1, 2002. What will be the mark up on capital if Mark up rate is 5%? The financial year is from July to June. A. Rs.5833 B. Rs. 8,333 C. Rs. 833 D. None of the given options. Calculation: =150,000 x 5% = 7,500 = 50,000 x 5% x 4/12 = 833 = 7,500 + 833 = 8,333 6) Which of the following is an example of Non commercial organization? A. Sole proprietorship B. Partnership C. Limited Company D. Trusts 7) In case where actual increase or decrease in capital such as Drawing and Profit is not recorded in capital account, such kind of account is called: A. Fixed capital account B. Fluctuating capital account C. Current account D. None of the given option 8) There should be a minimum of _________ members to form a public limited company. A. Ten B. Nine

C. Seven D. Two 9) What amount of Provisions for bad debts will appear in Profit & Loss account if: Total debtors Rs. 32,800 Bad debts Rs. 3,600 Provision for doubtful debts (old) Rs. 6,000 Current year provisions (New) Rs. 1,500 A. Rs. 11,100 B. Rs. 900 C. Rs. 8,100 D. Rs. 5,100 Calculation: = New reserve - Old reserves +Old bad debts = 1,500 – 6,000 + 3,600 = 900 10) Ascertain the amount of Current Assets from the following data. Stock Rs. 51,060 Debtors Rs. 37,178 Provision for doubtful debts Rs. 870 Cash at bank Rs. 666 Advance rent Rs. 120 Rs. 88,154 A. Rs. 88,034 B. Rs. 88,238

C. Rs. 89108 Calculation: Stock 51,060 Debtors 37,178 Less: Provision for doubtful debts (870) Cash at bank 666 Advance rent 120 88,154 1. Memorandum of association contains which of the followings: A. Place of registered office of the company B. Objective of the company C. Amount of registered share capital D. All of the given options 2. The maximum amount with which a company gets registration/incorporation is called: A. Authorized share capital B. Issued share capital C. Subscribed share capital D. Paid up share capital 3. No entry is recorded for: A. Issued share capital B. Authorized share capital C. Subscribed share capital D. None of the given options

4. All preliminary expenses are incurred by _________ of the company. A. Directors B. Subscribers C. Accountant D. Managers 5. Share Premium Account account is used to: A. Write off Preliminary Expenses of the company B. Write off the balance amount, in issuing shares on discount C. Issue fully paid Bonus Shares D. All of the given options 6. Dividend is approved by the share holders in the __________at the recommendation of the directors. A. Annual general meeting B. Directors meeting C. Statutory meeting D. Special meeting 7. In Pakistan, Financial Statements of limited companies are prepared in accordance with: A. International accounting standards adopted in Pakistan B. Companies Ordinance 1984 C. Both A & B D. None of the given options 8. Which of the following are explained in Notes to the accounts? A. Nature of business of the company

B. Accounting Policies of the company C. Details and explanation of items given in the Profit and Loss Account and Balance Sheet D. All of the given options 9. Both Debentures and Term Finance Certificates are usually issued by: A. Public Companies B. Private Companies C. Listed Companies D. Non listed companies 10. Which of the following is not a Component of Financial statement? A. Balance Sheet B. Notes to the Accounts C. Comparative figures of Previous Period D. None of the given options 1. A large organization with separate legal status is known as: a) Limited

Company

b) Sole proprietorship c) Partnership d) None

of the given options

2. Which one of the following concept may be stated as "for every debit, there is a credit"? a. b. c. d.

Separate Entity Concept Dual Aspect Concept Money Measurement Concept Accounting Period Concept

3. The accounting system, in which accounting entries are made on the basis of amount having become due for payment or receipt, is known as: a) Cash

system of accounting

b) Current

accounting period

c) Accrual d) None

system of accounting

of the given options

4. Assets which have no physical existence and which cannot be seen, touched or felt are called: a) Current

assets

b) Tangible assets c) Fictitious

assets

d) Intangible

assets

5. If the Gross profit is Rs. 5,000 and the net profit is 25% of the Gross profit. The expenses must be: a) Rs.3,750 b) Rs.1,250 c) Rs.4,150 d) Rs.6,250

6. If the profit is 1/4 of the sales then it is: a) 1/4

of the cost price

b) 1/3

of the cost price

c) 1/5

of the cost price

d) 1/2

of the cost price

7. Excess of debit over credit is called: a) Opening

balance

b) Closing

balance

c) Debit

balance

d) Credit

balance

8. Those liabilities which arise only on the happening of some event, are called: a) Current

Liabilities

b) Outstanding

Liabilities

c) Deferred Liabilities d) Contingent

Liabilities

9. Which one of the following system of recording transaction has a dual aspect concept of accounting? a) Double

entry system

b) Single entry

system

c) Cash

system of accounting

d) None

of the given options

10. The arithmetical accuracy of books of account is verified through: a) Journal b) Trial

Balance

c) Ledger d) None

of the given options

Mr. X, the sole proprietor of Company XY does not list his personal house on the balance sheet of Company XY; Example shows which one of the following concept? a) Business Entity b) Matching Concept

c) Going Concern Concept d) Full Disclosure 2) Which one of the following is a current liability? (a) Closing inventory (b) Opening inventory (c) Petty cash (d) Bank overdraft 3) The primary purpose of the balance sheet is to a) Report the financial position of the reporting entity at a particular point of time b) Measure the net income of a business up to a particular point in time c) Determine cash flow for the period d) Report the difference between cash inflows and cash outflows for the period 4) In Accrual Accounting an expense is recorded when it is a) Paid b) Incurred c) 15 days after receipt of invoice d) Earned 5) Which one of the following items will appear on the balance sheet of a company as current assets? a) Prepaid expenses b) Outstanding expenses

c) Furniture and equipment d) Building 6) Which of the following is correct about the drawings? They reduce the Gross profit They reduce the capital & Net Profit They increase in liabilities They are treated as asset 7) For purposes of measuring business income, the life of a business is: a) Divided into specific point of time b) Divided into irregular cycles c) Divided into discrete accounting periods d) Considered to be a continuous cycle 8) Consider the following totals: Revenues Rs. 100,000 Cost and expenses Rs. 45,000 Income taxes Rs. 18,000 Net income Rs. 42,000 What was the total of operating income? a. Rs. 42,000 b. Rs. 55,000 c. Rs. 60,000 d. Rs. 37,000 9) Office salaries, insurance, advertising, sales commissions and rent are the

examples of: a. Financial Expenses b. Operating expenses c. Marketing expenses d. All of the given options 10) _______shows how much of a mark-up a company is achieving between the cost of what it sells and the selling price a. Cost of goods sold b. Gross profit c. Gross margin d. Net profit 1. If Accumulated profit brought forward has credit nature, what will be its treatment? a. It will be added in net profit for the year b. It will be subtracted from the net profit for the year c. It will be deducted from current Assets d. It will be added in current assets 2. Fixed Assets at WDV + working capital =? a. Total shareholders equity b. Net capital employed c. Long term loan d. Current liability 3. Keeping in view the following data, what will be Net Cash Flow from

Investing Activities? Particulars Rs. Purchases from short term borrowing 45,000 Purchases of marketable securities (65,000) Proceeds from marketable securities 40,000 Loans made to borrowers (17,000) Cash paid acquire plant assets (160,000) Proceeds from sales of sales of plant Assets 75,000 Collection on loans 12,000 a. Rs. (115,000) b. Rs. 100,000 c. Rs. 55,000 d. None of the given options 4. Keeping in view the following data, what will be Net cash provided by operating activities? Particulars Rs. Net income 65,000 Depreciation expenses 40,000 Decrease in accrued interest receivable 1,000 Increase in accounts payable 15,000 Increase in accrued liabilities 7,000 Non operating loss on sales of marketable securities 4,000 Increase in accounts receivable 30,000

Increase in inventory 10,000 Decrease in accrued liabilities 8,000 Increase in prepayments 3,000 Non operating gain on sales of plant assets 31,000 Net cash provided by operating activities ? a. Rs. 115,000 b. Rs. 100,000 c. Rs. 50,000 d. None of the given options 5. Advances from customers are shown in which of the following heads in Balance Sheet? a. Current Assets b. Current liabilities c. Fixed Assets d. Long term liabilities 6. While preparing cash flow statements, the repayments of a loan during the year should be included under the heading of: a. Operating activities b. Financing activities c. Investing activities d. None of the given options 7. Which of the following statement is also known as a source and use statements?

a. Income Statements b. Statement of Cash Flows c. Balance Sheet d. Statement of Retained Earnings 1. If Accumulated profit brought forward has credit nature, what will be its treatment? a. It will be added in net profit for the year b. It will be subtracted from the net profit for the year c. It will be deducted from current Assets d. It will be added in current assets 2. Fixed Assets at WDV + working capital =? a. Total shareholders equity b. Net capital employed c. Long term loan d. Current liability 3. Keeping in view the following data, what will be Net Cash Flow from Investing Activities? Particulars Rs. Purchases from short term borrowing 45,000 Purchases of marketable securities (65,000) Proceeds from marketable securities 40,000 Loans made to borrowers (17,000) Cash paid acquire plant assets (160,000)

Proceeds from sales of sales of plant Assets 75,000 Collection on loans 12,000 a. Rs. (115,000) b. Rs. 100,000 c. Rs. 55,000 d. None of the given options 4. Keeping in view the following data, what will be Net cash provided by operating activities? Particulars Rs. Net income 65,000 Depreciation expenses 40,000 Decrease in accrued interest receivable 1,000 Increase in accounts payable 15,000 Increase in accrued liabilities 7,000 Non operating loss on sales of marketable securities 4,000 Increase in accounts receivable 30,000 Increase in inventory 10,000 Decrease in accrued liabilities 8,000 Increase in prepayments 3,000 Non operating gain on sales of plant assets 31,000 Net cash provided by operating activities ? a. Rs. 115,000 b. Rs. 100,000

c. Rs. 50,000 d. None of the given options 5. Advances from customers are shown in which of the following heads in Balance Sheet? a. Current Assets b. Current liabilities c. Fixed Assets d. Long term liabilities 6. While preparing cash flow statements, the repayments of a loan during the year should be included under the heading of: a. Operating activities b. Financing activities c. Investing activities d. None of the given options 7. Which of the following statement is also known as a source and use statements? a. Income Statements b. Statement of Cash Flows c. Balance Sheet d. Statement of Retained Earnings 8. Calculate depreciation for the year. Building at cost = Rs. 1, 00,000 Depreciation rate = 10%

a. Rs. 10,000 b. Rs. 1,000 c. Rs. 500 d. Rs. 0 9. Mr. A, Mr. B and Mr. C are three partners of a partnership firm. The profit sharing ratio is 2:3:5. If company has distributable profit of Rs. 4, 90,000, determine the profit of Mr. A. a. Rs. 98,000 b. Rs. 1, 47,000 c. Rs. 2, 45,000 d. Rs. 3, 43,000 10. An example of financing activities in the context of cash flow statement is: a. Fixed capital expenditure 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 asset 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 Which of the following is not a Cash flow in Cash flow statement?

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 None of the given options

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 Debtors

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 Which of the following would not be categorized as current assets?

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 2. The cost of running the business on day to day basis

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 written evidence in support of a business transaction is called:

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 33% 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 False