MGT101 Final Term Current Paper 4

FINALTERM EXAMINATION

MGT101- Financial Accounting

Q1. Double entry accounting system includes: (1 marks)

1. Accrual accounting only
2. Cash accounting only
3. Both cash and accrual accounting
4. None of the given options

Q2. What will be the effect on accounting equation, when payment is made to the creditor of the business? (1 marks)

1. Increase in an asset, increase in owner's equity
2. Increase in an asset, increase in a liability
3. Decrease in an asset, decrease in owner's equity
4. Decrease in an asset, decrease in a liability

Q3. Which of the following is CORRECT about the flow of recording a transaction? (1 marks)

1. Occurrence of event – voucher—Journal—Ledger—Trial Balance—profit and loss account—Balance Sheet
2. Occurrence of event—Journal – voucher —Ledger—Trial Balance—profit and loss account—Balance Sheet
3. Occurrence of event—Ledger – voucher—Journal—Trial Balance—profit and loss account—Balance Sheet
4. Occurrence of event—Trial Balance – voucher—Journal—Ledger—profit and loss account—Balance Sheet

Q4. An informal accounting statement that lists the ledger account balances at a point in time and compares the total of debit balances with the total of credit balances is known as: (1 marks)

1. Income Statement
2. Balance Sheet
3. Trial Balance
4. Cash Book

Q5. The unfavorable balance of Profit and Loss account should be: (1 marks)

1. Added in liabilities
2. Subtracted from current assets
3. Subtracted from liabilities
4. Subtracted from capital

Q6. Which of the following account will be credited, if business purchased a vehicle on cash? (1 marks)

1. Vehicle account
2. Cash account
3. Business account
4. Bank account

Q7. The total of all costs incurred to convert raw material into finished goods is known as: (1 marks)

1. Prime cost
2. Conversion cost
3. Sunk cost
4. Opportunity cost

Q8. A decrease in value of a fixed asset due to age, wear and tear is known as: (1 marks)

1. Depreciation
2. Accumulated Depreciation
3. Appreciation
4. Written Down Value

Q9. The cost of moving plant and machinery to a new site will be treated as: (1 marks)

1. Revenue expense
2. Capital expense
3. Administrative expense
4. Operating expense

Q10. Depreciation arises because of: (1 marks)

1. Fall in the market value of an asset
2. Fall in the value of money
3. Physical wear and tear
4. All of the given options

Q11. Which one of the following is NOT true about revaluation of fixed assets? (1 marks)

1. Revaluation should be made after regular intervals
2. Change in value should be permanent
3. Only relevant asset should be revalued in the whole class of asset
4. The profit or loss will be transferred to revaluation account

Q12. A Bank Reconciliation Statement is prepared to: (1 marks)

1. Ascertain that the difference between the Cash Book balance and the Bank

Statement balance has been accounted for

1. Correct errors in the Cash Book or errors in the Bank Statement
2. Amend the balance of the Bank Statement of the firm
3. Amend the balance in the Cash Book of the firm

Q13. Bank Statement is a record of transactions between the bank and the holder of: (1 marks)

1. A foreign currency account
2. A current account
3. A saving account
4. All of the given options

Q14. Which one of the following transactions will cause the balance in Mr. Terry's Cash Book to be greater than his Bank Statement balance? (1 marks)

1. A cheque is drawn but not yet presented at the bank for payment
2. The bank has not yet notified to Mr. Terry about a dishonoured cheque
3. A credit transfer into Terry's Bank Account
4. A cheque payment of Rs.101 is recorded in the Cash Book as Rs.110

Q15. Which of the following option is TRUE about the characteristic(s) of Bad Debt? (1 marks)

1. It is a definite loss to the business
2. It is not shown in Balance Sheet
3. No provision is necessary for it
4. All of the given options