MGT101 Final Term Objective

Solved by ABr & Chanda Rehman

Final MCQs

It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of past experience, it is estimated that 10% of the sundry debtors are doubtful. Actual bad debts are Rs. 1600. What amount of new provision for doubtful debts will be credited in profit & loss account

1. Rs. 3,600
2. Rs. 4,000 correct
3. Rs. 1,600
4. Rs. 2, 400

Correct answer: Rs. 4,000 correct

Explanation:

40,000 x 10%= 4000

NOTE: 1600 are already declared as ACTUAL BAD DEBTS. only DOUBTFUL debts are required

If Cost of asset=Rs. 100,000, Residual Value (RV) = Rs. 20,000 and Life = 3 years, what will be the rate of depreciation?

10% 22%

42%

52%

Rate = 1 – n√ RV / C · Where: · “RV” = Residual Value · “C” = Cost · “n” = Life of Asset · Calculate the rate if: · Cost = 100,000 · Residual Value (RV) = 20,000 · Life = 3 years · Rate = 1 – 3 √20000/100000 · = 42%

Q46. Mr. A & B entered into a partnership with an equal investment and equal share in profit or loss. Markup on capital of Mr. A is Rs.2,500 and markup on drawings of Mr. B is Rs.2,800. The net income for the year is Rs.95,000. What will be the amount of distributable profit? (1 marks)

1. Rs.89, 700
2. Rs.94, 700
3. Rs.95, 300
4. Rs.100, 300

Correct answer: Rs.95, 300

profit 95000

less capital interest 2500 · add drawing interest 2800 · 95300

Q27. Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with an equal share in profit or loss. Markup on drawings of Mr. A is Rs.1,500 and of Mr. B is Rs.1,800. The net income for the year is Rs.85,000. What will be the profit share of Mr. B? (1 marks)

1. Rs.42,350
2. Rs.44,150
3. Rs.41,600
4. Rs.40,850

Correct answer: Rs.44,150

Profit = 85000 · Add markup on drawings = 1500 + 1800 = 3300 · Total net profit = 88300 · Profit share of B = 88300/2 = 44150

Q28. Mr. A & B entered into a partnership invested Rs.50,000 and Rs.65,000 with an equal share in profit or loss. Markup on capital of Mr. A is Rs.2,000 and markup on drawings of Mr. B is Rs.3,000. The net income for the year is Rs.85,000. What will be the profit share of Mr. B? (1 marks)

1. Rs.40,000
2. Rs.43,000
3. Rs.130,000
4. Rs.133,000

Correct answer: Rs.43,000

Net Profit = 85000 · Add markup on Drawings = 3000 · Less markup on Capital = 2000 · Total Profit of the firm = 85000 + 3000 - 2000 = 86000 · Profit of B = 86000 / 2 = 43000

Q23. Accumulated depreciation is a ____________ account? (1 marks)

1. Fixed asset
2. Current asset
3. Contra asset
4. Liability

Correct answer: Contra asset

Q28. Which of the following statement is not true regarding the objective of statement of cash flows? (1 marks)

1. It is helpful for decision making by management
2. It is used for reporting the net profit of the period
3. It can be used for estimations for cash flows in future
4. It is used to determine the liquidity of the business

Correct answer: It is used for reporting the net profit of the period

Q30. Short term investments in marketable securities and treasury bills that will mature within ninety days from the date of acquisition, must be classified as: (1 marks)

1. Receivables
2. Receipts from Capital
3. Current and intangible assets
4. Cash equivalents

Correct answer: Cash equivalents

Q46. Which of the following is an example of cash outflow for a company? (1 marks)

1. Cash collected from customers
2. Cash paid for merchandise inventory
3. Writing off an uncollectible accounts receivable
4. Reclassifying accounts payable to notes payable

Correct answer: Cash paid for merchandise inventory

Q10. When the capitals are fixed, which of the following account will be debited for drawings (1 marks)

1. Individual Partner’s Current Account
2. Partner’s Cash Account
3. Partner’s Bank Account
4. Partners Capital Account

Correct answer: Individual Partner’s Current Account

Q42. In Income Statement, both beginning inventory and ending inventory appear in the section of: (1 marks)

1. Cost of goods sold
2. Indirect cost
3. Selling cost
4. Factory over head cost

Correct answer: Cost of goods sold