MGT101 Final Term Past Paper 1

FINALTERM EXAMINATION · Fall 2008 · MGT101- Financial Accounting (Session - 1)

Q1. Wages outstanding given in the trial balance will be treated as a (an): (1 marks)

1. Asset
2. Liability
3. Revenue
4. Deferred expense

Correct answer: Liability

Q2. Prepaid interest given in the Trial Balance will be treated as a (an): (1 marks)

1. Asset
2. Liability
3. Revenue
4. Deferred expense

Correct answer: Asset

Q3. If company has distributable profit is Rs. 4, 90,000. Profit sharing share ratio of Mr. A, Mr. B and Mr. C is 2:3:5 respectively what will be the Profit share for Mr. C in distributable profit. (1 marks)

1. Rs. 98,000
2. Rs. 1, 47,000
3. Rs. 2, 45,000
4. Rs. 3, 43,000

Correct answer: Rs. 2, 45,000

Q4. If the Capitals of partners are fixed then, at the end of financial year a partner’s drawings are transferred to the: (1 marks)

1. Credit side of the partner’s capital account
2. Credit side of the partner’s current account
3. Debit side of partnership bank account
4. Debit side of the partner’s current account

Correct answer: Debit side of the partner’s current account

Q5. If company has distributable profit of Rs. 490,000, Profit sharing share ratio of Mr. A, Mr. B and Mr. C is 2:3:5 respectively. What will be the share of profit for Mr. A in distributable profit? (1 marks)

1. Rs. 98,000
2. Rs. 147,000
3. Rs. 245,000
4. Rs. 343,000

Correct answer: Rs. 98,000

Q6. In which situation(s) Partnership is dissolved? (1 marks)

1. In case of death of partner
2. At the admission of new partner
3. If any partner resigned from partnership
4. All of the given options

Correct answer: All of the given options

Q7. In calculating earning per share (EPS), the net profit is divided by which of the following? (1 marks)

1. Number of ordinary shares
2. Number of preference shares
3. Paid up capital
4. Authorized capital

Correct answer: Number of ordinary shares

Q8. Which of the following statement in NOT TRUE about the limited company form of business? (1 marks)

1. The limited company form of business allows ownership of the business to be spread amongst many people
2. Shareholders can appoint professionals
3. Shareholders are personally liable for all the liabilities incurred by the business
4. Regular filing of information about the affairs of the company is a legal requirement

Correct answer: Shareholders are personally liable for all the liabilities incurred by the business

Q9. A private limited company can commence its business: (1 marks)

1. Immediately on receiving a certificate of incorporation
2. Without receiving a certificate of incorporation
3. Only when it receives certificate of commencement of business
4. Only when it receives both, the certificate of incorporation as well as certificate of commencement of business

Correct answer: Only when it receives both, the certificate of incorporation as well as certificate of commencement of business

Q10. An example of financing activities in the context of cash flow statement is: (1 marks)

1. Capital expenditures on purchase of fixed assets
2. Long-term deposit
3. Financial charges paid
4. Dividend paid

Correct answer: Financial charges paid

Q11. A firm may earn profit during an accounting period but have less money in the bank at the end of the period then it had at the beginning. Which of the followings, on its own, could explain this? (1 marks)

1. Not paying invoices received from creditors
2. The sale of fixed assets during the period
3. An increase in trade debtors over the course of the period
4. An increase in the depreciation charge relative to the previous accounting period

Correct answer: An increase in trade debtors over the course of the period

Q12. The primary purpose of preparing a cash flow statement for an entity is to provide information about: (1 marks)

1. Its financial position at the end of an accounting period
2. Its cash receipts and cash payments during an accounting period
3. Its financial position at the start of an accounting period
4. None of the given options

Correct answer: None of the given options

Q13. Which of the following option(s) is TRUE about the Sales returns? (1 marks)

1. Sales returns reduce the Gross sales of the firm
2. Sales returns affect the Net income of the firm
3. Sales returns affect the flow of cash
4. All of the given options

Correct answer: All of the given options