MGT101 Midterm Past Papers

Financial Accounting MGT101

Mid term papers

Q1. The expenses that give benefit for a period of more than twelve months are called ________. (1 marks)

1. Capital expenses
2. Revenue expenses
3. Preliminary expenses
4. None of the given options

Correct answer: Revenue expenses

Q2. An expense incurred by the business for the purchase of land & building is an example of: (1 marks)

1. Capital Expense
2. Revenue Expense
3. Deferred Expense
4. Preliminary Expense

Correct answer: Capital Expense

Q3. Income of the business includes: (1 marks)

1. Cash sales only
2. Credit sales only
3. Credit purchases only
4. Both cash sales and credit sales

Correct answer: Both cash sales and credit sales

Q4. The basic accounting principle/concept according to which Business is independent from its owner(s) is known as: (1 marks)

1. Separate Entity Concept
2. Matching Concept
3. Going Concern Concept
4. Materiality Concept

Correct answer: Separate Entity Concept

Commercial Accounting is based on:

1. Single entry book keeping
2. Double entry book keeping
3. Both single and double entry book keeping
4. Cash basis of book keeping

Correct answer: Double entry book keeping

Q6. Obligations to pay cash or un-earned incomes by the business are the: (1 marks)

1. Expenses
2. Assets
3. Liabilities
4. Equities

Correct answer: Liabilities

Q7. What would be the affect on the components of the accounting equation, if goods are purchased on cash? (1 marks)

1. Increase in cash and decrease in equity
2. Increase in cash and increase in goods
3. Increase in goods and decrease in cash
4. Increase in equipment and increase in equity

Correct answer: Increase in goods and decrease in cash

Q8. When Capital is increased by an amount, it is recorded on the: (1 marks)

1. Left or credit side of the account
2. Right or debit side of the account
3. Left or debit side of the account
4. Right or credit side of the account

Correct answer: Left or credit side of the account

Q9. Which of the following is also called "The original book of entry"? (1 marks)

1. General Journal
2. General Ledger
3. Trial Balance
4. Profit and Loss Account

Correct answer: General Journal

Q10. 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 (1 marks)

1. Trial Balance
2. Cash Book

Correct answer: Trial Balance

Q11. Which of the following is CORRECT for Trading account? (1 marks)

1. It inculdes cost of goods sold and all the direct expenses related to sales
2. It inculdes cost of goods sold and all the indirect expenses related to sales
3. It inculdes cost of goods sold and all the direct and indirect expenses
4. It inculdes cost of goods sold and all the direct and selling, administrative expenses

Correct answer: It inculdes cost of goods sold and all the direct expenses related to sales

Q12. Which one of the following is NOT prepared by Non profit organizations? (1 marks)

1. Profit & Loss account
2. Income & Expenditure account
3. Receipts & Payments account
4. Balance Sheet

Correct answer: Profit & Loss account

Q13. Which of the following is an example of a Current liability? (1 marks)

1. Closing inventory
2. Opening inventory
3. Petty cash
4. Bank overdraft

Correct answer: Bank overdraft

Q14. Identify the business transaction for given entry below. (1 marks)

Vehicle Account XXX (Dr.) Bank Account XXX (Cr.)

1. Paid for vehicle through cheque
2. Paid for vehicle through cash
3. Purchased vehicle on credit
4. None of the given options

Correct answer: Paid for vehicle through cheque