MGT401 Final Term Objective

Midterm Examination MGT401 – Financial Accounting II

Q01. Which of the following type of the business is governed under the Partnership Act 1932 in Pakistan?

•  Sole-Proprietorship

 Partnership

•  Limited Companies
•  Unlimited Companies

Q02. Which of the following is/are not example of current liability?

•  Sundry Debtors
•  Loan given to Mr. A for shorter period

Q03. Which of the following are the resources controlled by the entity as a result of a past event from which future economic benefits are expected to flow to the entity?

•  Assets
•  Gains
•  Liabilities
•  Expenses

Q04. All of the following are the assets of the firm except

•  A building owned by the firm
•  Goods in transit
•  Money owed to the firm by it’s debtors
•  Money which the firm has borrowed and has not yet been repaid.

Q05. Which of the following is related to the qualitative characteristics that make financial information useful?

•  Reliability only
•  Relevancy only

 Both Reliability and Relevancy

•  Comparability

Q06. Which of the following statement is true regarding Going Concern Concept?

•  The Business is profitable

 The assets of the Business are valued at Market Value

•  The business will continue until the Directors decide to close it
•  The Business will continue its working

Q07. Under which of the following assumptions, the Financial Statements are to be prepared?

•  Future Assumptions
•  Past Assumptions

 Accrual Basis and Going Concern Basis

•  Accrual Basis Assumption only

Q08. Which one of the following is not a physical asset?

•  Term Finance Certificates
•  Loan Agreements
•  Trade Receivables

 Goodwill

Q09. Which one of the following is not the example of Financial Instruments?

•  Share Capital
•  Loans Payable
•  Inventories

Q10. The firm uses diminishing balance method for calculating Depreciation. The vehicle costing 20,000 was sold after two years. The sale resulted neither in loss or profit. What was the sale price of the Vehicle?

•  7,200
•  12,000

 12,800

•  16,000

Q11. Which of the following is/are not included in the disclosure requirement of Trade Debts with respect to the Companies Ordinance 1984?

•  Amount due in respect of goods sold
•  Amount due in respect of services rendered

 Amount due in respect of other contractual obligation

•  Amount due which are in nature of loans or advances.

Q12. A firm has two categories of stock. The cost and Net Realizable Value (NRV) of each is as follows:

Cost NRV

Category 1 · Rs. 35,000 · Rs. 22,000 Category 2 · Rs. 22,000 · Rs. 25,000

What amount will be disclosed.

•  44,000

 47,000

•  57,000
•  60,000

Q13. Which of the following method is suitable for calculating the cost of inventory when actual costs of individual units of merchandise can be determined from the accounting records?

•  FIFO Method
•  LIFO Method
•  Weighted Average Method

 Specific Identification Method

Q14. Which of the following authority regulates/governs the functioning of Companies?

 Securities & Exchange Commission of Pakistan

•  Federal Government
•  Ministry of Finance

Q15. Which of the following is true about the meeting of Directors?

•  The quorum for a meeting of Directors of a listed company should not less than 1/3 of their members or four which is greater.
•  The quorum for a meeting of Directors of a listed company should not less than 1/3 of their members or four which is lesser.
•  The quorum for a meeting of Directors of a listed company should not less than 1/2 of their members or four which is greater.
•  The quorum for a meeting of Directors of a listed company should not less than 1/2 of their members or four which is lesser.