MGT401 Midterm Objective

Midterm Examination (Spring 2010)

By ADNAN AWAN

Q1. Marks: 1 - Please choose one

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

Ø Sole-Proprietorship

Ø Partnership

Ø Limited Companies Ø Unlimited Companies

Partnership

Is the type of business that is owned by more than one person. These persons form a “Partnership Firm” through an agreement called “Partnership Agreement”. Partnership firms and agreements are governed by the Partnership Act 1932.

Q2. Marks: 1 - Please choose one

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

Ø Sundry Debtors

Ø Loan given to Mr. A for shorter period

Current Liabilities:

v Trade and other payables, v Interest, profit, return or mark-up accrued on loans and other payables v Short term borrowings v Current portion of long term borrowings v Current portion of long term murabaha v Provision for taxation

Q3. Marks: 1 - Please choose one

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?

Ø Assets

Ø Gains Ø Liabilities Ø Expenses

Assets

Resources Controlled by the entity As a result of a past event from which future economic benefits are expected to flow to the entity

Q4. Marks: 1 - Please choose one

All of the following are the assets of the firm except

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

Q5. Marks: 1 - Please choose one

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

Ø Reliability only Ø Relevancy only

Ø Both Reliability and Relevancy

Ø Comparability

Financial information must be complete within the restrictions of materiality and cost, to be reliable. Omission may cause information to be misleading.

Q6. Marks: 1 - Please choose one

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

Ø The Business is profitable Ø The assets of the Business are valued at Market Value Ø The business will continue until the Directors decide to close it

Ø The Business will continue its working

Going Concern

The concept implies that the business will continue to operate for the foreseeable future

Q7. Marks: 1 - Please choose one

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

Ø Future Assumptions Ø Past Assumptions

Ø Accrual Basis and Going Concern Basis

Ø Accrual Basis Assumption only

Financial statements are prepared on the following assumptions. v Accruals basis v Going concern

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

Ø Term Finance Certificates Ø Loan Agreements Ø Trade Receivables

Ø Goodwill

Other examples: Physical Assets:

v TFC, v Loan Agreements, v Trade Receivables / Payables.

Q9. Marks: 1 - Please choose one

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

Ø Share Capital Ø Loans Payable

Ø Inventories

Q10. Marks: 1 - Please choose one

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?

Ø 7,200 Ø 12,000

Ø 12,800

Ø 16,000

Q11. Marks: 1 - Please choose one

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

Ø Amount due in respect of goods sold Ø Amount due in respect of services rendered

Ø Amount due in respect of other contractual obligation

Ø Amount due which are in nature of loans or advances.

Q12. Marks: 1 - Please choose one

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