Few Fin 621 MCQs need attention
Aamir Ismail
kindly solve mentioned below
Which of the following principle deals with the valuation and recording of the assets at cost?
► Entity Principle
► Matching Principle
► Cost Principle
►
Stable Currency principle
Question No: 2 ( Marks: 1 ) - Please choose one
Which of the
following is the acronym for GAAP?
► Generally Adopted Accounting
Principles
► Generally Accepted Auditing Principles
► Generally
Accepted Accounting Principles
► Generally Adapted American Principles
Question No: 3 ( Marks: 1 ) - Please choose one
How much duration
does an accounting period usually have?
► Three months
► Two years
► One year
► Five years
Question No: 4 ( Marks: 1 ) - Please choose one
To determine the
balance of a particular account, one should refer to which of the
following?
► Ledger
► Source document
► Chart of accounts
► Journal
Question No: 5 ( Marks: 1 ) - Please choose one
As transactions
and events related to financial resources occur, they are analyzed with
respect to their effect on which of the following?
► Financial position of the company
► Accounting cycle
► Trial
balance
► Liquidity position of the company
Question No: 6 ( Marks: 1 ) - Please choose one
Which of the
following refers to the term “posting”?
► The system of giving
numbers to the accounts
► Transferring the debits and credits to
ledger
► Transferring the debits and credits to journal
► The recording of transactions
Question No: 7 ( Marks: 1 ) - Please choose one
Which of the
following is the next step after the preparation of trial balance?
► Adjusted trial balance
► Financial statements
► Adjusting
entries
► Closing entries
Question No: 8 ( Marks: 1 ) - Please choose one
Which of the
following is TRUE regarding the income statement?
► The income
statement reports only revenue for which cash was received at the point
of sale
► The income statement reports the financial position of a
business at a particular point in time
► The income statement is sometimes called the statement of operations
►
The income statement reports revenues, expenses and liabilities
Question No: 9 ( Marks: 1 ) - Please choose one
Which of the
following principle is used for recording an expense?
► Matching Principle
► Cost Principle
► Realization Principle
►
Objectivity Principle
Question No: 10 ( Marks: 1 ) - Please choose one
The net income
reported on the income statement is Rs. 90,000. However, adjusting
entries have not been made at the end of the period for supplies expense
of Rs. 2,700 and accrued salaries of Rs. 1,300. Net income, as
corrected, would be:
► Rs. 87,300
► Rs. 86,000
► Rs. 88,700
► Rs. 90,000
Question No: 11 ( Marks: 1 ) - Please choose one
Prepaid Expense
is a(n) _________ account and has a _________ normal balance.
► Revenue, credit
► Liability, credit
► Asset, debit
►
Expense, debit
Question No: 12 ( Marks: 1 ) - Please choose one
Company A owns a
building. Which of the following statements regarding depreciation is
FALSE from an accounting perspective?
► As the market value of the building increases, depreciation should
increase
► Depreciation is an estimated expense to be recorded each
period during the building’s life
► As depreciation is recorded,
stockholders’ equity is reduced
►As depreciation is recorded, total assets are reduced
Question No: 13 ( Marks: 1 ) - Please choose one
A firm paid Rs.
800,000 in dividends over the last period. The beginning and ending
retained earnings account balances were Rs. 10,100,000 and Rs.
12,500,000 respectively. Assuming a 40% average tax rate, what was the
firm's net income (net profit after taxes)?
► Rs. 5,333,333
► Rs. 3,200,000
► Rs. 2,400,000
► Rs. 1,600,000
Question No: 14 ( Marks: 1 ) - Please choose one
Which of the
following is the largest single expense of most merchandising firms?
►
Cost of goods sold
► Rent Expense
► Amortization Expense
►
Salaries Expense
Question No: 15 ( Marks: 1 ) - Please choose one
Which of the
following is NOT among the five main kinds of current assets?
► Cash and equivalents
► Deferred income
► Accounts receivable
► Prepaid expenses
Question No: 16 ( Marks: 1 ) - Please choose one
When preparing a
statement of cash flows under the indirect method, supplemental
disclosure should be made for which of the following?
► Net cash consumed by operating activities
► Cash dividend
distributions
► Cash paid for interest and taxes
► Cash paid for
wages
Question No: 17 ( Marks: 1 ) - Please choose one
Which of the
following items is included in the financing activities section of the
statement of cash flows?
► Cash effects of transactions involving making and collecting
loans
► Cash effects of acquiring and disposing of investments and
property, plant, and equipment
► Cash effects of transactions
obtaining resources from owners and providing them with a return on
their investment
► Cash effects of transactions that enter into the determination of net
income
Question No: 18 ( Marks: 1 ) - Please choose one
ABC Company has a
cost of goods sold of Rs. 500,000. During the year the inventory
increased by Rs. 10,000 and accounts payable increased by Rs. 15,000.
The interest expense was Rs. 15,000 for the year and dividend of Rs.
11,000 were paid during the year. What would be the cash payments for
the purchase of the merchandise.
► Rs. 505,000
► Rs. 516,000
► Rs. 490,000
► Rs. 495,000
Question No: 19 ( Marks: 1 ) - Please choose one
The statement of
cash flow does NOT assist investors, creditors and others in assessing:
► The company’s ability to generate positive cash flows in future
periods
► The company’s ability to meet its obligations and to pay
dividends
► The company’s needs for external financing
► The
company’s ability to forecast future losses
Question No: 20 ( Marks: 1 ) - Please choose one
Notes to
financial statements are beneficial in meeting the disclosure
requirements of financial reporting. The note should not be used to:
► Correct an improper presentation in the financial statements
►
Describe significant accounting policies
► Describe depreciation
methods employed by the company
► Describe principles and methods
peculiar to the industry
Question No: 21 ( Marks: 1 ) - Please choose one
When using the
perpetual inventory system, each time a sale is recorded the:
► Inventory account is increased
► Inventory account is decreased
►
Cost of Goods Sold account is decreased
► Cost of goods available
for sale decreases
Question No: 22 ( Marks: 1 ) - Please choose one
Which of the
following feature is shown by the income statement for a merchandising
company?
► Gross profit
► Cost of goods sold
► A sales revenue
section
► All of the given options
Question No: 23 ( Marks: 1 ) - Please choose one
In a period of
rising prices, all of the following statements regarding LIFO are true
EXCEPT:
► Net income is generally higher
► Ending inventory is
generally undervalued
► It can be used to manipulate net income
► Most recent inventory
costs are allocated to cost of goods sold
Question No: 24 ( Marks: 1 ) - Please choose one
From the given
data, calculate Cost of Goods Sold using the FIFO costing method:
Beginning
inventory is 10 units . Rs. 10 each.
On January 20, purchased 10
units . Rs. 20 each
On January 30, purchased 5 units . Rs. 30 each
15 of the 25 units are
sold.
► Rs. 200
► Rs. 150
► Rs. 350
► Rs. 450
Question No: 25 ( Marks: 1 ) - Please choose one
In which of the
following inventory pricing procedure, the oldest costs incurred rarely
have an effect on the ending inventory valuation?
► FIFO
►LIFO
► Retail
► Weighted-average
Question No: 26 ( Marks: 1 ) - Please choose one
If beginning
inventory is Rs. 60,000, cost of goods purchased is Rs. 380,000, and
ending inventory is Rs. 50,000, what is cost of goods sold under a
periodic system?
► Rs. 390,000
► Rs. 370,000
► Rs. 330,000
► Rs. 420,000
Question No: 27 ( Marks: 1 ) - Please choose one
The purpose of
recording depreciation on productive assets is to:
► Reflect the
decline in the market value of the assets each period
► Reduce income
when the company has an exceptionally profitable year
► Be in conformity with the revenue recognition principle
► Allocate
the original cost of a productive asset to expense over its useful life
Question No: 28 ( Marks: 1 ) - Please choose one
In which of the
following situations, a company should NOT record any depreciation
expense on asset described?
► Computer Airline is required by law to maintain its aircraft in “as
good as new” condition
► Metro Advertising owns an office building
that has been increasing in value each year
► Computer Sales Company
has in inventory a new type of computers, designed never to obsolete
► None of the given option is right as depreciation is applied on all
assets
Question No: 29 ( Marks: 1 ) - Please choose one
Which of the
following is NOT the part of annual report?
► Financial statements
► Auditor’s report
► Five year summary
►
Future investments report
Question No: 30 ( Marks: 1 ) - Please choose one
In a statement of
cash flows, the acquisition of land by issuing capital stock:
► Is not shown at all, since no cash was received or disbursed
►
Is shown as an investing activity
► Is shown as a financing activity
►
Is shown in a supplementary schedule as a non-cash investing and
financing transaction
Question No: 31 ( Marks: 1 ) - Please choose one
Which of the
following would represent an increase in Owner's Equity?
► Increase in net income
► Increase in assets
► Increase in
accounts receivable
► Increase in cash
Question No: 32 ( Marks: 1 ) - Please choose one
Which of the
following steps of accounting cycle keep on occuring throughout the
period?
► Journalizing and posting the entries
► Making adjusting entries
for the relevent accounts
► Preparing Trial Balance
► Preparing
financial statements
Question No: 33 ( Marks: 1 ) - Please choose one
Which one of the
following items is NOT generally used in preparing a statement of cash
flows?
► Adjusted trial balance
► Comparative balance sheets
► Current
income statement
► Additional information
Question No: 34 ( Marks: 1 ) - Please choose one
Which of the
following items does NOT result in an adjustment in the merchandise
inventory account under a perpetual system?
► A return of merchandise inventory to the supplier
► Payment of
freight costs for goods shipped to a customer
► Payment of freight
costs for goods received from a supplier
► A purchase of merchandise
Question No: 35 ( Marks: 1 ) - Please choose one
From the given
information, calculate the Cost of Goods Sold using the weighted-average
cost method:
Beginning inventory 10 units . Rs. 10 each
On
January 20, purchased 10 units . Rs. 20 each
On January 30, purchased 5 units . Rs. 30 each
15 of the 25 units are
sold
► Rs. 200
► Rs. 270
► Rs. 300
► Rs. 350
Question No: 36 ( Marks: 1 ) - Please choose one
Which of the
following is the most common item in adjusting entries of a
merchandising business?
► Un-earned revenue
► Pre-paid expense
► Depreciation expense
►
Accrued revenue
Question No: 37 ( Marks: 1 ) - Please choose one
Closing entries
result in net income being calculated in the income summary account and
then transferred to which of the following account?
► Revenue account
►
Common Stock account
► Dividends account
► Owner's Capital account
Question No: 38 ( Marks: 1 ) - Please choose one
The users of a
statement of cash flows are mostly interested in:
► Net cash flow
from operating activities
► Net cash flow from investing activities
►
Net cash flow from financing activities
► Net cash flow from non-cash transactions
Question No: 39 ( Marks: 1 ) - Please choose one
Which of the
following question is NOT addressed by cash flow statement?
► How
much cash was generated by the company’s operations?
► Why is such a
profitable company able to pay only small dividends?
► How much was spent for the new plants and equipment?
► How
profitable the company’s current assets are?
Question No: 40 ( Marks: 1 ) - Please choose one
Which of the
following statements is CORRECT regarding depreciation methods?
►
Accumulated depreciation represents a fund being accumulated fro the
replacement of assets
► The cost of a machine includes the cost of repairing damage to the
machine during the installation process
► A company may use different
depreciation methods in its financial statements and its income tax
returns
► The use of an accelerated depreciation method causes an asset to wear
out more quickly than does the straight line method
Question No: 42 ( Marks: 5 )
Olympic Inc., had the following
cash flows during the current year:
Cash received from customers Rs. 240,000
Interest and dividend
received 50,000
Proceeds from the sale of the plant assets 330,000
Cash
paid to suppliers and employees 127,000
Cash paid for the purchase
of investments 45,000
Cash paid for the purchase of treasury stock 36,000
Determine the amount of net cash flow from operating activities by using the direct method.
--
A.Ismail
shahaan zulfiqar
--
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