In the name of ALLAH, the most beneficient, the most merciful

Financial Accounting - II (MGT401)

Multiple Choice Questions (MCQs)

 

Objective Questions

Question

What will be the accounting treatment of loss in the books of accounts of a company which arises from the revaluation of an asset?

  1. Dr. Asset A/C
    Cr. Revaluation A/C
  2. Dr. Asset A/C
    Cr. Accumulated Depreciation A/C
  3. Dr. Asset A/C
    Cr. Disposal of Asset A/C
  4. Dr. Revaluation A/C
    Cr. Asset A/C

Answer: Chapter No.  

Question

Preparation and presentation of Financial Statements are governed by:

  1. Companies Ordinance 1984
  2. International Accounting Standards
  3. International Financial Reporting Standards
  4. All of the given

Answer: Chapter No.  

Question

Which of the following is NOT a Qualifying Asset?

  1. Power plant being in the process of manufacturing
  2. Inventories requiring a substantial period for manufacturing
  3. Special order for a special inventory that will be manufactured in 5 months
  4. Asset ready for use

Answer: Chapter No.  

Question

Which of the following is the type of business owned by one person?

  1. Sole-Proprietorship
  2. Partnership
  3. Public Limited Company
  4. Unlimited Company

Answer: Chapter No.  

Question

If the holding company owns more than 50% but less than 100% shares of the subsidiary company then the subsidiary type will be termed as:

  1. Partially owned subsidiary
  2. Wholly owned subsidiary
  3. Direct subsidiary
  4. Indirect subsidiary

Answer: Chapter No.  

Question

What should be the treatment of research cost incurred by a business according to IAS-38?

  1. It should be recorded as a part of capital of the business
  2. It should be recorded as non-current asset
  3. It should be recorded as current asset
  4. It should be recorded as expense for the period

Answer: Chapter No.  

Question

Which of the following IAS deals with Revaluation of Assets?

  1. IAS 16
  2. IAS 07
  3. IAS 01
  4. IAS 23

Answer: Chapter No.  

Question

Which of the following schedule of the Company Ordinance 1984 is related to the classification of intangible assets?

  1. 4th schedule
  2. 5th schedule
  3. 6th schedule
  4. 2nd schedule

Answer: Chapter No.  

Question

How many person(s) is(are) required to takeover the business after the death of a member in case of Single Member company?

  1. Seven
  2. Three
  3. Two
  4. One

Answer: Chapter No.  

Question

Who sign the Memorandum of Association (MOA) of a

  1. Promoters of the company
  2. Managers of the company
  3. Employees of the company
  4. All of the given

Answer: Chapter No.  

Question

Concept of Related Parties is defined in:

  1. Companies Ordinance 1984
  2. IAS
  3. Both Companies Ordinance 1984 and IAS
  4. Neither in Companies Ordinance 1984 nor in IAS

Answer: Chapter No.  

Question

Which of the following IAS deals with the Borrowing Costs?

  1. IAS 23
  2. IAS 07
  3. IAS 01
  4. IAS 16

Answer: Chapter No.  

Question

Which of the following is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding?

  1. Research
  2. Development
  3. Audit
  4. Accounting

Answer: Chapter No.  

Question

Which of the following is an artificial person recognized by law?

  1. Limited company
  2. Partnership
  3. Sole-Proprietorship
  4. Trust

Answer: Chapter No.  

Question

At least what percentage of voting right is required for assuming an investor company to have significant influence in the affairs of investee company?

  1. 50%
  2. 10%
  3. 20%
  4. 60%

Answer: Chapter No.  

Question

Which af the following is the ability to govern the financial and operating policies of an enterprise so as to obtain from its activities?

  1. Control
  2. Significant Influence
  3. Direct subsidiary
  4. Indirect subsidiary

Answer: Chapter No.  

Question

Which institute recommends the adoption of IAS (International Accounting Standards) in Pakistan?

  1. Institute of Chartered Accounts of Pakistan (ICAP)
  2. Institute of Cost & Management Accountants of Pakistan (ICMAP)
  3. Securities and Exchange Commission of Pakistan (SECP)
  4. Stock Exchange

Answer: Chapter No.  

Question

If the holding company owns 100% shares of the subsidiary company then the subsidiary type will be termed as:

  1. Partially Owned Subsidiary
  2. Wholly Owned Subsidiary
  3. Direct Subsidiary
  4. Indirect Subsidiary

Answer: Chapter No.  

Question

Which of the following sections of the Companies Ordinance 1984 is related to the Annual General Meeting?

  1. Section 157
  2. section 158
  3. section 159
  4. Section 160

Answer: Chapter No.  

Question

Which of the following costs can be capitalized?

  1. Purchases of assets financed through issue of debentures
  2. Assets that are not currently in use because of excess capacity
  3. Assets not currently undergoing activities necessary to prepare for intended use
  4. Assets intended for sale or use that are produced as discrete projects

Answer: Chapter No.  

Question

Which of the following may result for an inability to sell a financial asset quickly at close to its fair value?

  1. Price Risk
  2. Liquidity Risk
  3. Interest Rate Risk
  4. Currency Risk

Answer: Chapter No.  

Question

Which of the following methodology is adopted for the valuation of investments in associated companies?

  1. Equity Method
  2. At cost or Under IAS 39
  3. At amortized cost
  4. At fair value

Answer: Chapter No.  

Question

What will be the accounting treatment of loss in the books of accounts of a company which arises from the revaluation of an asset?

  1. Dr. Asset A/C
    Cr. Revaluation A/C
  2. Dr. Asset A/C
    Cr. Accumulated Depreciation A/C
  3. Dr. Asset A/C
    Cr. Disposal of Asset A/C
  4. Dr. Revaluation A/C
    Cr. Asset A/C

Answer: Chapter No.  

Question

IAS-16 deals with:

  1. Property, Plant and Equipment
  2. Cash Flow Statement
  3. Presentation of Financial Statements
  4. Earning per share

Answer: Chapter No.  

Question

If an intangible resource does not fulfill the criteria of intangible asset then what will be the treatment of expenditures incurred to acquire such intangible resource?

  1. It will be recorded as non-current asset of the company
  2. It will be recorded as an expense for the period
  3. It will be recorded as current asset of the company
  4. It will be recorded as capital of the company

Answer: Chapter No.  

Question

If the holding company owns100% shares of the subsidiary company then the subsidiary type will be termed as:

  1. Partially Owned Subsidiary
  2. Wholly Owned Subsidiary
  3. Direct Subsidiary
  4. Indirect Subsidiary

Answer: Chapter No.  

Question

Which activities by definition do not fulfill the recognition criteria according to IAS-38?

  1. Development activities
  2. Research activities
  3. Both development and research activities
  4. None of the given

Answer: Chapter No.  

Question

If the holding company owns marginally less than 100% shares of the subsidiary company then the subsidiary type will be termed as:

  1. Partially Owned Subsidiary
  2. Wholly Owned Subsidiary
  3. Virtually Wholly Owned Subsidiary
  4. Indirect Subsidiary

Answer: Chapter No.  

Question

The closing balance of inventory will be if: Opening inventory will Rs.1, 000, purchases will Rs.10, 000 and cost of sales will Rs.10,500.

  1. Rs. 1,000
  2. Rs. 500
  3. Rs. 1,500
  4. Rs. 950

Answer: Chapter No.  

Question

Which of the following is/are the method(s) for calculating the cost of inventory?

  1. FIFO Method
  2. Weighted Average Method
  3. Specific Identification Method
  4. All of the given

Answer: Chapter No.  

Question

Depreciation is best described as:

  1. A decline in the market value of the assets
  2. A means of expanding the net-cost of non-current assets over their useful life
  3. A source of estimating the amount of money needed to replace the assets
  4. A means of spreading the payment for non-current assets over a period of years

Answer: Chapter No.  

Question

When it is appropriate for a company to use Weighted Average Cost method of inventory?

  1. When prices of materials are more stable
  2. When prices of materials are more volatile
  3. When prices of materials are constantly decreasing
  4. When prices of materials are constantly increasing

Answer: Chapter No.  

Question

Total factory cost of a manufacturing concern consists of

  1. Direct Material + Direct Labor
  2. Direct Labor + FOH
  3. Direct Material + FOH
  4. Direct Material + Direct Labor + FOH

Answer: Chapter No.  

Question

If the holding company owns more then 50% but less then 100% shares of the subsidiary company then the subsidiary type will be termed as:

  1. Partially Owned Subsidiary
  2. Wholly Owned Subsidiary
  3. Direct Subsidiary
  4. Indirect Subsidiary

Answer: Chapter No.  

Question

A Partnership firm has a maximum ______ numbers of partners.

  1. 20
  2. 15
  3. 10
  4. 2

Answer: Chapter No.  

Question

Which of the followings information(s) should be disclosed by a company in respect of long term loans made to others?

  1. Interest rate
  2. Period or installments for loan repayment
  3. Any other terms and conditions which have material effects
  4. All of the given

Answer: Chapter No.  

Question

Which one of the following methods for inventory valuation is NOT suitable for homogeneous units?

  1. FIFO Method
  2. LIFO Method
  3. Weighted Average Method
  4. Specific Identification Method

Answer: Chapter No.  

Question

Which one of the following is the type of stock for trading concerns?

  1. Raw Material
  2. Work in Process
  3. Finished Goods
  4. Stock in Trade

Answer: Chapter No.  

Question

Companies are registered under:

  1. Partnership Act 1932
  2. Companies Ordinance 1984
  3. Partnership Agreement
  4. Income Tax Ordinance 1979

Answer: Chapter No.  

Question

Which of the following IAS deals with the Borrowing Costs?

  1. IAS 23
  2. IAS 07
  3. IAS 01
  4. IAS 16

Answer: Chapter No.