Financial Accounting - II (MGT401)

1. Sitara Textile is using the prudence concept to record the profit in its income statement. According to prudence concept, Sitara Textile will record profit when it is:

   1. Expected
   2. Realized
   3. Material
   4. Received

2. 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

3. Revaluation of asset is conducted by:

   1. Directors
   2. Shareholders
   3. Managers
   4. Professional Qualified Valuers

4. 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

5. The closing stock will be shown under the head of ______ in Balance Sheet.

   1. Non current Assets
   2. Current Assets
   3. Intangible Assets
   4. Tangible Assets

6. 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%

7. Which of the following is the deduction or allowance allowed by a creditor to a debtor?

   1. Trade Discount
   2. Cash Discount
   3. Purchases return
   4. Sales return

8. Section 95A of the Companies ordinance 1984 is applied on which of the following companies?

   1. Listed companies only
   2. Non listed companies only
   3. Private companies only
   4. All companies

9. Which of the following is Not a qualitative characteristic of financial statements according to the IASB’s Framework?

   1. Materiality
   2. Understandability
   3. Comparability
   4. Relevance

10. 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

11. 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

12. 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

13. 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

14. Money set aside by limited companies to distribute among shareholders is called.

    1. Directors' salaries
    2. Free Sample Distribution
    3. Dividends
    4. Loan interest

15. Companies are registered under:

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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. A Partnership firm has a maximum ______ numbers of partners.

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

23. Which of the following IAS deals with Revaluation of Assets?

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

24. 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

25. IAS-16 deals with:

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

26. 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

27. 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

28. 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

29. When it is suitable to use specific identification cost method?

    1. When items of inventories are normally interchangeable
    2. When items of inventories are not normally interchangeable
    3. When goods are produced for regular projects
    4. None of the given

30. 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

31. 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

32. WXY Private Limited was incorporated on 1st Jan, 2010.According to local legislation, in how much time period company WXY is required to prepare its first annual accounts?

    1. Within 20 months
    2. Within 18 months
    3. Within 16 months
    4. Within 14 months

33. 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

34. 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

35. 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

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

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

37. Which of the following is/are the Classification of Current Assets with respect to the Companies Ordinance 1984?

    1. Cash Balance
    2. Loans and Advances
    3. Bank Balance
    4. All of the given

38. An inventory valuation system should include the cost of:

    1. Carriage in
    2. Carriage out
    3. Both Carriage in & Carriage out
    4. None of the given

39. 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

40. Which of the following is INCORRECT for equity of a Public Limited Company?

    1. Equity = Total Assets – Total Liabilities
    2. Equity = Share Capital + General Reserves + Revenue Reserves
    3. Equity = Share Capital + Reserves
    4. Equity = Share Premium + Reserves

41. Prime cost of goods manufactured is the total of:

    1. Direct materials consumed
    2. Direct materials consumed, direct wages and direct expenses
    3. Direct materials consumed and direct wages
    4. Direct materials consumed, direct wages, direct expenses and production overheads

42. 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

43. Which of the following IAS deals with the Borrowing Costs?

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

44. A Private limited company can be formed at least by:

    1. 2 members
    2. 3 members
    3. 1 member
    4. 7 members

45. 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

46. 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

47. 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

48. 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

49. 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

50. 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

51. 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

Select a course code for Objective Questions:

ACC311 ACC501 BIF101 BIF401 BIF501 BIO101 BIO201 BIO202 BIO203 BIO204 BIO301 BIO302 BIO303 BIO401 BIO503 BNK603 BT101 BT201 BT301 BT302 BT401 BT402 BT403 BT404 BT405 BT406 BT501 BT504 BT505 BT604 CHE201 CHE301 CS001 CS101 CS201 CS202 CS204 CS301 CS302 CS304 CS311 CS401 CS402 CS403 CS408 CS501 CS502 CS504 CS506 CS508 CS601 CS602 CS604 CS605 CS607 CS609 CS610 CS614 CS707 CS710 ECO401 ECO402 ECO403 ECO404 EDU302 EDU401 EDU402 EDU501 EDU601 ENG101 ENG201 ENG301 ENG501 FIN611 FIN624 FIN625 ISL201 IT430 MCM101 MCM301 MGMT623 MGT101 MGT211 MGT301 MGT401 MGT402 MGT501 MGT502 MGT503 MGT510 MGT601 MGT603 MKT501 MKT610 MKT630 MTH101 MTH202 MTH302 MTH501 MTH601 MTH634 PAK301 PHY101 PHY301 PSY101 PSY403 PSY502 PSY512 SOC101 SOC301 SOC401 STA301 STA630 STA641 ZOO102 ZOO401 ZOO501 ZOO502 ZOO503 ZOO504 ZOO505 ZOO506 ZOO510 ZOO630

Select a course code for Subjective Questions:

ACC311 CS001 CS101 CS201 CS301 CS607 CS701 CS702 CS703 CS704 CS707 CS708 CS710 CS711 CS718 CS721 CS724 ECO401 ECO403 ENG101 ENG301 MGT703 MTH501 STA301