Financial Accounting II - MGT401 Spring 2012 Mid Term Solved Quiz

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN
AFTER MIDTERM 1 TO 30 LEC 2012 JANUARY.

Which of the following represent(s) the Prime Cost?
Select correct option:
Direct Material Cost + Direct Labour Cost
Total Factory Cost Factory Overheads
Conversion Cost Factory Overheads + Direct Material Costs
All of the given options
A debit balance of Rs.5,000 on As account in the books of B means that:
A is receivable of B
B is receivable of A
B owes A
A owes B
Which of the following is/are the physical asset(s)?
Term Finance Certificates
Loan Agreements
Trade Receivables
Which activities by definition do not fulfill the recognition criteria according to IAS38?
Development activities
Research activities
Both development and research activities
None of the given options
Who elect the Board of Directors (BODs) of a company?

Managers
Shareholders
Employees
Both Managers & Employees
Which of the following methodology is adopted for the valuation of investments held
to maturity?
Proportionate Consolidation or Equity Method
At cost or Under IAS 39
At amortized cost

At fair value
Which one of the following IAS is related to the Interest in Joint Venture?
IAS 27
IAS 28
IAS 31
IAS 32
Which of the following is another name for Authorized Capital of a company?

Nominal Capital
Issued Capital
Subscribed Capital
Paid up Capital
According to IAS-16, property, plant and equipment are the assets which held for
Production of goods or services
Supply of goods or services
Administrative purpose
The present value of a sum of Rs. 200 to be received in the future will be:
More than Rs. 200
Equal to Rs. 200
Less than Rs. 200
At least what percentage of voting right is required for assuming an investor company
to have significant influence in the affairs of investee company?
50%
10%
20%
60%
Which one of the following is related to the IAS 32?

Consolidated and Separate Financial Statements

Interest in Joint Venture
Financial Instruments Disclosure and Presentation
Financial Instruments Recognition and Measurement
Which one of the following expenses should be included in prime cost?

Repairs to factory plant
Office salaries
Factory insurance
Direct production wages
Which of the following is/are the Classification of Current Assets with respect to the
Companies Ordinance 1984?
Stock
Cash Balance
Finished Goods
Depreciation is best described as:

A decline in the market value of the assets
A means of expanding the net-cost of non-current assets over their useful life
A source of estimating the amount of money needed to replace the assets
A means of spreading the payment for non-current assets over a period of years
Which of the following IAS deals with the Borrowing Costs?

IAS 23
IAS 07
IAS 01
IAS 16
In which situation, Y will be the indirect subsidiary of X?
If X holds more than 50% shares of Y and Y holds more than 50% shares of W
If W holds less than 50% shares of X and more than 50% shares of Y
If Y holds more than 50% shares of W and X holds less than 50% shares of Y
If X holds more than 50% shares of W and W holds more than 50% shares of Y

Which of the following schedule of the Company Ordinance 1984 is related to the
classification of intangible assets?
4th schedule
5th schedule
6th schedule
2nd schedule
Which of the following intangible assets have un-limited life?
Copyright
Goodwill
Licensing
Franchising
If the ownership transferred by the end of the lease term then it is called:
Finance lease
Operating lease
Hire purchase
Possession
Which of the following is NOT the method of stock valuation?
FIFO Method
Weighted Average Method
Specific Identification Method
Straight Line Method
Partnership firms are registered under which of the following?

Partnership Act 1932
Companies Ordinance 1984
Partnership Agreement
Income Tax Ordinance 1979
Which of the followings schedule of Companies Ordinance 1984 describes about the
additional heads of non-current assets?
5th Schedule
4th Schedule
6th Schedule
2nd Schedule

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?
It will be recorded as non-current asset of the company
It will be recorded as an expense for the period
It will be recorded as current asset of the company
It will be recorded as capital of the company
According to the section 95A of the Companies ordinance 1984, which of the following
statement is correct?
Creditors are not entitled to object repurchase
Creditors are entitled to object repurchase fully
Creditors are entitled to object repurchase partially
Company is not required to maintain a capital repurchase reserve
Which of the following IAS deals with the Borrowing Costs?

IAS 23
IAS 07
IAS 01
IAS 16
Depreciable amount of an asset = -----------------Select correct option:
Original cost - Accumulated depreciation
Original cost - Disposal value
Original cost - Depreciation
Original cost - Revalued amount
Which one of the following is NOT recorded under Equity section of the Balance
Sheet?
Share Premium
Share Capital
Accumulated Profit
Dividend Payable
The classification of a lease as either a finance or operating lease is based on:

The duration of the lease
Transfer of the risks and rewards of ownership
The minimum lease payments (MLP) being at least 60% of the fair value
Useful economic life of the asset
Which is the objective of financial statements according to IASBs Framework?

Provide information about the financial performance, position, and changes in
financial position of an entity which is useful for wide range of users of financial
statements in making economic decisions
Prepare and present income statement, balance sheet, statement of changes in equity
and cash flow statement
Prepare all financial statements in accordance with applicable Accounting Standards
and interpretations
None of the given
Which institute issues the Certificate of Incorporation in Pakistan?

SEC
SECI
SECP
SECB
Identify which of the following techniques for valuing inventory are allowed under
IAS-2? (i) FIFO (First in First Out) (ii) Average cost (iii) LIFO (Last in First Out)
(iv) Replacement cost
(i), (ii), (iii), (iv)
(i), (ii), (iv)
(i), (ii)
(iii), (iv)
Which one of the following is TRUE with respect to FIFO in inventory valuation?
First-In-First-Out
First-In-Freight-Out
Freight-In-First-Out
Freight-In-Freight-Out
Which of the following IAS covers the treatment & recognition of Provision?
IAS 33
IAS 37
IAS 38
IAS 39
Which of the following represents that the shares are issued at a price below the face
value?
Share issued at premium

Share issued at discount
Share issued at par value
Share issued at nominal value
Which of the following has the ability to continue the lease for a secondary period at a
rent which is substantially lower than market rent?
Lessee
Lessor
Accountant
Businessman
In which case, capitalization of borrowing cost should be suspended for a qualifying

asset?
When sustainable administrative or technical work is taking place
When active development is interrupted for an extended period
When there is a temporary delay in the process taking place
Which of the following TRUE with respect to Provision?

It is a liability of uncertain timing or amount?
It is a liability of certain timing or amount?
It is an asset of uncertain timing or amount?
It is an income of uncertain timing or amount?
Which one of the following is the type of stock for trading concerns?
Raw Material
Work in Process
Finished Goods
Stock in Trade
What is the benchmark treatment of borrowing cost under IAS-23?

It should be charged as an expense
It should be capitalized
It should be both charged as an expense and capitalized
Which of the following value is recorded in the books of lessee in case of operating
lease asset?

Faire value
Present value
Market value
Not recorded at any value
All of the following are Fixed assets EXCEPT:

Machinery
Freehold land
Leasehold land
Marketable securities
The accounting concept that is primarily used to classify lease as operating or finance
is
Substance over form
Prudence
Neutrality
Completeness
What should be the treatment of research cost incurred by a business according to
IAS-38?
It should be recorded as a part of capital of the business
It should be recorded as non-current asset
It should be recorded as current asset
It should be recorded as expense for the period
In which of the followings system(s) FIFO and Weighted Average cost methods of
inventory are used?
Perpetual System
Periodic System
Both Perpetual & Periodic System
What is reflected by the Memorandum of Association (MOA) of a company?

Operating procedures of a company
Objectives of a company
Decisions making process of a company
Working environment of a company
Which of the following asset is NOT an example of Tangible Fixed Assets?
Patent rights
Furniture
Vehicles

Machinery
Which company is required to represent financial statements after every three, six
and twelve months to SECP and shareholders by Companies Ordinance 1984?
Public Listed Company
Public Unlisted Company
Single Member Company
Private Unlisted Company
Who sign the Memorandum of Association (MOA) of a company?
Promoters of the company
Managers of the company
Employees of the company
Which of the following will be included in the cost of inventory?
Conversion cost
Purchasing cost
Freight inward cost
According to Companies Ordinance 1984, at least what percentage of majority favor
is required to pass the "Special Resolution"?
45%
60%
75%
90%
Which of the following asset is not an example of Intangible Fixed Assets?

Vehicles
Good Will
Copyrights
Trade Marks and Designs
Which of the following intangible assets have un-limited life?

Copyright
Goodwill
Licensing
Franchising

ABC Co. exchanges its production machine with filtration plant from XYZ Co. At
what value ABC Co. will record the filteration plant in its books of accounts?
Carrying value of filteration plant
Realization value of filteration plant
Residual value of filteration plant
Fair value of filteration plant
Which of the following is the application of research findings or other knowledge to a

plan or design for the production of new or substantially improved materials, devices,
products, processes, systems or services before the start of commercial production or
use?
Applied research
Development
Business research
Accounting
Depreciation is:
A systematic allocation of depreciable amount of an asset over its estimated useful life
The end life of an asset
The increase in value of asset
Another name of Impairment
What will be the accounting treatment of gain in the books of accounts of a company
which arises from the revaluation of an asset?
Dr. Asset A/C Cr. Revaluation A/C
Dr. Asset A/C Cr. Accumulated Depreciation A/C
Dr. Asset A/C Cr. Disposal of Asset A/C
Dr. Revaluation A/C Cr. Asset A/C
According to the section 95A of the Companies ordinance 1984, which of the following
statement is correct?
Creditors are not entitled to object repurchase
Creditors are entitled to object repurchase fully
Creditors are entitled to object repurchase partially
Company is not required to maintain a capital repurchase reserve
Section 96 of the Companies ordinance 1984 is applied on which of the following

companies?
Listed companies only

Non listed companies only
Private companies only
All companies
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:
Expected
Realized
Material
Received
Which one of the following is related to the Benchmark Treatment for an investment
in jointly controlled entities?
Proportionate Consolidation Method
Equity Method
LIFO Method
Which of the following option is/are TRUE with respect to the Disclosure
requirement for intangible assets acquired by the way of Government grants?
The fair value initially recognized
Disclosure for carrying amount
Disclosure for the amount of commitments for acquisition of intangible assets
Which document contains the information about authorized share capital of a

company?
Memorandum of Association
Memorandum of Undertaking
Memorandum of Understanding
Both Memorandum of Association & Memorandum of Understanding
Which of the following is INCORRECT with respect to Perpetual Inventory System?

Receipt of inventory is debited to Stock Account
Issuance of inventory is Credited to Stock Account and Debited to Material
Consumption Account
Receipt of inventory is debited to Purchase Account

Material Consumption Account becomes the part of Trading Account
Which of the following asset is NOT an example of Tangible Fixed Assets?

Patent rights
Furniture
Vehicles
Machinery
Which of the following represents that the shares are issued at a price below the face
value?
Share issued at premium
Share issued at discount
Share issued at par value
Share issued at nominal value
If: Total Factory Cost is Rs. 30,000 Opening Work in Process Inventory is Rs. 5,000
Closing Work in Process Inventory is Rs. 10,000 Then: What will be the amount of
Cost of Goods Manufactured?
Rs. 35,000
Rs. 25,000
Rs. 15,000
Rs. 20,000
Which of the following is related with IAS -17?

Leasing
Property, Plant and Equipment
Earning per shares
Borrowing costs
Minimum Lease Payment = ------------.

Initial Payments + Contingent rent Down Payments
Initial Payments + All lease rentals + Contingent rent
Initial Payments + Insurance paid by lessor and recovered from lessee + Any lease
processing charges
Initial Payments + All lease rentals + Any amount that is guaranteed to be paid

In which of the following scenario(s) an investor should record the investment by

using cost method according to IAS-28?
When investment is solely acquired for the purpose of disposal in near future
When investment is solely acquired for the purpose of long term retaining in future
When investment is solely acquired for the unlimited period
In which year, local legislations of Pakistan permitted to make private limited

company by a single person?
2002
2001
2000
1999
Which of the following IAS deals with Revaluation of Assets?

IAS 16
IAS 07
IAS 01
IAS 23
Which activities by definition do not fulfill the recognition criteria according to IAS38?
Development activities
Research activities
Both development and research activities
Which of the following is/are excluded from Financial Assets?

Physical Assets
Inventories
Prepaid expenses

Which of the following is NOT the Classification of Current Assets with respect to the
Companies Ordinance 1984?
Stock
General Stores
Spare parts
Bank over draft
Both future value and present value of a sum of money are based on:
Interest Rate
Number of time periods
Both interest rate and number of time periods
Neither interest rate nor number of time period
Which of the following IAS is related to the Consolidated and Separate Financial
Statements?
IAS 27
IAS 28
IAS 31
IAS 32
Which organizations are required special approvals from SECP for their
establishment?
Manufacturing Organizations
Non Profit Organizations
Profit Making Organizations
Service Organizations
Which of the following is (are) intangible resources for a company?
Software licensing
Royalty
Production rights
Which of the following IAS covers the Long-Term Financing?

IAS 32 only
IAS 39 only
Both IAS 32 and IAS 39
IAS 17
What is the treatment of Depreciation in accounting?

Treated as a reserve
Treated as an expense
Treated as a surplus
Treated as a Liability
Which of the followings is(are) type of stock in trade?
Machinery tools & spares
Consumable stationery
Goods held for resale purpose
In which of the following situations a company operates beyond the scope of its
objectives enlisted in Memorandum of Association (MOA)?
Ultra Virus
Ultra Violence
Ultra Vires
Ultra Wires
Which of the following is Not a qualitative characteristic of financial statements
according to the IASBs Framework?
Materiality
Understandability
Comparability
Relevance
The profit on a finance lease transaction for lessor who can be either manufacturer or
dealer should:
Not be recognized separately from finance income
Only be recognized at the end of the lease term
Be allocated on a straight line basis over the life of the lease
Be recognized in the normal way on the transaction

Which of the following is an agreement whereby the lessor conveys to the lessee in
return for a payment or series of payments the right to use an asset for an agreed
period of time?
A lease
Hire purchase
Installment
Trading on credit basis
Which company is required to represent financial statements after every three, six
and twelve months to SECP and shareholders by Companies Ordinance 1984?
Public Listed Company
Public Unlisted Company
Single Member Company
Private Unlisted Company
kamran.gul123: 1
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.
Rs. 1,000
Rs. 500
Rs. 1,500
Rs. 950
Interest Rate
Which of the following is the deduction or allowance allowed by a creditor to a

debtor?
Trade Discount
Cash Discount
Purchases return
Sales return

Which of the following IAS deals with Inventories?

IAS 38
IAS 23
IAS 02
IAS 16
Which of the following is shown on the liability side of Balance Sheet?
Discount on issue of shares
Premium on issue of shares
Preliminary expenses
Goodwill
Which of the fallowing is TRUE with respect to Liability?

It is a present obligation of the entity arising from a past event the settlement of
which is expected to result in an outflow from the entity of resources embodying
economic benefits.
It is a past obligation of the entity arising from a future event the settlement of which
is expected to result in an outflow from the entity of resources embodying economic
benefits.
It is a present obligation of the entity arising from a past event the settlement of
which is expected to result in an inflow from the entity of resources embodying
economic benefits.
It is not a present obligation of the entity arising from a past event the settlement of
which is expected to result in an outflow from the entity of resources embodying
economic benefits.
Which of the following IAS covers the treatment & recognition of Contingent
Liabilities?
IAS 33
IAS 37
IAS 38
IAS 39
What is reflected by the Memorandum of Association (MOA) of a company?

Operating procedures of a company

Objectives of a company
Decisions making process of a company
Working environment of a company
Question # 1 of 20 ( Start time: 12:18:26 AM ) Total Marks: 1

Which of the following is/are example(s) of development activities?
The design of tools, jigs, moulds and dies involving new technology
The design, construction and testing of pre-production or pre-use prototypes and
models
The design, construction and operation of a pilot plant

Who issues International Accounting Standards?
Board of International Standards on Auditing
International Accounting Standards Board
Institute of Chartered Accountants of Pakistan
Securities and Exchange Commission of Pakistan

Which of the following section of the Companies ordinance 1984 refers to the share
issued at discount?
Section 83
Section 84
Section 85
Section 86
By recording depreciation in the books of accounts, what a company ensures about
the cost of non current assets which provide the benefit for their use in business?
It is extending over the forecasted periods
It is extending over the accounting periods
It is extending over the tax periods
It is extending over the revenue periods

Which of the following represents the claims of the owners against the assets of the
business?
Assets
Expenses
Owners Equity
Income
How many person(s) is(are) required to takeover the business after the death of a
member in case of Single Member company?
Seven
Three
Two
One

Which of the following is NOT an accounting concept?
Prudence
Going concern
Depreciation
Matching

Which of the following is INCORRECT with respect to Periodic Inventory System?
Receipt of inventory is debited to Purchase Account
Closing stock is recorded by debiting Stock Account and crediting Trading Account
Receipt of inventory is debited to Stock Account
No record is made for individual issue in the General Ledger

Interest Rate


If an item that meets the definition of an element is recognized:
When it is possible that any future economic benefit linked with the item will flow to
or from the entity.
When the element has cost or worth that can be measured reliably
When entity obtains control of the rights or obligations linked with the item.
When there is probable that any future economic benefit linked with the item will
flow to or from the entity and the item has a cost or worth that can be measured
reliably

Which of the following is/are INCORRECT with respect to the Capital section of the
balance sheet for a sole-proprietorship?
Opening Capital New Capital + Profit for the year = Closing Capital
Opening Capital New Capital + Loss for the year = Closing Capital
Opening Capital Loss for the year + Drawings = Closing Capital

Minimum Lease Payment = ------------.
Initial Payments + Contingent rent Down Payments
Initial Payments + All lease rentals + Contingent rent
Initial Payments + Insurance paid by lessor and recovered from lessee + Any lease
processing charges
Initial Payments + All lease rentals + Any amount that is guaranteed to be paid
during or at the end of the lease term

Which one of the following expenses should be included in prime cost?
Repairs to factory plant
Office salaries
Factory insurance
Direct production wages

Accounting concept which presents non current assets should be valued at cost less
accumulated depreciation rather than their imposed sale-able value is the concept.
Going Concern
Materiality
Accrual Basis
Prudence
Which type of lease is normally Not long term and transfers all the risks and rewards
of ownership?
Finance lease
Operating lease
Sale & lease back
Hire Purchase Agreement

What is the treatment of Accumulated Depreciation in accounting?
Treated as a reserve
Treated as a contra asset
Treated as a surplus
Treated as an expense
Which of the following investments are recorded using Equity Method?
Investments made for longer period
Investments made for shorter period
Investments made for shorter and longer period

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Financial Accounting II - MGT401 Spring 2012 Mid Term Solved Quiz

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MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

AFTER MIDTERM 1 TO 30 LEC 2012 JANUARY.

Who elect the Board of Directors (BODs) of a company?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which of the following is another name for Authorized Capital of a company?

Which one of the following is related to the IAS 32?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which one of the following expenses should be included in prime cost?

Depreciation is best described as:

Which of the following IAS deals with the Borrowing Costs?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Partnership firms are registered under which of the following?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which of the following IAS deals with the Borrowing Costs?

The classification of a lease as either a finance or operating lease is based on:

Which is the objective of financial statements according to IASBs Framework?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which institute issues the Certificate of Incorporation in Pakistan?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

In which case, capitalization of borrowing cost should be suspended for a qualifying

Which of the following TRUE with respect to Provision?

What is the benchmark treatment of borrowing cost under IAS-23?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

All of the following are Fixed assets EXCEPT:

What is reflected by the Memorandum of Association (MOA) of a company?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which of the following asset is not an example of Intangible Fixed Assets?

Which of the following intangible assets have un-limited life?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which of the following is the application of research findings or other knowledge to a

Section 96 of the Companies ordinance 1984 is applied on which of the following

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which document contains the information about authorized share capital of a

Which of the following is INCORRECT with respect to Perpetual Inventory System?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which of the following asset is NOT an example of Tangible Fixed Assets?

Which of the following is related with IAS -17?

Minimum Lease Payment = ------------.

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

In which of the following scenario(s) an investor should record the investment by

In which year, local legislations of Pakistan permitted to make private limited

Which of the following IAS deals with Revaluation of Assets?

Which of the following is/are excluded from Financial Assets?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which of the following IAS covers the Long-Term Financing?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

What is the treatment of Depreciation in accounting?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which of the following is the deduction or allowance allowed by a creditor to a

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Which of the following IAS deals with Inventories?

Which of the fallowing is TRUE with respect to Liability?

What is reflected by the Memorandum of Association (MOA) of a company?

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Question # 1 of 20 ( Start time: 12:18:26 AM ) Total Marks: 1

Question # 2 of 20 ( Start time: 12:18:52 AM ) Total Marks: 1

Question # 3 of 20 ( Start time: 12:19:11 AM ) Total Marks: 1

Question # 5 of 20 ( Start time: 12:20:20 AM ) Total Marks: 1

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Question # 7 of 20 ( Start time: 12:21:22 AM ) Total Marks: 1

Question # 8 of 20 ( Start time: 12:21:51 AM ) Total Marks: 1

Question # 9 of 20 ( Start time: 12:22:09 AM ) Total Marks: 1

MGT401 LATEST QUIZ SOLVED BY MASOOD KHAN

Question # 10 of 20 ( Start time: 12:22:26 AM ) Total Marks: 1