Financial & management accounting unsolvrd1

MB0025 FMA
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() SECTION A (ONE MARKS)
(1) .What are the main objectives of preparing a trial balance?
(a) to check the arithmetic accuracy of entries made.
(b) basis for financial statements
(c) it is a summarized ledger
(d) all of the above
Answer : D

(2) .Which of the given statement is False?
(a) errors can be committed at all stages, commencing from journalizing,
posting, costing, balancing, transferring the closing balances, etc.
(b) Errors of omission, error of principle and compensating errors are not
disclosed by trial balance.
(c) Errors of costing , posting to wrong side of an account, wrong amount etc
can be detected by trial balance.
(d) none of the above
Answer : D

(3) .Final accounts in case of a sole proprietorship form consist normally of:
(a) trading account
(b) profit and loss account
(c) balance sheet
Answer : D

(4) .Which all constitutes the final accounts?
(a) profit and loss account
(b) balance sheet
(c) Both a and b
Answer : C

(5) Suspense account is the__________________________.
(a) difference between debit total and credit total of a trial balance.
(b) total of all the ledger accounts.
(c) total of all the subsidiary books.
(d) permanent account.
Answer : A

(6) . An examination of the sources and uses of funds is part of:
(a) a forecasting technique.

(b) a funds flow analysis.
(c) a ratio analysis.
(d) calculations for preparing the balance sheet
Answer : B

(7) .What is the uses of cash flow statement?
(a) explaining the reasons for low cash balance
(b) shows the major sources and uses of cash
(c) helps in short term financial projections can be made for the future.
Answer : D

(8) .Which of the following is the steps in preparing cash flow statement?
(a) preparation of cash flow statement
(b) comparison of current items
(c) Both a and b
(d) None of the above
Answer : C

(9) .What is the key objectives of cash flow statements?
(a) to show the causes of changes in cash balance between the balance sheet
dates.
(b) to show the actors contributing to the reduction of cash balance inspire of
increasing g of profit or decreasing of profit.
(c) Both a and b
Answer : C

(10) . What are the key features of cash flow statement?
(a) concerned with the changes in working capital, position between two
balance sheet dates
(b) calculated only by actual receipt and payment
(c) increase in current liabilities or decision in current assets will mean
decision in it
Answer : B

(11) .Cash from operation can be calculated in:
(a) cash sales method
(b) net profit method
(c) Both a and b
Answer : C

(12) .What is the key features of fund flow statement?
(a) taken into consideration only the changes in cash position between two

balance sheet
(b) calculated by adjusted P & l a/c
(c) increase in current liabilities or decrease in current assets will increase in
cash and vice versa
Answer : B

(13) Which of the following equations properly represents a derivation of the
fundamental accounting equation?
(a) Assets + liabilities = owner's equity.
(b) Assets = owner's equity.
(c) Cash = assets.
(d) Assets - liabilities = owner's equity
Answer : D

(14) .Which of the error is committed while posting entries from subsidiary books
to ledger?
(a) posting a wrong amount
(b) posting to the wrong side of an account
(c) wrong totaling
(d) omitting to post an entry from subsidiary book to ledger
Answer : B

(15) For every debit , there should be an equivalent credit. This is called ____
principle.
(a) double aspect.
(b) matching cost and revenue.
(c) expense.
(d) income recognition
Answer : A

(16) Balance sheet is ________
(a) an account.
(b) a statement of affairs.
(c) a book of entry.
(d) part of double entry system.
Answer : C

(17) Which of the following would not be included on a balance sheet?
(a) Accounts receivable.
(b) Accounts payable.
(c) Sales.
(d) Cash.
Answer : C

(18) Which of these items would be accounted for as an expense?

(a) Repayment of a bank loan.
(b) Dividends to stockholders.
(c) The purchase of land.
(d) Payment of the current period's rent
Answer : D

(19) Financial accounting focuses on ________data.
(a) Futuristic.
(b) Historic.
(c) Present.
(d) Available.
Answer : B

(20) Mr. Z, the owner, brings furniture worth Rs. 10000 into his business. What is
the effect?
(a) asset increases and asset decreases.
(b) asset decreases and liability decreases.
(c) asset increases and liability increases.
(d) asset increases and owner's equity increases.
Answer : D

(21) The expenses which could not be written off during the period of their
incidence is called __________.
(a) fictitious assets.
(b) current assets.
(c) fixed assets.
(d) none of the above.
Answer : A

(22) Interest on drawings is _____ to the business.
(a) An expense.
(b) A payment.
(c) An income.
(d) A liability.
Answer : C

(23) .What is the main errors that can detected before preparation of trial balance?
(a) an error affecting only one account or more than one account in such a
way that no journal entry is possible for its rectification
(b) an error affecting two or more accounts in such a way that a complete
journal entry can be passed for its rectification
(c) both a and b
Answer : C

(24) Rent payable for December, 2002 but paid in January, 2003 is known as

_____ for 2002.
(a) An expense.
(b) Prepaid expense.
(c) Accrued Rent.
(d) A Liability.
Answer : C

(25) .It represents wages payable paid to those employees who directly engaged in
the conversion of raw materials into final product.
(a) indirect materials
(b) direct labor
(c) indirect labor
(d) chargeable expenses
Answer : B

(26) Debentures are issued for the purpose of paying redeemable preference
shares. What is the accounting effect?
(a) Increase in liability, decrease in proprietor's equity.
(b) Increase in liability, decrease in liability.
(c) Increase in liability, decrease in assets.
(d) Increase in liability, increase in assets.
Answer : A

(27) When cash is paid to Creditors, Creditor's account is _____.
(a) debited.
(b) credited.
(c) tallied.
(d) None of the above.
Answer : A

(28) If wages are paid for installation of machinery, _____ A/c is debited and ____
A/c is credited.
(a) wages, cash.
(b) cash, machinery.
(c) wages, machinery.
(d) machinery, cash.
Answer : D

(29) Outward Invoice number is the number of the invoice issued by the _______
to the _______.
(a) businessman, customer.
(b) businessman, supplier.
(c) customer, businessman.
(d) supplier, businessman.
Answer : A

(30) Bills accepted by the proprietor of the business and drawn by suppliers are
called _______.
(a) bills.
(b) bills receivable.
(c) bills payable.
(d) purchase bills.
Answer : C

(31) ___________ is a personal account.
(a) bank of india.
(b) cash.
(c) discount received.
(d) salary.
Answer : A

(32) Which one of the following is not a ledger?
(a) creditor's ledger.
(b) journal ledger.
(c) debtor's ledger.
(d) general ledger.
Answer : B

(33) Posting is done ___________.
(a) either from journal or any subsidiary book.
(b) from journal.
(c) from subsidiary book.
(d) from ledger.
Answer : A

(34) One which is adopted by management, relevant to the situations is
called_____.
(a) accounting principles.
(b) accounting policy.
(c) accounting doctrines.
(d) none of the above.
Answer : B

(35) .Management process generates:
(a) data
(b) procedure
(c) Both a and b
Answer : A

(36) .Which of the following is False?
(a) cash flow statement reveals the inflow and outflow of cash during a

particular period.
(b) cash flow statement is always prepared in statement form
(c) cash flow statement explains the reasons for low cash balance.
Answer : B

(37) .Which of the following statement is correct?
(a) decision-making is the nucleus of management process
(b) managers take decisions on the basis of a set of alternatives
(c) Both a and b
Answer : C

(38) .What is the steps followed in designing the MIS?
(a) evaluation of strategy
(b) choosing the best strategy
(c) setting the objectives
Answer : D

(39) .Fixed costs:
(a) remain fixed within a range if production
(b) not directly linked to product units
(c) spent on elapse of time
Answer : D

(40) ."Management accounting is concerned with accounting information that is
useful to management". Who gave this definition?
(a) R N Anthony
(b) Charles
(c) Josiah
Answer : A

() SECTION B
(41) __________records goods returned to suppliers out of credit purchases.
(a) return outward book
(b) journal proper
(c) bills payable book
(d) sales day book
Answer : A

(42) ___________records bills reused by suppliers.
(a) sales day book
(b) bills payable book

(c) purchases day book
Answer : B

(43) __________records cash receipts and payments.
(a) sales day book
(b) journal proper
(c) cash book
Answer : B

(44) __________is a self sufficient secondary book in the sense that all entries in
the primary books will be posted.
(a) General ledger
(b) Debtors ledger
(c) Creditors ledger
(d) Main ledger
Answer : A

(45) _____________is a book of secondary entries.
(a) ledger
(b) sundry debtor account
(c) journal proper
(d) cash book
Answer : A

(46) ___________has separate accounts for each customer.
(a) General ledger
(b) Debtors ledger
(c) Creditors ledger
(d) Main ledger
Answer : B

(47) _______is a person who owes some thing to busniess.
(a) accountant
(b) debtor
(c) creditor
(d) stock trader
Answer : B

(48) All increase in________and decreases in________, represent the uses of
funds.
(a) assets, liabilities
(b) liabilities, assets
(c) either a or b

Answer : A

(49) _________refers to an increase in cost from one alternative to another.
(a) average cost
(b) out of pocket cost
(c) differential cost
(d) incremental cost
Answer : D

(50) There is manly stages in the accounting process when errors ca is detected.
(a) three
(b) two
(c) four
(d) None of the a above
Answer : B

(51) An error caused due to non-recording of transaction in the journal, hence not
reflecting in the ledger and subsequently is called______________.
(a) Error of omission
(b) Error of commission
(c) Compensating errors
(d) Error of principle
Answer : A

(52) _______________is prepared to show the financial position of a business on a
particular date.
(a) Profit and loss account
(b) Balance sheet
(c) Journal proper
Answer : B

(53) ____________is arrived by deducting the direct cost of goods sold from sales
proceeds.
(a) net profit
(b) gross profit
(c) annual profit
Answer : B

(54) The below given graph shows_________cost.
(a) unit fixed cost
(b) linear variable cost
(c) semi-variable cost
Answer : C

(55) __________costs are partly variable partly fixed.
(a) carrying cost
(b) fixed cost
(c) step cost
(d) semi-fixed cost
Answer : D

(56) __________a cost which cannot be influenced by the action of a specified
member of an undertaking.
(a) controllable cost
(b) non-controllable cost
(c) Both a and b
Answer : B

(57) on the basis of_________, costs is classified as direct costs and indirect costs.
(a) nature of elements
(b) traceability
(c) normality
Answer : B

(58) ____________is one which in the aggregate values in direct proportion to the
volume of production.
(a) carrying cost
(b) fixed cost
(c) variable cost
(d) semi-fixed cost
Answer : C

(59) ___________is the cost of opportunity lost.
(a) relevant cost
(b) opportunity cost
(c) fixed cost
(d) nine of the above
Answer : B

(60) ___________cost remains constant for a given volume of output and at higher
level of output it increase in a fixed amount.
(a) carrying cost
(b) fixed cost
(c) step cost
(d) semi-fixed cost
Answer : C

() SECTION C
(61) Given current ratio is 1.5:1; Quick ratio 1:1 and current liabilities Rs. 50000.
Calculate current assets.
(a) 60000
(b)75000
(c) 71000
(d)65000
Answer : B

(62) The income statement of DR Ltd is as follows:
To opening stock 200,000.00 By sales 1,200,000.00
Purchases 800,000.00 Closing stock 100,000.00
Direct expense 100,000.00
Gross profit 200,000.00
1,300,000.00 1,300,000.00
To Admn expenses 100,000.00 By Gross profit 200,000.00
Selling expenses 80,000.00 Profit on sale of investments 60,000.00
Non-operating exp 40,000.00 Dividends received 40,000.00
Net Profit 80,000.00
300,000.00 300,000.00
Calculate the gross profit ratio.
(a) 15.61%
(b) 16.61%
(c) 17.63
(d) 18.98%
Answer : B

(63) Given the data is:
Stock: opening Rs. 75000; closing Rs. 100000, credit sales Rs. 200000, cash sales
Rs.
50000, Gross profit 25%. Calculate the stock turnover ratio.
(a) 2.16 times
(b) 2.17 times
(c) 2.14 times
(d) 2.56 times
Answer : C

(64) Extracts from financial account of SB Ltd are given below:
Year 2006 Year 2007
Assets
Stock 10,000.00 20,000.00
Debtors 30,000.00 30,000.00
Payment in advance 2,000.00 -
Cash in hand 20,000.00 15,000.00

Liabilities

Sundry creditors 25,000.00 30,000.00
Bills payable 15,000.00 12,000.00
Bank overdraft 5,000.00
Sales amounted to Rs., 350000 in 2006 and Rs. 300000 in 2008. Compute the
solvency position of DR.
(a) 1.38:1
(b) 2.1.38
(c) 4.5:6
Answer : A

(65) Arrange the following in the order as they are used in the preparation of
break-even chart:
(i) fixed cost line (ii) break-even point (iii) horizontal axis (iv) draw the total sale
line
(a) i, ii, iv, iii
(b) iii, i, ii, iv
(c) ii, iv, i, iii
(d) iv, i, ii, iii
Answer : B

(66) Calculate the break-even point from the following figures:
Total sales Rs 275000, Variable expenses Rs 500000, net profit Rs 108000.
(a) 1089766
(b)117000
(c) 432000
Answer : B

(67) From the following calculate the BEP and number of units to be sold to earn a
profit of Rs. 3000 per year. Selling price per unit Rs 10. Variable cost per unit Rs 7.
Fixed overheads-works Rs 27000, selling Rs 12600.
(a) 14200
(b)14000
(c) 16000
(d)24356
Answer : A

(68) From the following information, calculate the turnover required to earn profit
of Rs 30000. Fixed cost Rs 21000, Variable cost Rs w per unit, selling price Rs 5 per
unit.
(a) 12345
(b)14000
(c) 76890
(d)85000
Answer : D

(69) The following information is obtained: Stcok on Jan 1,2007:
Raw materials Rs 40000
Finished goods Rs 30000
Purchases of raw materials Rs 240000
Direct wages Rs 136000
Worksd expense Rs 70400
Dividends paid Rs 40000
Office expenses Rs 24000
Depreciation Rs 10000
Selling and distribution expenses Rs 32000
Work in progress: 1.1.2007 Rs 64000
31.12.2007 Rs 72000
Goodwill griten off Rs 40000
Stcok on 31.12.2007:
Raw materials Rs 42000
Finished goods Rs 32000
Sale of finished goods Rs 550000
Payment of sales tax Rs 16000
Prepare a cost sheet
(a) profit = Rs. 33000
(b) profit= Rs. 34000
(c) Profit = Rs. 33600
(d) Profit = Rs. 37650
Answer : C

(70) Find MCSR, Variable cost per unit Rs. 40. selling price per unit Rs. 80. Fixed
expenses Rs. 200000. Output 10000 units.
(a) 50%
(b) 45%
(c) 42%
(d) 54%
Answer : A

(71) The success of a business entity depends on the combined effects of factors.
(a) four
(b) five
(c) three
(d) two
Answer : A

(72) Calculate MCSR and Break even point :Sales Rs 500000. Fixed costs Rs.
100000. Profut Rs 150000.
(a) 210000
(b)200000
(c) 340000

(d)123000
Answer : B

(73) Calulate the selling proice if marginal cost is Rs. 2400 and MCSR is 20%. (a)
3214 (b)3189
(c) 3654
(d) 3000
Answer : D

(74) Calculate the variable cost :Sales Rs 150000. Profit Rs 40000. Fixed cost Rs.
30000. Find the amount of variable cost.
(a) 80000
(b)76000
(c) 56000
(d)81000
Answer : A

(75) Find the fixed cost:Sales Rs. 20000. Variable cost Rs. 40000. Profit Rs.
30000. (a) 100000 (b)120000 (c) 110000 (d)130000
Answer : D

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