Accounting MCQs

A systematic way to maintain the books of accounts is called_________?

A. Accountancy
B. Economics
C. Book Keeping
D. Auditing

An Art of reading, classifying & summarizing of accounts in a systematic way is

called__________?
A. Accounting
B. Accountancy
C. Auditing
D. Book Keeping
The maintenance of accounts in a systematic way is called__________?
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A. Accounting
B. Reading
C. Book Keeping
D. Auditing

Goods Return by the customer are termed as :

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A. Purchase return
B. Customer return
C. Sales return
D. Inventory return

Modern system of book keeping is called______________?

0

A. Double entry system

B. American system
C. Single entry system
D. Italic system

The person to whom goods are sold on credit is called___________?

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A. Buyer
B. Seller
C. Debtor
D. Creditor
Double entry means______________?

A. Entry in two sets of books

B. Entry at two ends
C. Entry at two dates
D. Entry for two aspects of the transaction

Discount received is a/an:

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A. Asset
B. Expense
C. Liability
D. Revenue

Obligation of the Business are known as___________?

0

A. Liabilities
B. Revenues
C. Expenses
D. Assets

The amount invested by the proprietor to start the business is called:

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A. Capital
B. Business
C. Drawings
D. All of them

The person to whom goods are sold on credit is called___________?

0

A. Buyer
B. Seller
C. Debtor
D. Creditor

Double entry means______________?

0

A. Entry in two sets of books

B. Entry at two ends
C. Entry at two dates
D. Entry for two aspects of the transaction
Discount received is a/an:
0

A. Asset
B. Expense
C. Liability
D. Revenue

Obligation of the Business are known as___________?

0

A. Liabilities
B. Revenues
C. Expenses
D. Assets

The amount invested by the proprietor to start the business is called:

0

A. Capital
B. Business
C. Drawings
D. All of them

For the business, capital is ____________?

0

A. Expense
B. Liability
C. Assets
D. All of them

When owner withdraw cash for its private use, it is called ___________?
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A. Profit
B. Income
C. Expense
D. Drawing

Assets having physical existence are called ___________?

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A. Current asset
B. intangible asset
C. Tangible asset 
D. Liquid asset

The assets which have some market value are called ____________?
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A. Fixed asset
B. Quick asset
C. Fictitious assets
D. Real assets

The assets which come into existence upon the happening of a certain event are
called__________?
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A. Contingent assets
B. Fixed assets
C. Fictitious assets
D. Quick assets

Income earned but not received is called ____________?

3

A. Fictitious assets
B. Quick asset
C. Real asset
D. Outstanding asset

Debts which are payable in the course of a month are called _____________?
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A. External liabilities
B. Fixed liabilities
C. Current liabilities
D. Liquid Liabilities

The unsold goods are ______________?

0

A. Equity
B. Sale return
C. Inventory
D. Purchases
The systems of accounting are _____________?
1

A. Two
B. Three
C. Five
D. Six
(more…)

A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of____________?

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A. Error of omission
B. Error of commission
C. Compensating error
D. Error of principle

Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example
of____________?
0

A. Error of principle
B. Error of commission
C. Error of omission
D. Error of duplication

Institute of Chartered Accountants of Pakistan was established in____________?

0

A. 1949
B. 1956
C. 1961
D. 1972

Trial balance is prepared to check accuracy of_______________?

0

A. Ledger accounts balances 

B. Balance sheet balances
C. Income statement balances
D. Cash flow statement balances

If a transaction is completely omitted from the books of accounts, will it affect the
agreement of a trial balance?
0
A. Yes
B. No
C. Transactions can’t be omitted
D. none of these

________ is the common base for preparing a trial balance?

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A. Ledger accounts 
B. General Journal
C. Specialized journals
D. Balance sheet

Which of the following is true about a trial balance?

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A. It lists down the balances of accounts 

B. It lists down the balances of a balance sheet
C. It is a kind of financial statement
D. It is not a part of accounting cycle

Debit balance = Credit balance in a trial balance indicates that:

0

A. No error in recording transactions

B. No error in posting entries to ledger accounts
C. Account balances are correct
D. Mathematically Capital+Liabilities=Assets

Trial balance is commonly prepared?

0

A. Frequently during the year

B. At the end of an accounting period
C. At the end of a month
D. At the end of a year

Which of the following will affect the agreement of a trial balance?

0

A. Complete omission of a transaction

B. Partial omission of a transaction 
C. Error of principle
D. compensating errors
If debit balances = credit balances, trial balance only shows or check the ____________ and
it does not indicate that no errors were made during recording and posting.
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A. Arithmetic accuracy 
B. Errors of commission
C. Omissions of economic events
D. Understatements of balances

Which of the following account with normal balance is shown at the debit side of a trial
balance?
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A. Rent income account

B. Creditors account
C. Unearned income account
D. Cash account

Which of the following account with normal balance is shown at the credit side of a trial
balance?
0

A. Cash account
B. Bank account
C. Equipment account
D. Accrued expenses account

Which of the following specialized journals records “goods returned by customers”?

0

A. Purchase journal
B. Sales journal
C. Purchases return journal
D. Sales return journal

Sales on credit is recorded in which of the following journal?

0

A. Purchase journal
B. Sales journal
C. Purchases return journal
D. Sales return journal

Transactions that a BUSINESS doesn’t record in any specialised journal are recorded in
which of the following journals or day books?
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A. Cash payments journal
B. Cash receipts journal
C. Purchases return journal
D. General journal

Another name of journal is_____________?

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A. Specialized journal
B. Day book
C. Cash book
D. Record book

Which of the following specialised journals will record “goods returned by the BUSINESS
“?
0

A. Purchase journal
B. Sales journal
C. Purchases return journal
D. Sales return journal

Sales and purchase journal don’t record__________?

0

A. Credit sales
B. Credit purchases
C. Credit sales and purchases
D. Cash sales and purchases

Cash received from debtor is recorded in which of the following SPECIALIZED journals?
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A. Purchase journal
B. Sales journal
C. Cash receipts
D. Cash payments journal

Which of the following is a type of cash receipt journal + cash payment journal?
0

A. Bank statement
B. Statement of cash flow
C. Cash book
D. Cash documents
Cash purchases is recorded in which of the following specialized journals?
0

A. Purchase journal
B. Sales journal
C. Purchases return journal
D. Cash payments journal

A brief explanation recorded below every entry in general journal is commonly known
as__________?
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A. Narration
B. Explanation
C. Summary
D. Other information

Credit purchase of plant and machinery is recorded in which of the following journals?
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A. General journal
B. Cash journal
C. Purchase journal
D. Purchase return journal

Debit note is the basis for recording a transaction in which of the following journals?
4

A. General journal
B. Cash journal
C. Purchase journal
D. Purchase return journal
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SALE of old furniture” will be recorded in which of the following specialised journals?
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A. Purchase journal
B. Sales journal
C. General journal
D. Cash receipt journal

Credit note is the basis for recording a transaction in which of the following
SPECIALIZED journals?
1
A. Purchase journal
B. Sales return journal
C. General journal
D. Cash receipt journal

Specialized journals are more adequate for which TYPE OF BUSINESSES?

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A. Small businesses
B. Big businesses
C. Sole proprietorship
D. Partnership

Which of the following is known as an evidence that a transaction took place?

0

A. Cash receipts journal

B. General journal
C. Source document
D. Cash book

BUSINESS paid rent amounting to $100″ which of the following specialized journals
records this transaction?
0

A. Cash receipts journal

B. Cash payments journal
C. Sales journal
D. Purchase journal

Credit memo or credit note No. is entered in which of the following journal?
0

A. General journal
B. Cash journal
C. Purchase journal
D. Sales return day book

In accounting an Economic event is referred to as:

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A. Cash
B. Bank statement
C. Transaction 
D. Exchange of money
Identify the correct sequence of accounting process
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A. Communicating→Recording→Identifying
B. Recording→Communicating→Identifying
C. Identifying→communicating→recording
D. Identifying→recording→communicating

Bookkeeping mainly concerns with which part of accounting process?

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A. Analyzing
B. Preparing financial statements
C. Recording financial information
D. Auditing the books of accounts

Financial accounting provides financial information to all of the following external users
except:
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A. Government agencies
B. investors
C. Creditors
D. Managers

For which step of accounting process the accountants of business entity prepare financial
statements?
0

A. Identification of economic event

B. Communication of financial information 
C. Recording financial information
D. Making decisions about business

Keeping the log of financial information in books of original entries is called__________?

0

A. Recording 
B. summarizing
C. Grouping
D. Processing

Auditing is what?
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A. Reporting the financial information
B. Examination of financial statements 
C. Preparation financial statements
D. maintaining the ledger records

Which of the following is the external user of financial statements?

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A. Manager of the business

B. CEO of the business
C. Creditor of the business 
D. Controller of the business

Which of the following is the internal user of financial statements?

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A. Creditor of the business

B. Government agency
C. Shareholder of the business
D. Manager of the business

_________ is the first phase of accounting cycle?

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A. Identifying an economic event or transaction

B. Preparing journals
C. Posting entries to ledger accounts
D. Making decisions about business

In accounting an Economic event is referred to as:

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A. Cash
B. Bank statement
C. Transaction 
D. Exchange of money

Identify the correct sequence of accounting process

0

A. Communicating→Recording→Identifying
B. Recording→Communicating→Identifying
C. Identifying→communicating→recording
D. Identifying→recording→communicating

Bookkeeping mainly concerns with which part of accounting process?

0

A. Analyzing
B. Preparing financial statements
C. Recording financial information
D. Auditing the books of accounts

Financial accounting provides financial information to all of the following external users
except:
0

A. Government agencies
B. investors
C. Creditors
D. Managers

For which step of accounting process the accountants of business entity prepare financial
statements?
0

A. Identification of economic event

B. Communication of financial information 
C. Recording financial information
D. Making decisions about business

Keeping the log of financial information in books of original entries is called__________?

0

A. Recording 
B. summarizing
C. Grouping
D. Processing

Auditing is what?
0

A. Reporting the financial information

B. Examination of financial statements 
C. Preparation financial statements
D. maintaining the ledger records

Which of the following is the external user of financial statements?

0

A. Manager of the business

B. CEO of the business
C. Creditor of the business 
D. Controller of the business

Which of the following is the internal user of financial statements?

0

A. Creditor of the business

B. Government agency
C. Shareholder of the business
D. Manager of the business

_________ is the first phase of accounting cycle?

0

A. Identifying an economic event or transaction

B. Preparing journals
C. Posting entries to ledger accounts
D. Making decisions about business

What is the basic accounting equation?

0

A. Capital+Liabilities=Assets
B. Assets+ liabilities =Capital
C. Capital+assets=liabilities
D. Liabilities+Capital

Which of the following is a liability?

0

A. Cash
B. Equipment
C. Debtors
D. Creditors

What is equity?
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A. Cash from the business

B. liability of a business
C. Owner’s claim on total assets 
D. Owner’s claim on total liabilities

Identify the asset from the following:

0

A. Cash and cash equivalent 

B. Creditors
C. Notes payable
D. Bank loan

_______ the withdrawal of cash and goods by the owner of the busienss for his/her personal
use?
0

A. Depreciation
B. Drawings
C. Outflow of cash
D. Appreciation

Net loss occurs when______________?

0

A. Expenses are greater than Income

B. Expenses are less than Income
C. Expenses=Income
D. Liabilities are greater than income

Double entry implies that

0

A. Recording entries in journal

B. Recording entries in Ledger account
C. Recording two aspects of every transaction 
D. Recording every transaction in books

Identify the nominal account

0

A. Machinery account
B. Building account
C. Creditors account
D. Rent expenses account

Which of the following accounts can be classified as a real account?

0

A. Rent expenses account

B. Rent income account
C. insurance expenses account
D. Cash account

Transferring entries from journal to ledger account is commonly known as____________?

0

A. Recording
B. Transferring
C. Posting
D. Entry making

What is the basic accounting equation?

0

A. Capital+Liabilities=Assets
B. Assets+ liabilities =Capital
C. Capital+assets=liabilities
D. Liabilities+Capital

Which of the following is a liability?

0

A. Cash
B. Equipment
C. Debtors
D. Creditors

What is equity?
0

A. Cash from the business

B. liability of a business
C. Owner’s claim on total assets 
D. Owner’s claim on total liabilities

Identify the asset from the following:

0

A. Cash and cash equivalent 

B. Creditors
C. Notes payable
D. Bank loan
_______ the withdrawal of cash and goods by the owner of the busienss for his/her personal
use?
0

A. Depreciation
B. Drawings
C. Outflow of cash
D. Appreciation

Net loss occurs when______________?

0

A. Expenses are greater than Income

B. Expenses are less than Income
C. Expenses=Income
D. Liabilities are greater than income

Double entry implies that

0

A. Recording entries in journal

B. Recording entries in Ledger account
C. Recording two aspects of every transaction 
D. Recording every transaction in books

Identify the nominal account

0

A. Machinery account
B. Building account
C. Creditors account
D. Rent expenses account

Which of the following accounts can be classified as a real account?

0

A. Rent expenses account

B. Rent income account
C. insurance expenses account
D. Cash account

Transferring entries from journal to ledger account is commonly known as____________?

0

A. Recording
B. Transferring
C. Posting
D. Entry making

Which of the following is the normal balance of a rent expense account?

0

A. Credit balance
B. Cash balance
C. Overdraft
D. Debit balance

Revenue and expense accounts are referred as______________?

0

A. Nominal accounts 
B. Real account
C. Cash accounts
D. Banks account

The real accounts are accounts of Assets, liabilities and ___________?

0

A. Expenses
B. Revenues
C. Capital
D. Drawing

Building account is classified as _________ account?

0

A. Nominal
B. Real 
C. Cash
D. Capital

Office equipments account is classified as _________ account?

0

A. Nominal
B. Real 
C. Cash
D. Capital

___________ helps business to classify transactions according to their nature?

0

A. General journal
B. Real accounts
C. Ledger accounts
D. Cash accounts

Which of the following is a real account?

0

A. Office equipment
B. Rent expenses
C. Rent income
D. Insurance expense

Which of the following accounts are closed at the end of an accounting period?
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A. Nominal accounts
B. Balance sheet accounts
C. Real accounts
D. None of them

Which of the following is the closing balance of a ledger account?

0

A. Balance c/d (Carried down)

B. Balance b/d
C. Balance e/d
D. Balance f/c

The Basic accounting equation is___________?

0

A. Asset=Expense +Income
B. Assets=Cash+Capital
C. Assets=Capital+Liabilities
D. Assets=Expenses+Capital

Find out the value of assets if: Liabilities=$5000 and Capital=$1000

0

A. $4000
B. $6000
C. $7000
D. $3000

Calculate the amount of cash if: Total assets=$10,000 Total liabilities=$10,000 Total
Capital=$5000
0

A. $6000
B. $10,000
C. $5000
D. $1000

Capital increases if _________ increases?

0

A. Expenses
B. Drawings
C. Interest on capital
D. Revenue

Capital of a business decreases if there is an increase in___________?

0

A. Drawings 
B. Income
C. Gains
D. Fresh capital

If the total liabilities of a business decrease by $5000 what will be the effect on total asset?
0

(assuming the amount of capital remain same)

A. Remain constant
B. Decrease by $5000 
C. Increase by $5000
D. Increase by $10,000

If the business’s owner withdraws cash for his/her personal use what will be the effect on
capital?
0

A. Increase in capital
B. Remain the same
C. Decrease in capital
D. No effect on capital
Net income equal to Revenues minus____________?
0

A. Gains
B. Depreciation
C. Expenses
D. Capital expenditures

Collection of account receivable will

0

A. Increase assets and decrease assets 

B. Increase assets and decrease liabilities
C. Increase assets and increase capital
D. Increase assets and increase cash

Payment of expenses will ______ the assets

0

A. Increase
B. Reduce 
C. apportion
D. Overstate

Which of the following is the practical implementation of the accounting equation?

0

A. Cash flow statement

B. Income statement
C. Statement of changes in equity
D. Statement of financial position

Which of the following accounting equation is correct?

0

A. Cash+Other assets=Capital-Liabilities
B. Capital+ Liabilities=Assets+Income
C. Assets-Liabilities=Capital
D. Assets+Capital=Liabilities

Fresh capital introduction will increase____________?

0
A. Assets and liabilities
B. Assets and equity 
C. Liabilities and equity and bank balance
D. Capital and liabilities

Cash received for services rendered will______________?

0

A. Increase cash and liability

B. Increase equity and liability
C. Increase fixed assets and cash
D. Increase cash and equity

Which of following best describes the increase in equity expands___________?

0

A. Business operations 
B. cash outflows
C. Inflows of cash
D. Appropriation expenses

If Cash=$1000 inventories=$4000 Debtors=$5000 fixed assets=? Capital+Liabilities=$15000

What is the Amount of total assets?
0

A. $5000 
B. $10,000
C. $15,000
D. $20,000

Depreciation decreases____________?
0

A. Liabilities
B. Cash
C. Bank
D. Capital

An increase in provision for bad debt will____________?

0

A. Decrease net income 

B. Decrease liabilities
C. Increase net income
D. Increase liabilities
Current assets – Current liabilities=?
0

A. Capital
B. Absorbed capital
C. Net assets
D. Net working capital

Assets-Liabilities=____________?
0

A. Cash
B. Equity
C. Net income
D. Net expenses

The process of recording is done?

0

A. Two times a year

B. once a year
C. Frequently during the accounting period
D. At the end of a accounting period

General journal is a book of _______ entries?

0

A. First
B. Original
C. Secondary
D. Generic

The process of recording transactions in different journals is called_________?

0

A. Posting
B. Entry making
C. Adjusting
D. Journalizing

Every business transaction affects at least ________ accounts?

0
A. One
B. Two
C. Three
D. Infinite

Discount allowed is a kind of deduction from_____________?

0

A. Account payable
B. Account receivable
C. Cash account
D. Discount account

The other name of journal is____________?

0

A. Ledger
B. T account
C. Day book
D. Cash book

A journal entry in which two or more account is debited or credited is referred

as____________?
0

A. Journal entry
B. Multi entry
C. Additional entry
D. Compound entry

he term 2/10-n/30 implies that ______ % discount will be given if the payment is made
within days or full amount is receivable within 30 days?
0

A. 2,10
B. 10,2
C. 10,30
D. 3,15

Goods returned by customer should be debited to which of the following accounts?

0

A. Sales income account

B. Sales account
C. Return inward account
D. Expenses account
Discount allowed is___________?
0

A. Expense of business
B. Income of business
C. Loss of business
D. Abnormal loss of business

_________ is the evidence that a transaction took place?

0

A. Source documents
B. Ledger
C. Bonds
D. Journals

Which of the following will be debited if a business purchases goods on credit?

0

A. Cash
B. Debtor
C. Creditor
D. Purchases

Which of the following accounts will be debited if the business’s owner withdraws cash
from business for his personal use?
0

A. Drawings
B. Cash
C. Business
D. Stock

Journals are also referred as_____________?

0

A. Book of entries
B. Book of original entries
C. T account
D. Books of economic event

The standard format of journal does not include which of the following?
0
A. Assets column
B. Date column
C. Description column
D. Amount column

In which of the following orders data is entered in journal?

0

A. Alphabetical order
B. Numeric order
C. Bullets order
D. Chronological order

Which of the following accounts will be credited if a company purchases building for cash?
0

A. Capital account
B. Fixed assets account
C. Building account
D. Cash account

Discount for quick repayment of debt is normally referred as____________?

0

A. Trade discount
B. Prompt payment discount
C. Cash discount
D. Bulk discount

The first step in accounting process is___________?

0

A. Recording the transaction

B. Identifying the transaction
C. Posting the transaction
D. Preparing the source documents

A chart of accounts generally start with which of the following types of accounts?
0

A. Assets accounts
B. liability accounts
C. Cash accounts
D. Revenue accounts

Total depreciation of an asset cannot exceed its:

0

A. Scrap value
B. Residual value
C. Market value
D. Depreciable value

During the year 2011-2012, the value of closing inventory was overstated by 25,000. Which
of the following is true?
0

A. The cost of goods sold was overstated during 2011-2012 and income will be understated
during 2012-2013
B. The income was overstated during 2011-12 and closing inventory will be overstated during
2012-2013
C. The retained earnings was overstated during 2011-2012 and retained earnings will be
understated during 2012-2013
D. The cost of goods sold was understated during 2011-2012 but retained earnings will not be
affected during 2012-2013

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Which of the following errors is an error of omission?

0

A. Sale of ` 100 was recorded in the Purchases Journal

B. Wages paid to Mohan have been debited to his account
C. The total of the sales journal has not been posted to the Sales Account
D. Repairs to buildings have been debited to buildings account

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Which of the following statements is /are true?

0

A. Entering wrong amount in the subsidiary book affects the agreement of the Trial Balance
B. Undercasting or overcastting of a subsidiary book is an example or error of commission
C. Errors of principle do not affect the agreement of Trial Balance
D. Both B. and C. above

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Which of the following is true?

0
A. Error of casting affects personal accounts
B. Omission of a transaction from a subsidiary record affects only one account
C. Error of carry forward affects two accounts
D. Error of principle involves an incorrect allocation of expenditure or receipt between
capital and revenue

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Journal proper is meant for recording_____________?

0

A. Credit purchase of fixed assets

B. Return of goods
C. All such transactions for which no special journal has been kept by the business
D. None of these

Closing stock in the Trial Balance implies that______________?

0

A. It is already adjusted in the opening stock

B. It is adjusted in the Purchase A/c
C. It is adjusted in the Cost of Sale A/c
D. It is adjusted in the Profit &Loss A/c

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Which of the following statements is true?

0

A. If a Trial Balance tallies, it always means that none of the transactions has been completely
omitted
B. A Trial Balance will not tally if a transaction is omitted
C. A customer to whom goods have been sold on credit cannot avail himself of a cash discount
D. A credit balance in the Pass Book indicates excess of deposits over withdrawals

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The adjustment to be made for income received in advance is:

0

A. Add income received in advance to respective income and show it as a liability

B. Deduct income received in advance from respective income and show it as a liability
C. Add income received in advance to respective income and show it as asset
D. Deduct income received in advance from respective income and show it as an asset in the
Balance Sheet
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Which of the following statements is correct about Trial Balance?

1

A. The Trial Balance is prepared after preparing the Profit and Loss Account
B. The Trial Balance shows only balances of Assets and Liabilities
C. The Trial Balance shows only nominal account balances
D. The Trial Balance has no statutory importance from the point of view of law

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While finalizing the current year‘s accounts, the company realized that an error was made
in the calculation of closing stock of the previous year. In the previous year, closing stock
was valued more by 50,000. As a result
0

A. Previous year‘s profit is overstated and current year‘s profit is also overstated.
B. Previous year‘s profit is understated and current year‘s profit is overstated.
C. Previous year‘s profit is overstated and current year‘s profit is understated.
D. There will be no impact on the profit of either the previous year or the current year.

Which of the following is not correct about Errors?

0

A. Errors which affect one account can be errors of posting

B. Errors of omission arise when any transaction is left to be recorded
C. Errors of carry forward from one year to another year affect both Personal and Real A/c
D. Errors of commission arise when any transaction is recorded in a fundamentally incorrect
manner

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If goods worth 1,750 returned to a supplier is wrongly entered in sales return book as
1,570, then
0

A. Net Profit will decrease by 3,140

B. Gross Profit will increase by 3,320
C. Gross Profit will decrease by 3,500
D. Gross Profit will decrease by 3,320
For the past 3 years, DK Ltd. has failed to accrue unpaid wages earned by workers during
the last week of the year. The amounts omitted, which were considered material, were as
follows:
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March 31,2010 – ` 56,000

March 31, 2011 – ` 51,000
March 31, 2012 – ` 64,000

The entry on March 31, 2012 to rectify these omissions would include a

A. Credit to wage expense for ` 64,000

B. Debit to wage expense for ` 64,000
C. Debit to wage expense for ` 51,000
D. Debit to wage expense for ` 13,000

Purchase journal is kept to record_____________?

0

A. All purchases of goods

B. All credit purchases of goods
C. All credit purchases
D. None of these

The beginnings inventory of the current year is overstated by 5,000 and closing inventory is
overstated by 12,000. These errors will cause the net income for the current year by
0

A. 17,000 (overstated.
B. 12,000 (understated.
C. 7,000 (overstated.
D. 7,000 (understated.

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The accountant of Leo Ltd. recorded a payment by cheque to a creditor for supply of
materials as 1,340.56. The bank recorded the cheque at its correct amount of 3,140.56. The
Company has not passed any rectification entries and the error is not detected through the
bank reconciliation. The impact of this error is
0

A. The Trial Balance will not agree

B. The balance of creditors is understated
C. The purchases are understated
D. The favorable bank balance as per Pass Book is less than the Bank balance as per Cash
book
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Which of the following errors affects the agreement of a Trial Balance?

0

A. Mistake in balancing an account

B. Omitting to record a transaction entirely in the subsidiary books
C. Recording of a wrong entry in the subsidiary books
D. Posting an entry on the correct side but in the wrong account

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Which of the following should not be treated as revenue expenditure?

0

A. Interest on loans and debentures

B. Annual fire insurance premiums on Plant and Equipment
C. Sales tax paid in connection with the purchase of office equipment
D. Small expenditures on long- lived assets, such as ` 20 for a paper weight.

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Capital expenditure is an expenditure which

0

A. Benefits the current accounting period

B. Will benefit the next accounting period
C. Results in the acquisition of a permanent asset
D. Results in the acquisition of a current asset

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Which of the following is not a deferred revenue expenditure?

0

A. Expenses in connection with issue of equity shares

B. Preoperative expenses
C. Heavy advertising expenses to introduce a new product
D. Legal expenses incurred in defending a suit for breach of contract to supply goods

Any donation received for a specific purpose is a_________?

0
A. Liability
B. Assets
C. Revenue receipts
D. Capital receipts

Which of the following is an item of capital expenditure?

0

A. Research and development costs during the year

B. Interest on borrowed fund utilized for acquisition of Office Furniture
C. Installation charges paid in conjunction with the purchase of Office Equipment
D. Monthly rent of a machinery used in the business

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The balance of which of the following accounts do not disappear, once they are
debited/credited to Trading Account?
0

A. Sales
B. Purchases
C. Inward returns
D. Closing stock

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Which one of the following should be considered a revenue expenditure?

0

A. 1000 paid for the execution of a new plant

B. Loss of 10,000 incurred in increasing the sitting accommodation of a hotel
C. Damage paid on account of breach of a contract to supply certain goods
D. Repair to machinery purchased, second hand.

Which of the following statements are / is true? – Events after Balance Sheet are?
0

A. All the significant events after the Balance Sheet date

B. The events after Balance Sheet date but before submitting it to the Registrar of Companies
C. The events after Balance Sheet date but before its approval by the board
D. All changes after Balance Sheet date before its approval

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Which one of the following is a capital expenditure?

0
A. Compensation paid to Directors on termination of their services
B. Expenditure incurred in connection with the renewal of a Trade Mark.
C. Gratuities paid to Directors on termination of their services.
D. Royalty paid in installments for the purchase of rights to manufacture and sell patient
medicines.

Which of the following enhances the earning capacity of an asset?

0

A. Increase in working capacity of an asset

B. Reduction in operating costs
C. Replacing damaged parts of an asset
D. Both A. and C. above

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Which of the following items should not be capitalized relating to fixed assets?
0

A. Interest payable on loans or deferred credits taken for the acquisition or construction of fixed
assets before they are ready for use
B. Stand by equipment and servicing equipment
C. Expenditure incurred on test runs and experimental production
D. Administration and general expenses

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Which of these errors affect only one account?

0

A. Errors of casting
B. Errors of carry forward
C. Errors of posting
D. All the three

Which of these errors affect two or more accounts

0

A. Errors of complete omission

B. Errors of principle
C. Errors of posting to wrong account
D. All the three

Which of the following error is an error of principle

0

A. 5,000 received from Sham credited to Ram A/c

B. 5,000 incurred on installation of new plant debited to travelling expenses A/c
C. 500 paid for wages debited to salary A/c
D. 500 being purchase of raw material debited to purchase A/c ` 50

Which of the following is an one sided error?

0

A. 500 purchase of old equipment not recorded in the books of A/c at all
B. 500 being expense on travelling expense credited to travelling expenses
C. Both
D. None

Any gain on the sale of non-current assets should be _________ from the net profit and the
loss must be _________to the net profit in determining fund from operation?
0

A. Added, Reduced
B. Added, Added
C. Deducted, Added
D. Deducted, Deducted

Cash book records?

0

A. Only cash sales

B. All types of cash receipts and payments
C. Only revenue receipts
D. Only capital receipts

In a three column cash book_______________does not exist?

0

A. Cash column
B. Bank column
C. Petty cash column
D. Discount column

Which of these transactions will not be recorded in cash book?

0

A. Cash received from debtors

B. Cash paid to creditors
C. Salary remained outstanding
D. Cash deposited with bank

The closing balance of a petty cash book is a / an___________?

0

A. Liability
B. Gain
C. Assets
D. Loss

Which column of a cash book will not have credit balance___________?

0

A. Bank column
B. Discount column
C. Cash column
D. None

Petty cash balance is a/an___________?

0

A. Assets
B. Expenditure
C. Liability
D. None

Which of these is a Part of cash in hand?

0

A. Postage stamps
B. B/R
C. Cheque Deposited with Bank
D. B/R endorsed

Which of the following is a Real A/c?

0

A. Salary A/c
B. Bank A/c
C. Building A/c
D. Goodwill A/c

Which of the following is a representative Personal A/c?

0

A. Outstanding Salary A/c

B. Rent A/c
C. SBI A/c
D. Bad debts A/c

Which of the following is a Nominal A/c ?

0

A. Outstanding Salary A/c

B. Rent A/c
C. SBI A/c
D. Debtors A/c

Goodwill A/c is a/an__________?

0

A. Nominal A/c
B. Tangible Asset
C. Intangible Asset
D. Fictitious Asset

Posting is the process of____________?

0

A. Posting the letters in drop box

B. Posting suitable person to a suitable job
C. Entering in the ledger the information contained in the ledger
D. All the three

A book wherein various accounts are opened is called____________?

0

A. Subsidiary books
B. Journal
C. Ledger
D. Trial Balance

Which of these is not a special purpose journal?

0

A. Cash journal
B. Purchase journal
C. Debtors journal
D. Sales journal
The periodic total of sales day book is posted to___________?
0

A. Sales A/c
B. Cash sales A/c
C. Sales return A/c
D. Credit sales A/c

The periodic total of purchase day book is posted to____________?

0

A. Purchase register
B. Purchase A/c
C. Cash purchase A/c
D. Credit purchase A/c

Capital expenses are shown in___________?

0

A. Balance Sheet
B. Profit and Loss A/c
C. Trading A/c
D. None of these

Revenue receipts are shown in___________?

0

A. Balance Sheet
B. Profit and Loss appropriation A/c
C. Manufacturing A/c
D. Trading and Profit and Loss A/c

Revenue is generally recognized as being earned at that point of time when?

0

A. sale is effected
B. cash is received
C. production is completed
D. debts are collected

Which of the following is a revenue expenses?

0
A. Raw material consumed
B. Plant purchased
C. Long term loan raised from bank
D. Share Capital

Which of the following is a capital expenditure?

0

A. Repair of plant and machinery

B. Salary paid to workers
C. Cost of stand by equipment
D. Annual whitewash of the office building

Which of these types of expenditure would not be treated as a Capital Expenditure?

0

A. Acquisition of an Asset
B. Extension of an Asset
C. Improvement of the existing Asset
D. Maintenance of the Asset

Expenses of the following nature are treated as a Revenue expenses except__________?

0

A. Expenses for day to day running of the business

B. Putting the new asset in working condition
C. Depreciation
D. Purchase of raw material

Cash received from debtors would be deemed as___________of funds.

0

A. No flow
B. Sources
C. Uses
D. Gain

Generally the term fund is used to mean the difference between?

0

A. Current assets and current liabilities

B. Profit and loss A/C and Balance sheet
C. Current assets and non-current liabilities
D. Current liabilities and non-current liabilities

Which of these documents is not required for Bank Reconciliation?

0

A. Bank column of Cash Book

B. Bank Pass Book
C. Bank Statement
D. Trial Balance

Which of these items are taken into consideration for preparation of adjusted Cash Book
0

A. Mistake in Cash Book

B. Mistake in Pass Book
C. Cheque issued but not presented for payment
D. Cheques deposited but not cleared

Credit balance as per Cash Book mean____________?

0

A. Surplus cash
B. Bank overdraft
C. Terms deposits with bank
D. None of these

Debit side of Bank Pass book corresponds to___________?

0

A. Credit side of Cash Book

B. Debit side of Cash Book
C. Debit side of Trial Balance
D. Credit side of Balance Sheet

Difference in Bank Balance as per Pass Book and Cash Book may arise on account
of_____________?
0

A. Cheque issued but not presented

B. Cheque issued but dishonoured
C. Cheque deposited and credited by bank
D. All of A. and B. above

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The Bank Reconciliation Statement is prepared?

0
A. To rectify the mistakes in the Cash Book
B. To arrive at the Bank Balance
C. To arrive at the Cash Balance
D. To bring out the reasons for the difference between the Balance as per Cash Book and
the Balance as per Bank Statement

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Bank reconciliation is a statement prepared to reconcile__________?

0

A. Trial balance
B. Cash book
C. Bank A/c
D. Cash as per cash book with bank balance as per bank pass book

Bank reconciliation statement is a part of_________?

0

A. Cash book
B. Trial balance
C. Auditors report
D. None of these

Benefits of preparing Bank Reconciliation Statement includes___________?

0

A. It bring out any errors committed in preparation of Cash book / Bank Pass Book
B. Highlights under delay in clearance of cheques deposited but not credited
C. Help know actual bank balance
D. All the three

Debit balance as per bank pass book mean_____________?

0

A. Surplus cash
B. Bank Overdraft
C. Terms deposits with bank
D. None of these

Which of the following is not a cause of difference in balance as per cash book and balance
as per bank pass book___________?
0

A. Errors in cash book

B. Errors in pass book
C. Cheques deposited and cleared
D. Cheques issued but not presented for payment

Provision is created for____________?

0

A. Unknown Liabilities
B. Known Liabilities
C. Creation of Secret Reserves
D. All the Three

Which of the following is not a method of charging depreciation?

0

A. Straight line Method

B. Written down value Method
C. Discounted present value Method
D. Sum of digits Method

A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If
depreciation is charged @ 10% on SLM method, find the profit or loss on sale of the car?
0

A. 20,000 Loss
B. 20,000 Profit
C. 10,000 Loss
D. 10,000 Profit

A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If
depreciation is charged @ 10% on written down value method, find the profit or loss on
sale of the Second hand car?
0

A. Loss of 20,000
B. Loss of 22,000
C. Loss of 11,000
D. Profit of 11,000

Which of the following is true with respect to providing depreciation under diminishing
balance method?
0

A. The amount of depreciation keeps increasing every year while the rate of depreciation keeps
decreasing
B. The amount of depreciation and the rate of depreciation decrease every year
C. The amount of depreciation decreases while the rate of depreciation remains the same
D. The amount of depreciation and the rate of depreciation increases every year

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Which of the following statements best describes the purpose of depreciation?

0

A. Regular reduction of asset value to correspond to changes in market value as the asset ages
B. A process of correlating the market value of an asset with its gradual decline in physical
efficiency
C. Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried
on the Balance Sheet in excess of net realizable value
D. Allocation of the cost of an asset to the periods in which services are received from the
asset

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The main objective of providing depreciation is to?

0

A. Calculate the true profit

B. Show the true financial position in the Balance Sheet
C. Provide funds for replacement of fixed assets
D. Both A. and B. above

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Depreciation is a process of____________?

0

A. Valuation
B. Valuation and allocation
C. Allocation
D. Appropriation

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The portion of the acquisition cost of the asset yet to be allocated is known as___________?
0

A. Written down value

B. Accumulated value
C. Salvage value
D. Residual Value
Which of the following statements is true with regard to written down value method of
depreciation?
0

i. The rate at which the asset is written off reduces year after year
ii. The amount of depreciation provided reduces from year to year
iii. The rate of depreciation as well as the amount of depreciation reduce year after year
iv. The value of the asset gets reduced to zero over a period of time

A. Only (i) above

B. Only (ii) above
C. Both (i) and (ii) above
D. (i),(ii) and (iii) above

The accounting process of gradually converting the unexpired cost of fixed assets into
expenses over a series of accounting periods is_________?
0

A. Depreciation
B. Physical deterioration of the asset
C. Decrease in market value of the asset
D. Valuation of an asset at a point of time

Which of the following factors are primarily considered to determine the economic life of
an asset?
0

A. Passage of time, asset usage, and obsolescence

B. Tax regulations and SEBI guidelines
C. Tax regulations and asset usage
D. SEBI guidelines and Asset usage

In which of the following methods, the cost of the asset is spread over in equal proportion
during its useful economic life?
0

A. Straight-line method
B. Written down value method
C. Units-of-production method
D. Sum-of-the years‘-digits method

Which of the following statements is correct about Depreciation?

0
A. Depreciation cannot be provided in case of loss in a financial year
B. Depreciation is a charge against profit
C. Depreciation is provided in the books only when there is profit
D. Depreciation is an appropriation of profit

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Depreciation is calculated on the____________?

0

A. Cost price of asset

B. Market price
C. Cost+ Transport+ Installation expenses
D. Cost or market values whichever is less

Which of the following is an external cause of depreciation?

0

A. Routine repair and maintenance

B. Misuse
C. Obsolescence
D. Wear and tear

Which of the following is not depreciated?

0

A. Building
B. Land
C. Plant and Machinery
D. Office equipment

____________is also known as Appraisal system of depreciation?

0

A. Inventory system
B. Survey system
C. Annuity system
D. Insurance

Bad debts recovered account will be transferred to______________?

0

A. Debtor‘s Account
B. Profit and Loss Account
C. Provision for Doubtful Debt Account
D. Either (b )or C. above
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The entry for creating a Provision for bad debts is_____________?

3

A. Debit Provision for Bad Debts A/c and credit Debtors A/c
B. Debit Debtors A/c and credit Provision for Bad Debts A/c
C. Debit Provision for Bad Debts A/c and credit Profit & Loss A/c
D. Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.

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When a person purchasing goods on credit he becomes a_________in the books of the
seller?
0

A. Debtor
B. Creditor
C. Defaulter
D. Offender

Cost of goods sold excludes___________?

0

A. Opening Stock
B. Carriage inward
C. Wages & Salary
D. Postage & Stamps

Tax deducted at source A/c appears in___________?

0

A. Assets side
B. Liability side
C. Profit & Loss A/c
D. Debited to Capital A/c

Investment in own share A/c appears in____________?

0

A. Asset side
B. Liability side
C. Netted from Capital
D. Profit & Loss A/c

Payments received in advance from a customer for a contract can be__________?

0

A. Shown as a deduction from contract work-in-progress on asset side

B. Shown as a liability
C. Credited to P&L A/c
D. Either A. or B. above

If a company has contingent liabilities, they appear in the__________?

0

A. Balance Sheet
B. Directors‘ report
C. Notes on account to Balance Sheet
D. Chairman‘s report

Contingent liabilities are disclosed in the notes to Balance Sheet

Recent developments have made much of a company‘s inventory obsolete. This obsolete
inventory should be?
0

A. Written down to zero or its scrap value

B. Shown in the Balance Sheet at its replacement cost
C. Shown in the Balance Sheet at cost, but classified as a non-current asset
D. Carried in the accounting records at cost until it is sold

Which of the following is not classified as inventory in the financial statements?

0

A. Finished goods
B. Work-in-process
C. Stores and spares
D. Advance payments made to suppliers for raw materials

If actual bad debts are more than the provision for bad debts, then there will be
a_____________?
0

A. Credit balance of Provision for Bad Debts Account

B. Debit balance of Provision for Bad Debts Account
C. Debit balance of Bad Debts Account
D. Debit balance of Discount on Debtors Account
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The creation of provision for doubtful debts given as an adjustment

requires____________?
0

A. Debit Profit and Loss Account and deduct the provision from debtors
B. Credit Profit & Loss Account and deduct the provision from debtors
C. Credit Profit and Loss Account and add the provision to debtors
D. Debit Profit & Loss Account and add the provision to debtors

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Under the direct write-off method of recognizing a bad debt expense. Which of the
following statements is/are true?
0

A. The bad debt expense is not matched with the related sales
B. Revenue is overstated in the year of sales
C. It violates the matching principle of accounting
D. All of the above

At the time of preparation of financial accounts, bad debt recovered account will be
transferred to?
0

A. Debtors A/c
B. Profit & Loss A/c
C. Profit & Loss Adjustment A/c
D. Profit & Loss Appropriation A/c

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The balance of Revaluation Reserve pertaining to an asset that has been disposed off or
retired can be transferred to?
0

A. General Reserve A/c

B. Profit & Loss A/c
C. Asset A/c
D. Capital Reserve A/c

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Average Accounting Return is a measure of accounting profit relative to:
0

A. Book value
B. Intrinsic value
C. Cost
D. Market value

During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases
by Rs. 8,000. What will be the amount of cash received from customers for the period?
0

A. Rs. 33,000
B. Rs. 25,000
C. Rs. 17,000
D. Rs. 8,000

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Which of the following form of business organization is least regulated?

0

A. Sole-proprietorship
B. General Partnership
C. Limited Partnership
D. Corporation

Which of the following statement is considered as the accountant’s snapshot of firm’s

accounting value as of a particular date?
0

A. Income Statement
B. Balance Sheet
C. Cash Flow Statement
D. Retained Earning Statement

Period cost include which of the following ?

0

A. selling Expense
B. Direct labor
C. factory overhead
D. selling Expenses & administrative expenses

Submitted by: Maneesh kumar

The compensation paid by the borrower of fund to lender, from the borrower point of the
cost of borrowing fund is called?
0

A. Interest Rate
B. Required rate of return
C. Nominal interest rate
D. All of the above

Submitted by: Maneesh kumar

An income statement in which each item expressed as percentage of Sale?

0

A. Balance sheet
B. income statement
C. common size income statement
D. All of the Above

Submitted by: Maneesh kumar

Short term Assets expected to be converted into cash within 1 year or less than?
0

A. Current Assets
B. Fixed Assets
C.  Current Assets& current liabilities
D. All of the above

Submitted by: Maneesh Kumar

_________is the cost of converting raw material into finished products?

0

A. Prime cost
B. Explicit cost
C. Job order cost
D. Conversion cost

Submitted by: Maneesh Kumar

Net sales equals, sales minus:

0
A. Return outwords
B. Return inwards
C. cost of goods sold
D. carriage on sales

Submitted by: Kamran Ahmad

LIFO stands for__________?

0

A.  Lots in , Few out

B.  Link input, Format Output
C.  Last input, First Output
D.  Last in, First Out

Submitted by: Muhammad Danish

Property, Plant and Equipment are conventionally presented in the Balance Sheet at
_________?
0

A. Replacement cost – Accumulated Depreciation

B. Historical cost – Salvage Value
C. Historical cost – Depreciation portion thereof
D. Original cost adjusted for general price-level changes

Outstanding salaries is shown as___________?

0

A. An Asset in the Balance Sheet

B. A Liability
C. By adjusting it in the P & L A/c
D. Both B. and C. above
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Insurance prepaid is shown as:___________?

0

A. Current Asset
B. Current Liability
C. Fixed Asset
D. Income
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Depreciation appearing in the Trial Balance should be?

0
A. Debited to P&L A/c
B. Shown as liability in Balance Sheet
C. Reduced from related asset in Balance Sheet
D. Both A. and C. above
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A club paid subscription fees of `1,400. Out of which ` 200 is prepaid. In such case
0

A. P&L A/C is debited with 1,400

B. P&L A/C is debited with 1,200
C. 200 is shown as current asset
D. Both B. and C. above
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Bad debts recovered is:

0

A. Credited to P&L A/c

B. Debited to P&L A/c
C. Reduced from debtors in Balance Sheet
D. Added to debtors in Balance Sheet
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The adjustment to be made for prepaid expenses is____________?

0

A. Add prepaid expenses to respective expenses and show it as an asset

B. Deduct prepaid expenses from respective expenses and show it as an asset
C. Add prepaid expenses to respective expenses and show it as a liability
D. Deduct prepaid expenses from respective expenses and show it as a liability
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On scrutiny of a firm‘s books of accounts, it was observed that the following errors have
occurred in the previous years but have not yet been rectified.
0

i. Depreciation for 2011-2012- 7,000 understated

ii. Accrued expenses as at March 31, 2013 – 10,000 understated
The impact of this on the reported net income for the year ending March 31, 2013 is

A. 7,000 Overstated
B. 10,000 Overstated
C. 17,000 Understated
D. 17,000 Overstated
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Which of the following entries is correct in respect of reserve for discounts on accounts
payable?
0

A. Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c
B. Debit Accounts Payable A/c and Credit P&L A/c
C. Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c
D. Debit Reserve for Discount on Accounts Payable A/c and credit Accounts Payable A/c
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Sundry debtors as per Trial Balance is 43,000 which includes 2,200 due from ‗H in respect
of goods sent to him on approval basis, the cost price of which is 1,800. Rectification would
involve:
0

A. Adding 2,200 to closing stock

B. Deducting 1,800 from closing stock and deducting 2,200 each from debtors and sales
C. Adding 1,800 to closing stock and deducting 2,200 each from debtors and sales
D. Deducting 1,800 from debtors

Goods in stock worth 800 are destroyed by fire and the Insurance Co. is accepted the claim
for 600. Adjustment would involve
0

A. Debit of 800 to Trading Account and credit of 600 and 200 to insurance company and
Profit and Loss Account respectively
B. Deduct the 800 from closing stock in the Trading Account
C. Credit insurance company for 600
D. Debit of 600 and 200 to insurance company and Profit and Loss Account respectively
and
credit of 800 to Trading Account

Prepaid expenses are valued on the Balance Sheet at

0

A. Replacement cost
B. Current cost
C. Cost to acquire less accumulated amortization
D. Cost less expired portion
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Which of the following relationships is/are false?

0
A. Net Profit = Gross Profit – Administration and Other expenses
B. Net Profit = Gross Profit + Administration expenses and Other expenses
C. Opening Stock + Purchases – Closing Stock = Cost of Sales
D. Both B. and C. above
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Gross Profit is equal to_________?

0

A. Sales – Cost of goods sold

B. Sales – Closing Stock + Purchases
C. Opening Stock + Purchases – Closing Stock
D. None of the above

Which of the following shall not be deducted from net profit while calculating managerial
remuneration?
0

A. Loss on sale of undertaking

B. Debts considered bad and written off
C. Liability arising from a breach of contract
D. Director‘s remuneration
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Which of the following equations is correct?

0

A. Gross Profit+ Sales+ Direct expenses+ Purchases+ Closing stock = Opening stock
B. Gross Profit+ Sales+ Direct expenses+ Purchases- Closing stock = Opening Stock
C. Gross Profit + Opening Stock + Direct expenses + Purchases- Closing stock = Sales
D. Gross Profit – Opening Stock + Direct expenses + Purchases +Closing stock = Sales

Which of the following is not true with regard to preparation of Profit & Loss Account?
0

A. Profit & Loss Account is prepared for a certain period and hence it is an interim
statement
B. Profit & Loss Account does not disclose the effect of non-financial items
C. Net Profits are ascertained on the basis of current costs
D. Net Profits as disclosed by P&L Account is not absolute

The Profit and Loss Account shows the:

0
A. Financial results of the concern for a period
B. Financial position of the concern on a particular date
C. Financial results of the concern on a particular date
D. Cost of goods sold during the period
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Which of the following will not appear in Profit and Loss Account of a business?
0

A. Drawings
B. Bad debts
C. Accrued expenses
D. Reserve for discount on Sundry Creditors
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Which of the following is not a financial statement?

0

A. Profit and Loss Account

B. Balance Sheet
C. Funds Flow Statement
D. Trial Balance
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If unexpired insurance appears in the Trial Balance, it should be:

0

A. Credited to the Profit & Loss Account

B. Debited to the Profit & Loss Account
C. Shown on the liabilities side of the Balance Sheet
D. Shown on the assets side of the Balance Sheet
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Which of the following are/is not a fixed asset?

0

A. Stock
B. Vehicle
C. Fixed deposit in bank
D. Both A. and C. above

Which of the following are/is a current asset?

0

A. Sundry Debtors
B. Stock
C. Prepaid insurance
D. All of A. B. and C. above

Tax deducted at source appears in the Balance Sheet

0

A. On the assets side under current assets

B. On the assets side under loans and advances
C. On the liabilities side under current liabilities
D. On the liabilities side under provisions

Which of the following statements is false ? select the false from below options
0

A. Balance Sheet discloses financial position of the business

B. A person who owes to the business is called Debtor
C. Decrease in the value of the asset could decrease the value of a liability
D. Assets are to be shown in the Balance Sheet at the realizable value
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The Balance Sheet gives information regarding the____________?

0

A. Results of operations for a particular period

B. Financial position during a particular period
C. Profit earning capacity for a particular period
D. Financial position as on a particular date

Which of the following accounts appear(s) in the Balance Sheet of a business?

0

i. Stock at the end of the financial year

ii. Stock at the beginning of the financial year
iii. Drawings
iv. Prepaid Rent
v. Interest received but not yet earned

A. Only (i) above

B. Only (iii) above
C. Both (i)and (iii) above
D. (i), (iii), (iv) and (v) above

Computers taken on hire by a business for a period of twelve months should be classified
as:___________?
0
A. Current assets
B. Intangible assets
C. Deferred revenue expenditure
D. Not an asset
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Which of the following is not an intangible asset?

0

A. Trade mark
B. Franchise
C. Accounts Receivable
D. Secret Profit
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Which of the following is a current liability?

0

A. Prepaid expenses
B. Trademark
C. Discount on issue of shares
D. Outstanding Salaries
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Based on which of the following concepts, is Share Capital Account shown on the liabilities
side of a Balance Sheet?
0

A. Business entity concept

B. Money measurement concept
C. Going concern concept
D. Matching concept
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Which of the following is not a contingent liability?

0

A. Debts included in Sundry Debtors which are doubtful in nature

B. Uncalled liability on partly paid shares
C. Claims against the company not acknowledged as debts
D. Arrears of fixed cumulative dividend
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Which of the following are current assets of a business?

0
i. Income received in advance
ii. Stock
iii. Debtors
iv. Pre-paid expenses
v. Accrued income

A. Both (i) and (iv) above

B. Both (ii) and (iii) above
C. (i),(ii) and (iii) above
D. (ii),(iii),(iv) and (v) above

Closing entries are generally passed:

0

A. At the time of opening new books of account

B. At the time of closing the accounts
C. During the course of accounting period any time
D. After certification of accounts

Closing stock appearing in the Trial Balance is shown in:

0

A. Trading A/c and Balance Sheet

B. Profit and Loss A/c
C. Balance Sheet only
D. Trading A/c only

Depreciation Account appearing in the Trial Balance is shown in:

0

A. Profit and Loss A/c

B. Trading A/c
C. Deducted from the concerned assets A/c
D. Shown on the liability side

Profit on sale of old plant is:___________?

0

A. In Trading A/c
B. In Profit and Loss Appropriation A/c
C. Profit and Loss A/c
D. Being a non operating item ignored

Carriage on goods purchased is shown in:___________?

0
A. Profit and Loss A/c
B. Capitalized with work in progress
C. Trading A/c
D. Shown in Balance Sheet

Which of these is not an operating income?

0

A. Income from sale of trading goods

B. Bad debts recovered
C. Interest on FDs
D. None

Riaz holds an average inventory of 36,000(CP) with an inventory turnover of 5 times. If the
firm makes a gross profit of 25% on sales, find the total sales of the company.
0

A. 2,40,000
B. 2,10,000
C. 2,00,000
D. 1,80,000

From the following details what will be the partners commission? Net profit before
charging partners commission 65,000. Partners commission @ 11% after charging such
commission.
0

A. 6441
B. 5431
C. 7654
D. 9876

From the following details what will be the partners commission? Net profit before
charging partners commission 65,000. Partners commission 11% before charging such
commission
0

A. 6441
B. 5431
C. 7150
D. 5876

Arrangement of Balance Sheet in a logical order is known as __________?

0
A. Dressing Balance Sheet
B. Marshalling Balance Sheet
C. Formatting Balance Sheet
D. Make up of Balance Sheet

Find the cost of goods sold if goods are sold for 2,000 at 25% profit on cost?
0

A. 1,600
B. 1,500
C. 1,000
D. 1,800

Find the value of opening stock from the following data. Purchases 1,50,000, Closing stock
30,000 Sales 2,20,000, Gross profit 40,000.
0

A. 50,000
B. 55,000
C. 60,000
D. 65,000

A Bill of Exchange is drawn on 1st April, 2018 payable after 3 months. The due date of the
bill is?
0

A. 30th June,2018
B. 1st July,2018
C. 4th July,2018
D. 4th August,2018
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When bill discounted with the bank is dishonored?

0

A. Acceptor‘s Account is debited in the books of drawer

B. Bills Receivable Account is credited in the books of drawer
C. Bank Account is debited in the books of drawer
D. Bills Payable Account is debited in the books of drawer

In the books of the drawer, the accounting treatment involved on receipt of a bill of
exchange duly accepted by the drawee is?
0
i. Debit Bills Receivable Account
ii. Debit Drawee‘s Account
iii. Credit Drawee‘s Account
iv. Credit Sales Account

A. Only (i) above

B. Both (ii) and (iv) above
C. Both (i) and (iii) above
D. Both (i) and (iv) above
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The noting charges levied on dishonour of an endorsed bill by the Notary Public are to be
borne by
0

A. The drawer of the bill

B. The person responsible for dishonour
C. The holder of the bill
D. The endorser of the bill
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The drawer of a trade bill passes relevant entries with regard to the transaction involved in
it. But, in case of an accommodation bill, he passes an entry in addition to the usual entries.
The additional entry so passed is with respect to
0

A. Discounting of the bill with the bank

B. Payment of the bill on due date
C. Remitting or receiving the amount
D. Sending the bill to bank for collection
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Under which of the following situations, is journal entry not passed in the books of the
drawer?
0

A. When a discounted bill is honoured by the drawee on the due date

B. When a bill is sent to the bank for collection
C. When a bill is renewed at the request of the drawee
D. When a debtor accepts a bill drawn by the drawer

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Which of the following is not a feature of a promissory note?

0
A. It must be in writing
B. It contains an unconditional promise to pay
C. It is payable to the bearer
D. It must be signed by the maker
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How many parties are generally found in a Bill of Exchange?

0

A. 4
B. 2
C. 3
D. 5

Negotiable Instrument Act was enacted in_________?

0

A. 1981
B. 1881
C. 1871
D. 2001

Which of these is not an essential feature of a bill of exchange?

0

A. Unconditional
B. Certainty of amount
C. In writing
D. Amount to be paid in foreign currency

A foreign bill of exchange is generally drawn up in___________?

0

A. Triplicate
B. Duplicate
C. Single
D. Quadruplicate

Which of these are not required in a promissory note?

0

A. Acceptance
B. Unconditional promise to pay
C. Properly stamped
D. Payment to be made legal currency
X draws a Bill of Exchange on Y for 10,000 on 1-1-2013 for 3 months. The due date of the
bill will be_________?
0

A. 4-4-2013
B. 3-4-2013
C. 1-4-2013
D. 31-3-2013

Accommodation bills are generally for?

0

A. Genuine trade reasons

B. For mutual financial accommodation
C. To help augment money supply
D. All the three

A cash deposit made by business appears on the bank statement as _______ balance?
0

A. Debit
B. Credit 
C. Expenses
D. Liability

A check returned by bank marked “NSF” means that:

0

A. Bank can’t verify your identity

B. There are not sufficient funds in your account 
C. Check has been forged
D. Check can’t be cashed being illegal

Bank reconciliation statement is prepared by____________?

0

A. Accountant of the business

B. Manager of the business
C. Controller of the bank
D. Accountant of the bank

Bank charges amounting to $5000 was not entered in the cash book. Identify the correct
adjustment in cash book?
0
A. Bank charges will be debited in cash book
B. Bank charges will be added to cash book balance
C. Bank charges will be credited in cash book
D. Bank charges need no adjustment in cash book

Favorable balance of cash book implies that

0

A. Credit balance of cash book

B. Debit balance of cash book 
C. Bank overdraft
D. Adjusted balance of cash book

Bank reconciliation statement is the comparison of a bank statement (sent by bank) with
the _________ (prepared by business).
0

A. Cash receipt journal

B. Cash payment journal
C. Cash book
D. Financial statements

In the Bank reconciliation statement “Deposit in transit” is usually:

0

A. Subtracted from bank balance

B. Added to bank balance 
C. Added to Cash book balance
D. Subtracted from cash book balance

Unpresented checks also referred as____________?

0

A. Uncollected checks
B. Uncredited checks
C. Outstanding checks
D. Bounced checks

A discount of $2000 was given to a supplier on his prompt repayment of debt but the
cashier entered the gross amount in cash book. What should be the adjustment in cash to
work out the correct balance of cash book?
0

A. $2000 will be debited in cash book

B. $2000 will be credited in cash book 
C. $4000 will be debited in cash book
D. $4000 will be credited in the cash book

Standing orders are ________

0

A. Credited in the cash book 

B. Debited in the cash book
C. Entered in the bank statement
D. Entered in the petty cash balance

Uncollected checks also referred as______________?

0

A. Unpresented checks
B. Uncredited checks
C. Outstanding checks
D. Bounced checks

___________ are checks that are issued by the business but not yet presented to bank
0

A. Uncollected checks
B. Uncredited checks
C. Outstanding checks
D. Bounced checks

Bank sent debit advice of $500 to company being interest on overdraft. It wasn’t entered in
cash book. Identify the correct adjustment in cash book.
0

A. $500 will be debited

B. $500 will be credited 
C. Non-adjustable
D. $1000 will be subtracted

In bank reconciliation statement the amount of outstanding checks is added to ________

balance of cash book.
0

A. Adjusted 
B. Unadjusted
C. Understated
D. Overstated

Which of the following error results in unadjusted cash book balance?

0

A. Outstanding checks 
B. Unpresented checks
C. Deposit in transit
D. Omission of Bank charges

_________ Checks that are presented to bank but not yet credited by the bank.
0

A. Unpresented checks
B. Uncredited checks 
C. Outstanding checks
D. Bounced checks

Favorable balance of bank statement implies that

0

A. Credit balance
B. Debit balance
C. Bank overdraft
D. Adjusted balance

Balance as per cash book(adjusted.=$1000, Unpresented checks=$2000, Uncredited

checks=$500, Deposit in transit=$500. Compute the balance as per bank statement.
0

A. $2000 
B. Zero
C. $3000
D. $2500

A company was entered in hire purchase agreement and had to pay $1000 per month.
Three payments were made via bank account but no entry was found in cash book. Identify
the correct adjustment in cash book
0

A. $1000 will be added to cash book balance

B. $2000 will be deducted from cash book balance
C. $3000 will be added to cash book balance
D. $3000 will be subtracted from cash book balance

$5000 deposited in bank account was entered twice in the cash book. Identify the correct
adjustment in cash book.
0
A. $5000 will be credited 
B. $5000 will be debited
C. $10,000 will be credited
D. $10,000 will be debited

An entry which is made on both sides of a cash book is called__________?

0

A. Cash entry
B. Contra entry
C. Payment entry
D. Compound entry

Cash book records:______________?

0

A. Cash payments
B. Cash receipts
C. Cash payments and cash receipts
D. Neither cash payments nor cash receipts

Cash book is prepared by____________?

0

A. Bank
B. Accountant of business 
C. Manager of a company
D. Bank’s cashier

Discount received is recorded on which of the following side of a cash book?

0

A. Receipts
B. Payments 
C. Incomes
D. Expenditures

The closing balance of petty cash book is considered as_________?

0

A. Liability
B. Asset 
C. Expenses
D. Income

A credit balance in cash book indicates?

0

A. Bank balance
B. Cash at bank
C. Bank overdraft
D. Bank underdraft

Petty cash fund is supposed to be replenished?

0

A. Every day
B. Every half year
C. Every year
D. At the end of every accounting period

Postdated checks are considered as__________?

0

A. Cash
B. Bank balance
C. Accounts receivable
D. Cash reserve

Which of the following is generally not the party to a check?

0

A. Payee
B. Payer
C. Bank
D. Seller

Cash book with cash and discount column is mostly referred as________?
0

A. Simple cash book

B. Two column cash book
C. Three column cash book
D. Petty cash book

A simple or one column cash book usually has which of the following main columns?
0

A. Bank
B. Payments
C. Discount
D. Cash

Purchase of office equipment for cash will be recorded on which of the following sides of a
cash book?
0

A. Receipts
B. Payments
C. Incomes
D. Expenditures

Postage stamps on hand are considered as_________?

0

A. Bank
B. Prepaid expenses 
C. Accounts receivable
D. Creditor

A cash book that is used to record the small payments of cash is generally referred
as_________?
0

A. Simple cash book

B. Two column cash book
C. Three column cash book
D. Petty cash book

Drawings by owner of business are generally recorded on which of the following side of a
cash book?
0

A. Receipts
B. Payments 
C. Incomes
D. Expenditures

Payment of rent expenses is recorded on which side of cash book?

0

A. Receipts
B. Payments
C. Income
D. Expense
Cash discount is allowed on _______ repayment of debt.
0

A. Lump sum
B. Prompt 
C. Actual
D. None of them

Introduction capital by owner of business is recorded on which side of a cash book?

0

A. Receipts 
B. Payments
C. Incomes
D. Expenditures

A cash book with cash, bank and discount column is commonly referred as________?
0

A. Cash book
B. Two columns cash book
C. Three columns cash book
D. Petty cash book

The most common imprest system is the ________ system?

0

A. Petty cash 
B. Cash book
C. Cash receipt
D. Discount

Which English alphabet is similar to the shape of an account?

0

A. I
B. T
C. H
D. None

When production is equal to sales, which of the following is TRUE?

0
A. No change occurs to inventories for either use absorption costing or variable costing
methods
B. The use of absorption costing produces a higher net income than the use of variable costing
C. The use of absorption costing produces a lower net income than the use of variable costing
D. The use of absorption costing causes inventory value to increase more than they would though
the use of variable costing

An average cost is also known as________?

0

A. Variable cost
B. Unit cost
C. Total cost
D. Fixed cost

Costs that change in response to alternative courses of action are called___________?

0

A. Relevant costs
B. Differential costs
C. Target costs
D. Sunk costs

The total cost incurred in the operation of a business undertaking other than the cost of
manufacturing and production is known as________?
0

A. Direct cost
B. Variable cost
C. Commercial cost
D. Conversion cost

Consider the following data for a company during the month of June 2012 Budgeted hours
4,000 Standard hours for actual production 4,400 Maximum possible hours in the budget
period 4,800 Actual hours 3,800 The activity ratio of the company during the month is
0

A. 111%
B. 120%
C. 95%
D. 117%

Which of the following bases is not appropriate for apportionment of Transport

department‘s cost ?
0
A. Crane hours
B. Crane value
C. Truck Mileage
D. Truck value

The cost of obsolete inventory acquired several years ago, to be considered in a keep vs.
disposal decision is an example of :
0

A. Uncontrollable cost
B. Sunk cost
C. Avoidable cost
D. Opportunity cost

Budgeted sales for the next year is 5,00,000 units. Desired ending finished goods inventory
is 1,50,000 units and equivalent units in ending W-I-P inventory is 60,000 units. The
opening finished goods inventory for the next year is 80,000 units, with 50,000 equivalent
units in beginning W-I-P inventory How many equivalent units should be produced?
0

A. 5,80,000
B. 5,50,000
C. 5,00,000
D. 5,75,000

If the asset turnover and profit margin of a company are 1.85 and 0.35 respectively, the
return on investment is.
0

A. 0.65
B. 0.35
C. 1.50
D. 5.29

A company is currently operating at 80% capacity level. The production under normal
capacity level is 1,50,000 units. The variable cost per unit is ` 14 and the total fixed costs are
` 8,00,000. If the company wants to earn a profit of ` 4,00,000, then the price of the product
per unit should be
0

A. 37.50
B. 38.25
C. 24.00
D. 35.00
Consider the following data pertaining to the production of a company for a particular
month :
0

Opening stock of raw material 11,570

Closing stock of raw material 10,380
Purchase of raw material during the month 1,28,450
Total manufacturing cost charged to product 3,39,165
Factory overheads are applied at the rate of 45% of direct labour cost.
The amount of factory overheads applied to production is
A. 65,025
B. 94,287
C. 95,020
D. 1,52,624

If the minimum stock level and average stock level of raw material are 4,000 and 9,000
units respectively, find out its reorder quantity.
0

A. 8,000 units
B. 11,000 units
C. 10,000 units
D. 9,000 units

A worker has a time rate of 15/hr. He makes 720 units of component (standard time : 5
minutes/ unit) in a week of 48 hours. His total wages including Rowan bonus for the week is
0

A. 792
B. 820
C. 840
D. 864

One of the most important tools in cost planning is__________?

0

A. Direct cost
B. Cost Sheet
C. Budget
D. Marginal Costing.

A Ltd. Has sales of 2,200, total fixed cost of 570, variable cost of 1,540, raw material
consumed of ` 1,100, number of units sold 22,000. What shall be the BEP 9 in units) if raw
material price is reduced by 2%?
0
A. 18,387
B. 18,560
C. 18,750
D. 19,000

Auditing MCQs
____________ is a systematic examination of the books and records or a business?

A. Auditing
B. Vouching
C. Verification
D. Checking

The term ‘Audit’ is derived from a Latin word “audire” which means___________?

A. To inspect
B. To examine
C. To hear
D. To investigate

The main object of an audit is _____________?

A. Expression of opinion
B. Detection and Prevention of fraud and error
C. Both (A) and (B)
D. Depends on the type of audit.

An auditor is like a_______________?

A. Blood haunt
B. Watch dog
C. May both according to situation
D. None of these

Process of verifying the documentary evidences of transactions are known as___________?

0
A. Auditing
B. Testing
C. Vouching
D. Verification

Auditing is compulsory for____________?

A. Small scale business

B. Partnership firms
C. Joint stock Companies
D. Proprietary Concerns

Concealment of shortage by delaying the recording of cash receipts is known as_____________?

A. Embezzlement
B. Misappropriation
C. Lapping
D. None of these

The fundamental objective of the audit of a company is to_____________?

A. Protect the interests of the minority shareholders

B. Detect and prevent errors and fraud
C. Assess the effectiveness of the company’s performance
D. Attest to the credibility of the company’s accounts

The concept of stewardship means that a company’s directors________________?

A. Are responsible for ensuring that the company complies with the law
B. Are responsible for ensuring that the company pays its tax by the due date
C. Safeguard the company’s assets and manage them on behalf of the shareholders 
D. Report suspected fraud and money laundering to the authorities

Why do auditors concentrate their efforts on material items in accounts?

A. Because they are easier to audit

B. Because it reduces the audit time
C. Because the risk to the accounts of their being incorrectly stated is greater
D. Because the directors have asked for it

Which of the following is NOT the responsibility of a company’s directors?

A. Reporting to the shareholders on the accuracy of the accounts

B. Establishment of internal controls
C. Keeping proper accounting records
D. Supplying information and explanations to the auditor

International auditing standards are issued by the______________?

A. International Accounting Standards Board

B. Financial Accounting Standards Board
C. International Standards Board
D. Auditing Practices Board

Which of the following is not true about opinion on financial statements?

A. The auditor should express an opinion on financial statements.

B. His opinion is no guarantee to future viability of business
C. He is responsible for detection and prevention of frauds and errors in financial
statements 
D. He should examine whether recognised accounting principle have been consistently

A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of____________?

A. Error of omission
B. Error of commission
C. Compensating error
D. Error of principle

When an auditor is proposed for removal from office, which one of the following is he NOT permitted
to do?

A. Circulate representations to members

B. Apply to the court to have the proposal removed 
C. Speak at the AGM/EGM where the removal is proposed
D. Receive notification of the AGM/EGM where the removal is proposed

Which one of the following is NOT a duty of the auditor?

A. Duty to report to the company’s bankers 

B. Duty to report to the members
C. Duty to sign the audit report
D. Duty to report on any violation of law

Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of
the auditor?

A. The shareholders in a general meeting 

B. The managing director
C. The board of directors in a board meeting
D. The audit committee

The independent auditor’s primary responsibility is to______________?

A. the directors
B. the company’s creditors (payables)
C. the company’s bank
D. the shareholders

How long is the auditor’s term of office?

A. Until the audit is complete

B. Until the financial statements are complete
C. Until the next AGM (Annual General Meeting) 
D. Until the directors remove them

Which of the following is correct in relation to materiality?

A. A matter is material only if it changes the audit report

B. A matter is material if the auditor and the directors both decide that further work needs to be
done in the area under question
C. A matter is material only if it affects directors’ emoluments
D. A matter is material if its omission or misstatement would reasonably influence the
decisions of an addressee of the auditors’ report

Which one of the following is NOT considered to be part of planning?

A. Background i.e. industry

B. Previous year’s audit i.e. any qualifications in the report
C. Considering the work to be done by the client staff e.g. internal audit
D. Considering whether the financial statements show a true and fair view

Audit risk is composed of 3 factors. Which of the following is NOT one of those factors?

A. Compliance risk
B. Detection risk
C. Control risk
D. Inherent risk

Which of the following should NOT be considered at the planning stage?

A. The timing of the audit

B. Analytical review
C. Last year’s written representation letter
D. Obtaining written representations

At the planning stage you would NOT consider____________?

A. the timing of the audit

B. whether corrections from the inventory count have been implemented
C. last year’s audit
D. the potential use of internal audit

Which of the following describes sampling risk?

A. The risk of the auditor carrying out a test the wrong way round
B. The risk of reliance on unsuitable audit evidence
C. The risk that the sample does not reflect the population 
D. The risk of the auditor reaching the wrong conclusions from testing
Which of the following is NOT an accepted method of selection in sampling?

A. Systematic selection
B. Pervasive selection
C. Random selection
D. Haphazard selection

Which of the following are you unlikely to see in the current file of auditors’ working papers?

A. Memorandum & articles of association 

B. Audit planning memorandum
C. Summary of unadjusted errors
D. Details of the work done on the inventory count

According to ISA 500, the strength of audit evidence is determined by which two qualities?

A. Appropriateness & competence

B. Sufficiency & appropriateness
C. Reliability & extensiveness
D. Objectivity & independence

Which of the following is normally the most reliable source of audit evidence?

A. Internal audit
B. Suppliers’ statements
C. Board minutes
D. Analytical review

The degree of effectiveness of an internal control system depends on:

A. The design of the internal control system and the implementation of the controls 
B. The design of the internal controls and the implementation of the control system
C. The implementation of the controls and the correctness of the accounting records
D. The design of the internal control system and the correctness of the accounting records
According to ISA 315, which of the following is NOT an element of the control environment?

A. Participation of management
B. Information processing 
C. Commitment to competence
D. Human resource policies and practices

According to ISA 315, which of the following is NOT a control activity?

A. Performance reviews
B. Physical controls
C. Organizational structure 
D. Segregation of duties

Lapping is also known as___________?

A. Teeming and lading

B. Looping
C. Embezzlement
D. Hacking

Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example
of____________?

A. Error of principle
B. Error of commission
C. Error of omission
D. Error of duplication

Which of the following statements is not true?

A. Management fraud is more difficult to detect than employee fraud

B. Internal control system reduces the possibility of occurrence of employee fraud and
management fraud
C. The auditor’s responsibility for detection and prevention of errors and frauds is similar.
D. All statements are correct.

Internal audit is undertaken:

0

A. By independent auditor
B. Statutorily appointed auditor
C. By a person appointed by the management 
D. By a government auditor

The scope of internal audit is decided by the___________?

A. Shareholders
B. Management
C. Government
D. Law

Audit of banks is an example of_____________?

A. Statutory audit
B. Balance sheet audit
C. Concurrent audit
D. All of the above

Concurrent audit is a part of____________?

A. Internal check system

B. Continuous audit
C. Internal audit system
D. None of these

Audit in depth is synonymous for____________?

A. Complete audit
B. Completed audit
C. Final audit
D. Detailed audit

Institute of Chartered Accountants of Pakistan was established in____________?

0

A. 1949
B. 1956
C. 1961
D. 1972

Which of the following statements is not true about continuous audit?

A. It is conducted at regular interval

B. It may be carried out on daily basis
C. It is needed when the organization has a good internal control system
D. It is expensive

Internal check is carried on by___________?

A. Staff specially appointed for the purpose

B. Internal auditor
C. Supervisor of the staff
D. Members of the staff

Errors of Omission are_____________?

A. Technical errors
B. Errors of principle
C. Compensating errors
D. None of the above

Window dressing implies_______________?

A. Curtailment of expenses
B. Checking of Wastages
C. Under valuation of assets
D. Over Valuation of assets

Test Checking refers to___________?

0
A. Testing of accounts and records
B. Checking of selected number of transactions
C. Examination of adjusting and closing entries
D. Checking of all transactions recorded

Which of the following statements is not correct about materiality?

A. Materiality is a relative concept

B. Materiality judgments involve both quantitative and qualitative judgments
C. Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs of
an informed decision maker who will rely on the financial statements
D. At the planning state, the auditor considers materiality at the financial statement level
only

______the audit risks_______the materiality and_________the audit effort.

A. Lower, Higher, Lower

B. Lower, Lower, Higher
C. Higher, Lower, Lower
D. Lower, Higher, Higher

When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied
that the___________?

A. Amount of known misstatement is documented in working papers

B. Estimates of the total likely misstatement is less than materiality level 
C. Estimate of the total likely misstatement is more than materially level
D. Estimates of the total likely misstatement cannot be made

In determining the level of materiality for an audit, what should not be considered?

A. Prior year’s errors

B. The auditor’s remuneration 
C. Adjusted interim financial statements
D. Prior year’s financial statements

Analytical procedures issued in the planning stage of an audit, generally

0

A. Helps to determine the nature, timing and extent of other audit procedures
B. Directs attention to potential risk areas
C. Indicates important aspects of business
D. All of the above

Which of the following statements is most closely associated with analytical procedure applied at
substantive stage?

A. It helps to study relationship among balance sheet accounts

B. It helps to discover material misstatements in the financial statements
C. It helps to identify possible oversights
D. It helps to accumulate evidence supporting the validity of a specific account balance

Verification refers to_________?

A. Examining the physical existence and valuation of assets. 

B. Examining the journal and ledger
C. Examination of vouchers related to assets.
D. None of the above.

Stock should be valued at_________?

A. Cost
B. Market price
C. Cost or Market price whichever is lower.
D. Cost less depreciation.

Floating assets are valued at____________?

A. cost
B. Market price
C. Cost or market price whichever is lower
D. Cost less depreciation

Goods sold on the basis of ‘sales or return ‘ should:

0
A. Be included in the stock
B. Not be included in the stock
C. Not be checked by auditor
D. None of the above

Of the following, which is the least persuasive type of audit evidence?

A. Bank statements obtained from the client

B. Documents obtained by auditor from third parties directly.
C. Carbon copies of sales invoices inspected by the auditor 
D. Computations made by the auditor

Which of the following statements is, generally, correct about the reliability of audit evidence?

A. To be reliable, evidence should conclusive rather than persuasive

B. Effective internal control system provides reliable audit evidence 
C. Evidence obtained from outside sources routed through the client
D. All are correct.

In an audit of financial statements, substantive tests are audit procedures that __________?

A. May be eliminated for an account balance under certain conditions

B. Are designed to discover significant subsequent events
C. Will increase proportionately when the auditor decreases the assessed level of control risk
D. May be test of transactions, test of balance and analytical procedures

The nature, timing and extent of substantive procedures is related to assessed level of control risk

A. Randomly
B. Disproportionately
C. Directly
D. Inversely

Which of the following factors is most important in determining the appropriations of audit evidence?

0
A. The reliability of audit evidence and its relevance in meeting the audit objective 
B. The objectivity and integrity of the auditor
C. The quantity of audit evidence
D. The independence of the source of evidence

When is evidential matter, generally, considered sufficient?

A. When it constitutes entire population

B. When it is enough to provide a basis for giving reasonable assurance regarding
truthfulness
C. When it is objective and relevant
D. When auditor collects and evaluates it independently

Which of the following is not corroborative evidence?

A. Minutes of meetings
B. Confirmations from debtors
C. Information gathered by auditor through observation
D. Worksheet supporting consolidated financial statements

What would most appropriately describe the risk of incorrect rejection in terms of substantive
testing?

A. The auditor concludes balance is materially correct when in actual fact it is not
B. The auditor concludes that the balance is materially misstated when in actual fact it not 
C. The auditor has rejected an item for sample which was material
D. None of the above

Which of the following affects audit effectiveness?

A. Risk of over reliance

B. Risk of incorrect rejection
C. Risk of incorrect acceptance
D. Both A and C

What would most effectively describe the risk of incorrect acceptance in terms of substantive audit
testing?

0
A. The auditor has ascertained that the balance is materially correct when in actual fact it
is not 
B. The auditor concludes the balance is materially misstated when in actual fact is not
C. The auditor has rejected an item from sample which was not supported by documentary
evidence
D. He applies random sampling on data which is inaccurate and inconsistent

Audit programme is prepared by____________?

A. The auditor
B. The client
C. The audit assistants
D. The auditor and his audit assistants

The working papers which auditor prepares for financial statements audit are___________?

A. Evidence for audit conclusions

B. Owned by the client
C. Owned by the auditor
D. Retained in auditor’s office until a change in auditors

The quantity of audit working papers complied on engagement would most be affected
by__________?

A. Management’s integrity
B. Auditor’s experience and professional judgment
C. Auditor’s qualification
D. Control risk

Which of the following best describes the primary purpose of audit programme preparation?

A. To detect errors or fraud

B. To comply with GAAP appropriate evidence
C. To gather sufficient
D. To assess audit risk

Which of the following is not an advantage of the preparation of working paper?

0
A. To provide a basis for review of audit work
B. To provide a basis for subsequent audits
C. To ensure audit work is being carried out as per programme
D. To provide a guide for advising another client on similar issues

The auditor’s permanent working paper file should not normally, include__________?

A. Extracts from client’s bank statements 

B. Past year’s financial statements
C. Attorney’s letters
D. Debt agreements

For what minimum period should audit working papers be retained by audit firm?

A. For the time period the entity remains a client of the audit firm.
B. For a period of ten years
C. For a period auditor opines them to be useful in servicing the client 
D. For the period the audit firm is in existence.

Which of the following factors would least likely affect the quantity and content of an auditor’s
working papers

A. The assessed level of control risk

B. The possibility of peer review
C. The nature of auditor’s report
D. The content of management representation letter

Which of the following statement is true regarding an auditor’s working papers?

A. They document the level of independence maintained by the auditor

B. They should be considered as the principle support for the auditor’s report 
C. They should not contain details regarding weaknesses in the internal control system
D. They help the auditor to monitor the effectiveness of the audit firm’s quality control

Which of the following statement best describes the understanding with respect to ownership and
custody of working papers prepared by an auditor?

0
A. The working papers may be obtained by third parties when they appear to be relevant
to issues raised in litigation
B. The safe custody of working papers is the responsibility of client, if kept at his premises
C. The working papers must be retained by an audit firm for a period of 10 years
D. Successor auditors may have access to working papers of the predecessor auditors. The
approval of client is not required.

The current file of the auditor’s working papers, generally, should include____________?

A. A flowchart of the internal controls

B. Organisation charts
C. A copy of financial statements 
D. Copies of bond and debentures

Auditing is what?

A. Reporting the financial information

B. Examination of financial statements 
C. Preparation financial statements
D. maintaining the ledger records

Marketing MCQs

Marketing is both an “art” and a “science” there is constant tension between the creative side of
marketing and the ________ side.

A. Selling side
B. Formulated side
C. Management side
D. Forecasting side

Good marketing is no accident, but a result of careful planning and __________?

A. Execution
C. Strategies
D. Tactics
e. Research
The most formal definition of marketing is ____________?

A. Meeting needs profitably

B. Identifying and meeting human and social needs
C. The 4Ps (Product, Price, Place, Promotion)
D. an organizational function and a set of processes for creating, communicating, and
delivering, value to customers, and for managing customer relationships in ways that
benefit the organization and its stake holders.
E. improving the quality of life for consumers

Marketing management is ____________?

A. Managing the marketing process

B. Monitoring the profitability of the companies products and services
C. Developing marketing strategies to move the company forward
D. The art and science of choosing target markets and getting, keeping, and growing
customers through creating, delivering, and communicating superior customer value,

A transaction involves ____________?

A. at least two parties

C. each party is capable of communication and delivery
D. each party is free to accept or reject the exchange offer
E. all of the above

__________ goods constitute the bulk of most countries’ production and marketing efforts.

A. Durable
B. Impulse
C. Physical
D. Service e. Event

Information can be produced and marketed as a ___________?

A. Product
b. Show
C. Reality
D. Service
Charles Revson of Revlon observed: “In the factory, we make cosmetics; in the store, _________.

A. we sell quality
B. we challenge competitors
C. we implement ads
D. we sell hope

A Marketer is someone seeking a response from another party, called the __________.

A. Customer
B. Fund raiser, contributor
C. Voter
D. Prospect

In latent demand, consumers may share a strong need that cannot be satisfied by a/an____________?

A. Future Product
B. Expected Product
C. Latent Product
D. Existing Product

In __________more customers would like to buy the product than can be satisfied.

A. latent demand
B. irregular demand
C. overfull demand
D. excessive

Marketers often use the term ___________ to cover various groupings of customers.

A. People
B. Buying power
C. Demographic segment
D. Market
Companies selling mass consumer goods and services such as soft drinks, cosmetics, air travel, and
athletic shoes and equipment spend a great deal of time trying to establish a superior brand image in
markets called __________.

A. Business markets
B. Global markets
C. Consumer markets
D. Nonprofit and governmental markets

In business markets, advertising can play a role, but a stronger role may be played by the sales force,
______, and the company’s reputation for reliability and quality.

A. Brand image
B. Distribution
C. Promotion
D. Price

Global marketers must decide ___________.

A. Which countries to enter

B. How to adapt their product and service features to each country
C. How to price their products in different countries
D. All of the above

In order to describe a cluster of complementary products and services that are closely related in the
minds of consumers but are spread across a diverse set of industries, Mohan sawhney has proposed
the concept of__________?

A. Vertical Integration
B. Horizontal Integration
C. beta Market
D. Meta Market

The age which promises to lead to more accurate levels of production, more targeted
communications, and more relevant pricing is term as____________.

A. Age of Globalization
B. Industrial Age
C. Information Age
D. Production Age

Many countries have ________ industries to create greater competition and growth opportunities.

A. open-market
B. deregulated
C. regulated
D. scientifically segmented

Customers are showing greater price sensitivity in their search for ___________.

A. The right product

B. The right service
C. The right store
D. Value

Rising promotion costs and shrinking profit margins are the result of ___________.

A. Changing technology
B. Globalization
C. Deregulation
D. Heightened competition

In response to giant retailers and category killers, entrepreneurial retailers are building entertainment
into stores with coffee bars, lectures, demonstrations, and performances. They are marketing a(n)
________ rather than a product assortment.

A. Customer value
B. Customer delight
C. total service solution
D. intangible benefit(s)

Many brick-and-click competitors became stronger contenders in the marketplace than the pure-click
firms because they had a larger pool of resources to work with and ________.

0
A. Better prices
B. Well-established brand names
C. One-on-one communications
D. direct selling capability

The __________ is practiced most aggressively with unsought goods, goods that buyers normally do
not think of buying, such as insurance, encyclopedias, and funeral plots.

a. Marketing concept
b. Selling concept
c. Production concept
d. Product concept

The ________ concept holds that consumers will favor those products that offer the most quality,
performance, or innovative features.

A. Product
B. Marketing
C. Production
D. Selling

The concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the
organization’s products is termed as____________?

A. Production Concept
B. Selling Concept
C. Marketing Concept
D. Buying Concept

Several scholars have found that companies who embrace the marketing concept achieve superior
performance. This was first demonstrated for companies practicing a ___________ understanding and
meeting customers’ expressed needs.

A. Reactive market orientation

B. Proactive marketing orientation
C. Total market orientation
D. Impulsive market orientation

In the course of converting to a marketing orientation, a company faces three hurdles _______.
0

A. Organized resistance, slow learning, and fast forgetting

B. Management, customer reaction, competitive response
C. Decreased profits, increased R&D, additional distribution
D. Forecasted demand, increased sales expense, increased inventory costs

Companies that practice both a reactive and proactive marketing orientation are implementing a
__________ and are likely to be the most successful.

A. Total market orientation

B. External focus
C. Customer focus
D. Competitive, customer focus

Marketers argue for a __________ in which all functions work together to respond to, serve, and
satisfy the customer.

A. Cross-functional team orientation

B. Collaboration model
C. Customer orientation
D. Management-driven organization

HRM MCQs

The meaning of the acronym HRM is ______________?

A. Human Relations Management

B. Humanistic Resource Management
C. Human Resource Management
D. Human Resourceful Management

The term used before the language of modern HRM was ___________?

A. Labour Relations
B. Personnel Management
C. Industrial Management
D. All of the above

Which of the following is not a function normally performed by HR department?

A. Accounting
B. Recruitment and Selection
C. Pay and Reward
D. Employee Relations

Which of the following statements is false?

A. Organizations are now less hierarchical in nature

B. Organizations are now generally focusing upon domestic rather than international
matters
C. Organizations have adopted more flexible norms
D. Organizations have been subject to a raft of organizational change programs

Human Resource Management is______________?

A. Employee oriented
B. Employer oriented
C. Legally oriented
D. None of the above

Scope of the HRM includes ______________?

A. Retirement and separation of employees

B. HR training and development
C. Industrial relations
D. All of the above

Human Resource Management (HRM) is_________?

A. A Staff function
B. A line function
C. A staff function, line function and accounting function
D. All of the above
The objectives of HRM are categorized as _____________?

A. Personal objectives
B. Functional objectives
C. Organisational and social objectives
D. All of the above

The scope of HRM does not include ____________?

A. Retirement of employees
B. Manpower planning
C. Training of employees
D. Maintenance of accounts

The meaning of the acronym ‘SHRM’ is ____________?

A. Short-term Human Resource Management

B. Strategic Human Resource Management
C. Strategestic Human Resource Management
D. Strategic Humane Resource Management

Recruitment is widely viewed as a ______________?

A. positive process
B. negative process
C. positive as well as negative process
D. none of the above processes

Recruitment policy usually highlights need for establishing ____________?

A. job specification
B. job analysis
C. job description
D. none of the above
The process of developing the applicant’s pool for job openings in an organization is
called___________?

A. Hiring
B. Recruitment
C. Selection
D. Retention

A brief write-up of what the job is all about is ____________?

A. job finding
B. job summary
C. job analysis
D. job specification

A job specification is one of the areas of ___________?

A. job analysis
B. job design
C. job description
D. job summary

The division of the total task to be performed into a manageable and efficient unit is____________?

A. a job design
B. a job specification
C. a job analysis
D. a job description

Which of the following is the area from which applicants can be recruited?

A. Employment Lines
B.Employees’ Association
C. Labour Market
D. Labour Schemes

For forecasting the demand for manpower, the important techniques used are_____________?
0

A. Delphi Techniques
B. Statistical Techniques
C. Work Study Techniques
D. All of the above

Selection of the candidates is done out of______________?

A. Target population
B. internal sources
C. external sources
D. internal as well as external sources

HRM is considered as____________?

A. a reactive function
B. a proactive function
C. an auxiliary function
D. an auxo-reactive function

A job design is ___________?

A. the design involving maximum acceptable job design qualities to perform a job
B. the division of total task to be performed into manageable and efficient units
C. a systematic way of designing and determination of the worth of a job
D. none of the above

According to Edwin Flippo, the first and immediate product of job analysis is__________?

A. the job description

B. the job design
C. the job production
D. the job specification

One of the important organizational factors affecting ‘Job Design’ is ___________?

0
A. Workflow
B. Autonomy
C. Feedback
D. Diversity

Behavioral factors affecting job design are _____________?

A. Autonomy
B. Diversity
C. Feedback
D. All of the above

Factors affecting job design are ____________?

A. behavioral factors
B. environmental factors
C. organizational factors
D. all of the above

Organisational factors affecting job design are ______________?

A. workforce and cultural factors

B. employee availability and abilities
C. ergonomics and cultural factors
D. feedback and diversity factors

The procedure for determining the duties and skill requirements of a job and the kind of person who
should be hired for it is ______________?

A. job analysis
B. job design
C. job recruitment
D. job description

A list of the duties, responsibilities, reporting relationship, working conditions and supervisory
responsibilities of a job as a product of a job analysis is _____________?

0
A. job enlargement
B. job design
C. job description
D. job enlistment

Job Characteristics Model is proposed by ____________?

A. Hockman and Coldham

B. Hockman and Oldcham
C. Hackman and Oldham
D. Horkman and Olatham

The Integrated System Model of Strategic Human Resource Manaqement acknowledges the existence
within the organisation of _______________?

A. multiple cultural and strategic environment

B. multiple stakeholders
C. multiple recruitment integrated system
D. multiple structural organisations

One of the dimensions included in the Harvard Model is ______________?

A. HR outcomes interest
B. Behavioral interest
C. Stakeholders interest
D. Performance interest

Manpower inventory involves ________________?

A. the classification of the inventory of workers in an organisation in addition to the qualities.

B. the classification of characteristics of personnel in an organisation, in addition to
counting their number.
C. the classification of characteristics of managers’ qualities in addition to their number.
D. the classification of characteristic features of functions for inventory in addition to the total
number of functions.

One of the external sources of recruitment is ____________?

0
A. retired managers and employees
B. dependents of deceased employees
C. gate hiring
D. none of the above
(more…)

Selection is_________?

A. Subjective
B. Objective
C. Normative
D. Positive

Recruitment__________________

A. follows selection
B. precedes selection
C. matches selection
D. none of the above

Manpower inventory is ____________?

A. to find out how manpower is to be utilized

B. to prepare inventory for scheduling manpower
C. the data collected about the present employees of an organization
D. the data as calculated by demand forecast and compared with inventory in respect of
manpower

E-recruiting methods include____________?

A. internet job boards

B. career websites
C. employer websites
D. all of the above

The Job Characteristics Model is one of the most influential attempts to____________?

0
A. design jobs with increased motivational properties
B. assign jobs with proper motivational properties
C. analyse jobs with increase and proper motivation
D. describe jobs with increase motivation for proper jobs

High job satisfaction is the outcome of which of the following core dimensions described by the Job
Characteristics Model?

A. Task identity
B. Task significance
C. Feedback
D. Autonomy

Low absenteeism and turnover is the outcome of which of the following core dimensions described by
the Job Characteristics Model

A. Autonomy
B. Feedback
C. Task Identity
D. Task Significance

Which of the following factors is one of the environmental factors affecting job description:

A. Workflow and culture

B. Autonomy and feedback
C. Employee availability and abilities
D. Culture and diversity

A broad, general and written statement of a specific job based on the findings of an analysis is called
as __________?

A. Specific Job Design

B. Job Identification
C. Specific Particular Analysis
D. Job Description

The Michigan Model emphasis the following functions and their interrelates.

0
A. selection, recruitment, induction and promotions
B. appraisal, rewards, promotions and retention
C. selection, recruitment, rewards and promotion
D. selection, appraisal, rewards and human resource development

The Integrated system model is also known as ___________?

A. Harvard Model
B. Michigan Model
C. Integrated Model
D. Warwick System Model

A general statement or understanding which provides guidelines for decision-making to H.R.

managers in respect of various H.R. functions and activities is known as ____________?

A. H.R. Vision statement

B. H.R. Philosophy
C. H.R. Mission statement
D. H.R. Policy

When an interviewer prepares a list of questions in advance and asks those question to the candidate
to obtain the information from him; it is called ___________?

A. a structured interview
B. a well-organized interview
C. a systematic type interview
D. none of the above

When an interviewer asks the questions to the candidate according to the response received from him
and the questions asked are not pre-determined in such an interview, it is called ___________?

A. unprepared type of interview

B. unstructured interview
C. unconditional interview
D. none of the above

Job identification is one of the components of _____________?

0
A. job specification
B. job design
C. job description
D. job evaluation

systematic and orderly process of determining the worth of a job in relation to other jobs is
____________?

A. worth job specification

B. job description
C. job evaluation
D. job identification

A broad statement of the purpose, scope, duties and responsibilities of a particular job
is___________?

A. job specification
B. job description
C. job analysis
D. job design

Job descriptions are also called as____________?

A. Task oriented
B. Task analysis
C. performance oriented
D. Credit analysis

Submitted by: Sana Ullah Swabiwal

____________ is the main source of innovations?

A. Upgraded technology
B. Human mind
C. Competitors’ pressure
D. Research & Development

Which of the following role a manager performs as a Resource allocator?

0
A. Interpersonal role
B. Decisional role
C. Informational role
D. Supportive role’

Recruitment is widely viewed as a ___________ process?

A. Positive
B. Negative
C. Both Positive and Negative
D. Unnecessary

. The best medium to reach a ‘large audience for the process of recruitment is___________?

A. Casual applicants
B. Advertising
C. Employee referrals
D. Employment agencies

The biggest problem facing e-HR is the___________?

A. rarity of HR
B. diversity of HR
C. security of HR data
D. sustainability of HR

Treating employees as precious human resources is the basis of the__________approach?

A. Hard HRM
B. Soft HRM
C. Medium HRM
D. Utiliarian approach

In comparing internal selection with external selection, an advantage of internal selection is

that____________?

A. Internal selection requires few procedures to locate and screen viable job candidate
B. Internal selection presents fewer dangers of inourring legal liability than external selection
C. There is less need to use multiple predictors in assessing internal candidates than. with
external candidates
D. Information about internal candidates tends to be more verifiable than information
about external candidates

What is meant by the term “Management” by Objectives’?

A. A. system of giving the authority to carry out certain jobs by those lower down the
management hierarchy
B. The system of management that is based on bringing together experts into a team
C. The setting of objectives to bring about the achievement of the corporate goals
D. The control of the Organisation by those in the ‘head office’

Which of the following department is responsible for handling safety & health issues of employees?

A. HR department
B. Procurement department
C. Finance department
D. Marketing department

What are the ideas underpinning ‘soft, commitment’ or ‘high-road’ HRM practices?

A. Labour needs to be treated as assets to be invested in.

B. Employees are a cost which should be minimized.
C. A lack of mutuality existing between employee and employer
D. A disregard for unlocking discretionary effort

Why are employers interested in employee engagement?

A. To encourage employees to trust their manager

B. To make a quick profit
C. To make employees work harder for less
D. Because engaged employees are more motivated and prepared to give their best to make
the firm succeed

The best hiring occurs when the goals of which of the following should consistent to each other?

0
A. HR managers, Finance managers
B. Head office, Brand
C. Organisation, individual
D. Lower managers, Top managers

Why does the Resource-based view of SHRM represent a paradigm shift in SHRM thinking?

A. Because it focuses on the internal human resources of the business as a source of

sustainable competitive advantage
B. Because it advocates tight vertical integration between the organisation’s business strategy
and human resource strategy.
C. Because it relies on a set of high-commitment HR practices to deliver sustainable competitive
advantage.
D. Because it focuses on the external context of the business

Under which of the following authority, an HR manager took the decision to provide training to its
employees regarding the operations of newly installed machine?

A. Staff
B. Functional
C. Line
D. Implied

When constructing the ad, it is important to consider how to best ________?

A. Attract attention to the advertisement

B. Get right candidate
C. How will be the profit
D. The candidate reach in profit

Which one of the following responsibilities is specifically associated with the HR function of employee
relations?

A. Conducting attitude surveys

B. Work analysis
C. HR information systems
D. Job design

___________ best defines how well a test or selection procedure measures a person’s attributes.
0

A. Reliability
B. Testing
C. Validity
D. Organizational constraint

Job Enrichment involves____________?

A. Increases the amount of money employees are paid for completing an unit of work
B. Is a programme through which management seeks greater productivity from workers
C. Means that staff i$ moved periodically from task to task in order to increase variety and
interest
D. Involves giving employees work with a greater degree of responsibility and autonomy

When planning for employment requirements, what must be forecasted?

A. Sales desired
B. Production Scheduled
C. Inventory
D. Personnel needs

The HR policy which is based on the philosophy of the utmost good for the greatest number of people
is covered under the_____________?

A. utilitarian approach
B. approach based on rights
C. approach based on justice
D. configurational approach

Although many authors experience difficulty in distinguishing between personnel management and
HRM, it can be argued that HRM is the elevation of personnel management to a
more___________level.

A. Strategic
B. organisational
C. operational
D. centralized
HR managers play vital role in___________?

A. Setting production targets

B. Formulating strategies
C. Publishing financial statements
D. Preparing reports to shareholders

HRM is more___________ whereas Personnel Management is slightly narrow?

A. Complex
B. Detailed
C. Mechanical
D. Growth-oriented

Which of the following term is used to identify, “what the job holder does”? “how it is done”? & “why
it is done”?

A. Job specification
B. Job evaluation
C. Job description
D. Job title

Which of the following statement represents ‘effectiveness’ ?

A. Achieve most output in less time

B. Achieve mass production
C. Achieve most output with least input
D. Achieve Organisational goals

Why Organisations provide, attractive salaries, fringe benefits, career development opportunities:

A. To retain valuable human resources

B. To be the market leader in the future
C. To attract more and more people
D. To enforce government regulations

Which of the following approach emphasizes the effect of psychological and social factors on
employees’ performance?
0

A. Scientific approach
B. Rational approach
C. Human relations approach
D. Systematic approach

Which of the following is not a type of information that should be provided by application forms?

A. Education
B. Experience
C. work stability
D. Applicant’s age

HR’s basic challenges in formulating strategies include(s):________________?

A. Need to support corporate productivity and performance improvement efforts.

B. Employees not play any role in performance improvement efforts
C. Not being involved in designing the company’s strategic plan.
D. Management agenda’s

Internal recruitment has the potentiality to increase the of the employees.

A. Conflicts
B. Misunderstanding
C. Income
D. Morale

Identifying and executing the firm’s mission by matching its capabilities with demands of its
environment is the firm’s:

A. Strategic Management
B. Mission statement
C. Vision
D. SWOT analysis

_____________examination may protect the company against unwarranted claims under workers
compensation laws?

0
A. Written
B. Physical
C. Mental
D. Reference

Creating an environment that facilitates a continuous and . two-way exchange of information

between the superiors and the subordinates is the core of_____________?

A. High involvement management model

B. Low commitment management model
C. High performance management model
D. Low performance Management model

Formulating and executing HR systems that produce employee competencies and behaviors needed to
achieve the company’s strategic aims is/are_____________?

A. Strategic HR Management
B. Strategy executjon
C. HR strategies
D. Strategic implementation

The focus of Human Resource Management revolves around____________?

A. Machine
B. Motivation
C. Money
D. Men

Which of the following is closely associated with strategic human resource management?

A. Infficient utilisation of human resources

B. Not attracting the best human resources
C. Providing Superficial training
D. Providing Best training methods

Human Resource Management aims to maximize employees as well as

Organizational_________________?

0
A. Effectiveness
B. Economy
C. EffiCiency
D. Performativity

Strategic human resource management aims to achieve competitive advantage in the market
through__________?

A. Price
B. Product
C. People
D. Process

Strategic management process usually consists of _________steps.

A. Four
B. Five
C. Six
D. Seven
Read More Details about this Mcq

Advertisements through newspapers, TV, radio, professional journals and magazines

are___________methods of recruitment.

A. Direct
B. Indirect
C. Third-party
D. E-recruitment

The process of developing an applicants’ pool for job openings in an Organization is

called____________

A. Hiring
B. Recruitment
C. Selection
D. Retention

Which of the following would likely be the least effective method of recruiting internal job
candidates?
0

A. Posting information on Organisational bulletin boards

B. Examining HR records of current employees
C. Advertising in national newspapers and journals
D. Internal Sources

The interview is used as a method for determining___________?

A. The personality of the candidate.

B. The degree ‘of fit between the applicant and the demands of the job.
C. His/her age.
D. Physical attributes

The thorough & detailed study.regarding jobs within an Organisation is represented by:__________?

A. Job analysis
B. Job description
C. Job specification
D. Job evaluation

The process of choosing individuals who have re1evant qualifications to fill existing or projected job
openings is__________?

A. Screening process
B. Selection process
C. Interview process
D. Pre-screeninq process

Firing the non-performing employees, HR manager is said to perform the__________?

A. Interpersonal role
B. Informational role
C. Supportive role
D. Decisional role

Which of the following component of attitude represents a person’s opinio’ns knowledge, and
information?

0
A. Affective component
B. Cognitive component
C. Behavioral component
D. Objective component

Which of the following is not a function normally performed by the HR· department?

A. Employee relation
B. Training and Development
C. Accounting
D. Recruitment and Selection

Which of the following test indicates the person’s inclination towards a particular occupation that
provides satisfaction to that individual?

A. Vocational interest test

B. Cognitive aptitude test
C. Personality test
D. psychomotor abilities test

Successful managers are__________?

A. Efficient & effective

B. Strict to employees
C. Wrong Policy makers
D. Wrong decision makers

Which of the following statements most accurately defines human resource management?

A. Human resource management contributes to business strategy and plays an important role in
the implementation of business strategy
B. Human resource management is an approach to managing people
C. Human resource management seeks to achieve competitive advantage through the
strategic deployment of a highly committed and capable workforce, using an integrated
array of cultural, structural and personnel techniques
D. Human. resource management focuses on people as the source of competitive advantage
Which of the following is a key HR role as defined by Ulrich et al (2009)?

A. Personnel administrator
B. Business ally
C. Payroll advisor
D. Organisational geographer

The advantage of external recruiting is that:___________?

A. They ensure consistency from opening to closing

B. They are useful for companies too small to have dedicated recruiters
C. They are very inexpensive
D. Time Consuming

Executive recruiters are also called___________?

A. head hunters
B. staffers
C. alternative staffing companies
D. contract technical recruiters

Which of the following is a disadvantage of using an executive recruiter?

A. many contacts in field

B. adept at contacting candidates who are not on the job market
C. unfamiliar with company perceptions of ideal candidate
D. ability to keep identity of firm confidential

Which of the following is not true of the activity known as job analysis?

A. The rate of pay for the job is fixed.

B. The job elements are rated in terms such as frequency. of use or amount of time
involved
C. It aims to describe the purpose of a job and the conditions under which it is
performed
D. Jobs are broken into elements such as information required or relations with
other people
Which of the following force makes an individual eligible to make decisions, give orders &. directing
work activities of others?

A. Power
B. Influence
C. Authority
D. Command

HR Department maintains _________records.

A. Employee
B. Sales
C. Production
D. Inventory

A Competency consists of____________?

A. The specific tasks a person must do

B. Skills and behaviours
C. A list of tests that will measure cognitive ability
D. Communications and behaviour

How often HR planning process is implemented within an Organisation?

A. Continuously
B. Annually
C. Bi-annually
D. Quarterly

Which of the following emerged when individuals realized the strength they could gain by joining
together to negotiate with employers?

A. Trade Unions
B. Human Relation movement
C. Employment Legislations
D. Employee relationship Management

Which of the following functions of HRM deals with ‘Collective Bargaining’?

0

A. Staffing
B. Forecasting
C. Employee-assistance management
D. Employee relations management

Once a firm has a pool of applicants, the first step in Pre-screening is the_________?

A. in-person interview
B. on-site visit
C. application form
D. telephone interview

Career counseling ‘is part of which of the following functions of HRM?

A. Compensation & benefits

B. Planning & selection
C. Training and Development
D. Maintenance of HRIS

In the future, HR managers will have to deal with all of the following workforce changes, except

A. a more racially diverse workforce

B. a skills shortfall among workers
C. an abundance of entry level workers
D. an older workforce

Mr. ‘A’ must decide what positions the firm should fill in the next six months. What activity is Mr. ‘A’
working on?

A. Recruitment
B. Selection
C. Personnel planning
D. Interviewing

In strategic human resource management, HR strategies are generally aligned with______________?

0
A. Business Strategy
B. Marketing Strategies
C. Finance strategy
D. Economic strategy

The number of people hired for a particular job compared to the number of individuals in the
applicant pool is often expressed as________?

A. Application ratio
B. Recruitment ratio
C. Selection ratio
D. Employment ratio

The extent to which an employment selection test provides consistent results is known
as:__________?

A. Reliability
B. Dependability
C. Consistency
D. Trustworthiness

HRM typically provides which of these types of training to temporary employees?

A. Retirement planning’
B. Benefits options
C. Orientation
D. Career planning and management

In which stage of HR intranet site development are multiple sites linked together to create a seamless
experience for the individual?

A. Personalized
B. Integrated
C. Transactional
D. Brochureware

Which approach that seeks the to link strategy, business, performance and HRM policies and
practices, assumes that there are a number of HRM practices that are suitable for all Organisations?

0
A. Best Practice
B. Best fit
C. Resource-based view
D. Life cycle models

Job analysis produces which of the following, regardless of the technique used?

A. Benchmarks
B. Individual interview
C. Job specifications
D. Replacement charts

Why do companies use external job searches instead of internal searches?

A. Legal requirements
B. It is less expensive
C. Companies can add new talent, new ideas to the organization
D. Orientation time is reduced

Which of the following department of an Orqanisation performs the managerial function of matching
Orqanisational needs with the skills & abilities of the employees?

A. Finance department
B. Marketing department
C. Production department
D. Human Resource department

The most popular method of recruiting applicants to jobs is_________?

A. Radio and TV advertisement

B. Corporate website
C. Employee referral schemes
D. Commercial job boards

Tests that measure traits, temperament, or disposition are examples of___________?

A. Manual dexterity tests

B. Personality tests
C. Intelligence tests
D. Work sample tests

Which Personnel association uses the idea of bundles of integral HRM practices?

A. European association for personnel management

B. U.S office of personnel management
C. Chartered Institute of personnel & development
D. Association of personnel Service Orqanisations

HRP stands for___________?

A. Human resource project

B. Human resource planning
C. Human recruitment planning
D. Human recruitment procedure

Recruiting is necessary to_________?

A. forecast the supply of outside candidates

B. developing an applicant pool
C. determine whether to use inside or. outside candidates
D. develop qualifications inventories

Which of the following is NOT a goal of HRM?

A. Integration of HRM with the corporate strategy of the Organization

B. Producing the desired human behavior that helps to achieve Organisatlons goals
C. Creation of a flexible environment that can easily adopt change
D. To endure proper delivery of products

Vertical integration in relation to SHRM can be described as which of the following?

A. The relationship or integration between an Organisation’s senior managers

B. The relationship or integration between HR functional policies, for example employee
development, employee reward and employee relations
C. The relationship or integration between the internal HR processes, and the
Organisation’s business strategy and external market.
D. The relationship or integration between operational functions and policies

Why might there be some difficulty in identifying and applying the Best-practice approach to HRM in
Organisations?

A. Because the best-practice approach tends to be resource- intensive

B. Because there is much variation in the literature and empirical research as to what constitutes
best-practice
C. Because the best-practice approach would not fit the cost-reduction driven strategies favoured
by many in short-termist economies.
D. Because the best-practice approach does not emphasize the individual business context

Which of these models is not a rational planning approach?

A. Corporate- level strategic planning

B. Strategic business unit level strategic planning
C. Processual Approach
D. Operational level strategic planning

Relationship between HRM & Management?

A. Both are same .

B. Management is one aspect of HRM
C. HRM is one aspect of Management
D. No relationship exists

The unstructured interview:___________?

A. Infrequently conducted
B. Typically is unbiased
C. Typically is related to future
D. Typically biased job performance

Human resource planning techniques include the use of some or all of the following?

A. Size of organizational structure

B. Infrastructure Plan
C. Control and evaluation
D. Employee Management

Using a structured interviewing technique would likely achieve all of the following
except___________?

A. Increased consistency across candidates

B. Reduced subjectivity on the part of the interviewer
C. Enhanced job relatedness
D. More opportunity to explore areas as they arise during the interview

Which one of the following is NOT the advantage of Workforce Diversity?

A. Increased creativity and flexibility

B. Decreased problem-solving skills
C. Multiple perspectives
D. Greater openness to new ideas

How can high potential employees be developed for future positions?

A. internal training
B. Increasing pal skill
C. Managing employee
D. Allowing them to do further studies

Which of the following approach emphasizes the’ effect of psychological &. Social factors on
employees’ performance?

A. Scientific approach
B. Rational approach
C. Human relations approach
D. Systematic approach

Campus Recruiting does not have the advantage of___________?

A. High Intellectual Capacity

B. Higher understanding of organization
C. High level of curiosity
D. High potential

Increasing the number and variety of tasks assigned to a job is called__________?

A. Job rotation
B. Job enlargement
C. Job enrichment
D. A. and C.

The goal of this stage of HR intranet site development is to provide employees with a truly
individualized experience based on their individual profiles?

A. Brochure ware
B. Transactional
C. Lnteqrated
D. Personalized

The characteristics of human resources are _____________in nature?

A. Homogeneous
B. Heterogeneous
C. Ductility
D. Stable

The written statement of the findings of job analysis is called __________?

A. Job design
B. Job classification
C. Job description
D. Job evaluation

The first step in the human resource planning process is ____________?

A. Preparing a job analysis

B. Forecasting future human resource needs
C. Assessing future demand
D. Assessing future supply
The process which best defines the locating and, encouraging potential employees to apply for jobs
is___________?

A. Human resource planning

B. Selection
C. Recruitment
D. Job Analysis

Which of the following is an example of operative function of HR managers?

A. PIanning’
B. Organizing
C. Procurement
D. Controlling

The human resource management functions aims at____________?

A. ensuring that the ‘human resources possess, adequate capital, tool equipment and material to
perform the job successful
B. helping the Organisation deal with its employees in different stages of employment
C. improving an Organisation’s creditworthiness among financial institutions
D. Ensuring financial & Marketing Stability

The term procurement stands for__________?

A. recruitment and selection

B. training and development
C. pay and benefits
D. health and safety

Strategic human resource management involves____________?

A. Financing project marketing related programming

B. setting employment standards and policies
C. linking human resources with strategic objectives to improve performance
D. Project planning

The one of the following is the best reason for the reduced use of written tests is____________?
0

A. They are hard to construct

B. They are difficult to validate
C. They are expensive to adminis
D. They give very little information

The field of HRM was founded on the idea that the competitive advantage of the organisation relies
on the following sources of capital:

A. cultural, human and system capital

B. social, cultural and human capital
C. organisation relies on the ,following sources of capital
D. cultural, human and source capital

Which of the following act represents a situation in which employment decisions are NOT affected by
illegal-discrimination?

A. Fair employment
B. Legal compliance
C. Litigation Process
D. Affirmative action

If one were to think of HR as a business, which of the following “product lines” involves developing
effective HR systems that help the Organisation meet its goals for attracting, keeping and developing
people with the skills it needs?

A. Administrative services
B. Business partner services
C. Strategic partner
D. Product quality audit

The process of grouping of similar types of works together is known as____________?

A. Job classification
B. Job design
C. Job evaluation
D. Job description
Which of the following aptly describes the role of line managers and staff advisors namely HR
professionals?

A. Staff advisers focus more on developing HR programmes while line managers are more
involved in the implementation of those programmes
B. Line managers are concerned more about develop.ing HR programmes whereas staff advisors
are more involved in implementing such programmes
C. Staff advisors are solely responsible for developing, implementIng and evaluating the HR
programmes while line managers are not all involved in any matters concerning HR
D. Line managers alo~e are responsible for developing, implementing and evaluating the HR
programmes while staff advisors are not all involved in any matters concerning HR.

Identify the managerial function’ out of the following functions of HR managers?

A. Procurement
B. Development
C. Organizing
D. performance appraisal

The following are some of the ways that human resources can benefit through electronic systems,
except:_________?

A. online recruiting can eliminate paperwork and speed up the hiring process
B. online learning can slash travel costs and make training available anytime anywhere
C. working online can reduce the resistance sometimes experienced from employees
D. online retirement planning can help employees map out their future while reducing questions
and paperwork for HR

A written statement of policies and principles that guides the behaviour of all employees is
called__________?

A. code of ethics
B. word of ethics
C. ethics/ dilemma
D. Training Manual

The mental process to interpret environment as’ per one’s own understanding is known
as:__________?

0
A. Perception
B. Attitude
C. Personality
D. Ability

The sixth step of the SHRM application tool is to evaluate the plan against success criteria. During this
stage it is important to note:___________?

A. the positive effects of the actions implemented

B. the negative effects of the actions implemented
C. the failures that resulted from the implementation of the plan
D. the positive & negative effect of the actions implemented

The critical role of the SHRM Application Tool is to:_____________?

A. Outline techniques, frameworks, and six steps that must be followed to effectively implement
change in an organisation.
B. Develop a better strategic management process to deal with the dynamic changing
environment today’s organisations face.
C. Identify and assess a narrow group of actions and plan how the organisation can overcome
resistance to change.
D. identify if the organisation ‘has enough staff, if the staff heed training, if the compensation
practices are appropriate, and if jobs are designed correctly

HR managers are generally the___________managers?

A. Line
B. Middle
C. Staff
D. Top

The last step in the e-selection process is __________?

A. consider how the various new stakeholders and clients will use the system
B. train the employees that will be responsible for the administration of the process
C. draw-up a flow chart of the current assessment process
D. draft the desired flow process that will result from the E-selection process

Which of the following term best represents the individuals who have interests in an Organisation and
are influenced by it?
0

A. Workforce
B. Stakeholders
C. Customers
D. Stockholders

Which of the following is not an advantage of using a private employment agency?

A. it may be faster than in-house recruiting

B. it does not require internal recruitment specialists
C. screening may not be as thorough
D. it may be better for attracting minority candidates

The degree to which interviews, tests, and other selection procedures yield comparable data over
time and alternative measures is best define by__________?

A. Job sampling
B. Reliability
C. Validity
D. Organisational culture

Moving employees from· one job to another in a predetermined way is called ____________?

A. Job rotation
B. Job re-engineering
C. Work mapping
D. Job enrichment

The Statement which best describes the function of Human Resources Planning is___________?

A. An integrated set of processes, programs and systems in an Organisation that focuses on

maximizing employee contribution in order to achieve Qrganisational success
B. The’ process of ensuring that people required running the company are being used as
effectively as possible especially in fulfilling developmental needs in order to accomplish
the organisation’s goals.
C. The formal process of familiarizing new employees with the Organisation,new job, work units
and culture values, beliefs and accepted behaviour.
D. The process of effectively and efficiently managing your assets.
E-operations cover Web-based initiatives that:

A. improve the marketing of existing products

B. improve the creation of existing products
C. improve ways to address an identified set of customer needs
D. improve the selling process

__________ is the process of deciding what positions the firm will have to fill?

A. Recruitment
B. Selection
C. Personnel Planning
D. Interviewing

A number of benefits can be derived from using E-recruiting, these include:

A. it decreases the effectiveness of the recruitment process by reaching larger numbers of

qualified people
B. it increases recruitment costs, it decreases and streamlines the administrative process cycle
times
C. it does not al!ow the company to evaluate the success of its recruitment strategy
D. it increases the effectiveness of the recruitment process by reaching larger numbers of
qualified people

The primary aim of recruitment and selection process is to___________?

A. Meet the high labour turnover

B. Hire the best individuals at optimum cost
C. Ensure the availability of surplus in the case of sickness and absence
D. Hire Excess manpower for the future

To address the challenges and opportunities they face organisations engage in a process of strategic
management. Strategic management is:

A. short-term focused and composed of organisational strategy, including strategy formulation

and implementation
B. short-term focused and composed of the organisation’s mission, vision and value statements
C. long-term focused and composed of organisational strategy, including strategy
formulation and implementation
D. long-term focused and composed of the organisation’s mission, vision and value statements

Which of the following have/has proven to be a particularly good predictor for jobs that include
cognitively complex tasks?

A. intelligence tests
B. integrity evaluations
C. work samplingD) drug tests
E. behavioral assessment

Human resource management is the formal part of an organization responsible for all of the following
aspects of the management of human resources except:

A. systems, processes, and procedures

B. policy making, implementation, and enforcement
C. strategy development and analysis
D. management of the Organisation’s finances

A practice used by different companies to reduce costs by transferring portions of work to outside
provider rather than completing it internally is termed as:

A. Planning
B. Decentralization
C. Restructuring
D. Outsourcing

The system of ranking jobs in a firm on the basis of the relevant characteristics, duties, and
responsibilities is known as__________?

A. Job evaluation
B. Job design
C. Job specification
D. Job description

Which of the following is not an elements of traditional job design?

0
A. Formal Organisation charts
B. Clear and precise job descriptions
C. Well-defined mobility (promotion and transfer) paths
D. Employee number chart

The Scope of human resource management includes:___________?

A. Production
B. Marketing
C. Inventory management
D. Training & Development

Which of the following act represents a situation in which employment decisions are NOT affected by
illegal discrimination?

A. Fair employment
B. Legal compliance
C. Litigation Process
D. Affirmative action

The first step in the e-selection process is____________?

A. consider how the various new stakeholders and clients will use the system
B. train the employees that will be responsible for the administration of the process
C. draw-up a flow chart of the current assessment process
D. draft the desired flow process that will result from the E-selection process

Motivating the employees is classified as___________?

A. Informational role
B. Interpersonal role
C. Decisional role
D. Conceptual role

The Mental Process to interpret environment as’ per one’s own understanding is known
as:____________?

0
A. Perception
B. Personality
C. Attitude
D. Ability

Finance MCQs

___________ is concerned with the acquisition, financing, and management of assets with
some overall goal in mind.
0

A. Financial management
B. Profit maximization
C. Agency theory
D. Social responsibility

Having some overall goal in mind, financial management is concerned with:

0

A. Acquisition of assets
B. Financing of assets
C. Management of assets
D. All of them

The investment decision is the most important of the firm’s three major decisions, when it
comes to:
0

A. Value creation
B. Value addition
C. Value proposition
D. Value deletion

Annual cash dividends divided by annual earnings; or alternatively, dividends per share
divided by earning per share is termed as:
0

A. Earning per share ratio

B. Proposed dividend ratio
C. Dividend payout ratio
D. Expected dividend ratio

Profit maximization is the maximizing a firm’s Earning:

0
A. Before Tax
B. After Tax
C. Both A and B
D. None of Them

An individual authorized by another person, called the principle, to act on the latter’s on
behalf is known as an/a:

A. Agent
B. Servant
C. Subordinate
D. Assistant

Stakeholders include:
0

A. Stakeholders
B. Creditors and customs
C. Employees and suppliers
D. All of Them

All the constituencies with a stake in the fortunes of the company are termed as:
0

A. Stakeholders
B. Directors
C. Chief executives
D. Subordinates

The system by which companies are managed and controlled is known as:
0

A. Management System
B. Strategic System
C. Corporate Governance
D. Internal System

Corporate governance encompasses the relationship among a company’s:

0

A. Shareholders and board of director

B. Board of directors and senior management
C. Shareholders and senior management
D. Shareholders, board of directors and senior management
The Board of Directors sets company-wide policy and advices the CEO and other senior
executies, who manage the company’s:
0

A. Managerial activities
B. Year-to-Year activities
C. Day-to-Day activities
D. Financial activities

A major facet of financial management involves providing the financing necessary to

support:
0

A. Liabilities
B. Debts
C. Loans
D. Assets

The market price of a firm’s stock represents the focal judgment of all market participants
as to the value of the:
0

A. Particular market
B. Particular firm
C. Particular creditor
D. Particular debtor

Agency theory suggests that managers(the agents), particularly those of large , publically-
owned firms, may have different objectives from those of the:
0

A. Workers
B. Subordinates
C. Shareholders
D. Employees

Maximizing Shareholder wealth:

0

A. Relieves the firms responsibility towards society

B. Does not relieve the firm’s responsibility towards society
C. Partially relives the firm’s responsibility towards society
D. None of Them

Earning per share is computed as:

0

A.   ____________Earning After Tax_____________
          No of common shares outstanding

B.   ____No of common shares outstanding___

Earning after Tax

C.  ____Earning before Tax____

Common shares

D.   None of Them

Period costs include which of the following?

0

A. Selling expense
B. Raw material
C. Direct labor
D. Manufacturing overhead

Product costs include which of the following?

0

A. Selling expenses
B. General expenses
C. Manufacturing overhead
D. Administrative expenses

Financial policy is evaluated by which of the following?

0

A. Profit Margin
B. Total Assets Turnover
C. Debt-equity ratio
D. None of the given options

Cash flow from assets involves which of the following component(s)?

0

A. Operating cash flow

B. Capital spending
C. Change in net working capital
D. All of the given options
Which of the following refers to the cash flows that result from the firm‟s day-to-day
activities of producing and selling?
0

A. Operating Cash Flows

B. Investing Cash Flows
C. Financing Cash Flows
D. All of the given options

Finance is vital for which of the following business activity (activities)?

0

A. Marketing Research
B. Product Pricing
C. Design of marketing and distribution channels
D. All of the given options

Which of the following costs are reported on the income statement as the cost of goods
sold?
0

A. Product cost
B. Period cost
C. Both product cost and period cost
D. Neither product cost nor period cost

Standard Company had net sales of Rs. 750,000 over the past year. During that time,
average receivables were Rs. 150,000. Assuming a 365-day year, what was the average
collection period?
0

A. 5 days
B. 36 days
C. 48 days
D. 73 days

Which of the following terms refers to the use of debt financing?

0

A. Operating Leverage
B. Financial Leverage
C. Manufacturing Leverage
D. None of the given options

In which type of market, new securities are traded?

0

A. Primary market
B. Secondary market
C. Tertiary market
D. None of the given options

Which of the following ratios are particularly interesting to short-term creditors?

0

A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios

Quick Ratio is also known as_______________?

0

A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. Solvency Ratio

A portion of profits, which a company retains itself for further expansion, is known as:
0

A. Dividends
B. Retained Earnings
C. Capital Gain
D. None of the given options

Which of the following is measured by profit margin?

0

A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy

Which of the following set of ratios is used to assess a business’s ability to generate earnings
as compared to its expenses and other relevant costs incurred during a specific period of
time?
0
A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios

A company having a current ratio of 1 will have __________ net working capital.
3

A. Positive
B. Negative
C. zero
D. None of the given options

Which of the following equation is known as Cash Flow (CF) identity?

0

A. CF from Assets = CF to Creditors – CF to Stockholder

B. CF from Assets = CF to Stockholders – CF to Creditors
C. CF to Stockholders = CF to Creditors + CF from Assets
D. CF from Assets = CF to Creditors + CF to Stockholder

The difference between current assets and current liabilities is known as____________?
0

A. Surplus Asset
B. Short-term Ratio
C. Working Capital
D. Current Ratio

The principal amount of a bond at issue is called____________?

0

A. Par value
B. Coupon value
C. Present value of an annuity
D. Present value of a lump sum

Which of the following is the process of planning and managing a firm‟s long-term
investments?
0

A. Capital Structuring
B. Capital Rationing
C. Capital Budgeting
D. Working Capital Management
A standardized financial statement presenting all items of the statement as a percentage of
total is:
0

A. a common-size statement
B. an income statemen
C. a cash flow statement
D. a balance sheet

The DuPont Identity tells us that Return on Equity is affected by:

1

A. The DuPont Identity tells us that Return on Equity is affected by:

B. asset use efficiency (as measured by total assets turnover)
C. financial Leverage (as measured by equity multiplier)
D. all of the given options (a, b and c)

A series of constant cash flows that occur at the end of each period for some fixed number
of periods is ____________ .
0

A. an ordinary annuity
B. annuity due
C. multiple cash flows
D. perpetuity

Which of the following is the overall return the firm must earn on its existing assets to
maintain the value of the stock?
0

A. IRR (Internal Rate of Return)

B. MIRR (Modified Internal Rate of Return)
C. WACC (Weighted Average Cost of Capital)
D. AAR (Average Accounting Return)

Which of the following is known as the group of assets such as stocks and bonds held by an
investor ?
2

A. Stock Bundle
B. Portfolio
C. Capital Structure
D.. None of the given options

Which of the following relationships holds TRUE if a bond sells at a discount?

0

A. Bond Price < Par Value and YTM > coupon rate
B. Bond Price > Par Value and YTM > coupon rate
C. Bond Price > Par Value and YTM < coupon rate D. Bond Price < Par Value and YTM <
coupon rate

Which of the following strategy belongs to restrictive policy regarding size of investments
in current assets?
0

A. To maintain a high ratio of current assets to sales

B. To maintain a low ratio of current assets to sales
C. To less short-term debt and more long-term debt
D. To more short-term debt and less long-term debt

Which of the following statement is CORRECT regarding compound interest?

0

A. It is the most basic form of calculating interest.

B. It earns profit not only on principal but also on interest.
C. It is calculated by multiplying principal by rate multiplied by time.
D. It does not take into account the accumulated interest for calculation.

When real rate is high, all the interest rates tend to be ___________?
0

A) Higher
B) Lower
C) Constant
D) None of the given options

Profitability index (PI) rule is to take an investment, if the index exceeds___________?

0

A. -1
B. 0
C. 1
D. 2

Average Accounting Return is a measure of accounting profit relative to:

0

A. Book value
B. Intrinsic value
C. Cost
D. Market value

Which of the following is the cheapest source of financing available to a firm?

0

A. Bank loan
B. Commercial papers
C. Trade credit
D. None of the given options.

_______________refers to the extent to which fixed-income securities (debt and preferred

stock) are used in a firm’s capital structure?
0

A. Financial risk
B. Portfolio risk
C. Operating risk
D. Market risk

The use of Personal borrowing to alter the degree of financial leverage is

called__________?
0

A. Homemade leverage
B. Financial leverage
C. Operating leverage
D. None of the given option

_________ refers to the most valuable alternative that is given up if a particular investment
is undertaken?
0

A. Sunk cost
B. Opportunity cost
C. Financing cost
D. All of the given options

A model which makes an assumption about the future growth of dividends is known as:
0

A. Dividend Price Model

B. Dividend Growth Model
C. Dividend Policy Model
D. All of the given options
Which of the following is not a quality of IRR ?
0

A. Most widely used

B. Ideal to rank the mutually exclusive investments
C. Easily communicated and understood
D. Can be estimated even without knowing the discount rate

Which of the following is a series of constant cash flows that occur at the end of each period
for some fixed number of periods?
0

A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options

During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases
by Rs. 8,000. What will be the amount of cash received from customers for the period?
0

A. Rs. 33,000
B. Rs. 25,000
C. Rs. 17,000
D. Rs. 8,000

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The conflict of interest between stockholders and management is known as:

0

A. Agency problem
B. Interest conflict
C. Management conflict
D. Agency cost

Which of the following form of business organization is least regulated?

0

A. Sole-proprietorship
B. General Partnership
C. Limited Partnership
D. Corporation

Which of the following ratios are intended to address the firm’s financial leverage?
0
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Asset Management Ratios
D. Profitability Ratios

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Balance Sheet is based upon which of the following formula?

0

A. Assets = Liabilities – Stockholder’s equity

B. Assets + Liabilities = Stockholder’s equity
C. Assets + Stockholder’s equity = Liabilities
D. Assets = Liabilities + Stockholder’s equity

Quick Ratio is also known as_________?

0

A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. None of the given options

Which of the following is a special case of annuity, where the stream of cash flows
continues forever?
0

A. Ordinary Annuity
B. Special Annuity
C. Annuity Due
D. Perpetuity

You just won a prize, you can either receive Rs. 1000 today or Rs. 1,050 in one year. Which
option do you prefer and why if you can earn 5 percent on your money?
0

A. Rs. 1,000 because it has the higher future value

B. Rs. 1,000 because you receive it sooner
C. Rs. 1,050 because it is more money
D. Either because both options are of equal value

Which of the following ratios are particularly interesting to shortterm creditors?

0

A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios

In which form of Business, owners have limited liability?

0

A. sole proprietorship
B. partnership
C. joint stock company
D. none of the above

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Which of the following item provides the important function of shielding part of income
from taxes?
0

A. Inventory
B. Supplies
C. Machinery
D. Depreciation

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The process of determining the present value of a payment or a stream of payments that is
to be received in the future is known as:
0

A. Discounting
B. Compounding
C. Factorization
D. None of the given options

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You need Rs. 10,000 to buy a new television. If you have Rs. 6,000 to invest at 5 percent
compounded annually, how long will you have to wait to buy the television?
0

A. 8.42 years
B. 10.51 years
C. 15.75 years
D. 18.78 years

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In which of the following type of annuity, cash flows occur at the beginning of each period?
1

A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options

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Between the two identical bonds having different maturity periods, the price of the ______
bond will change less than that of ______ bond.
0

A. long-term; short-term
B. short-term; long-term
C. lower-coupon; higher-coupon
D. None of the given options

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Which of the given area is NOT addressed by Business Finance?

0

A. Financing
B. Investing
C. Managing day today expenses
D. None of the given options

A company having a current ratio of 1 will have ________ net working capital.
0

A. Positive
B. Negative
C. zero
D. None of the given options

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Business Finance addresses which of the following?

0

A. Capital budgeting
B. Capital structure
C. Working capital management
D. All of the given options
In which type of business, all owners share in gains and losses and all have unlimited
liability for all business debts?
0

A. Sole-proprietorship
B. General Partnership
C. Limited Partnerhsip
D. Corporation

Which of the following is measured by retention ratio?

0

A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy

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How many years will it take to pay off a Rs. 11,000 loan with a Rs. 1,241.08 annual
payment and a 5% interest rate?
0

A. 6 years
B. 12 years
C. 24 years
D. 48 years

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Which one of the following terms refers to the risk arises for bond owners from fluctuating
interest rates?
0

A. Fluctuations Risk
B. Interest Rate Risk
C. Real-Time Risk
D. Inflation Risk

Which of the following set of ratios relates the market price of the firm’s common stock to
selected financial statement items?
0

A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios

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If a firm uses cash to purchase inventory, its quick ratio will?

0

A. Increase
B. Decrease
C. Remain unaffected
D. Become zero

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Standard Corporation sold fully depreciated equipment for Rs.5,000. This transaction will
be reported on the cash flow statement as a(n):
0

A. Operating activity
B. Investing activity
C. Financing activity
D. None of the given options

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Which of the following ratios are particularly interesting to short term creditors?
0

A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios

Mr. Y and Mr. Z are planning to share their capital to run a business. They are going to
employ which of the following type of business?
0

A. Sole-proprietorship
B. Partnership
C. Corporation
D. None of the given options

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When the market’s required rate of return for a particular bond is much less than its
coupon rate, the bond is selling at:
0

A. Premium
B. Discount
C. Par
D. Cannot be determined without more information

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Which of the following statement is considered as the accountant’s snapshot of firm’s

accounting value as of a particular date?
0

A. Income Statement
B. Balance Sheet
C. Cash Flow Statement
D. Retained Earning Statement

The most important item that can be extracted from financial statements is the actual
________ of the firm.
0

A. Net Working Capital

B. Cash Flow
C. Net Present Value
D. None of the given options

A firm has paid out Rs. 150,000 as dividends from its net income of Rs. 250,000. What is
the retention ratio for the firm?
0

A. 12%
B. 25%
C. 40%
D. 60%

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Which of the following ratios is NOT from the set of Asset Management Ratios?
0

A. Inventory Turnover Ratio

B. Receivable Turnover
C. Capital Intensity Ratio
D. Return on Assets

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Which of the following statement about bond ratings is TRUE?

0

A. Bond ratings are typically paid for by a company’s bondholders.

B. Bond ratings are based solely on information acquired from sources other than the bond
issuer.
C. Bond ratings represent an independent assessment of the credit-worthiness of bonds.
D. None of the given options

If you plan to save Rs. 5,000 with a bank at an interest rate of 8%, what will be the worth
of your amount after 4 years if interest is compounded annually?
0

A. Rs. 5,400
B. Rs. 5,900
C. Rs. 6,600
D. Rs. 6,802

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Which of the following statement is TRUE regarding debt?

0

A. Debt is an ownership interest in the firm.

B. Unpaid debt can result in bankruptcy or financial failure.
C. Debt provides the voting rights to the bondholders.
D. Corporation’s payment of interest on debt is fully taxable.

A firm reports total liabilities of Rs. 300,000 and owner’s equity of Rs. 500,000. What
would be the total worth of the firm’s assets?
0

A. Rs. 300,000
B. Rs. 500,000
C. Rs. 800,000
D. Rs. 1100,000

Which of the following measure reveals how much profit a company generates with the
money shareholders have invested?
A. Profit Margin
B. Return on Assets
C. Return on Equity
D. Debt-Equity Ratio

If you have Rs. 850 and you plan to save it for 4 years with an interest rate of 10%, what
will be the future value of your savings?
0

A. Rs. 1,000
B. Rs. 1,244
C. Rs. 1,331
D. Rs. 1,464

In case of international business which of the given factor(s) must be considered?

0

A. Role of foreign exchange

B. Balance of payments
C. Attitude of Governments
D. All of the given options

Which of the following refers to the difference between the sale price and cost of inventory?
0

A. Net loss
B. Net worth
C. Markup
D. Markdown

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Who of the following make a broader use of accounting information?

0

A. Accountants
B. Financial Analysts
C. Auditors
D. Marketers

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The Yield to Maturity of a bond is the same as_____________?

0
A. The present value of the bond
B. The bonds internal rate of return 
C. The future value of the bond
D. None of these

Choose from the following a symptom which is not relating to “Over Trading”?
0

A. Cash shortage
B. Low inventory turnover ratio
C. Low current ratio
D. High inventory turnover ratio

The formula to calculate the present value of a single cash flow is given by:
0

A. CF1 / (1+r)n
B. C2 / (1+r)
C. C0 + C (1+r)n
D. None of these

The effect of purchasing power or inflation on present value is important because

_________?
0

A. It increases the real value of cash flows received in the future

B. It reduces the real value of cash flows received in the future
C. It has no effect on real value of cash flow received in the future
D. None of these

An Asset is __________?
0

A. Sources of funds
B. Use of funds
C. Inflow of funds
D. None of these

Which of the following measure reveals how much profit a company generates with the
money shareholders have invested?
0

A. Profit Margin
B. Return on Assets
C. Return on Equity
D. Debt-Equity Ratio

If you have Rs. 850 and you plan to save it for 4 years with an interest rate of 10%, what
will be the future value of your savings?
0

A. Rs. 1,000
B. Rs. 1,244
C. Rs. 1,331
D. Rs. 1,464

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In case of international business which of the given factor(s) must be considered?

0

A. Role of foreign exchange

B. Balance of payments
C. Attitude of Governments
D. All of the given options

Which of the following refers to the difference between the sale price and cost of inventory?
0

A. Net loss
B. Net worth
C. Markup
D. Markdown

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Who of the following make a broader use of accounting information?

0

A. Accountants
B. Financial Analysts
C. Auditors
D. Marketers

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The Yield to Maturity of a bond is the same as_____________?

0
A. The present value of the bond
B. The bonds internal rate of return 
C. The future value of the bond
D. None of these

Choose from the following a symptom which is not relating to “Over Trading”?
0

A. Cash shortage
B. Low inventory turnover ratio
C. Low current ratio
D. High inventory turnover ratiO

The formula to calculate the present value of a single cash flow is given by:
0

A. CF1 / (1+r)n
B. C2 / (1+r)
C. C0 + C (1+r)n
D. None of these

The effect of purchasing power or inflation on present value is important because

_________?
0

A. It increases the real value of cash flows received in the future

B. It reduces the real value of cash flows received in the future
C. It has no effect on real value of cash flow received in the future
D. None of these

An Asset is __________?
0

A. Sources of funds
B. Use of funds
C. Inflow of funds
D. None of these

A techniques uses to identify financial statements trends are included____________?

A. Common size analysis

B. Percent change analysis
C. Returning ratios analysis
D. Both A and B
Companies that help to set benchmarks are classified as__________?

A. competitive companies
B. Benchmark companies
C. Analytical companies
D. Return companies

Total assets divided common equity is a formula uses for calculating___________?

A. Equity multiplier
B. Graphical multiplier
C. Turnover multiplier
D. Stock multiplier

Price per share divided by earnings per share is formula for calculating_________?
0

A. Price earnings ratio

B. Earning price ratio
C. Pricing ratio
D. Earning ratio

In independent projects evaluation, results of internal rate of return and net present value
lead to_____________?
0

A. Cash flow decision

B. Cost decision
C. Same decisions
D. Different decisions

Company low earning power and high interest cost cause financial changes which
have_____________?
0

A. High return on equity

B. High return on assets
C. Low return on assets
D. Low return on equity

Projects which are mutually exclusive but different on scale of production or time of
completion then the__________________?
0

A. External return method

B. Net present value of method
C. Net future value method
D. Internal return method

A point where profile of net present value crosses horizontal axis at plotted graph indicates
project____________________?
0

A. Costs
B. Cash flows
C. Internal rate of return
D. External rate of return

Profit margin multiply assets turnover multiply equity multiplier is used to

calculate____________?
0

A. Return on turnover
B. Return on stock
C. Return on assets
D. Return on equity

Payback period in which an expected cash flows are discounted with help of project cost of
capital is classified as___________________?
0

A. Discounted payback period

B. Discounted rate of return
C. Discounted cash flows
D. Discounted project cost

Ratios which relate firm’s stock to its book value per share, cash flow and earnings are
classified as_________?
0

A. Return ratios
B. Market value ratios
C. Marginal ratios
D. Equity ratios

An equation in which total assets are multiplied to profit margin is classified

as_____________?
0

A. Du DuPont equation
B. Turnover equation
C. Preference equation
D. Common equation

In capital budgeting, term of bond which has great sensitivity to interest rates
is______________?
0

A. Long-term bonds
B. Short-term bonds
C. Internal term bonds
D. External term bonds

Price earning ratio and price by cash flow ratio are classified as___________?
0

A. Marginal ratios
B. Equity ratios
C. Return ratios
D. Market value ratios

High price to earning ratio shows company’s_____________?

0

A. Low dividends paid

B. High risk prospect
C. High growth prospect
D. High marginal rate

Process of comparing company results with other leading firms is considered

as____________?
0

A. Comparison
B. Analysis
C. Bench marking
D. Return analysis

An equity multiplier is multiplied to return on assets to calculate_________?

0

A. Return on assets
B. Return on multiplier
C. Return on turnover
D. Return on stock
A project whose cash flows are more than capital invested for rate of return then net
present value will be___________?
0

A. Positive
B. Independent
C. Negative
D. Zero

In mutually exclusive projects, project which is selected for comparison with others must
have____________?
0

A. Higher net present value

B. Lower net present value
C. Zero net present value
D. All of above

Profitability index in capital budgeting is used for_________?

0

A. Negative projects
B. Relative projects
C. Evaluate projects
D. Earned projects

Relationship between Economic Value Added (EVA) and Net Present Value (NPV) is
considered as____________?
0

A. Valued relationship
B. Economic relationship
C. Direct relationship
D. Inverse relationship

An uncovered cost at start of year is $200, full cash flow during recovery year is $400 and
prior years to full recovery is 3 then payback would be__________?
0

A. 5 years
B. 3.5 years
C. 4 years
D. 4.5 years
Present value of future cash flows is divided by an initial cost of project to
calculate_______?
0

A. Negative index
B. Exchange index
C. Project index
D. Profitability index

First step in calculation of net present value is to find out_________?

0

A. Present value of equity

B. Future value of equity
C. Present value cash flow
D. Future value of cash flow

Life that maximizes net present value of an asset is classified as__________?

0

A. Minimum life
B. Present value life
C. Economic life
D. Transaction life

In capital budgeting, positive net present value results in_________________?

0

A. Negative economic value added

B. Positive economic value added
C. Zero economic value added
D. Percent economic value added

In estimating value of cash flows, compounded future value is classified as its__________?

0

A. Terminal value
B. Existed value
C. Quit value
D. Relative value

If two independent projects having hurdle rate, then both projects should________?
0

A. Be accepted
B. Not be accepted
C. Have capital acceptance
D. Have return rate acceptance

Cash flow which starts negative than positive then again positive cash flow is classified
as__________?
0

A. Normal costs
B. Non-normal costs
C. Non-normal cash flow
D. Normal cash flow

Cash inflows are revenues of project and are represented by__________?

0

A. Hurdle number
B. Relative number
C. Negative numbers
D. Positive numbers

Net present value, profitability index, payback and discounted payback are methods
to______________?
0

A. Evaluate cash flow

B. Evaluate projects
C. Evaluate budgeting
D. Evaluate equity

A type of project whose cash flows would not depend on each other is classified
as______________?
0

A. Project net gain

B. Independent projects
C. Dependent projects
D. Net value projects

Bonds issued by corporations and exposed to default risk are classified as_________?
0

A. Corporation bonds
B. Default bonds
C. Risk bonds
D. Zero risk bonds
Falling interest rate leads change to bondholder income which is__________?
0

A. Reduction in income
B. Increment in income
C. Matured income
D. Frequent income

Bonds that have high liquidity premium are usually have_________?

0

A. Inflated trading
B. Default free trading
C. Less frequently traded
D. Frequently traded

Treasury bonds are exposed to additional risks that are included________?

0

A. Reinvestment risk
B. Interest rate risk
C. Investment risk
D. Both A and B

Payment divided by par value is classified as______________?

0

A. Divisible payment
B. Coupon payment
C. Par payment
D. Per period payment

An annual interest payment divided by current price of bond is considered

as_____________?
0

A. Current yield
B. Maturity yield
C. Return yield
D. Earning yield

Coupon rate of convertible bond is_________?

0

A. Higher
B. Lower
C. Variable
D. Stable

An outstanding bond are also classified as__________?

0

A. Standing bonds
B. Outdated bonds
C. Dated bonds
D. Seasoned bonds

A market interest rate for specific type of bond is classified as bond’s_____________?

0

A. Required rate of return

B. Required option
C. Required rate of redemption
D. Required rate of earning

An inflation rate includes in bond’s interest rates is one which is inflation rate________?
0

A. At bond issuance
B. Expected in future
C. Expected at time of maturity
D. Expected at deferred call

An average inflation rate which is expected over life of security is classified as__________?
0

A. Inflation premium
B. Off season premium
C. Nominal premium
D. Required premium

Type of bond which pays interest payment only when it earns is classified as__________?
0

A. Income bond
B. Interest bond
C. Payment bond
D. Earning bond

Price of an outstanding bond increases when market rate___________?

0

A. Never changes
B. Increases
C. Decreases
D. Earned

If coupon rate is less than going rate of interest, then bond will be sold________?
0

A. Seasoned par value

B. More than its par value
C. Seasoned par value
D. At par value

A bond whose price will rise above its face value is classified as________?
0

A. Premium face value

B. Premium bond
C. Premium stock
D. Premium warrants

Stated value of bonds or face value is considered as_____________?

0

A. State value
B. Par value
C. Bond value
D. Per value

Real risk-free interest rate in addition with an inflation premium is equal

to_____________?
0

A. Required interest rate

B. Quoted risk-free interest rate
C. Liquidity risk-free interest rate
D. Premium risk-free interest rate

Bonds with deferred call have protection which is classified as__________?

0

A. Provision protection
B. Provision protection
C. Deferred protection
D. Call protection

When price of bond is calculated below its par value, it is classified as___________?
0

A. classified bond
B. Discount bond
C. Compound bond
D. Consideration earning

Rate on debt that increases as soon market rises is classified as________?

0

A. Rising bet rate

B. Floating rate debt
C. Market rate debt
D. Stable debt rate

Bonds that can be converted into shares of common stock are classified as_________?
0

A. Convertible bonds
B. Stock bonds
C. Shared bonds
D. Common bonds

Reinvestment risk of bond’s is usually higher on______?

0

A. Income bonds
B. Callable bonds
C. Premium bonds
D. Default free bonds

Market in which bonds are traded over-the-counter than in an organized exchange is

classified as__________?
0

A. Organized markets
B. Trade markets
C. Counter markets
D. Bond markets
Coupon payment of bond which is fixed at time of issuance____________?
0

A. Remains same
B. Becomes stable
C. Becomes change
D. Becomes low

Coupon payment is calculated with help of interest rate, then this rate considers
as________?
0

A. Payment interest
B. Par interest
C. Coupon interest
D. Yearly interest rate

An effect of interest rate risk and investment risk on a bond’s yield is classified
as_________?
0

A. Reinvestment premium
B. Investment risk premium
C. Maturity risk premium
D. Defaulter’s premium

Yield of interest rate which is below than coupon rate, this yield is classified as_________?
0

A. Yield to maturity
B. Yield to call
C. Yield to earning
D. Yield to investors

If market interest rate falls below coupon rate then bond will be sold__________?
0

A. Below its par value

B. Above its par value
C. Equal to return rate
D. Seasoned price

Rate of return (in percentages) consists of___________?

0
A. Capital gain yield interest yield
B. Return yield + stable yield
C. Return yield + unstable yield
D. Par value + market value

Type of bonds that are issued by foreign governments or foreign corporations are classified
as__________?
0

A. Zero risk bonds

B. Zero bonds
C. Foreign bonds
D. Government bonds

If market interest rate rises above coupon rate, then bond will be sold_____________?
0

A. Equal to return rate

B. Seasoned price
C. Below its par value
D. Above its par value

An interest rate which is used in calculation of cash flows of bonds is

called______________?
0

A. Required rate of redemption

B. Required rate of earning
C. Required rate of return
D. Required option

Type of options that permit bond holder to buy stocks at stated price are classified
as______?
0

A. Provision
B. Guarantee
C. Warrants
D. Convertibles

Bond that has been issued in very recent timing is classified as_______?
0

A. Mature issue
B. Earning issue
C. New issue
D. Recent issue

Bonds issued by local and state governments with default risk are____________?
0

A. Municipal bonds
B. Corporation bonds
C. Default bonds
D. Zero bonds

Maturity date decides at time of issuance of bond and legally permissible is classified
as____________?
0

A. Original maturity
B. Permanent maturity
C. Artificial maturity
D. Valued maturity

Value generally promises to pay at maturity date and a firm borrows is considered as
bond’s__________?
0

A. Bond value
B. Per value
C. State value
D. Par value

Bonds issued by government and backed by Pak government are classified as_________?
0

A. Issued security
B. Treasury bonds
C. U.S bonds
D. Return security

An increasing in interest rate leads to decline in value of__________?

0

A. Junk bonds
B. Outstanding bonds
C. Standing bonds
D. Premium bonds
Coupon rate of bond is also called____________?
0

A. Nominal rate
B. Premium rate
C. Quoted rate
D. Both a and c

Bonds issued by small companies tend to have_____________?

0

A. High liquidity premium

B. High inflation premium
C. High default premium
D. High yield premium

Type of bonds that pays no coupon payment but provides little appreciation are classified
as______________?
0

A. Depreciated bond
B. Interest bond
C. Zero coupon bond
D. Appreciation bond

Reinvestment risk of bonds is higher on__________?

0

A. Short maturity bonds

B. High maturity bonds
C. High premium bonds
D. High inflated bonds

In large expansion programs, increased riskiness and flotation cost associated with project
can cause_______________?
0

A. Rise in marginal cost of capital

B. Fall in marginal cost of capital
C. Rise in transaction cost of capital
D. Rise in transaction cost of capital

Cash outflows are costs of project and are represented by___________?

0
A. Negative numbers
B. Positive numbers
C. Hurdle number
D. Relative number

Sum of discounted cash flows is best defined as____________?

0

A. Technical equity
B. Defined future value
C. Project net present value
D. Equity net present value

If net present value is positive, then profitability index will be__________?

0

A. Greater than two

B. Equal to
C. Less than one
D. Greater than one

Cash flows occurring with more than one change in sign of cash flow are classified
as________?
0

A. Non-normal cash flow

B. Normal cash flow
C. Normal costs
D. Non-normal costs

Situation in which firm limits expenditures on capital is classified as________?

0

A. Optimal rationing
B. Capital rationing
C. Marginal rationing
D. Transaction rationing

An internal rate of return in capital budgeting can be modified to make it representative

of_________?
0

A. Relative outflow
B. Relative inflow
C. Relative cost
D. Relative profitability
Other factors held constant, greater project liquidity is because of___________?
0

A. Less project returns

B. Greater project return
C. Shorter payback period
D. Greater payback period

Project whose cash flows are sufficient to repay capital invested for rate of return then net
present value will be_________?
0

A. Negative
B. Zero
C. Positive
D. Independent

Process in which managers of company identify projects to add value is classified

as__________?
0

A. Capital budgeting
B. Cost budgeting
C. Book value budgeting
D. Equity budgeting

Number of years forecasted to recover an original investment is classified as________?

0

A. Payback period
B. Forecasted period
C. Original period
D. Investment period

In capital budgeting, a negative net present value result in______________?

0

A. Zero economic value added

B. Percent economic value added
C. Negative economic value added
D. Positive economic value added

Modified rate of return and modified internal rate of return with exceed cost of capital if
net present value is____________?
0
A. Positive
B. Negative
C. Zero
D. One

Set of projects or set of investments usually maximize firm value is classified as_________?
0

A. Optimal capital budget

B. Minimum capital budget
C. Maximum capital budget
D. Greater capital budget

In internal rate of returns, discount rate which forces net present values to become zero is
classified as__________?
0

A. Positive rate of return

B. Negative rate of return
C. External rate of return
D. Internal rate of return

High price to earnings ratio shows company’s_________?

0

A. Low dividends paid

B. High risk prospect
C. High growth prospect
D. High marginal rate

Return on assets = 5.5%, Total assets $3,000 and common equity $1,050 then return on
equity would be_________?
0

A. $22,275
B. 15.71%
C. 1.93%
D. 1.925 times

Net income available to stockholders is $150 and total assets are $2,100 then return on total
assets would be_________?
0

A. 0.07%
B. 7.14%
C. 0.05 times
D. 7.15 times

A technique uses in comparative analysis of financial statement is_________?

0

A. Graphical analysis
B. Preference analysis
C. Common size analysis
D. Returning analysis

Price per share is $30 and an earnings per share is $3.5 then price for earnings ratio would
be___________?
0

A. 8.57 times
B. 8.57%
C. 0.11 times
D. 11%

Set of rules made by corporation founders such as directors election procedure are
classified as_________?
0

A. Stock laws
B. By laws
C. Liability laws
D. Corporate laws

Legal entity separation from its legal owners and managers with help of state laws is
classified as____________?
0

A. Controlled corporate business

B. Corporation
C. Limited corporate business
D. Unlimited corporate business

Notes, mortgages, bonds, stocks, treasury bills and consumer loans are classified
as______________?
0

A. Financial instruments
B. Capital assets
C. Primary assets
D. Competitive instruments
Set of rules consisting of behavior towards its directors, creditors, shareholders,
competitors and community is considered as____________?
0

A. Agency governance
B. Hiring governance
C. Corporate governance
D. External governance

Price for debt is called_________?

0

A. Debt rate
B. Investment return
C. Discount rate
D. Interest rate

High price to earnings ratio shows company’s_________?

0

A. Low dividends paid

B. High risk prospect
C. High growth prospect
D. High marginal rate

Return on assets = 5.5%, Total assets $3,000 and common equity $1,050 then return on
equity would be_________?
0

A. $22,275
B. 15.71%
C. 1.93%
D. 1.925 times

Net income available to stockholders is $150 and total assets are $2,100 then return on total
assets would be_________?
0

A. 0.07%
B. 7.14%
C. 0.05 times
D. 7.15 times

A technique uses in comparative analysis of financial statement is_________?

0
A. Graphical analysis
B. Preference analysis
C. Common size analysis
D. Returning analysis

Price per share is $30 and an earnings per share is $3.5 then price for earnings ratio would
be___________?
0

A. 8.57 times
B. 8.57%
C. 0.11 times
D. 11%

Set of rules made by corporation founders such as directors election procedure are
classified as_________?
0

A. Stock laws
B. By laws
C. Liability laws
D. Corporate laws

Legal entity separation from its legal owners and managers with help of state laws is
classified as____________?
0

A. Controlled corporate business

B. Corporation
C. Limited corporate business
D. Unlimited corporate business

Notes, mortgages, bonds, stocks, treasury bills and consumer loans are classified
as______________?
0

A. Financial instruments
B. Capital assets
C. Primary assets
D. Competitive instruments

Set of rules consisting of behavior towards its directors, creditors, shareholders,

competitors and community is considered as____________?
0
A. Agency governance
B. Hiring governance
C. Corporate governance
D. External governance

Price for debt is called_________?

0

A. Debt rate
B. Investment return
C. Discount rate
D. Interest rate

Risk free rate is subtracted from expected market return is considered as___________?
0

A. Country risk
B. Diversifiable risk
C. Equity risk premium
D. Market risk premium

Beta which is estimated as regression slope coefficient is classified as___________?

0

A. Historical beta
B. Market beta
C. Coefficient beta
D. Riskier beta

In weighted average capital, capital structure weights estimation does not rely on value
of__________?
0

A. Investors equity
B. Market value of equity
C. Book value of equity
D. Stock equity

Method uses for an estimation of cost of equity is classified as___________?

0

A. Market cash flow

B. Future cash flow method
C. Discounted cash flow method
D. Present cash flow method
Variability for expected returns for projects is classified as___________?
0

A. Expected risk
B. Stand-alone risk
C. Variable risk
D. Returning risk

A risk associated with project and way considered by well diversified stockholder is
classified as______________?
0

A. Expected risk
B. Beta risk
C. Industry risk
D. Returning risk

During planning period, a marginal cost for raising a new debt is classified as__________?
0

A. Debt cost
B. Relevant cost
C. Borrowing cost
D. Embedded cost

If coupon rate is more than going rate of interest, then bond will be sold________?
0

A. More than its par value

B. Seasoned par value
C. At par value
D. Below its par value

Type of bond in which payments are made on basis of inflation index is classified
as_____________?
0

A. Borrowed bond
B. Purchasing power bond
C. Surplus bond
D. Deficit bond

Price of an outstanding bond decreases when market rate is_______________?

0
A. Increased
B. Decreased
C. Earned
D. Never changed

Right held with corporations to call issued bonds for redemption is considered
as___________?
0

A. Artificial provision
B. Call provision
C. Redeem provision
D. Original provision

Required rate of return in calculating bond’s cash flow is also classified as_______?
0

A. Going rate of return

B. Yield
C. Earning rate
D. Both A and B

If default probability is zero and bond is not called, then yield to maturity
is_____________?
0

A. Mature expected return rate

B. Lower than expected return rate
C. Higher than expected return rate
D. Equal to expected return rate

Cash flows that could be generated from an owned asset by company but not use in project
are classified as_________________?
0

A. Occurred cost
B. Mean cost
C. Opportunity costs
D. Weighted cost

Relevant cash flow which company expects when its will implement project is classified
as_____________?
0

A. Irrelevant cash flow

B. Relevant cash flow
C. Incremental cash flow
D. Decrease cash flow

Nominal interest rates and nominal cash flows are usually reflected the____________?
0

A. Inflation effects
B. Opportunity effects
C. Equity effects
D. Debt effects

In cash flow estimation, depreciation shelters company’s income from_______?

0

A. Expansion
B. Salvages
C. Taxation
D. Discounts

Weighted average cost of debt, preferred stock and common equity is classified
as_____________?
0

A. Cost of salvage
B. Cost of interest
C. Cost of taxation
D. Cost of capital

In cash flow estimation and risk analysis, real rate will be equal to nominal rate if there
is__________?
0

A. No inflation
B. High inflation
C. No transactions
D. No acceleration

Rate of return which is required to satisfy stockholders and debt holders is classified
as__________?
0

A. Weighted average cost of interest

B. Weighted average cost of capital
C. Weighted average salvage value
D. Mean cost of capital
In cash flow estimation, depreciation is considered as________________?
0

A. Cash charge
B. Non cash charge
C. Cash flow discounts
D. Net salvage discount

Net investment in operating capital is subtracted from net operating profit after taxes to
calculate___________?
0

A. Relevant inflows
B. Free cash flow
C. Relevant outflows
D. Cash outlay

Real interest rate and real cash flows do not include_____________?

0

A. Equity effects
B. Debt effects
C. Inflation effects
D. Opportunity effects

Real rate expected cash flows and nominal rate expected cash flows must
be______________?
0

A. Accelerated
B. Equal
C. Different
D. Inflated

Double declining balance method and sum of years digits are included in__________?
0

A. Yearly method
B. Single methods
C. Double methods
D. Accelerated methods

Interest rates, tax rates and market risk premium are factors which an/a_____________?
0
A. Industry cannot control
B. Industry cannot control
C. Firm must control
D. Firm cannot control

In retention growth model, payout ratio is subtracted from one to calculate___________?

0

A. Present value ratio

B. Future value ratio
C. Retention ratio
D. Growth ratio

Rate of required return by debt holders is used for estimation the__________?

0

A. Cost of debt
B. Cost of equity
C. Cost of internal capital
D. Cost of reserve assets

Current option price is added to present value of portfolio for calculating_________?

0

A. Future value of portfolio

B. Current value of stock
C. Future value of stock
D. Present value of portfolio

If stock market price is higher than strike price so call option____________?

0

A. Price will be lower

B. Rate will be higher
C. Price will be higher
D. Rate will be lower

Projects which are mutually exclusive but different on scale of production or time of
completion then the___________?
0

A. External return method

B. Net present value of method
C. Net future value method
D. Internal return method
Long period of bond maturity leads to_________?
0

A. More price changes

B. Stable prices
C. Standing prices
D. Mature prices

If coupon rate is equal to going rate of interest, then bond will be sold________?
0

A. At par value
B. Below its par value
C. More than its par value
D. Seasoned par value

Risk of fall in income due to fall in interest rates in future is classified as__________?
0

A. Income risk
B. Investment risk
C. Reinvestment risk
D. Mature risk

As free bonds issue for welfare by industrial agencies or pollution control agencies are
classified as__________?
0

A. Agent bonds
B. Development bonds
C. Pollution control bonds
D. Both B and C

Accounting & Auditing Paper -I (2000)

(1) Double entry book-keeping was fathered by:
(a) F.W.Taylor 
(b) Henry Fayol 
(c) Lucas Pacioli.

(2) Funds Flow Statement and sources and application statement are:’
(a) Synonymous 
(b) Antagonistic 
(c) None of these.

(3) Depreciation in spirit is similar to:

(a) Depletion 
(b) Amortization 
(c) Depression.

4) Balance Sheet is always prepared:

(a) for the year ended. 
(b) As on a specified date. 
(c) None of these.

(5) In Insurance, the following Profit and Loss Accounts are prepared:
(a) Separate for Fire, Marine, and Accidents etc.
(b) Consolidated for Fire, Marine, and Accidents etc.(c) None of these.

(6) Partners in Pakistan can today be fixed at the following numbers:

(a) 20 
(b) 50 
(c) 75.

(7) Flexible budget is a budget with the following features:

(a) Changes with volume of production.
(b) Changes with variable expenses
(c) Changes in Direct material.

(8) Break Even can be calculated as under:

(a) ______VC_______
FC- TR TC
(b) FC 
I- VC TR(c) None of these.

(9) Quick Ratio can be computed as under:

(a) Quick . Assets/Quick Liabilities
(b) Quick . Liabilities Current Assets
(c) Current Assets/ Current Liabilities

(10) In straight line method of depreciation, the written down value of a fixed asset will be
at the end of the life of the asset as under:
(a) Rupee one 
(b) Rupee zero (c) None of these.

(11) Sales budget must be prepared:

(a) Independently 
(b) Depending on production capacity 
(c) Based on Sales forecasts of market. 

(12) Consolidation of subsidiary accounts in the balance sheet of a unlisted Holding

company is at present in Pakistan:
(a) Compulsory 
(b) Voluntary 
(c) Required. 

(13) Retained earning is synonymous to:

(a) Accumulated profit and loss account
(b) Profit for the year
(c) None of these.

(14) The requirements of an audit report for a Banking Company in Pakistan is under:
(a) Under the Banking Companies Ordinance, 1962.
(b) Under the Companies Ordinance, 1984.
(c) Under (a) and (b) above.

(15) Deferred Taxation is:

(a) Fixed asset
(b) Fixed liabilities
(c) Part of Owners Equity.

(16) Investment Corporation of Pakistan follows:

(a) Open-end mutual funds 
(b) Closed-end mutual funds 
(c) None of these.

(17) Directors Report is ---- in respect of financial report constituent.

(a) Mandatory for a limited Company
(b) Voluntary for a limited Company
(c) None of these.

(18) Every limited Company in Pakistan is required by law to include the following along
with financial reports:
(a) Ratio Analysis
(b) Chairman’s Review
(c) None of these.

(19) Cash budget excludes the following:

(a) Non-Cash items
(b) Cash items
(c) Purchase on Credit items.

(20) NGOs are legally required to:

(a) Prepare accounts in a prescribed manner under the law.(b) Prepare accounts as
desired by donors.
(c) None of these.

Accounting & Auditing Paper -II (2000)

1. Fixed Cost:
a. Changes with production
b. Never changes even if production capacity is doubled
c. None of the above

2. Conversion cost is:

a. Material Cost + Overhead Cost
b. Direct Labour + Material Cost
c. Labour Cost + Overhead Cost

3. Process Costing is relevant to:

a. Cement industry
b. Job Order cost oriented Projects
c. None of the above

4. Operating Profit is:

a. Profit after deducting financial costs
b. Profit after deducting taxes
c. Profit after deducting normal operating expenses including depreciation

5. A good Cost Accounting System is:

a. If it computes estimated cost only
b. If it cannot be reconciled with financial accounts
c. If it enables management to increase productivity and rationalize cost structure

6. Verification includes:
a. Checking Vouchers
b. Examining audit report
c. None of the above

7. Stratified audit sample means:

a. Randomly selected items for audit
b. Purposively selected items for audit
c. Items carefully selected from each group

8. Internal Control is totally synonymous with:

a. Internal check
b. Internal audit
c. None of above

9. Audit of a bank is generally conducted through:

a. Routine checking
b. Couching
c. Balance sheet audit

10. An auditor is liable for his annual audit of accounts o:

a. Creditors
b. Bankers
c. Owners

11. Income Tax is levied on:

a. Agricultural Income
b. Presumptive Income
c. None of above

12. If a firm has paid super-tax, its partners may follow any one of the following
behaviours:
a. No need to pay income tax, even if the income exceeds the taxable limit.
b. Pay income tax, even if the income does not exceed the taxable income.
c. Pay income tax as required under the law. 
13. A resident multinational company need not:
a. Pay income tax, if it s caused under Double Taxation agreement.
b. If it is not enjoying tax exemption under the Income Tax Ordinance, 1979 (Second
Schedule).
c. None of above

14. Income Tax rates are the same for:

a. Limited Companies
b. Banking Companies
c. None of above

15. Super Tax on companies is:

a. In vogue in Pakistan
b. Not in vogue in Pakistan
c. None of above

16. Current Ratio is calculated as:

a. Fixed Assets/Current Liabilities
b. Current Liabilities/Current Assets
c. Current Assets/Current Liabilities

17. Short-term loan can be described as:

a. If the period is three years
b. If the period is less than one year
c. If the period is over one year

18. A partnership, in today’s Pakistan, under the current law can have the following number
of partners:
a. 50
b. 20
c. 100

19. Combination can be best described as:

a. Restructuring of Capital of a Company
b. Reduction of Capital of a Company
c. Amalgamation of two different types of businesses

20. Sources of funds can be increased by:

a. Describing selling prices
b. Increasing expenditure
c. None of above

Accounting & Auditing paper-I (2001)

Write only the correct answer in the Answer Book. Do not reproduce the questions.

(1) Books of original entry are called:

(a) Ledger 
(b) Work sheets
(c) Journal
(d) None of these
(2) For preparing balance sheets prepaid expenses are shown as part of:
(a) Liability
(b) Equities
(c) Assets
(d) None of these

(3) Unpaid and unrecorded expenses are called:

(a) Prepaid expenses
(b) Accrued expenses
(c) Additional expenses
(d) None of these

(4) Amount, cash, or other assets removed from business by owner is:
(a) Capital
(b) Drawings
(c) Assets
(d) None of these

(5) Under the diminishing balance method, depreciation amount is:

(a) Payment
(b) Receipt
(c) Expenditure
(d) None of these

(6) Users of accounting information include:

(a) The tax authorities
(b) Investors
(c) Creditors
(d) All of these

(7) The business form(s) in which the owner(s) is (are) personally liable is (are) the:
(a) Partnership only
(b) Proprietorship
(c) Corporation only
(d) Partnership and proprietorship 
(e) None of these

(8) The investment of personal assets by the owner:

(a) Increases total assets and increases owner’s equity
(b) Increases total assets only
(c) Has no effect on assets but increases owner’s equity
(d) Increase assets and liabilities
(e) None of these

(9) All of the following are forms of organizations except:

(a) Proprietorship
(b) Corporation
(c) Retailer
(d) Partnership
(e) None of these

(10) Economic resources of a business that are expected to be of benefit in the future are
referred to as:
(a) Liabilities
(b) Owner’s equity
(c) Withdrawals
(d) Assets
(e) None of these

(11) An owner investment of land into the business would:

(a) Decrease withdrawals
(b) Increase liabilities 
(c) Increase owner’s equity
(d) Decrease assets
(e) None of these

(12) A cash purchase of supplies would:

(a) Decrease owner’s equity
(b) Increase liabilities 
(c) Have no effect on total assets
(d) None of these

(13) An owner investment of each into the business would:

(a) Increase assets
(b) Decrease liabilities
(c) Increase withdrawals
(d) Decrease owner’s equity
(e) None of these

(14) The payment of rent each month for office space would:
(a) Decrease total assets
(b) Increase liabilities
(c) Increase owner’s equity
(d) None of these

(15) Real accounts are related to:

(a) Assets
(b) Expenses and incomes
(c) Customers and Creditors etc.
(d) None of these

(16) Which one of the following accounts would usually have a debit balance?
(a) Cash
(b) Creditors
(c) Accounts payable
(d) Salaries Expenses
(e) None of these

(17) Quick assets include which of the following?

(a) Cash
(b) Accounts Receivable
(c) Inventories
(d) Only (a) and (b)
(e) None of these

(18) Net income plus operating expenses is equal to:

(a) Net sales
(b) Cost of goods available for sale
(c) Cost of goods sold
(d) Gross profit
(e) None of these

(19) The maximum number of partners in Pakistan can be fixed at the following:
(a) 20
(b) 50
(c) 75
(d) None of these

(20) Balance sheet is always prepared:

(a) For the year ended
(b) As on a specific date
(c) None of these 

Accounting & Audting Paper-II (2001)

Write only the correct answer in the Answer Book. Do not reproduce the questions.

(1) The measureable value of an alternative use of resources is referred to as:

(a) An opportunity cost
(b) An imputed cost
(c) A different cost
(d) A sunk cost
(e) None of these

(2) A quantitative expression of management objectives is an:

(a) Organizational chart
(b)Management chart
(c) Budget
(d) Procedural chart
(e) None of these

(3) A cost center is:

(a) A unit of production in relation to which costs are ascertained
(b) A location which is responsible for controlling direct costs
(c) Part of the factory overhead system by which costs are gathered
(d) Any location or department which incurs cost
(e) None of these

(4) At break-even point of 400 units sold the variable costs were Rs. 400 and the fixed costs
were Rs.200. What will be the 401 units sold contributing to profit before income tax?
(a) Rs. 0.00
(b) Rs. 0.50
(c) Rs. 1.00
(d) Rs. 1.50
 (e) None of these

(5) In considering a special order situation that will enable a company to make use of
currently idle capacity, which of the following cost will be irrelevant:
(a) Materials
(b) Depreciation
(c) Direct labour
(d) Variable factory overhead
(e) None of these

(6) A fixed cost:

(a) May change in total when such change is not related to changes in production
(b) Will not change in total because it is not related to changes in production
(c) Is constant per unit for each unit of change in production
(d) May change in total, depending on production with the relevant range
(e) None of these

(7) Completion of a job is result in:

(a) DR finished goods …….. CR WIP
(b) DR Cost of goods ……... CR finished goods
(c) DR WIP ……………..….….. CR FOH control
(d) DR FOH control …….….. CR FOH applied
(e) None of these

(8) Operating cost in often named as:

(a) Manufacturing cost plus commercial expenses
(b) Prime cost plus factory overheads
(c) Direct material plus direct labour
(d) Selling plus administrative expenses
(e) None of these

(9) Expenses such as rent and depreciation of a building are shared by several departments
these are:
(a) Indirect expenses
(b) Direct expenses
(c) Joint expenses
(d) All of the above
(e) None of these

(10) If under applied FOH is closed to cost of goods sold, the journal entry is:
(a) DR Cost of goods sold …….. CR FOH control
(b) DR FOH control ……..……….. CR Cost of goods sold
(c) DR FOH control ……..……….. CR Profit % loss account
(d) None of these

(11) Re-order quantity …… 3600 units

Maximum consumption ...… 900 units per week
Minimum comsumption …....300 units per week
Re-order period …………….….5 weeks
 Based on this data Re-order level is:
(a) 4500 units
(b) 3900 units
(c) 1200 units
(d) 400 units
(e) None of these

(12) The time lag between indenting and receiving material is called:
(a) Lead time
(b) Idle time
(c) Stock out time
(d) None of these

(13) A credit balance remaining in FOH Control account is called:

(a) Over-applied overhead
(b) Under-applied overhead
(c) Actual overhead
(d) None of these

(14) Direct material cost plus direct labour cost is called:

(a) Prime cost
(b) Conversion cost
(c) Product cost
(d) All of these
(e) None of these

(15) Productivity means:

(a) The ability to produce
(b) All units produced
(c) Good units produced
(d) None of these

(16) A segment of the business that generates both revenue and cost is called:
(a) Profit Center
(b) Cost Center
(c) Cost driver
(d) All of these
(e) None of these

(17) Verification includes:

(a) Checking vouchers
(b) Examining audit report
(c) None of these

(18) Audit of a bank is generally conducted through:

(a) Routine checking
(b) Vouching
(c) Balance sheet audit
(d) None of these
(19) Economics resources of a business that are expected to be of benefit in the future are
referred to as:
(a) Liabilities
(b) Owner’s equity
(c) Withdrawals
(d) Assets
(e) None of these

(20) Short term Loan can be best described as:

(a) If the period is three years
(b) If the period is less than one year
(c) If the period is over one year
(d) None of these

Accounting & Auditing Paper-I (2002)

(1) Maximum number of partners in a partnership firm set up in Pakistan under Partnership
Act, 1932 is:
(a) 5
(b) 25
(c) 20
(d) None of these

(2) Preparation of final financial reports is governed in Pakistan under:

(a) No law
(b) Companies Ordinance 1984
(c) None of these

(3) Depreciation is based on:

(a) Economic life of asset
(b) Declared life of asset by supplier
(c) Normal life of asset
(d) None of these

(4) Inventory turnover is calculated as under:

(a) Cost of Goods sold/Closing Inventory
(b) Gross profit/Closing Inventory
(c) Sales/Opening Inventory
(d) None of these

(5) There is a difference between:

(a) Worksheet and Balance Sheet
(b) Worksheet and profit and loss account 
(c) Worksheet as combination of results of profits and financial positions
(d) None of these

(6) Deferred Revenue is:

(a) Liability
(b) Asset
(c) None of these

(7) Preparation of annual report of a firm is governed under:

(a) Partnership Act 1932
(b) Under partnership Deed
(c) None of these

(8) Deferred Taxation amount be treated as:

(a) Foot note
(b) An item in the Balance Sheet on asset side
(c) None of these

(9) Return of Equity will be calculated as under:

(a) Operating Profit x 100/Equity
(b) Net profit x 100/Paid up Capital only
(c) None of these

(10) Current maturity of long term loan is:

(a) Current Liability
(b) Long Term Liability
(c) None of these 

Accounting & Auditing Paper-II (2002)

Write only the correct answer in the Answer Book. Do not reproduce the questions.

(1) Prime cost is calculated as under:

(a) Manufacturing Cost/Cost of Goods Sold
(b) Direct Method plus factory overheads
(c) Direct labour + Direct Material
(d) None of these

(2) Process Cost is very much applicable in:

(a) Construction Industry
(b) Pharmaceutical Industry
(c) Air line company
(d) None of these

(3) The latest computation of variances of manufacturing overheads is in one the following
ways:
(a) Two variance approaches
(b) Three variance approaches
(c) Four variance approaches
(d) None of these

(4) Random sampling in auditing means:

(a) Selection through convenience sampling
(b) Selection through scientific sampling approach
 (c) None of these

(5) Expenditure incurred in procuring machinery is:

(a) An admissible expenditure for tax purposes
(b) No admissible for tax purposes
(c) None of these

(6) Increase in income constitutes:

(a) Inflows
(b) Outflows
(c) None of these

(7) M & A stands for:

(a) Mergers & Analysis
(b) Mergers & Acquisitions
(c) Mergers & Allocation
(d) None of these

(8) An endowment insurance policy can be taken in respect of:

(a) Fire insurance
(b) Accident insurance
(c) Life insurance
(d) None of these

(9) Audit and special audit are the same:

(a) In Insurance Company
(b) In Banking Company
(c) None of these

(10) Acid test is the same as:

(a) Quick test
(b) Liquid test
(c) None of these

Accounting & Auditing Paper-I (2003)

(1) Acid Test Ratio is calculated as under:

(a) Current Assets/Current Liabilities
(b) Fixed Assets/Current Liabilities
(c) Liquid Assets/Current Liabilities
(d) None of these

(2) Deferred cost is a:

(a) Liability
(b)Asset
(c) None of these

(3) Work Sheet is:

(a) Balance Sheet
(b) Fund Flows Statement
(c) A combination of Profit and Loss Account and Balance Sheet items
(d) None of these

(4) Banks, for the preparation of financial statements, are governed under:
(a) Banking Companies Ordinance, 1962
(b) State Bank of Pakistan Act
(c) None of these

(5) Return on investment is computed:

(a) Investment/Profit x 100
(b) Profit x 100/Investment
(c) None of these 

Accounting & Auditing Paper-II (2003)

Write only the correct answer in the Answer Book. Do not reproduce the questions.

(1) Rent of the premises constitutes variable expenses for cost allocation:
(a) True
(b) False

(2) Sugar used in a sugarcane company is:

(a) Variable cost
(b) Fixed cost
(c) None of these

(3) An auditor is liable under the following circumstances:

(a) Third Party Liabilities
(b) Fraud perpetrated in highly sophisticated circumstances
(c) None of these

(4) Agricultural income is taxable under the Income Tax Laws of Pakistan:
(a) True
(b) False

(5) Principal and markup payment within one year constitutes long term liability for
disclosure in the balance sheet of a company.
(a) True
(b) False

(6) Ordinarily one can have the following partners in a partnership in Pakistan under the
Partnership Act 1932.
(a) 10
(b) 20
(c) 30
(d) None of these
 (7) Working Capital finance can be termed as “Running Finance” in a limited company.
(a) True
(b) False

(8) Income from Capital gains arising out of trading on a stock strange in Pakistan is taxable
these days:
(a) True
(b) False

(9) Conversion Cost is calculated as under:

(a) Labour Plus Materials
(b) Labour plus overheads
(c) None of these

(10) Current Ratio can be calculated as under:

(a) Current Liabilities/Current Assets
(b) Current Assets/Current Liabilities
(c) None of these