We are here with you hands in hands to facilitate your learning & don't appreciate the idea of copying or replicating solutions. Read More>>

Looking For Something at vustudents.ning.com? Click Here to Search

www.bit.ly/vucodes

+ Link For Assignments, GDBs & Online Quizzes Solution

www.bit.ly/papersvu

+ Link For Past Papers, Solved MCQs, Short Notes & More


Dear Students! Share your Assignments / GDBs / Quizzes files as you receive in your LMS, So it can be discussed/solved timely. Add Discussion

How to Add New Discussion in Study Group ? Step By Step Guide Click Here.

MGT101 solved midterm papers and all relative helping material at one place,,,,,!

this is collection friends.

hope you will get benefit form these sharing for midterm papers.

remember me in your prayers,

Best Regards,

Sana

+ How to Follow the New Added Discussions at Your Mail Address?

+ How to Join Subject Study Groups & Get Helping Material?

+ How to become Top Reputation, Angels, Intellectual, Featured Members & Moderators?

+ VU Students Reserves The Right to Delete Your Profile, If?


See Your Saved Posts Timeline

Views: 4830

.

+ http://bit.ly/vucodes (Link for Assignments, GDBs & Online Quizzes Solution)

+ http://bit.ly/papersvu (Link for Past Papers, Solved MCQs, Short Notes & More)

+ Click Here to Search (Looking For something at vustudents.ning.com?)

+ Click Here To Join (Our facebook study Group)

Attachments:

Replies to This Discussion

Note: (This is Featured Discussion)

For Important Helping Material related to the subject (Solved MCQs, Short Notes, Solved past Papers, E-Books, FAQ,Short Questions Answers & more). You must view all the featured Discussion in this subject group.

For how you can view all the Featured discussions click on the Back to Subject Name Discussions link below the title of this Discussion & then under featured Discussion corner click on the view all link.

MIDTERM  EXAMINATION

2nd dec 2009

MGT101- Financial Accounting 

Question No: 1    ( Marks: 1 )    - Please choose one

 Depreciation arises because of:

 

       ► Fall in the market value of an asset

       ► Fall in the value of money

       ► Physical wear and tear

       ► All of the given options

 

Question No: 2    ( Marks: 1 )    - Please choose one

          Consider the following:

 

Beginning inventory

10 units @ Rs. 10 per unit

First purchase

35 units @ Rs. 11 per unit

Second purchase

40 units @ Rs. 12 per unit

Third purchase

20 units @ Rs. 13 per unit

Eighty-five units were sold, what is the value of the ending inventory using the FIFO method of inventory costing?

       ► Rs.260 

       ► Rs.232

       ► Rs.284

       ► Rs.268

Question No: 3    ( Marks: 1 )    - Please choose one

 Which of the following is NOT an example of Current Asset?

       ► Bank Overdraft

       ► Accounts Receivable

       ► Notes Receivable

       ► Prepaid Expenses

Question No: 4    ( Marks: 1 )    - Please choose one

 Which of the following statement is NOT TRUE about Current liabilities?

 

       ► These are due within one year

       ► These are short-term loans

       ► These are consist of all debts, payable after 12 months

       ► In working capital, these are deducted from current assets

Question No: 5   ( Marks: 1 )    - Please choose one

 

Which of the following essentials are shown in Bank Book?

(1) Date of transaction

(2) Narration of transaction

(3) Cheque number

 

       ► (1) & (2) only

       ► (2) & (3) only

       ► (1) & (3) only

       ► (1), (2) & (3)

Question No: 6    ( Marks: 1 )    - Please choose one

 Income of the business includes:

 

       ► Cash sales only

       ► Credit sales only

       ► Credit purchases only

       ► Both cash sales and credit sales

Question No: 7    ( Marks: 1 )    - Please choose one

 Particulars

Rs.

Opening stock of raw material

100,000

Closing stock of raw material

80,000

Purchases of raw material during the period

200, 000

Cost of Material Consumed

?

 

       ► Rs. 205,000

       Rs. 215,000

       ► Rs. 220,000

       ► Rs. 225,000

Question No: 8    ( Marks: 1 )    - Please choose one

 Which of the following account will be credited, when the goods are purchased on cash?

 

       ► Stock account

       ► Cash account

       ► Supplier account

       ► Work in process account

Question No: 9    ( Marks: 1 )    - Please choose one

 If the cost of sales is Rs. 60,000, sales are Rs. 95,000 and operating expenses are Rs.20,000 during the year. What would be the Net Profit?

 

 

       ► Rs.15,000

       ► Rs. 35,000

       ► Rs. 55,000

       ► Rs. 60,000

Question No: 10    ( Marks: 1 )    - Please choose one

 Which of the following account balance will be shown on debit side of Trial Balance? (It is assumed that all account balances are shown on normal balance).

 

       ► Capital account

       ► Sundry creditors account

       ► Accounts payable account

       ► Cash account

Question No: 11    ( Marks: 1 )    - Please choose one

 Which of the following account will be credited, if business bought goods on credit from Mr. Ali?

 

 

       ► Purchases account

       ► Mr. Ali account

       ► Cash account

       ► Sales account

Question No: 12    ( Marks: 1 )    - Please choose one

 A summarized record of transactions related to individuals or things is called a/an  ___________.

 

 

       ► Account

       ► Voucher

       ► Journal

       ► Trial balance

Question No: 13    ( Marks: 1 )    - Please choose one

 When a Liability is reduced or decreased, it is recorded on the:

 

       ► Right or debit side of the account

       ► Left or debit side of the account

       ► Left or credit side of the account

       ► Right or credit side of the account

Question No: 14    ( Marks: 1 )    - Please choose one

 Cost incurred for the maintenance of shop is considered as _________.

       ► Deferred expense

       ► Capital expense

       ► Revenue expense

       ► Preliminary expense

Question No: 15    ( Marks: 1 )    - Please choose one

 Double entry accounting system includes:

 

 

       ► Accrual accounting only

       ► Cash accounting only

       ► Both cash and accrual accounting

       ► None of the given options

Question No: 16    ( Marks: 1 )    - Please choose one

 The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the asset, is termed as:

 

       ► Appreciation

       ► Depreciation

       ► Fluctuation

       ► None of the given options

Question No: 17    ( Marks: 1 )    - Please choose one

 Under the reducing balance method of depreciation:

 

       ► Amount of depreciation increases every year

       ► Amount of depreciation remains constant for every year

       ► Amount of depreciation decreases every year

       ► None of the given options

Question No: 18    ( Marks: 1 )    - Please choose one

          Consider the following:

Beginning inventory

10 units @ Rs. 10 per unit

First purchase

35 units @ Rs. 11 per unit

Second purchase

40 units @ Rs. 12 per unit

Third purchase

20 units @ Rs. 13 per unit

Eighty units were sold, what is the value of the ending inventory using the FIFO method of inventory costing?

 

       ► Rs.260

       ► Rs.232

       ► Rs.284

       ► Rs.320

Question No: 19    ( Marks: 1 )    - Please choose one

 Cost of asset

Rs. 1,00,000

Life of asset

5 years

Depreciation for each year

Rs. 5,000

Sale price after 5 years

Rs.50,000

Book value of Asset after 5 years

?

 

       ► Rs.25, 000

       ► Rs. 75,000

       ► Rs. 15,000

       ► Rs. 1, 00,000

Question No: 20    ( Marks: 1 )    - Please choose one

 In cost of goods sold statement the ‘total factory cost’ is equal to:

 

 

       ► Cost of material consumed + Labor cost

       ► Cost of material consumed + Conversion cost

       ► Cost of material consumed + Total factory cost

       ► Cost of material consumed + Factory overhead

   

Question No: 21    ( Marks: 1 )    - Please choose one

 Which of the following account balance will be shown on debit side of Trial Balance? (It is assumed that all account balances are shown on normal balance).

 

       ► Cash Account

       ► Furniture Account

       ► Motor Account

       ► All of the above

Question No: 22    ( Marks: 1 )    - Please choose one Which of the following account will be credited, if business sold goods for Rs.10,000 on credit?

 

 

 

       ► Cash account

       ► Sales account

       ► Accounts receivable account

       ► Purchases account

   

Question No: 23    ( Marks: 1 )    - Please choose one

 Which of the following account will be credited, if business purchased a vehicle on cash?

 

       ► Vehicle account

       ► Cash account

       ► Business account

       ► Bank account

Question No: 24    ( Marks: 1 )    - Please choose one

 Which of the following essentials are shown in Bank Book?

(1) Date of transaction

(2) Narration of transaction

(3) Cheque number

 

       ► (1) & (2) only

       ► (2) & (3) only

       ► (1) & (3) only

       ► (1), (2) & (3)

Question No: 25    ( Marks: 1 )    - Please choose one

 Commercial Accounting is based on:

       ► Single entry book keeping

       ► Double entry book keeping

       ► Both single and double entry book keeping

       ► Cash basis of book keeping

Question No: 26    ( Marks: 1 )    - Please choose one

 Particulars

Rs.

Opening written down value of machine

Rs. 2,00,000

Cost of  new machine purchased during the year

 Rs. 50,000

Depreciation during the year

Rs. 25,000

Closing written down value (WDV) of machines

?

 

       ► Rs. 2, 25,000

       ► Rs. 2, 50,000

       ► Rs. 2, 75,000

       ► Rs. 75,000

Question No: 27    ( Marks: 1 )    - Please choose one

 Which of the following is an example of direct materials cost?

 

 

       ► Polish and finishing material for chair

       ► A piece of wood for the production of chair

       ► Production worker’s wages

       ► Depreciation expenses

 

Question No: 28    ( Marks: 1 )    - Please choose one

 Which of the following account will be credited, when the goods are purchased on cash?

 

       ► Stock account

       ► Cash account

       ► Supplier account

       ► Work in process account

Question No: 29    ( Marks: 1 )    - Please choose one

 Following are the inventories of Manufacturing Concern EXCEPT:

 

       ► Raw material

       ► Work in process

       ► Finished goods

       ► Merchandise inventory

Question No: 30    ( Marks: 1 )    - Please choose one

 Word “Credit” is derived from ______ language.

 

       ► Latin

       ► English

       ► French

       ► Chinese

Question No: 31    ( Marks: 1 )    - Please choose one

          Consider the following inventory record:

 

Date

Item

Quantity

Cost/Unit

Rs.

Total

Rs.

Jan. 2

Beginning inventory

10

10

100

Mar. 4

Purchase

35

11

385

May 8

Purchase

40

12

480

Nov. 3

Purchase

20

13

260

De31

Merchandise available

105

 

1,225

 

85 units were sold, Use the FIFO method of inventory costing and determine the cost of goods sold.

 

       ► Rs. 1,225

       ► Rs. 1,015

       ► Rs. 965

       ► Rs. 905

Question No: 32    ( Marks: 1 )    - Please choose one

 The assets which have a limited useful life are termed as:

 

       ► Limited assets

       ► Depreciateable assets

       ► Unlimited assets

       ► None of the given options

 The cost of moving plant and machinery to a new site will be treated as:

 

 

       ► Revenue expense

       ► Capital expense

       ► Administrative expense

       ► Operating expense

Question No: 33    ( Marks: 1 )    - Please choose one

 A decrease in value of a fixed asset due to age, wear and tear is known as:

       ► Depreciation

       ► Accumulated Depreciation

       ► Appreciation

       ► Written Down Value

Question No: 34    ( Marks: 1 )    - Please choose one

 What would be the value of 'cost of goods manufactured' if the total factory cost of the month is Rs. 6,000, opening work in process is Rs. 2,000 and the closing work in process is Rs. 2,500? 

 

       ► Rs. 5,500

       ►          Rs. 8,000

       ► Rs. 4,500

       ► Rs. 8,500

Question No: 35    ( Marks: 1 )    - Please choose one

 The area of accounting concerned with reporting financial information to the interested parties is called:

       ► Cost Accounting

       ► Financial Accounting

       ► Management Accounting

       ► Tax Accounting

Question No: 36    ( Marks: 1 )    - Please choose one

 Find out the missing value of an Accounting Equation with the help of given data:

 

Cash

Rs. 22,500

Debtors

Rs. 500

Total Assets

Rs. 80, 385

Accounts payable

Rs. 1,000

Total liabilities

Rs. 20,000

 

       ► Rs. 60,385 owner’s equity 

       ► Rs. 61,385 owner’s equity 

       ► Rs. 99,885 owner’s equity 

       ► Rs.  99,385 owner’s equity

Question No: 41    ( Marks: 10 )

 Show the effect of the following transactions upon the Accounting Equation.

 

2007 June1,

Mr. Salman started business with cash Rs. 1,00,000

5,

Purchased furniture for cash Rs. 4,000

6,

Purchased goods for cash Rs. 25,000

10,

Paid transportation on goods purchased Rs.1,000

12,

Sold goods for cash Rs. 15,000, costing 11,000

15,

Purchased goods on credit basis for Rs. 15,000

19,

Sold goods to Rashid on credit basis for Rs. 8,000, costing Rs. 6,500

25,

Received cash from Rashid Rs. 4,000

28,

Cash paid to creditor Rs. 9,000

30,

Paid rent and salaries for the month Rs. 4,000

 

 

 

Q no 41 ka solution kia ho ga ...koi idea de dy plzz......balance sheet bnani hy kia....

            Lesson-1                        

BASIC CONCEPTS OF ACCOUNTING

 

 

Accounting:-

Accounting is the art of recording, summarizing, reporting, and analyzing financial transactions.

                                                OR

Accounting is the art of recording, classifying, 
summarizing,in significant manner and in terms of money, 
Transaction and events which are in part of at least and 
Interpreting the results there of.
 

Transactions:-

In accounting or business terms, any dealing between two persons involving money or a valuable thing is called transaction. 

Barter Transaction:-

            Every transaction where goods are exchanged for goods is called a “Barter Transaction”.

 

Types of Business Organizations:-

 

1.       Sole Proprietorship

 

According to D.W.T. Stafford, “It is the simplest form of business organization, which is owned and controlled by one man”

 

•          Easy Formation

•          Unlimited Liability

•          Ownership

•          Profit

•          Management

•          Easy Dissolution

 

2.       Partnership

 

According to Partnership Act, 1932, “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”

  

•          Legal Entity

•          Profit and Loss Distribution

•          Unlimited Liability

•          Transfer of Rights

•          Management

•          Number of Partners

 

3.       Joint Stock Company

 

According to S. E. Thomas, “A company is an incorporated association of persons formed usually for the pursuit of some commercial purposes”

•          Creation of Law

•          Separate Legal Entity

•          Limited Liability

•          Transferability of shares

•          Number of Members

•          Common Seal

                                                                        Lesson-2

                                                RECORD KEEPING AND SOME BASIC CONCEPTS

 

Types of Business Entities:-

Commercial Organizations (Profit Oriented)

  • Sole proprietor
  • Partnership
  • Limited companies

Non-Commercial Organizations (Non-Profit Oriented)

  • NGO’s (Non-government Organizations)
  • Trusts
  • Societies

 

Goodwill:-

This is simply the value attached to the good reputation earned through good and clean conduct of business over a number of years. This good reputation also has a value and becomes part of investment in business

Budget:-

          Budget Is a plan of income, expenses & other financial operation for a future period.

 

 

            Lesson-4

                                                SINGLE AND DOUBLE ENTRY RECORD KEEPING

 

Single Entry Book Keeping/cash accounting:-

In Single Entry Book Keeping Only one aspect of the transaction is recorded.

Double Entry Book Keeping/commercial accounting:-

In Double Entry Book Keeping every transaction has two aspects i.e. receiving a benefit and giving a benefit.

 

Debit:-

            It signifies the receiving of benefit. In simple words it is the left hand side.

Credit:-

            It signifies the providing of a benefit. In simple words it is the right hand side.

 

Dual Aspect of Transactions:-

For every debit there is an equal credit. This is also called the dual aspect of the transaction.

 

 

 

 

 

 

Lesson-5

 

Account:-

            Record that summarizes movement in an individual item is called an Account.

 

Classification of Accounts:-

 

The accounts are classified into following heads:

  • Assets
  • Liabilities
  • Income
  • Expenses (further divided into capital and revenue expenses)

 

Assets:-

Assets are the properties and possessions of the business to pay in future. Can be amount payable for material purchased, expenses etc. 

 

Properties and possessions can be of two types:

  • Tangible Assets that have physical existence (are further divided into Fixed Assets and Current Assets)(Furniture, vehicle etc).
  • Intangible Assets that have no physical existence (copyright, Good will etc).

 

Liabilities:-

Liabilities are the debts and obligations of the business. Liability is the obligation of the business to provide a benefit or asset on a future date.

Asset vs liability:- 

Asset is a right to receive and liability is an obligation to pay, therefore, these are opposite to each other.

 

Income & Expenses:-

  • Income/revenue is the value of goods and services that a business charges from its customers.

 

  • Expenses are the costs incurred to earn the revenue.

 

Accounting Equation:-

Assets = Liabilities + Owner’s equity

Capital Expenditure:-

It is the expenditure to create an asset that helps in generating future income and its life is more than 12 month. For example machinery purchases, furniture purchases etc.

 

Revenue Expenditure:-

It is the day to day expenses whose benefit is drawn immediately. For example, salary of the employee, rent of the building, etc.

 

 

 

 

 

 

 

 

                                                            Lesson-6

                                                FLOW OF TRANSACTIONS

 

Event:-

Event is the happening of any thing but in accounting we discuss monetary events

Monetary Events:-

If the financial position of a business is change due to the happening of event that Event is called Monetary Event

The Voucher:-

Voucher is documentary evidence in a specific format that records the details of a transaction.

The General Journal:-

The Journal is used to record financial transactions in chronological (day-to-day) order. All vouchers were first recorded in books of accounts. It was also called the Book of Original Entry or Day Book.

Ledger:-

It is a book that keeps separate record for each account (Book of Accounts).

 

BALANCE:-

The difference between the debit and the credit sides, known as the BALANCE.

 

                                                                        Lesson-7

 

Accounting Period:-

  • Accounting period is any period for which a Financial Statements are prepared. The length of the accounting period can be anything between one day to one year.
  • The legal or statutory definition of accounting year is a maximum of one year.
  • The only exception in this case is the
  • Formation of a new company which is formed before the start of accounting period.

 

Financial year (A period of 12 month duration):-

            In Pakistan, financial year starts from 1st of July and ends on 30th of June.

 

Debit Balance:-

If debit side of a ledger is greater than credit side, the balance will be written on the credit side and it will be called Debit Balance.

Credit Balance:-

If credit side is greater than debit side, the balance will be written on the debit side. This balance is called Credit Balance.

Trial Balance:-

At the end of accounting period, a list of all ledger balances is prepared. This list is called trial Balance.

                                                            Lesson-8

 

Income & Expenditure Vs Profit & Loss Account:-

  • Income and Expenditure Account is used for Non-Profit Organizations like Trusts, NGOs
  • Profit and Loss Account is used for Commercial organizations like limited companies.

 

Profit & Loss Account:-

Profit & Loss account is an account that summarizes the profitability of the organization for a specific accounting period.

 

  • First part is called Trading account in which Gross Profit is calculated. Gross profit is the excess of sales over cost of goods sold in an accounting period.
  • 2nd part is called Profit & Loss account in which Net Profit is calculated. Net Profit is what is left of the gross profit after deducting all other expenses of the organization in a specific time period.

 

Profit:-

It is the excess of income over expenses in a specified accounting period.

 

                                    Profit= Income - expenses

 

Administrative expenses:-

Administrative expenses are the expenses incurred in running a business effectively. Main components of this group are:

o Payment of utility bills

o Payment of rent

o Salaries of employees

o General office expenses

o Repair & maintenance of office equipment & vehicles.

Selling expenses:-

Selling expenses are the expenses incurred directly in connection with the sale of goods. This head contains:

o Transportation/carriage of goods sold

o Tax/freight paid on sale

Financial expenses:-

Financial expenses are the interest paid on bank loan & charges deducted by bank on entity’s bank accounts. It includes:

o Mark up on loan

o Bank charges

 

 

 

 

 

                                                            Lesson-9

 

Accounts payable:-

All businesses have liabilities; even the most successful companies’ purchase

stocks, supplies and receive services on credit. The liabilities arising from such purchases are called Accounts payable.

 

Capital:-

It is the funds invested by the owners of the business. Business has a liability to return these funds to the owner.

 

 

                                                            Lesson-10

 

Debtor:-

A person or organization from whom money is receivable by the business is called a debtor.

Creditor:-

            A person or organization to whom money is payable by the business is called a

creditor.

 

                                                            Lesson-11

 

Rules of Debit & Credit:-

            • Any account that obtains a benefit is Debit.

• Anything that will provide benefit to the business is Credit.

 

Expenditure

o Increase in Expenditure is Debit

o Decrease in Expenditure is Credit

Income

o Increase in Income is Credit

o Decrease in Income is Debit

Assets

o Increase in Asset is Debit

o Decrease in Asset is Credit

Liability

o Increase in Liability is Credit

o Decrease in Liability is Debit

 

 

 

 

 

 

 

 

                                                            Lesson-12

                                                The Accounting Equation

 

Capital:-

            The amount of resources supplied by the owner is called capital.

 

Asset:-

            The actual resources which are in the business are called assets.

                                    Asset = Capital

Long Term Assets:-

 These are the assets of the business that are receivable after twelve

months of the balance sheet date. For example, if business has invested some money for two

years in any saving scheme or has purchased saving certificates for more than one year, it is a

long term asset.

 

Liabilities:-

It is the name given to the amounts owing to these people for these assets.

                                    Assets = Capital + Liabilities

 

Long Term Liabilities:-

These are the liabilities that will become payable after a period of  more than one year of the balance sheet date. For example, if business has taken a loan from bank or any third person and it is payable after ten years, it will be treated as a long term liability for the business.

 

Working Capital:-

            It is the net value of current assets and current liabilities.

 

Current Assets:-

            Current assets are the resources of the business that are expected to be received within 12 months in an accounting cycle.

 

Current liabilities:-

            Current liabilities are the amount owing to the business that is expected to be paid within one year In a financial year.

                                    Working capital = current Assets – current liabilities

 

Stock:-

            It is the value of goods available to the business that are ready for sale.

                                                            OR

            It is the quantity of unutilized or unsold goods.

 

 

 

Opening Stock:-

It is the value of goods available for sale in the beginning of an accounting year.

 

Closing Stock:-

            It is the value of goods unsold at the end of accounting year.

 

Treatment of depreciation:-

In profit and loss Account it is considered as expense and in balance sheet it is deducted from the concerned asset.

 

Drawing:-

Sometimes, the owner wants to take cash or kind out of the business for personal use. This known as drawing. Any money taken out as drawings will reduce capital.

 

 

                                                            Lesson-13

 

Voucher:-

            It is the first document to record an entry.

  • Receipt Voucher:-

It is used to record cash or bank receipt.

  • Payment Voucher:-

It is used to record a payment of cash or cheque.

  • Journal Voucher:-

It is used to record transaction that do not affect cash or bank.

 

Debit balance when carried forward, is writer on the debit side.

Credit balance when carried forward, is written on the credit side.

 

Difference between expenses & Purchases:-

 

  • If business purchases items for its own use (items that are not meant to be resold) are charged to expense account.
  • If business purchases items for resale purposes are charged to purchases account.

 

Raw material:-

            It is the basic part of an item, which is processed to make a complete item.

 

Work in process:-

At the end of the year, some part of raw material remains under process, I-e, it is neither in shape of raw material nor in shape of finished goods.

 

Finished Goods:-

It contains items that are ready for sale, but could not be sold in that accounting period.

 

Purchase of stock:-

           

            Debit:              Stock Account

            Credit:                                    Cash/supplier/creditor Account

 

Payment to creditors:-

           

            Debit:              cost of goods sold

            Credit:                                    Stock Account

 

Cost of goods sold:-

  • In trading concern, It is the value of goods unsold
  • In manufacturing concern, it is the value of raw material consumed plus any other manufacturing cost

 

 

Lesson-15

    Stock

 

Journal Entries:-

(In case of Trading Concern)

 

Purchase Of Goods:

                        Debit:              Stock/Material Account

                        Credit:                                    Cash/Bank/Creditor

Consumption of goods:

                        Debit:              Cost of goods sold

                        Credit:                                    Stock

Payment in case of credit purchase:

                        Debit:              Creditors Account

                        Credit:                                    Cash/Bank

 

(In case of Trading Concern)

 

Purchase of raw material:

                        Debit:              Stock/Material Account

                        Credit:                                    Cash/Bank/Creditors

Other direct costs incurred:

                        Debit:              Relevant cost/Expenses Head

                        Credit:                                    Cash/Bank/Payables

 

 

Raw material issued and other costs allocated to production of units:

                        Debit:              Work in process

                        Credit:                                    Stock Material Account

 

                        Debit:              Work in process

                        Credit:                                    relevant expense head Account

When production is completed:

                        Debit:              Finished Goods Stock Account

                        Credit:                                    Work in process Account

Entry for cost of sale:

                        Debit:              Cost of Goods sold Account

                        Credit:                                    finished Goods stock Account

Entry for sale of goods:

                        Debit:              cash/Account receivable Account

                        Credit:                                    Sale account

 

Return of Purchase Material:

                        Debit:              Goods return Account

                        Credit:                                    stock material Account

                                                            And

                        Debit:              Cash/Bank Account

                        Credit:                                    Goods Return Account

If our suppliers  supplies us some other material in exchange of material returned:

                        Debit:              Raw material Stock Account

                        Credit:                                    Goods return Account

 

                                                            Lesson-16

                                    COST OF GOODS SOLD STATEMENT

 

cost of goods sold statement:-

The statement shows the value of raw material consumed, amount spent on labor and other factory expenses, finished goods produced and goods unsold (in stock).

 

Standard format of cost of goods sold statement is given below:

 

Raw Material:                        O/S Raw Material

+ Purchases

+ Cost Incurred to Purchase RM

- C/S Raw Material

Cost of Material Consumed

Conversion Cost:                  + Direct Labor Cost

+ Factory Overheads

Total Factory Cost

 

Work in Process:                  + O/S of WIP

- C/S of WIP

Cost of Goods Manufactured

Finished Goods:                   + O/S of Finished Goods

- C/S of Finished Goods

Cost of Good Sold

 

Cost of material consumed:-

It is the cost of material used for consumption that has been put in the production process.

 

Over Heads:-

Over Heads are the other costs incurred in relation of manufacturing of goods. Examples are factory utilities, supervisor salaries, equipment repairs etc.

 

Total factory cost:-

It is the cost of material consumed plus labor and over heads. In other words it is the total cost incurred in the factory.

 

Cost of goods manufactured:-

It is total factory cost plus opening stock of work in process less closing stock of work in process.

 

Cost of goods sold:-

It is the cost of goods manufactured plus opening stock of finished goods less closing stock of finished goods.

 

Prime/Basic Cost = Cost of Direct Material Consumed + Direct Labor cost

 

Conversion cost:-

It is the cost incurred to convert raw material to finished goods.

Conversion cost = Labor cost + factory overhead

 

Valuation of Stock:-

Any manufacturing organization purchases different material through out the year. The prices of purchases may be different due to inflationary conditions of the economy. The question is, what item should be issued first & what item should be issued later for manufacturing. For this purpose, the organization has to make a policy for issue of stock. All the issues for manufacturing and valuation of stock are recorded according to the policy of the organization.

 

 

 

 

 

Mostly these three methods are used for the valuation of stock:

• First in first out (FIFO)

• Last in first out (LIFO)

• Weighted average

 

First in first out (FIFO)

The FIFO method is based on the assumption that the first merchandise purchased is the first merchandised issued. The FIFO uses actual purchase cost.

 

Last in first out (LIFO)

The LIFO method is based on the assumption that the recently purchased

merchandise is issued first. The LIFO uses actual purchase cost.

 

Weighted average method

This average cost is computed by dividing the total cost of goods available for sale by the number of units in inventory.

 

 

                                                      Lesson-17

                                                  DEPRECATION

 

Fixed Assets:-

Fixed Assets are those assets which are:

• Of long life

• To be used in the business to generate revenue

• Not bought with the main purpose of resale.

 

Fixed assets are also called “Depreciable Assets

 

 

Accumulated Depreciation:-

It is the depreciation that has been charged on a particular asset from

the time of purchase of the asset to the present time.

 

Amortization:-

No depreciation is charged for ‘Land’. In case of ‘Leased Asset/Lease Hold Land’ the amount paid for it is charged over the life of the lease and is called Amortization.

 

Methods of calculating Depreciation:-

 

1: Straight line method/Original cost method/Fixed installment method:-

                       

Depreciation = (cost – Residual value) / Expected useful life of the asset

 

Residual value:

It is the cost of the asset after the expiry of its useful life.

 

2: Write Down value/Reducing method/diminishing method:-

           

WDV = Original cost of fixed asset – Accumulated Depreciation

 

Entries for Recording Disposal:-

Debit:             Fixed Asset Disposal A/c

Credit:                      Fixed Asset Cost A/c

(With the cost of asset)

 

Debit:             Accumulated Dep. A/c

Credit:                       Fixed Asset Disposal A/c

(With the depreciation accumulated to date)

 

Debit:             Cash / Bank / Receivable A/c

Credit:                       Fixed Asset Disposal A/c

(With the price at which asset is sold)

 

           

                                                            Lesson-19

                                    METHODS OF CHARGING DEPRECIATION

 

Capital Work in Progress Account:-

   If an asset is not completed at that time when balance sheet is prepared, all costs incurred on that asset

up to the balance sheet date are transferred to an account called Capital Work in Progress Account.

Debit: Relevant asset account

Credit:            Capital work in progress account

 

 

                                                            Lesson-21

                                    REVALUATION OF FIXED ASSETS

 

Fair Value:-

It is the value, at which an asset would bring to the management, when sold to a knowledgeable party in a fair deal.

 

Rules for Revaluation:-

• Revaluation has to be carried out at regular intervals

• The change in the value should be permanent

• Whole class of asset has to be revalued

 

 

 

 

Capital Expenses / Capitalized:-

Capital Expenses are those expenses for which benefit is enjoyed for more than one accounting period. For example, the business has bought a car. Now, car will be used for many years. So, it is a capital expense.

 

Capital Expenditures are incurred in two ways:

• When an asset is acquired, and

• When an improvement is made in an existing asset.

 

Revenue / Deferred Expenses / Charged Off:-

Revenue Expenses are those expenses for which, the benefit is enjoyed within one accounting period. For example, the business has purchased stationery for office use. Now, the stationery is used within one year in the office. So, this will be a revenue expense.

 

Revenue Expenses are those expenses that are:

• Incurred in day to day running of the business.

• Incurred to maintain fixed assets in their original / useable condition.

 

Prepaid Expenses:

Prepaid Expenses are amounts that are paid in advance to a vender or creditor for goods and services.  E-g. insurance.

 

Capital Receipts:-

Receipts which are non-recurring and whose benefits are enjoyed over a long period are called ‘Capital Receipts’. For instance, Capital invested, Loan from bank, Sale proceed of fixed assets etc. Capital receipts are shown on the liability side of the balance sheet.

 

Revenue Receipts:-

Receipts which are recurring by nature and which are available for meeting all day to day expenses of a business concern are known as ‘Revenue Receipts’. For example, sale proceeds of goods, interest received, rent received etc.

 

                                                            Lesson-22

                                    BANK RECONCILIATION STATEMENTS

Bank statement:-

It is the detail of transactions in one’s account provided by the bank.

 

Unpresented Cheques:-

            a cheque is issued but it has not been presented

in the account, such kind of cheques are called Un-presented Cheques.

Un-Credited Cheques:-

            a cheque that has not been cleared in the bank

account as yet.

 

 

MIDTERM  EXAMINATION

Fall 2009

MGT101- Financial Accounting (Session - 3)

Time: 60 min

Marks: 50

Student Info

 StudentID:

 

 Center:

 

 ExamDate:

 

 

For Teacher's Use Only

    Q No.

1

2

3

4

5

6

7

8

Total

Marks

 

 

 

 

 

 

 

 

 

Q No.

9

10

11

12

13

14

15

16

 

Marks

 

 

 

 

 

 

 

 

 

Q No.

17

18

19

20

21

22

23

24

 

Marks

 

 

 

 

 

 

 

 

 

Q No.

25

26

27

28

29

30

31

32

 

Marks

 

 

 

 

 

 

 

 

 

Q No.

33

34

35

36

37

38

39

40

 

Marks

 

 

 

 

 

 

 

 

 

Q No.

41

 

 

 

 

 

 

 

 

Marks

 

 

 

 

 

 

 

 

 

 

 

    

Question No: 1    ( Marks: 1 )    - Please choose one

 Mr. “A” sold goods to Mr. “B” for Rs. 3,000 on October 8, 2008 and Mr. “B” paid at the same time. It will be case of ______________ sales.

 

       ► Cash

       ► Credit

       ► Accrual based

       ► None of the given options

   

Question No: 2    ( Marks: 1 )    - Please choose one

 Which of the following is non- profit organization?

       ► Sole proprietorship

       ► Partnership

       ► Limited company

       ►  Trust

   

Question No: 3    ( Marks: 1 )    - Please choose one

 Cost incurred for the maintenance of shop is considered as _________.

       ► Deferred expense

       ► Capital expense

       ► Revenue expense

       ► Preliminary expense

   

Question No: 4    ( Marks: 1 )    - Please choose one

 Which of the following is correct according to the double entry system of book-keeping?

 

       ► Debit = Credit

       ► Debit > Credit

       ► Debit < Credit

       ► All of the given options

   

Question No: 5    ( Marks: 1 )    - Please choose one

 Which of the following is NOT true about Double Entry System?

 

 

       ► Both credit and debit transactions are recorded

       ► Accurate profit and loss is calculated

       ► Financial statements can be made directly from the accounts

       ► Non cash transaction are not recorded under this system

   

Question No: 6    ( Marks: 1 )    - Please choose one

 An Asset that is NOT physical in nature is called _________.

 

       ► Intangible Asset

       ► Liquid Asset

       ► Current Asset

       ► Fixed Asset

   

Question No: 7    ( Marks: 1 )    - Please choose one

 What would be the affect on the components of the accounting equation, if goods are purchased on cash? 

 

       ► Increase in cash and decrease in equity

       ► Increase in cash and increase in goods

       ► Increase in goods and decrease in cash

       ► Increase in equipment and increase in equity

   

Question No: 8    ( Marks: 1 )    - Please choose one

 When Capital is increased by an amount, it is recorded on the:

 

       ► Left or credit side of the account

       ► Right or debit side of the account

       ► Left or debit side of the account

       ► Right or credit side of the account

   

Question No: 9    ( Marks: 1 )    - Please choose one

 Which of the following is also called "The original book of entry"?

 

       ► General Journal

       ► General Ledger

       ► Trial Balance

       ► Profit and Loss Account

   

Question No: 10    ( Marks: 1 )    - Please choose one

 An informal accounting statement that lists the ledger account balances at a point in time and compares the total of debit balances with the total of credit balances is known as:

 

       ► Income Statement

       ► Balance Sheet

       ► Trial Balance

       ► Cash Book

   

Question No: 11    ( Marks: 1 )    - Please choose one

 Which one of the following is NOT prepared by Non profit organizations?

 

       ► Profit & Loss account

       ► Income & Expenditure account

       ► Receipts & Payments account

       ► Balance Sheet

   

Question No: 12    ( Marks: 1 )    - Please choose one

 While making Income & Expenditure account, Excess of income over expenses in a specified accounting period is called:

 

       ► Profit

       ► Loss

       ► Surplus

       ► Deficit

   

Question No: 13    ( Marks: 1 )    - Please choose one

 An asset on the balance sheet which is expected to be sold or used within one year is known as:

 

       ► Tangible asset

       ► Current asset

       ► Fixed asset

       ► Long term asset

   

Question No: 14    ( Marks: 1 )    - Please choose one

 Accounts Receivable & Inventory are the examples of:

 

       ► Liquid assets

       ► Current assets

       ► Fixed assets

       ► Capital assets

   

Question No: 15    ( Marks: 1 )    - Please choose one

 Which of the following shows the categories of assets in a Balance Sheet?

 

 

       ► Current assets, Long term assets and Accounts payable

       ► Current assets, Long term assets and Fixed assets

       ► Current assets, Quick assets and Business debts

       ► Current assets, Fixed assets and Deferred cost

   

Question No: 16    ( Marks: 1 )    - Please choose one

 If the cost of sales is Rs. 95,000, sales are Rs. 100,000 and operating expenses are Rs. 200,000 during the year, what would be the net result?

 

 

       ► Loss of Rs. 1, 95,000

       ► Profit of Rs. 1, 95,000

       ► Profit of Rs 5,000

       ► Loss of Rs 5,000

   

Question No: 17    ( Marks: 1 )    - Please choose one

 Which of the following is an alternate term which can be used for “Capital”?

 

 

       ► Liability

       ► Owner’s net worth

       ► Working capital

       ► Asset

   

Question No: 18    ( Marks: 1 )    - Please choose one

 Partially completed products that are not yet ready for sale are known as:

 

 

       ► Raw material

       ► Work in process

       ► Finished goods

       ► Closing stock

   

Question No: 19    ( Marks: 1 )    - Please choose one

 WhicWhich of the following is an example of direct materials cost?

 

 

       ► Polish and finishing material for chair

       ► A piece of wood for the production of chair

       ► Production worker’s wages

       ► Depreciation expenses

   

Question No: 20    ( Marks: 1 )    - Please choose one

 Direct materials costs

Rs.70,000

Direct labor costs

30,000

Manufacturing overhead costs

60,000

conversion cost

?

 

       ► Rs. 20,000

       ► Rs.40, 000

       ► Rs.90, 000

       ► Rs.160, 000

   

Question No: 21    ( Marks: 1 )    - Please choose one

 In the cost of goods sold statement, the sum of labor cost and the factory over head is known as:

       ► Conversion cost

       ► Prime cost

       ► Total factory cost

       ► Cost of goods manufactured

   

Question No: 22    ( Marks: 1 )    - Please choose one

 In cost of goods sold statement, the ‘cost of material consumed’ is equal to:

 

       ► Opening raw material inventory + Purchases – Ending raw material inventory

       ► Opening raw material inventory - Purchases + Ending raw material inventory

       ► Ending raw material inventory + Opening raw material inventory - Purchases

       ► Ending raw material inventory + Opening raw material inventory + Purchases

   

Question No: 23    ( Marks: 1 )    - Please choose one

 In cost of goods sold statement the ‘total factory cost’ is equal to:

 

 

       ► Cost of material consumed + Labor cost

       ► Cost of material consumed + Conversion cost

       ► Cost of material consumed + Total factory cost

       ► Cost of material consumed + Factory overhead

   

Question No: 24    ( Marks: 1 )    - Please choose one

 In cost of goods sold statement the ‘cost of goods manufactured’ is equal to:

 

 

       ► Total factory cost + Opening work in process + Ending work in process

       ► Total factory cost + Opening work in process – Ending work in process

       ► Total factory cost - Opening work in process + Ending work in process

       ► Ending work in process +Total factory cost – Opening work in process

   

Question No: 25    ( Marks: 1 )    - Please choose one

 Cost of asset

Rs. 1,00,000

Life of asset

5 years

Depreciation for each year

Rs. 5,000

Sale price after 5 years

Rs.50,000

Written down value of asset on 5th year

Rs.75,000

profit or loss on disposal of fixed assets

?

 

       ► Rs.25, 000 loss

       ► Rs. 75,000 loss

       ► Rs. 15,000 profit

       ► Rs. 1, 00,000 profit

   

Question No: 26    ( Marks: 1 )    - Please choose one

 Cost of asset

Rs. 1,00,000

Life of asset

5 years

Depreciation for each year

Rs. 15,000

Sale price after 5 years

Rs.50,000

Book value of Asset after 5 years

?

 

       ► Rs.25, 000

       ► Rs. 75,000

       ► Rs. 15,000

       ► Rs. 1, 00,000

   

Question No: 27    ( Marks: 1 )    - Please choose one

            Consider the following inventory record:

 

Date

Item

Quantity

Cost/Unit

Rs.

Total

Rs.

Jan. 2

Beginning inventory

10

10

100

Mar. 4

Purchase

35

11

385

May 8

Purchase

40

12

480

Nov. 3

Purchase

20

13

260

De31

Merchandise available

105

 

1,225

 

85 units were sold, Use the FIFO method of inventory costing and determine the cost of goods sold.

  

       ► Rs. 1,225

       ► Rs. 1,015

       ► Rs.  965

       ► Rs.  992

   

Question No: 28    ( Marks: 1 )    - Please choose one

          Consider the following:

 

Beginning inventory

10 units @ Rs. 10 per unit

First purchase

35 units @ Rs. 11 per unit

Second purchase

40 units @ Rs. 12 per unit

Third purchase

20 units @ Rs. 13 per unit

Eighty-five units were sold, what is the value of the ending inventory using the FIFO method of inventory costing?

       ► Rs.260 

       ► Rs.232

       ► Rs.284

       ► Rs.268

   

Question No: 29    ( Marks: 1 )    - Please choose one

 Which one of the following is NOT true about revenue expenditure?

 

       ► These are the running expenses of the business

       ► They improve the financial position of the business

       ► They reduce the profit of the concern

       ► They do not appear in the balance sheet

   

Question No: 30    ( Marks: 1 )    - Please choose one

 Interest on loan paid by business is an example of :

       ► Deferred expense

       ► Revenue expense

       ► Capital expense

       ► None of the given options

   

Question No: 31    ( Marks: 1 )    - Please choose one

 Cash book is a part of:

 

 

 

 

       ► Voucher

       ► General Journal

       ► General Ledger

       ► Trial Balance

   

Question No: 32    ( Marks: 1 )    - Please choose one

 Find out the missing value of an Accounting Equation with the help of given data:

 

Cash

Rs.1, 00, 000

Debtors

Rs.10, 000

Other Assets

Rs. 1,000

Owner’s equity

Rs. 1, 000

 

 

       ► Rs. 12,000 liabilities

       ► Rs. 11,000 liabilities

       ► Rs. 1, 10,000 liabilities

       ► Rs. 1, 11,000 liabilities

   

Question No: 33    ( Marks: 1 )    - Please choose one

 Find out the missing value of an Accounting Equation with the help of given data:

 

Total Assets

Rs. 34,500

Accounts payable

Rs. 1, 000

Other liabilities

Rs. 11,500

 

       ► Rs. 22,000 owner’s equity

       ► Rs. 23, 000 owner’s equity

       ► Rs. 24,000 owner’s equity

       ► Rs. 46,000 owner’s equity

   

Question No: 34    ( Marks: 1 )    - Please choose one

 The basic purpose of depreciation is to achieve the:

       ► Matching principle

       ► Dual aspect principle

       ► Separate entity concept

       ► Money measurement concept

   

Question No: 35    ( Marks: 1 )    - Please choose one

 Find out the missing value of an Accounting Equation with the help of given data:

 

Owner’s equity

Rs. 22,500

Total Liabilities

Rs. 80, 385

Cash in hand

Rs. 1,000

Cash at bank

Rs. 2,000

Debtors

Rs. 500

 

       ► Rs. 1, 02,885 other assets

       ► Rs. 1, 02,885 other liabilities

       ► Rs. 99,885 current liabilities

       ► Rs.  99,385 other assets

   

Question No: 36    ( Marks: 1 )    - Please choose one

 Total depreciation of an asset can not exceed its:

 

       ► Scrap value

       ► Residual value

       ► Market value

       ► Depreciable value

   

Question No: 37    ( Marks: 1 )    - Please choose one

 Which of the following is CORRECT regarding depreciation?

 

 

 

 

       ► It refers to the end life of an asset

       ► It refers to the increase in value of asset

       ► It is another name of Impairment

       ► It is a systematic allocation of depreciable amount of an asset over its estimated useful life

   

Question No: 38    ( Marks: 1 )    - Please choose one

 Which one of the following is another name of carrying cost of an asset?

       ► Book Value

       ► Residual Value

       ► Fair Value

       ► Break up Value

   

Question No: 39    ( Marks: 1 )    - Please choose one

 Unfavorable balance of the cash book means:

 

       ► Credit balance in cash book

       ► Credit balance in pass book

       ► Debit balance in cash book

       ► All of the given options

   

Question No: 40    ( Marks: 1 )    - Please choose one

 What would be the value of 'cost of goods manufactured' if the total factory cost of the month is Rs. 6,000, opening work in process is Rs. 2,000 and the closing work in process is Rs. 2,500? 

 

       ► Rs. 5,500

       ► Rs. 8,000

       ► Rs. 4,500

       ► Rs. 8,500

   

Question No: 41    ( Marks: 10 )

 Following information of Ahmad & Company is given for the year ended 2007.

 

Particulars 

Units

Cost (Rs.)

Sales during the year

8,000

80,000

Opening Inventories:

 

 

Work in process

------

------

Finished goods

1,800

13,500

Closing Inventories:

 

 

Work in process

100

4,500

Finished goods

2,000

15,000

Manufacturing Cost:

 

 

Direct Material

 

30,000

Direct Labor

 

20,000

Factory Overhead

 

16,000

Required:

  1. Conversion Cost
  2. Total Factory Cost
  3. Cost of Goods Manufactured
  4. Cost of Good Sold statement

 

 

 

CONVERSION COST:

Conversion cost = labor cost + FOH

                           = 20,000 + 16,000

                           = 36,000 Rs.

 

 

 TOTAL FACTORY COST:

Total factory cost= cost of material consumed + conversion cost

                             = 30,000 + 36,000

                            = 66,000 Rs.

 

 

  COSTS OF GOOD MANUFACTURED:

                  = total FOH + Opening Stock WIP – Closing Stock WIP

                 = 16,000 + 0 – 4,500

                = 11,500 Rs.

 

 

COST OF GOODS SOLD:

 

= total factory cost + cost of good manufactured + opening stock of finished goods – closing stock of finished goods

 

= 66,000 + 11,500 + 13,500 – 15,000

 

= 76,000 Rs.

 

 

remember me in your prayers,

Attachments:

GOD BLESS YOU

remember me in your prayers,

Attachments:

remember me in your prayers,

Attachments:

in Return i need only urs prayers,,,,
Regards,
sana

Attachments:

in Return i need only urs prayers,,,,
Regards,
sana

Attachments:

in Return i need only urs prayers,,,,
Regards,
sana

Attachments:

RSS

Latest Activity

© 2020   Created by + M.Tariq Malik.   Powered by

Promote Us  |  Report an Issue  |  Privacy Policy  |  Terms of Service

.