Accounting & Auditing Paper 2004 - 21

Accounting & Auditing Paper 2004 - 21

1. The purchase of machinery on account would?

a) Increase an asset and decrease another asset
b) Increase an asset and decrease liability
c) Increase an asset and increase liability
d) Decrease an asset and increase liability

2. In general, the accounts in the income statement are known as?

a) Real account
b) Contra asset
c) Nominal account
d) Unrecorded revenue account

3. In general terms, financial assets appear in the balance sheet at?

a) Face value
b) Current cash value
c) Cash
d) Estimated future sales value

4. A limited Co. sold marketable securities cost Rs. 80,000 for Rs. 92,000 cash. In Co.’s income statement and statement of cash flows respectively, this will appear as?

a) A Rs. 12,000 gain and Rs. 92,000 cash receive
b) A Rs. 92,000 gain and Rs. 8,000 cash receive
c) A Rs. 12,000 gain and Rs. 80,000 cash receive
d) A Rs. 92,000 sales and Rs. 92,000 cash receive

5. Which of the following is least important as a measure of short term liquidity?

a) Debtor ratio
b) Current ratio
c) Cash flow from operating activities
d) Quick ratio

6. Uzma Ltd. Net income was Rs. 4,00,000 in 2003 and Rs. 1,60,000,in 2004.
What percentage increase in net income must achieve in 2005 to offset the decline in profits in 2004?

a) 60%
b) 150%
c) 200%
d) 70%

7. Which of the following does not describe accounting?

a) Language of Business
b) Is an end rather than a mean to an end
c) Useful for decision making
d) Used by business government, nonprofit organizations and individuals.

8. External uses of financial accounting information include all of the following except?

a) Investors
b) Labour unions
c) Line manager
d) General public

9. A fixed budget is?

a) A budget for single level of activity
b) A budget which ignored inflation
c) Used only for fixed cost
d) An overhead cost budget

10. A subscription received in advance is?
a) An income
b) An asset
c) A liability
d) A loss

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