Accounting & Auditing Paper 2007 - 2

Accounting & Auditing Paper 2007 - 2

1. Both the accounts for depreciation expense and accumulateddepreciation?

a) Are closed at the end of the period
b) Appear in the Adjusted Trial Balance Columns of the worksheet
c) Appear in the Trial Balance Columns of the worksheet
d) None of these

2. When a partnership is liquidated?

a) Any cash distribution to partners is allocated according to theprofit and loss sharing ratio.
b) Cash is distributed to each partner according to his or hercapital account balance before the sale of partnership assets.
c) Any gain or loss on disposal of partnership assets isdivided among the partners according to their relativeaccount balances.
d) None of these

3. In projecting the future profitability of a trading company,investors will be least concerned with changes in?

a) The gross profit rate
b) The quick ratio
c) Sales volume
d) None of these

4. Revenue is most commonly recognized at the time when?

a) Cash is collected
b) The order is received from customers
c) The sale is made
d) None of these

5. Which of the following list of accounts is used to compute thecost of goods sold?

a) Purchases, inventory, and sales returns.
b) Gross profit, purchase returns and carriage inward.
c) Inventory, net sales and purchases
d) none of these

6. which of the following is ascertained by drawing up an incomeand expenditure account

a) Cash in hand
b) Surplus or Deficiency
c) Capital Fund
d) none of these

7. On April 1, Hassan & Company received and paid a Rs.700 bill for the advertising done in March. In addition to this bill the company paid Rs. 6,100 during April for expenses incurred in that month. Hassan & Company paid Rs.3,600 as salary to employees for work done in April. Based on these facts, total expenses for themonth of April were?

a) Rs.6,100
b) Rs.6,800
c) Rs.10,700
d) None of these
e) Bill of march Rs 6100 + Salary exp Rs 3600= Rs 9700

8. Which of the following categories of accounts are closed at theend of an accounting period?

a) Temporary accounts
b) Permanent accounts
c) Personal accounts
d) None of these

9. Bond holders would be most interested in which of the following?

a) Quick ratio
b) Inventory turnover
c) Times interest earned
d) None of these

10. A retail store had current assets of Rs.72,000 and a current ratio of 2 to 1. The amount of working capital must have been?
a) Rs.144,000
b) Rs.108,000
c) Rs.72,000
d) None of these

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