Accounting & Auditing Paper 2009 - 2

Accounting & Auditing Paper 2009 - 2

1. The straight-line method of depreciation?

a) Generally gives best results because it is easy to apply
b) Should be use din a period of inflation, because it accumulates the fund for thereplacement of asset at a uniform rate.
c) Is the best method used for wasting assets.
d) Ignores fluctuations in the rate of asset usage.

2. Which of the following accounts are not closed at the end of an accountingperiod?

a) Revenue accounts
b) Expense accounts
c) Drawing accounts
d) Asset accounts

3. Under periodic inventory system cost of good sold is determined and recognizedin the books of accounts?

a) At the time of purchase of goods
b) At the time of sale of goods
c) At the end of the year
d) None of these

4. Which of the following is not a use of working capital?

a) Repayment of long term debt
b) Cash dividend declared but not paid
c) Payment of an account payable
d) Acquisition of treasury stock.

5. A transaction caused a Rs. 10,000 decrease in both assets and total liabilities.This transaction could have been?

a) Purchase of furniture for Rs. 10,000
b) An asset costing Rs.10,000 was destroyed by fire
c) Repayment of bank loan Rs. 10,000
d) Collection of a Rs.10,000 account receivable

6. Which ratio indicates a firm’s ability to pay current liabilities in the shortestpossible time?

a) Current Ratio
b) Equity Ratio
c) Debt Ratio
d) Quick Ratio

7. If we add the average number of days to turn the inventory over and theaverage age of receivables
in number of days, we arrive at?

a) The company’s fiscal period
b) The sales volume of the business
c) The company’s operating cycle
d) Nothing meaningful

8. Which of the following is least important in determining the fair market value of a share?

a) Earnings and dividends per share
b) Book value per share
c) The available supply of shares and the demand to purchase the shares.
d) The par value of share.

9. Financial statements prepared by a business firm are most likely to be?

a) Fully reliable
b) Tentative in nature
c) Relevant for all types of decisions
d) Always misleading

10. A deficit appears on the balance sheet?
a) Among the assets
b) As a deduction from total paid-up capital
c) Among the liabilities
d) None of these

11. One of the following is not an officer of a company?

a) Share registrar
b) Controller
c) Secretary
d) Treasurer

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