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Posted Date: 09 Jan 2009      Posted By:: ashish mishra    Member Level: Silver    Points: 5 (Rs. 1)

2007 M.B.A MBA FINANCIAL ACCOUNTING PART B Question paper



Course: M.B.A   University/board:





PART B
1. A company has following information
Sales = 6,00,000,
Opening Stock = 40,000,
Closing Stock = 10000,
G. P. Ratio = 40%,
Cash Sales = 1,00,000,
Avg. Debtors = 40,000
Stock Turnover Ratio is
a) 15
b) 15.4
c) 16
d) 14.4
Ans D
2. In Q 1, Find Purchase.
a) 3,00,000
b) 2,70,000
c) 3,30,000
d) None of these
Ans C
Q 3. In Q 1., Debtors Turnover Ratio is _______
a) 12
b) 10
c) 16.5
d) None of these
Ans D
Q 4. Selling Price = Rs. 25/-
Fixed Cost = 10,000
Variable Cost = Rs. 10/-
Find out number of unit for break-even?
a) 667 (Approx)
b) 767 (Approx)
c) 1000
Ans A
Q 5. In Q 4. How many units must be sold for profit of Rs. 10,000/-
a) 1500
b) 1467
c) 1333
d) None of these
Ans C
Q 6. If Selling Price in Q 35 is increased by
10%. What will be break-even Sale?
a) 15716 (Approx)
b) 14718 (Approx)
c) 16500
d) None of these
Ans A
Q 7. Curvilinear Variable Cost means
a) Concave Linear Variable Cost
b) Convex Linear Variable Cost
c) Both
d)None

Ans C
Q 8. From the following particulars, calculate Prime Cost?
Carriage Inward = 4000
Direct Material Purchased = 9,00,000
Productive Wages = 1,20,000
Material Sold = 80,000
Direct Expenses = 100% of Productive Wages
Import Duty on purchase of direct material
= 10% of purchase value
a) 824000
b) 1154000
c) 1454000
d) 1254000
Ans B
Q 9. If in Q 8. Opening Stock of Raw Material is Rs. 1,10,000 and Closing Stock of Raw Material is Rs. 1,50,000. What will be the prime cost?
a) 11,94,000
b) 11,14,000
c) 11,54,000
d) None of these
Ans B
Q 10. In the following which two are joint product –
a) Kerosene
b) Butter Milk
c) Wax
d) Molasses
e) Butter
Ans A& E
Q 11. Which of the following two statements are true
a) Depreciation should be allocated as per capital value of asset.
b) Electricity should be charged as per direct labour cost.
c) Allocation & absorption of overhead are same.
d) In simultaneous equation, method of overhead distribution no equation is required.
e) Step Ladder method is a method for Secondary Distribution.
Ans A& E

12 The key elements of a balance sheet are ____

a) Income
b) Asset
c) Liability
d) Equity

A) b & c
B) b, c & d
C) a, b & c
D) All of the above
Ans: b

13. Financial accounting deals with-

a) The process of summarizing and presentation of data in a format to various level of management
b) Preparation of records and reports necessary for filling tax return
c) Recording and summarizing financial transactions and preparation of statements in accordance with GAAP
d) With determination of financial requirements of account maintained
Ans: c
14. Retained earnings means-
a) Income retained by the firm by providing for contingent expenses
b) Income invested in the capital assets
c) Profits of the firm subsequently reinvested in the company
d) Amount paid in advance towards to expenses
Ans: c
15. Purchased goods on credit for Rs.30,000 the journal entry for this transaction is

a) Purchases A/c Dr., To Credit A/c
b) Purchases A/c Dr., To Cash A/c
c) Purchases A/c Dr., To Goods A/c
d) Goods A/c Dr., To Creditor A/c
Ans: a
16. The main function of a ledger is _____

a) to maintain record of each and every business transaction
b) to clarify and summarize the entries in the primary book under appropriate accounts
c) to maintain the record of all cash transactions
d) to find out the balance of assets and liabilities
Ans: b



17. Pass a rectifying journal entry if the salary paid has been wrongly posted to wages A/c

a) Cash A/c Dr. To Wages A/c
b) Wages A/c Dr. To Salary A/c
c) Salary A/c Dr. To Wages A/c
d) Salary A/c Dr. To Cash A/c
Ans: c

18 Commenced business with Cash 40,000, Stock 10,000, Furniture 20,000, Machinery 5,000, Loan from wife 10,000. Then the capital in the business is
A. 50,000
B. 80,000
C. 1,10,000
D. None of the above.
Ans : D

19Give the Journal Entry for: paid salary for the month Rs. 20,000

A Salary A/c Dr. 20,000
To Cash A/c 20,000
B Cash A/c Dr. 20,000
To Salary A/c 20,000
C Bank A/c Dr. 20,000
To Salary A/c 20,000
D All of the above.
Ans : A

20 The term ‘credit’ is derived from the _____ word ______ meanings trust or believe.

A French; credito
B Latin; Credero
C Greek; Cred
D None of the above.
Ans : B

21. Distribution of profits to shareholders is

A. Dividend
B. Bonus
C. Profit
D. Loan
Ans : A



22 Which shareholder’s are the real risk takers?

A) Preference
B) Equity
C) Debenture holders
D) All of the above.
Ans B
23. Inventories are normally classified in the
financial statements on

A) Raw materials and components
B) Work in progress
C) Finished goods
D) All of the above.
Ans : D
24.Which equation is correct?
a. Assets = Liabilities + Capital
b. Liabilities = Assets - Capital
c. Capital = Assets - Liabilities
d. Assets = Liabilities + Eo + (Y– X)
e. All
Ans. a

Q25.Improves under standibility of transactions
a. Ledger Folio
b. Journal Folio
c. Narration
d. Particulars
Ans.c
Q26. Which equation is correct?
a. ?in assets &? in liabilities ? Debited
b. ?in assets &? in liabilities ?Credited
c. Expenses & Losses ? Debited
d. Income & Gains ? Credited
e. All
Ans E
Q27 . Amount received from a customer Rs. 19,500/- in full settlement of his owings of Rs. 20,000/-
A Cash A\c Dr. 19500
Discount A\c Dr. 500
To Debtor A\c 20000
B. Cash A\c Dr. 19500
Debtor A\c Dr. 500
To Discount A\c 20000
C. Debtor A\c Dr. 20000
To Cash A\c 19500
To Discount A\c Dr. 500
D Cash A\c Dr. 19500
Discount A\c Dr. 500
To Bank A\c 20000

Ans. a

Q28. If a cloth merchant sells his furniture on credit, the statement is:
a. Sale of an asset b. Sale of Goods
c. Both a & b d. None
Ans. a
Q29. A bill of exchange accepted by a customer is called & a bill of exchange drawn by a supplier on the business entity is called-
a. Bills Payable & Bills Receivable
b. Bills Receivable & Bills Payable
c. Promissory Notes & Hundis
d. Cheques & Hundis
e. None
Ans. b

Q 30.There are______types of_______
a. Eight, primary books b. Six, secondary books
c. Nine, cash books d. Six, primary books
Ans. b
Q 31.Which statement is correct regarding Journal properties?
a. It is the book of orphan entries.
b. It is the book of residual entries
c. Both a & b
d. None
Ans.c
Q 32. The main disadvantage of any primary book is that________
a. Transactions are recorded date wise
b Transactions are recorded day wise
c. Not as per there nature
d. All
e. Both b & c
Ans. a
Q33.Which essential conditions are to be satisfied for a set of books of accounts to be called Proper books of accounts?
a. Double Entry Accounting is followed while recording transactions
b. The books of accounts are maintained on accrual basis
c Both a & b
d None
Ans. c
Q34. Fixed Assets are stated a or valued at
a. Cost plus accumulated depreciation
b. Cost less accumulated depreciation
c. Cost plus block depreciation
d. None
Ans. b
Q35. Stock in trade is valued at the
a. Lower of cost & Gross realizable value.
b. Lower of cost & Net realizable value.
c. Higher of cost & Net realizable value.
d. None.
Ans. b
Q36. Net realizable value is the
a. Actual or Estimated Selling Price
b. Less Cost of Completion
c. Cost reminds to be income in order to make the sale
d. All of the Above
e. Both a & b
Ans. d
Q37. Under "Provision"______
a. Liability is known
b. Liability is unknown
c. Capital is known
d. Assets is unknown
Ans. a
Q38. The term depreciation assets refers to
a. Tangible Fixed Assets
b.. Intangible Fixed Assets
c. Both a & b
d. None
Ans. a
Q39. Intangible Assets are _________
a. Also depreciated
b. not depreciated
c. They are a amortized
d. Both b & c
e. Both a & c
Ans. d
Q40. Which formula is corrected for SLM ?
A. C-S B. X1-X?S
N
C. S+C D. N+C
N S S

e. N-C
S
Ans. a
Note: C = Cost of Assets, S = Scrap Value, N = No. of exp. Years



Q41. Under which schemes you paid dividend in two installments - interim dividend & final dividend?
a. Equity Share
b. Preferred Share
c. Non-Equity Shares
d. Debentures
Ans. a
Q42. Interim dividend is paid usually _________
a. After half-yearly results are announced.
b. Before quarterly results are announced.
c. After quarterly results are announced.
d. None
Ans. a
43 In terms of quantity opening stock + purchases – sales is known as
A Opening Stock
B Closing Stock
C Gross Profit
D Gross Loss
Ans : B
44 Credit balances in personal accounts result in
A Liabilities
B Assets
C Balance Sheet
D Trial Balance
Ans : A
45 The cost of goods taken out by the owner of a business is to be debited to _______
A Stock account
B Capital account
C Drawings account
D Trading account
Ans : D
46 What is meant by dividend?
A Profit transferred to reserves.
B Profit distributed to shareholders.
C Profit as per P& L appropriation account
D Net profit transferred to P & L appropriation account.
Ans : B

47 Give two items that appear under the head ‘miscellaneous expenditure’ on the asset side of the balance sheet of a joint stock company.
A Preliminary expenses, Discount allowed on the issue of shares
B Goodwill, Interest on bank loan
C Provision for taxation, provision for contingencies
DProvision for insurance, proposed dividend
Ans : B
48What is meant by reserve?
A It is an arrangement made to provide for a known liability of which the amount cannot be determined exactly.
B It is the provision made for a liability, which is not specific and known.
C It is arrangement to calculate exact profit or loss.
D It is an amount set aside to pay tax.
Ans : A
49 .Purchased furniture worth Rs. 50000 paying 10000 in cash and balance payable after 3 month what is the journal entry for this
a) furniture a/c Dr. 50000
To cash 10000
To creditors 40000
b) Cash a/c Dr. 50000
To Furniture 10000
To creditors 40000
c) furniture a/c Dr. 50000
To Creditors 10000
To Cash 40000
d) Creditors a/c Dr. 50000
To cash 10000
To Furniture 40000
Ans. A
50. Income statement ( P & L A/C ) ……………….the revenues and costs incurred in the
process of earning revenues.
a)Matches
b)Combines
c)Calculates
d)Recheck
Ans A .

51. Balance sheet is a statement of …………of a business at a specific movement of time.
a)P& L
b)Revenues
c)Costs
d)Financial position
Ans. D

52 Financial statements disclose only…………… facts.
a) Monetary
b)Non Monetary
c)A & B Both
d) None of these
Ans.A.

53. P & L Aa/C is also called as the …………
a)Revenue Statement
b)Income Statement
c)A & B Both
d) None of these
Ans. B.
ANS: C
54 Break even sales is calculated as following:

a) Marginal cost
x Sale
Standard cost

b) F.C
x Sale
Contribution

c) F.C
x Sale
Total cost
Ans B
55 Angle of incidence is
a)The angle between the sales line & the Y-axis.
b)The angle between the sales line & the X - axis.
c)The angle between the sales line & the total cost line.
Ans C

56 The selling price per unit is Rs.20, V.C Rs.12 per unit and fixed cost Rs.16,000 the break even Production unit:-
(a) 800
(b) 2,000
(c) 3,000
Ans: b
57 Sales Rs. 20,000,V.C. Rs.12,000 & F.C Rs.4,000, the bread-even sales
(a) 12,000
(b) 10,000
(c) 1,500
Ans:b

58 Sales Rs. 20,000,V.C. Rs.12,000 & F.C Rs.4,000, P/V ratio is.
(i) 80%
(ii) 40%
(iii) 30%
Ans:B

59 Sales Rs. 20,000,V.C. Rs.12,000 net profit Rs.3,000 fixed cost is.
(i) 6,000
(ii) 5,000
(iii)4,000
Ans:B
60 Actual sales Rs.20,000, break-even sales Rs.12,000, margin of safety sales
(i) 8,000
(ii) 12,000
(iii) 10,000
Ans: A
61 P/V ratio is 0.6, marginal cost of production Rs.20. the selling price is:-
(i) Rs.40
(ii) Rs.60
(iii) Rs.50
Ans c
62 F.C. Rs.5,000 sales Rs,40,000 & P.V ratio 30 the amount of profit is :-
(i) Rs.7,000
(ii) Rs.9,000
(iii) Rs.12,000
Ans:A
63 The P/V ratio of a product is 0.4 & selling price is Rs.40 per unit. The marginal cost
is the product would be:-
(i) Rs.8
(ii) Rs.24
(iii) Rs.20
Ans: B
64 The P/V ratio of a product is 0.4 & selling profit is Rs.4000 per unit. The margin of
safety is:-
A Rs.10,000
B Rs.12,000
C Rs.6,000
AnsA
65 When F.C. is Rs.10,000 & P/V ratio is 50%, the BEP will be
A Rs.20,000
B Rs.40,000
C Rs.50,000
D None
Ans A
66 When PV ratio is 40% & sales value Rs.10,000 the variable cost will be :-
ARs.4,000
B Rs.6,000
C Rs.10,000
D None
Ans B
67 Ratio of ‘net sales’ to’ net W.C’ is a :-

A W.C. turnover ratio
B Profitability ratio
C Liquidity ratio
D Can’t say
Ans.(A)

68. Ratio of net profit before interest & fax to sales in a:-
A Operating profit ratio
B Capital gearing
C Solvency ratio
D Can’t say
Ans.(a)
69 The statistical yardstick that provides a measure of the relationship between two accounting figures in:-
A operating current ratio
B The accounting ratio
C Input output ratio
D None
Ans.(b)

70 Debt equity ratio is a :-
A Liquidity ratio
B Solvency ratio
C Profitability ratio
D None
Ans.(b)

71. The turnover ratio helps management in :-
AManaging a resources
BManaging a debit
CEvaluating performance
Ans.(c)

72 Long term solvency in indicated by
ACurrent ratio
B Debt / esslity ratio
CNet profit ratio
Ans.(b)
73. In case of a Ltd. Co. the term financial statement includes :-
A Trading A/C P & L A/C & B/S
B P & L A/C & B/S.
C B/S
D None
Ans.(a)
74. The term current assets does not include:-
a) Payments in advance
b) Bills receivable
c) Long-term deferred charges.
d) None Ans.(c)
75. The term fixed assets include :-
a) Stock in trade
b) Furniture
c) Payments in advance.
d) None Ans.(b)











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