MGT101 Grand Test ( Lesson 1 - 22 ) Aryan Ahmad Evening Class

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About This Quiz

Accounts involved are incorrectly mentioned in the given table of assignment even if the rules of debit and credit are correctly mentioned. So be careful to mention the accounts involved against each transaction.
Note related to load shedding: Please be proactive

MGT101 Grand Test ( Lesson 1 - 22 ) Aryan Ahmad Evening Class - Quiz
Questions and Answers
  • 2. 

    Make A word file and write answer there with question number and send it to [email protected]

  • 3. 

    Make A word file and write answer there with question number and send it to [email protected]

  • 4. 

    Make A word file and write answer there with question number and send it to [email protected]

  • 5. 

    Make A word file and write answer there with question number and send it to [email protected]

  • 6. 

    Make A word file and write answer there with question number and send it to [email protected]

  • 7. 

    Make A word file and write answer there with question number and send it to [email protected]

  • 8. 

    Make A word file and write answer there with question number and send it to [email protected]

  • 9. 

    Question: What is a Budget? 

    • Plan of income

    • Plan of income Plan of expenses

    • Plan of income Plan of expenses Plan of other financial operation

    • All of above

    Correct Answer
    A. All of above
    Explanation
    A budget is a plan that includes both income and expenses, as well as other financial operations. It is a comprehensive plan that outlines how much money will be earned, how much will be spent, and any other financial activities that will take place. This includes not only income and expenses, but also savings, investments, and any other financial transactions that may occur.

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  • 10. 

    Question: In accounting or business terms, any dealing between two persons involving money or a valuable?

    • Asset

    • Transaction

    • Liability

    • Income

    Correct Answer
    A. Transaction
    Explanation
    In accounting or business terms, a transaction refers to any dealing between two persons involving money or a valuable. This can include the exchange of goods, services, or money between parties. Transactions are recorded in the financial statements and play a crucial role in determining the financial position and performance of a business.

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  • 11. 

    Which is/are type of Business Organizations? 

    • Sole proprietorship

    • Business

    • Franchise

    • Manufacturing

    Correct Answer
    A. Sole proprietorship
    Explanation
    Sole proprietorship is a type of business organization where a single individual owns and operates the business. In this structure, the owner has full control and responsibility for all aspects of the business, including decision-making and financial obligations. This type of organization is commonly found in small businesses and offers simplicity in terms of formation and management.

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  • 12. 

    Which is not feature of partnership 

    • Ownership

    • Trading

    • Profit Sharing

    • Loss Sharing

    Correct Answer
    A. Ownership
    Explanation
    Partnership is a business structure where two or more individuals share ownership and responsibility for the business. Therefore, ownership is indeed a feature of partnership. The other options, trading, profit sharing, and loss sharing, are all features of partnership as well.

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  • 13. 

    Which is feature of Joint Stock Company ?

    • Management

    • Unlimited Liability

    • Profit and Loss Distribution

    • Separate Legal Entity

    Correct Answer
    A. Separate Legal Entity
    Explanation
    A feature of a Joint Stock Company is its separate legal entity. This means that the company is recognized as a distinct legal entity from its owners or shareholders. It can enter into contracts, own property, and sue or be sued in its own name. This provides limited liability to the shareholders, as their personal assets are protected in case of any debts or legal issues faced by the company.

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  • 14. 

    The maintenance of daily record of all financial transactions in such a manner that it would help ?

    • Daily record

    • Book keeping

    • Financial accounting

    • None of the above

    Correct Answer
    A. Book keeping
    Explanation
    Bookkeeping refers to the practice of maintaining a daily record of all financial transactions. It involves recording, organizing, and summarizing financial data to help businesses track their income, expenses, and overall financial health. By keeping accurate and up-to-date records, bookkeeping enables businesses to make informed financial decisions, comply with legal requirements, and assess their financial performance. Therefore, bookkeeping is the correct answer as it aligns with the description provided in the question.

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  • 15. 

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

    • True

    • False

    • Both

    • None Of Above

    Correct Answer
    A. True
    Explanation
    The given statement is true. A budget is indeed a plan that outlines the expected income, expenses, and other financial operations for a future period. It helps individuals and organizations to manage their finances effectively by setting financial goals, allocating resources, and tracking progress. A budget allows for better decision-making and helps in ensuring that income is sufficient to cover expenses and achieve financial objectives.

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  • 16. 

    Whatever money or resources from ones’ own pocket are put in a business is referred to as--------

    • Drawings

    • Loss

    • Capital

    • Profit

    Correct Answer
    A. Profit
    Explanation
    The correct answer is profit. Profit refers to the money or resources that an individual invests from their own pocket into a business. It is the financial gain that a business makes after deducting all expenses and losses. This term is used to indicate the positive outcome of a business venture, where the revenue generated exceeds the costs incurred.

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  • 17. 

    : ------------ is like a backbone of any business?

    • Debtor

    • Profit

    • Capital

    • Income

    Correct Answer
    A. Capital
    Explanation
    Capital is like a backbone of any business because it represents the financial resources that a company uses to fund its operations and investments. It includes the money invested by the owners, as well as any loans or financing obtained. Capital is essential for a business to start and grow, as it enables the purchase of assets, payment of expenses, and generation of profits. Without sufficient capital, a business may struggle to meet its financial obligations and expand its operations. Therefore, capital plays a crucial role in providing stability and support to a business, making it an appropriate analogy to a backbone.

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  • 18. 

    The main objective of a any business to earn ---------------

    • Minimize Margin

    • Increase Sale

    • Profit Decrease

    • Gain

    Correct Answer
    A. Gain
    Explanation
    The main objective of any business is to earn a gain. This means that the business aims to generate a profit and increase its revenue. By earning a gain, the business can cover its expenses, invest in growth opportunities, and provide returns to its stakeholders. Minimizing margin, decreasing profit, and increasing sales are not the primary objectives of a business, although they may be strategies or factors that contribute to achieving the main objective of earning a gain.

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  • 19. 

    The good reputation also has a value and becomes part of investment in business is ----------------

    • Trademark

    • Good Will

    • Asset

    • All Of Above

    Correct Answer
    A. Good Will
    Explanation
    Goodwill refers to the intangible value of a business's reputation, customer loyalty, and brand image. It represents the positive perception and trust that customers have towards a company, which can lead to increased sales, customer retention, and overall business growth. Goodwill is considered an asset because it can be bought, sold, or transferred as part of a business acquisition or merger. Therefore, it can be seen as an investment in the business, as it contributes to its long-term success and financial value.

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  • 20. 

    Which accounting system records both aspects of transaction i.e. receipt or payment and source

    • Transaction

    • Entry

    • Double Entry System

    • Invoice

    Correct Answer
    A. Double Entry System
    Explanation
    The double entry system is an accounting system that records both aspects of a transaction, including the receipt or payment and the source. This system ensures that every transaction is recorded in at least two accounts, with one account debited and another account credited. This ensures accuracy and completeness in financial record-keeping, as it provides a clear trail of the transaction from both the perspective of the company and the external party involved.

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  • 21. 

    The system records only cash movement and that too up to the extent of recording one aspect of

    • Double Entry System

    • Single Entry System

    • Barter System

    • None Of above

    Correct Answer
    A. Single Entry System
    Explanation
    The single entry system is a method of bookkeeping that records only cash movements and only one aspect of the transaction. It is a simplified form of accounting where only one entry is made for each transaction, typically in a cash book. This system is commonly used by small businesses or individuals who have a limited number of transactions to record. Unlike the double entry system, which records both the debit and credit aspects of a transaction, the single entry system only focuses on the cash aspect.

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  • 22. 

    : Is Cash in Hand our Profit?

    • No

    • Yes

    • Might be

    • None Of above

    Correct Answer
    A. No
    Explanation
    Cash in hand is not our profit because cash in hand refers to the physical currency or cash that a business has on hand at a given time. Profit, on the other hand, is the financial gain that a business earns after deducting all expenses from its revenue. While cash in hand can contribute to a business's overall financial health, it does not directly represent the profit generated by the business. Profit is calculated by considering various factors such as revenue, expenses, investments, and taxes. Therefore, cash in hand cannot be equated to profit.

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  • 23. 

    Which is the correct quatation for calculation of profit

    • Cash Sale-Cash Payment + (Credit Sale+Credit Expense)

    • Cash Sale-Cash Payment - (Credit Sale-Credit Expense)

    • Cash Sale-Cash Payment + (Credit Sale-Credit Expense)

    • Cash Sale+Cash Payment + (Credit Sale-Credit Expense)

    Correct Answer
    A. Cash Sale-Cash Payment + (Credit Sale-Credit Expense)
    Explanation
    The correct quotation for the calculation of profit is "Cash Sale-Cash Payment + (Credit Sale-Credit Expense)". This equation takes into account the cash sales, cash payments, credit sales, and credit expenses to determine the overall profit. By subtracting the cash payments and adding the credit sales and credit expenses, we can calculate the net profit.

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  • 24. 

    The accounting system in which events are recorded when actual cash / cheque is received or paid?

    • Credit Accounting

    • Cash Accounting

    • Transaction

    • All Of Above

    Correct Answer
    A. Cash Accounting
    Explanation
    Cash accounting is the correct answer because it is a system in which events are recorded only when actual cash or checks are received or paid. This means that transactions are not recorded until the money is physically exchanged. This method is commonly used by small businesses and individuals as it provides a simple and straightforward way to track cash flow. In contrast, credit accounting records transactions based on credit sales and purchases, regardless of whether cash has been exchanged. The term "transaction" is a general term that refers to any business activity or event that involves the exchange of goods, services, or money. Therefore, "All Of Above" is not the correct answer in this case.

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  • 25. 

    The value of goods or services that a business charges from its customers

    • Profit

    • Income

    • Receivable

    • Payable

    Correct Answer
    A. Income
    Explanation
    Income refers to the value of goods or services that a business charges from its customers. It is the revenue generated by a company from its primary activities, such as sales of products or services. Income is an important financial metric that indicates the company's ability to generate revenue and is a key component in determining profitability. It represents the inflow of economic benefits to the business, which contributes to its overall financial performance.

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  • 26. 

    Qno.1 Why we use financial accounting 

    • Business need

    • Accounting need

    • Financial need

    • Managerial need

    Correct Answer
    A. Financial need
    Explanation
    Financial accounting is used to meet the financial needs of a business. It involves recording, summarizing, and reporting financial transactions and information to stakeholders such as investors, creditors, and regulators. Financial accounting provides crucial information about the financial performance and position of a business, which helps in making informed decisions. It also ensures transparency and accountability in financial reporting, which is essential for attracting investors and maintaining the trust of stakeholders. Therefore, financial accounting is necessary to fulfill the financial requirements of a business.

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  • 27. 

    Qno.2 Which of the following shows a debit balance under normal circumstances? 

    • Asset

    • Capital

    • Liability

    • Sales

    Correct Answer
    A. Asset
    Explanation
    In accounting, a debit balance represents an increase in an asset account or a decrease in a liability or equity account. Therefore, under normal circumstances, an asset account would show a debit balance. This means that the total value of assets owned by a company exceeds the total value of its liabilities and equity.

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  • 28. 

    Qno.3 Normally the practice of Book Keeping under Single Entry System is followed by: 

    • Small businesses only

    • Governments only

    • Large scale businesses only

    • Both small businesses and governments

    Correct Answer
    A. Small businesses only
    Explanation
    The single entry system of bookkeeping is a simplified method used by small businesses to record their financial transactions. It is not suitable for large scale businesses or governments, which typically require more complex and accurate accounting methods. Therefore, the correct answer is small businesses only.

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  • 29. 

    Qno.4 An accounting system is used by a business to: 

    • Analyze transactions

    • Handle routine book-keeping tasks

    • Classify and summarize financial information

    • All of the given options

    Correct Answer
    A. All of the given options
    Explanation
    An accounting system is used by a business to analyze transactions, handle routine book-keeping tasks, and classify and summarize financial information. It encompasses all of these options to ensure accurate and organized record-keeping and financial reporting.

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  • 30. 

    Qno.5 Which of the following is TRUE for Company’s negative working capital? 

    • Current Asset > Current Liability

    • Current Asset = Current Liability

    • Current Asset < Current Liability

    • None of the given options

    Correct Answer
    A. Current Asset < Current Liability
    Explanation
    If a company has negative working capital, it means that its current liabilities exceed its current assets. This indicates that the company may have difficulty in meeting its short-term obligations with its current assets.

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  • 31. 

    Qno.6 Which one of the following is NOT true about Capital Expenditure? 

    • Creates future benefits

    • Incurred to acquire fixed assets

    • Incurred to increase the economic life of existing fixed assets

    • Reduce the profit of the concern

    Correct Answer
    A. Reduce the profit of the concern
    Explanation
    Capital Expenditure refers to the expenses incurred to acquire fixed assets or to increase the economic life of existing fixed assets. These expenditures are expected to create future benefits for the company. However, it does not necessarily reduce the profit of the concern. While capital expenditures may have an initial negative impact on profit due to the upfront costs, they can also lead to increased revenue and improved profitability in the long run. Therefore, the statement that capital expenditure reduces the profit of the concern is not true.

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  • 32. 

    Qno.7 Consider the following:Beginning inventory 10 units @ Rs. 10 per unitFirst purchase 35 units @ Rs. 11 per unitSecond purchase 40 units @ Rs. 12 per unitThird purchase 20 units @ Rs. 13 per unitSold 10 units @ 1035 units @ 1140 units @ 12Eighty-five units were sold, what is the value of the ending inventory using theFIFO method of inventory costing? 

    • Rs.260

    • Rs.232

    • Rs.284

    • Rs.268

    Correct Answer
    A. Rs.260
    Explanation
    The FIFO (First-In, First-Out) method assumes that the first units purchased are the first ones sold. In this case, the beginning inventory of 10 units is sold first, followed by the first purchase of 35 units, and then the second purchase of 40 units. The ending inventory is therefore made up of the remaining 20 units from the second purchase and the entire third purchase of 20 units. The value of the ending inventory can be calculated by multiplying the number of units in inventory (40 units) by the cost per unit from the second purchase (Rs. 12 per unit), which equals Rs. 480. Subtracting the cost of the units sold (Rs. 220) from this value gives us Rs. 260, which is the value of the ending inventory.

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  • 33. 

    Qno.9 A decrease in value of a fixed asset due to age, wear and tear is known as: 

    • Acc Depreciation

    • Accumulated

    • Appreciation

    • Written Down Value

    Correct Answer
    A. Accumulated
    Explanation
    The correct answer is "Accumulated Depreciation". Accumulated Depreciation refers to the gradual decrease in the value of a fixed asset over time due to factors such as age, wear and tear. It is a contra-asset account that is used to record the total depreciation expense incurred on the asset since its acquisition. By subtracting the accumulated depreciation from the original cost of the asset, the net book value or written down value can be determined.

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  • 34. 

    Qno.13 which of the following entities is not profit oriented entity? 

    • Sole - proprietorship

    • Partnership

    • Companies

    • Trust

    Correct Answer
    A. Trust
    Explanation
    A trust is not a profit-oriented entity because its primary purpose is to manage assets and funds for the benefit of others, such as charitable organizations or beneficiaries. Unlike sole proprietorships, partnerships, and companies, which are all business entities focused on generating profit, a trust is established to serve a specific purpose or cause rather than to maximize financial gains.

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  • 35. 

    Qno10 Which of the following is the act of recording each transaction in the Journal? 

    • Journalizing

    • Posting

    • Folioing

    • Transferring

    Correct Answer
    A. Journalizing
    Explanation
    Journalizing is the act of recording each transaction in the Journal. The Journal is a book of original entry where all transactions are initially recorded in chronological order. Journalizing involves analyzing the transaction, determining the accounts affected, and recording the details of the transaction in the Journal. This step is essential in the accounting process as it provides a complete and accurate record of all financial transactions for a business.

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  • 36. 

    The formula for calculating net profit is

    • Net Profit = Income / Expenses

    • Net Profit = Income + Expenses

    • Net Profit = Income – Expenses

    • None of above

    Correct Answer
    A. Net Profit = Income – Expenses
    Explanation
    The correct answer is "Net Profit = Income – Expenses" because net profit is calculated by subtracting expenses from income. This formula represents the concept that net profit is the amount left over after deducting all expenses from the total income generated.

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  • 37. 

    Calculate net income Expenses 1200 sales 10000 Purchases 8000

    • 12000

    • 800

    • 8800

    • 1800

    Correct Answer
    A. 800
    Explanation
    The correct answer is 800. To calculate the net income, we need to subtract the total expenses from the total sales. In this case, the total expenses are 1200 and the total sales are 10000. Subtracting 1200 from 10000 gives us a net income of 8800. However, since the question also mentions purchases, we need to subtract the purchases from the net income. The purchases are given as 8000, so subtracting 8000 from 8800 gives us a final net income of 800.

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  • 38. 

    Calculate net income Purchases 50000 Expenses 55000 Sales 100000

    • 5000

    • 10000

    • 50000

    • None of above

    Correct Answer
    A. None of above
    Explanation
    The correct answer is "none of above" because the net income is calculated by subtracting expenses from the sales. In this case, the sales are $100,000 and the expenses are $55,000. Therefore, the net income would be $45,000. None of the given options match this amount.

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  • 39. 

    Payment of utility bill is an example of --------

    • Asset

    • Income

    • Revenue Expenditure

    • Capital Expenditure

    Correct Answer
    A. Revenue Expenditure
    Explanation
    Payment of utility bills is considered a revenue expenditure. Revenue expenditures are expenses incurred in the day-to-day operations of a business to generate revenue. Utility bills, such as electricity, water, and gas, are regular expenses necessary for the functioning of a business. These expenses are incurred regularly and are necessary to keep the business running smoothly. Therefore, payment of utility bills falls under the category of revenue expenditure.

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  • 40. 

    Purchase of Plant and machinery?

    • Revenue Expenditure

    • Capital Expenditure

    • Administrative Expenditure

    • All of Above

    Correct Answer
    A. Capital Expenditure
    Explanation
    The purchase of plant and machinery is considered a capital expenditure because it is a long-term investment that is expected to generate benefits over a period of time. Capital expenditures are typically made to acquire or improve assets that will be used in the business for an extended period, such as equipment, property, or vehicles. These expenditures are not immediately consumed or used up, but rather provide ongoing value to the business. In contrast, revenue expenditures are expenses incurred in the day-to-day operations of the business and are typically consumed or used up within a short period of time. Administrative expenditures are a type of revenue expenditure that relates to the administrative functions of the business.

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  • 41. 

    Repair of plant and machinery (It is done every year)

    • Revenue Expenditure

    • Capital Expenditure

    • Administrative Expenditure

    • All of Above

    Correct Answer
    A. Revenue Expenditure
    Explanation
    Repair of plant and machinery is considered a revenue expenditure because it is a routine expense incurred to maintain and keep the assets in working condition. This type of expenditure is necessary for the day-to-day operations of a business and does not result in the acquisition of a new asset or an increase in the earning capacity of the business. As it is done every year, it is classified as a revenue expenditure rather than a capital expenditure, which would involve significant investments in new assets or improvements to existing ones.

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  • 42. 

    Fuel cost of plant and machinery (incurred frequently during the year)

    • Operating Expense

    • Administrative Expenditure

    • Capital Expenditure

    • Revenue Expenditure

    Correct Answer
    A. Revenue Expenditure
    Explanation
    Fuel cost of plant and machinery is considered as a revenue expenditure because it is a regular and recurring expense that is incurred frequently during the year. Revenue expenditures are expenses that are incurred in the normal course of business operations and are essential for generating revenue. These expenses are deducted from the revenue earned in the same accounting period and are not capitalized or included in the cost of assets. In this case, the fuel cost is necessary for operating the plant and machinery, which directly contributes to the generation of revenue.

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  • 43. 

    Depreciation expenses of fixed assets

    • Capital Exp

    • Revenue Exp

    • Both

    • None Of Above

    Correct Answer
    A. Capital Exp
    Explanation
    Depreciation expenses of fixed assets are considered capital expenses. Capital expenses are incurred to acquire or improve long-term assets, such as buildings, equipment, or vehicles, which are expected to provide benefits over multiple accounting periods. Depreciation expenses, which represent the allocation of the cost of these assets over their useful lives, are considered a capital expenditure because they are associated with the acquisition or improvement of fixed assets.

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  • 44. 

    Cost of acquiring copy right, patents, goodwill (Intangible assets will be used for many years)

    • Revenue Exp

    • Capital Exp

    • Operating Exp

    • None Of Above

    Correct Answer
    A. Capital Exp
    Explanation
    The cost of acquiring copyright, patents, and goodwill is considered a capital expenditure because these intangible assets are expected to provide long-term benefits to the company. Capital expenditures are investments in assets that will be used for many years and are not intended for immediate consumption or sale.

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  • 45. 

    On 1 Jan 2011, Company A purchased a vehicle costing $20,000. The company expects the vehicle to be operational for 4 years at the end of which it can be sold for $5,000. Calculate depreciation expense for the year ended

    • 4000

    • 3750

    • 3500

    • 4500

    Correct Answer
    A. 3750
    Explanation
    The depreciation expense for the year ended is $3,750. This is calculated by taking the initial cost of the vehicle ($20,000) and subtracting the estimated salvage value at the end of its useful life ($5,000). The result is $15,000. Then, this amount is divided by the expected useful life of the vehicle (4 years). The annual depreciation expense is therefore $3,750.

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  • 46. 

    If an asset is purchased for $10,000 and its salvage value is expected to be $800 at the end of its useful life, the depreciable cost would be

    • 8000

    • 9000

    • 9200

    • 4000

    Correct Answer
    A. 9200
    Explanation
    The depreciable cost is calculated by subtracting the salvage value from the initial purchase cost. In this case, the salvage value is $800 and the purchase cost is $10,000. Therefore, the depreciable cost would be $10,000 - $800 = $9,200.

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  • 47. 

    The Eastern company provides the following information regarding one of its fixed assets purchased on January 1, 2015: Cost of the asset: $35,000 Salvage value: $3,000 Useful life: 10 years Calculate the depreciable value under the straight-line method.

    • 3300

    • 3100

    • 3200

    • None

    Correct Answer
    A. 3200
    Explanation
    The depreciable value is calculated by subtracting the salvage value from the cost of the asset. Depreciable value = Cost - Salvage value = $35,000 - $3,000 = $32,000. The annual depreciation under the straight-line method is the depreciable value divided by the useful life: $32,000 / 10 years = $3,200 per year. So, the correct annual depreciation is $3,200.

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  • 48. 

    The inventory cost flow assumption where the cost of the most recent purchase is matched first against sales revenues is

    • FIFO

    • LIFO

    • AVERAGE

    • ALL

    Correct Answer
    A. LIFO
    Explanation
    LIFO (Last In, First Out) is the correct answer because it is an inventory cost flow assumption where the cost of the most recent purchase is matched first against sales revenues. This means that under LIFO, the most recently acquired inventory is assumed to be sold first, leaving the older inventory in stock. This method is commonly used in situations where prices are rising, as it results in a higher cost of goods sold and lower ending inventory value, which can provide tax advantages by reducing taxable income.

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  • 49. 

    The inventory cost flow assumption where the cost of the most recent purchases are likely to remain in inventory

    • FIFO

    • LIFO

    • AVERAGE

    • None Of Above

    Correct Answer
    A. FIFO
    Explanation
    FIFO stands for "First In, First Out," which means that the first items purchased or produced are the first ones to be sold or used. In terms of inventory cost flow assumption, FIFO assumes that the cost of the most recent purchases are likely to remain in inventory. This means that the cost of the items purchased most recently is matched with the revenue from the sale of those items, resulting in a more accurate representation of the current value of inventory. Therefore, the correct answer is FIFO.

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  • Aug 07, 2024
    Quiz Edited by
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  • May 26, 2017
    Quiz Created by
    Aryan

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