Accounting 1 MGT

Registration No __________________________ Prototype Quiz No. 1

BBA 2
Signature _______________________________

Instructions
Please read the following instructions carefully before attempting any question:
 Write your student Registration No. and Signature; Failure to do so will result in paper
cancellation.
 All questions are compulsory. This exam consists of 20 marks for Objective Type Questions,
Equation 10 marks and Variation Proforma 10 Marks and time allowed is one 60 minutes.
 For each OTQ statement, read the choices available carefully and “Encircle” (don’t tick mark)
one which you consider is the most suitable answer. Zero marks will be given if more than one
option is “Encircled”.
 Cutting and overwriting in objective type questions is not allowed; if done so, that particular
question will be marked Zero.
 Remember not to spend too much time on Objective type questions. It is important to manage
your time and response to test questions effectively.
 Do not ask any questions about the contents of this examination from anyone.
 If you believe that some essential piece of information is missing, make an appropriate
assumption and use it to solve the problem and will discuss in paper debate.
 Students are advised to solve paper in blue & black ink and do not use red, green ink and pencil.
 Writing irrelevant/immoral material will be severely penalized.
 This examination is closed book, closed notes, closed neighbors.
 Use of mobile phones is strictly prohibited; switch it off if it is in your custody.
 Failure to comply with the Teacher’s directions will result in your exam paper being cancelled.

(Not to Turn the Title Page Prior to Instructions)

OTQ / 20 Equation / 10 Proforma / 10 Total = / 40

www.accountancyKnowledge.com
Page intentionally left Blank

www.accountancyKnowledge.com
COMSATS, ABBOTTABAD Accounting I MGT

Q# 1 Multiple choice Questions (Marks 20)

1. External reporting is the result of?

(a) Financial accounting (b) Management accounting
(c) Cost accounting (d) Social accounting

2. All economics costs that a business incur through its operation to earn revenues?
(a) Assets (b) Drawing (c) Expense (d) Revenue

3. All of following are Assets except?

(a) Prepaid Rent (b) Goods (c) Unearned Income (d) b and c

4. The outcome of financial accounting is to?

(a) Record all transactions in the books of accounts
(b) Provide management with detailed analyses of costs
(c) Present the financial results to the organization by means of recognized financial statements
(d) Calculate profit

5. Residual interest in the net asset of an entity that remains after deducting its liabilities is?
(a) Owner Equity (b) Liabilities (c) Asset (d) Expense

6. Which of the following persons are most likely to use accounting information?
(a) Business owners (b) Lending institutions
(c) All of the above (d) None of the above

7. Which of the following forms of business organization can be publicly-traded?

(a) Partnership (b) Private Limited Companies
(c) Public Limited Companies (d) Both a and c

8. Which of these characteristics does not apply to partnership?

(a) Unlimited liabilities (b) Unlimited life
(c) Mutual agency (d) Single taxation

9. Which of the following business entity is collectively known as firm?

(a) Sole trader-ship (b) Partnership (c) Co-operative society (d) Company

10. Which of the following is true about a partnership?

(a) All partners have invested an equal amount of capital
(b) A partnership requires at least three people
(c) Partnerships do not get favourable tax treatment compared to joint stock company (JSC)
(d) All partners are personally liable for the debts of the business

11. Economic Obligations of the Business are called?

(a) Liabilities (b) Assets (c) Owner Equity (d) Revenues

12. Preparation of companies’ financial reports is governed in Pakistan under?

(a) State Bank of Pakistan Act 1956 (b) Companies Ordinance 1984
(c) Partnership Act 1932 (d) Banking Companies Ordinance 1962

www.accountancyKnowledge.com 3 Solution Quiz # 1

COMSATS, ABBOTTABAD Accounting I MGT

13. Which of the following is not a correct form of the Accounting Equation?
(a) Assets = Claims (b) Assets = Liabilities + Owner Equity
(c) Assets – Liabilities = Owner’s Equity (d) Assets + Owner’s Equity = Liabilities

14. The decrease in owner’s equity attributable to business activities is called?

(a) Assets (b) Drawing (c) Revenue (d) Expense

15. During a reporting period, a company’s assets increase by Rs. 80,000,000. Liabilities decrease by Rs.
20,000,000. Equity must therefore?
(a) Decrease by Rs. 100,000,000 (b) Increase by Rs. 100,000,000
(c) Decrease by Rs. 60,00,000 (d) Increase by Rs. 60,000,000

16. Liabilities are?

(a) Equal to the assets minus owner’s equity (b) Resources owned
(c) Created when Stockholder contributed cash (d) All of above are correct

17. Which of the following accounts will be used in equation, if the goods are sold on credit to Mr. Mahmood?
(a) Cash account and Owner’s equity (b) Account Receivable and Owner’s equity
(c) Cash and Account Receivable (d) Account Payable and Owner’s Equity

18. Which of the following transactions results in an immediate increase in expenses?

(a) Purchase of office equipment on credit (b) Payment of accounts payable
(c) Payment of wages (d) Repayment of bank loan

19. Which of the following journal entry will be recorded, if cash is drawn by a Proprietor?
(a) Drawings (Dr) and Cash (Cr) (b) Cash (Dr) and Drawings (Cr)
(c) Capital (Dr) and Drawings (Cr) (d) Drawings (Dr) and Capital (Cr)

20. What is the normal balance for an expense account?

(a) Credit (b) Debit (c) Contra liability (d) None of these

www.accountancyKnowledge.com 4 Solution Quiz # 1

 COMSATS, ABBOTTABAD Accounting I MGT

Q # 2 You are required to make Accounting Equation

(Marks = 10)
i. Invested Rs. 150,000 in cash by Owner
ii. Received cash as salary Rs. 3,600
iii. A bill of Rs. 7,200 was sent to Mr. Ashraf Abbasi, a customer
iv. Purchased inventory for cash Rs. 80,000 and on account Rs. 20,000 from Mr. Tahir
v. Paid rent and salaries for the month Rs. 4,000 and wages outstanding for month Rs. 1,000

BBA 2
Assets Equities

Cash A/R Inventory Wages Outstanding A/P O.E

1 150,000 150,000

Bal 150,000 150,000

2 3,600 3,600

Bal 153,600 153,600

3 7,200 7,200

Bal 153,600 7,200 160,800

4 (80,000) 100,000 20,000

Bal 73,600 7,200 100,000 20,000 160,800

5 (4,000) 1,000 (5,000)

Bal 69,600 7,200 100,000 1,000 20,000 155,800

Total Rs. 176,800 Rs. 176,800

www.accountancyKnowledge.com 5 Solution Quiz # 1

 COMSATS, ABBOTTABAD Accounting I MGT

Q # 3 Following Variation Proforma for Journal Entries have been provided, you are required to check changes in following transaction with the help of Proforma
(Marks = 10)

Variation Proforma for Journal Entries

Account Title Pillar of

S.No Transactions Reasons Debit (Rs.) Credit (Rs.)
Involved Accounts

Cash Asset Increase 100,000

1
Ali Started business with Cash Rs. 100,000 Owner Equity Owner Equity Increase 100,000

Account Payable Liability Decrease 1,500

2 Paid to Creditor of Rs. 1,500
Cash Asset Decrease 1,500

A/c Receivable Asset Increase 21,700

3 Sold merchandise Rs. 21,700 to Ali Malik
Sale Revenue Increase 21,700

Purchases Expense Increase 190

4 Bought goods by cash from F. Mills Rs. 190

Cash Asset Decrease 190

Owner withdrew from business for personal use Rs. Drawing Drawing Increase 2,400
5
2,400
Cash Asset Decrease 2,400

www.accountancyKnowledge.com 6 Solution Quiz # 1