ABC Company sold a plant asset that originally cost Rs. 60,000 for Rs. 25,000 cash. If the company correctly reports a Rs. 5,000 gain on this sale, the accumulated depreciation on the asset at the date of sale must have been:

• A) Rs. 40,000
• B) Rs. 25,000
• C) Rs. 35,000
• D) Rs. 55,000

Under the income statement approach to adjusting entries, the receipt of Rs. 5,000 of unearned revenue would be recorded by debiting Cash. Which account should be credited?

• A) Prepaid Revenue
• B) Unearned Revenue
• C) Revenue
• D) Cash

Which of the following is another name of the authorized capital?

• A) Outstanding capital
• B) Registered capital
• C) Paid in capital
• D) Listed capital

How would the sale of merchandise on account be represented in the seller's records?

• A) Increase assets and decrease liabilities
• B) Increase assets and increase paid-in capital
• C) Increase assets and increase income
• D) Increase assets and decrease revenues

If the ending inventory is understated in the year; the cost of goods sold will be _______ and gross profit __________.

• A) Understated, understated
• B) Overstated, understated
• C) Overstated, Overstated
• D) Understated, Overstated

Calculate Written Down Value (WDV) from following information:
Cost of fixed asset = Rs. 400,000; Accumulated depreciation= Rs. 270,000; Salvage value=70,000

• A) Rs. 200,000
• B) Rs. 60,000
• C) Rs. 130,000
• D) Rs. 270,000

How many types of audit certificate are there?

• A) Five
• B) Four
• C) Two
• D) Three

Retained Earnings are directly affected by all of the following factors EXCEPT:

• A) Divided paid
• B) Net loss
• C) Net profit
• D) Taxes

According to local law, the maximum number of partners in general partnership and Banking business are _________ respectively:

• A) 20 and 10
• B) 10 and 20
• C) 20 and 8
• D) 8 and 20

For purpose of measuring business income, the life of a business is divided into which of the following?

• A) Divided into irregular cycles
• B) Divided into specific points in time
• C) Divided into discrete accounting periods
• D) Considered to be a continuous cycle

Which one of the following inventory methods shows lower inventory valuation on balance sheet during inflation period?

• A) Last-in-First-Out (LIFO)
• B) All of the given options
• C) Average cost method
• D) First-in-First - out (FIFO)

Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings?

• A) Dividends paid
• B) Net loss
• C) Net income
• D) Investments by stockholders

Which of the following equations properly represents a derivation of the fundamental accounting equation?

• A) Assets + liabilities = owner's equity
• B) Cash = assets
• C) Assets - liabilities = owner's equity
• D) Assets = owner's equity

Dividends omitted on preferred shares that must be paid before common shareholders are entitled to be paid are referred to as:

• A) Callable
• B) Participating
• C) Cumulative
• D) In arrears

Which of the following is TRUE about the financial statements?

• A) Are required by corporations, but not for sole proprietorship or partnerships
• B) In either monetary or no monetary terms, depending upon the need of the decision maker
• C) They are primarily for the benefit of Stakeholders
• D) Are required only for publicly owned business organizations

Which of the following company would like to use the accelerated depreciation method?

• A) A company with low tax burdens
• B) A company with large tax burdens
• C) A company that want to report high net income
• D) A company that want to report huge assets

Which of the following states that the financial statements are presented fairly and in accordance with the generally accepted accounting principle?

• A) Disclaimer of opinion
• B) Unqualified opinion
• C) Qualified opinion
• D) Adverse opinion

The local law restricts the number of partners in a partnership firm up to:

• A) 35 members
• B) 20 members
• C) 15 members
• D) 30 members

Which of the following is NOT a characteristic of financial statements?

• A) They always present in monetary terms
• B) Understandable completely by a lay man as well
• C) They help in assessment of future profitability
• D) They always present economic events

Calculate depreciation expense for the year based on Straight Line Method from following information:
Cost of the Asset=Rs.120,000; Life of the Asset = 5 years; Residual value: Rs. 20,000.

• A) Rs. 24,000
• B) Rs. 28,000
• C) Rs. 18,000
• D) Rs. 20,000