ABC Company sold a plant asset that originally cost Rs. 50,000 for Rs. 22,000 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. 33,000
• B) Rs. 27,000
• C) Rs. 23,000
• D) Rs. 28,000

Gross profit is:

• A) Net profit less expenses of the period
• B) Sales less Purchases
• C) Cost of goods sold + Opening stock
• D) Excess of sales over cost of goods sold

A complete set of financial statements for Hartman Company, at December 31, 2007, would include each of the following, EXCEPT:

• A) Income statement for the year ended December 31, 2007
• B) Statement of projected cash flows for 2008
• C) Notes containing additional information that is useful in interpreting the financial statements
• D) Balance sheet as at December 31, 2007

A type of preferred stock that carries the provision that the issuer has the right to purchase back the stock at a certain price, and retire it whenever he wants is called:

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

Which of the following can be a partner of the XYZ partnership firm?

• A) A sole partnership business
• B) A company ABC limited
• C) All of the given option
• D) LMN partnership firm

Which one of the following is the most common type of opinion given by the auditor?

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

In the end month of accounting period, the company ABC obtains a long term bank loan in order to pay off short term obligation so that the working capital and current ratio may improve. The above is an example of:

• A) Creativity of accounting
• B) Financial budgeting
• C) Window Dressing
• D) Financial forecasting

Which of the following is (are) true about the Audit of financial statements?

• A) All of the given options
• B) External audit is necessary for the publicly owned companies
• C) External audit is required for all companies established under Companies Ordinance 1984
• D) External audit is conducted by the financial analyst

Which one of the following is NOT one of the broad areas of a business?

• A) Solvency
• B) Reliability
• C) Stability
• D) Profitability

Which one of the following inventory methods uses random withdrawal of inventory’ units?

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

Which of the following is NOT the characteristic of financial Statements?

• A) Information can be used for ratio analysis
• B) Always presented in the monetary terms
• C) Help in the assessment of projected incomes
• D) Provide the information about the Management and employees

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

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

Which of the following is the proper journal entry to record services rendered by ABC Company to a client for Rs. 500.

• A) Debit Cash 500; Credit Accounts Receivable 500
• B) Debit Accounts Receivable 500; Credit Capital Stock 500
• C) Debit Accounts Receivable 500; Service Revenue 500
• D) Cash 500; Credit Service Revenue 500

Nestle Pakistan Limited is an example of which of the following types of businesses?

• A) Service
• B) Manufacturing
• C) Merchandise
• D) Whole seller

Which of the following depreciation method does NOT provide a better tax shield?

• A) Accelerated depreciation
• B) Sum of the years digit
• C) Straight line
• D) Double declining balance

The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were:

• A) Greater than book value
• B) Less than book value
• C) Greater than cost
• D) Less than current market value

Stock holders’ equity of a corporation may NOT effect if:

• A) A company suffers losses in a year
• B) Issued bones shares
• C) Fluctuations are there in market value of shares
• D) Pay dividend to the shareholders

Which of the following is NOT a goal of analysis of financial statements?

• A) Assess the past performance
• B) Predict the future performance of the company
• C) Asses the working of management in the future
• D) Asses the current financial position

What is meant by the term “Quality of Financial Statements”?

• A) Financial Statement are prepared by the experts
• B) Financial Statement show the true picture of the business
• C) Financial Statements are audited by the Auditors
• D) Financial statements are reviewed by the CEO

Which statement is true about the shareholders?

• A) They have the right of drawings in the company
• B) They are the only stakeholders
• C) They usually have right to vote in annual general meeting
• D) They are entitle to receive annual return