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

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

Which of the following have an effect on the book value of an asset?

• A) Routine lubricant of the asset
• B) Maintenance of some parts of the asset
• C) Expenditure incurred to increase the efficiency of the asset
• D) All of the given

The appropriate journal entry to record machinery depreciation of Rs. 1,000 is:

• A) Debit - Depreciation Expense 1,000; Credit - Accumulated Depreciation 1,000
• B) Debit - Accumulated Depreciation 1,000; Credit – Machine 1,000
• C) Debit - Accumulated Depreciation 1,000; Credit - Depreciation Expense 1,000
• D) Debit - Depreciation Expense 1,000; Credit- Loss on asset value account 1,000

If demand of shares of a company decreases and company needs extra funds then the company should issue shares at:

• A) Discount
• B) Premium
• C) Face value
• D) Fair value

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

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

A company itself can be a partner of a firm because a company:

• A) Can manage it well
• B) Has large capital
• C) Is a juristic person
• D) Can also be register under Act 1932

Which of the following is a technique in accounting that can be used to present the financial position of the company in a favorable light?

• A) Good will
• B) Relevance
• C) Consistency
• D) Window dressing

Which one of the following inventory methods shows less expense on income statement during inflation period?

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

All of the following are the rights of the common shareholders of a Company Except:

• A) Right to take dividend
• B) Right to take part in the decision making
• C) Right to vote
• D) Right to attend the general meeting

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. 28,000
• B) Rs. 23,000
• C) Rs. 27,000
• D) Rs. 33,000

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

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

Gross profit is:

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

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. 270,000
• C) Rs. 60,000
• D) Rs. 130,000

A company has total current liabilities of Rs. 110,000 and total current assets of Rs. 150,000. Calculate the current ratio of the company.

• A) 0.73
• B) 1.41
• C) 1.36
• D) 1.39

The changes in the financial statement items from a base year to following years are often expressed as which of the following?

• A) Component percentages
• B) Common percentages
• C) Trend percentages
• D) Both trend and component percentages

Which of the following is formula to measure the return on assets?

• A) Operating income by average Fixed assets
• B) Operating income by average total assets
• C) Net income by average Fixed assets
• D) Net income before tax by average total assets

All of the following would be useful in assessing short-term liquidity Except?

• A) Current ratio
• B) Cash ratio
• C) Defensive interval ratio
• D) Quick ratio

Which of the following is NOT a financial ratio?

• A) Staff turnover ratio
• B) Net profit margin
• C) Receivable turnover
• D) Return on capital employed

In the vertical analysis of Balance sheet, all asset accounts are expressed as percentage of which of the following?

• A) Total liabilities
• B) Total assets
• C) Total current assets
• D) Total fixed assets

Which of the following is NOT a profitability measure?

• A) Dividend yield
• B) Return on total assets
• C) Return on sales
• D) Return on long term investment