COMSATS Institute of Information Technology Abbottabad

Department of Management Sciences

Terminal Section A

Class: Date:
Subject: Accounting Instructor: Zaheer A. Swati
Time Allowed: 30 Minutes Max Marks: 30
Registration # Signature

SECTION-A

(Time allowed: 30 Minutes) (Marks = 30)

A. Write appropriate choice in Answer Sheet (A) (Marks 30 * 1 = 30)

1. Marketable Securities, Account Receivables and Inventory are listed as

(a) Current Asset (b) Current Liabilities (c) Long Term Asset (d) Long term liabilities

2. Which of the followings are books of prime entry?

(a) Sales day book and trial balance (b) Petty cash book and accounts receivable ledger
(c) Petty cash book and General Journal (d) Cash book and assets register

3. Which of the following would not be regarded as an asset?

(a) A piece of equipment owned by a business (b) A building that has been used by the business
(c) An inventory of goods that have yet to be sold (d) A sum of money owed to the business

4. The adjusting entry to record unpaid salaries is

(a) Salary Expense (Dr) & Cash (Cr) (b) Salary Payable (Dr) & Salary Payable (Cr)
(c) Salary Expense (Dr) & Salary Payable (Cr) (d) Salary Payable (Dr) & Cash (Cr)

5. Unearned revenue of Rs. 2,000 now earned. The entry is?

(a) Unearned revenue to revenue (b) Cash to revenue
(c) Revenue to Unearned revenue (d) None of above

6. At the end of the current accounting period, Johnson Company failed to record utilities consumed during the period. Johnson
will be billed for the utilities during the next accounting period. As a result, current period assets, liabilities, equity, and
income, respectively, are
(a) Overstated, overstated, correct, correct (b) Correct, understated, overstated, overstated
(c) Overstated, understated, overstated, overstated (d) Overstated, understated, correct, correct

7. Adjusting entries at the end of an accounting period would not be required for which of the following
(a) Multi period costs that must be split among two or more accounting periods
(b) Multi period revenues that must be split among two or more accounting periods
(c) Expenses that have been incurred in a given period but not yet recorded in the accounts.
(d) Revenue that has been earned and recorded in the accounting records

8. At the end of the fiscal year, Accounts Receivable has a balance of Rs. 100,000 and Allowance for Doubtful Accounts has a
balance of Rs. 7,000. The expected net realizable value of the accounts receivable is:
(a) Rs. 100,000 (b) Rs. 93,000 (c) Rs. 107,000 (d) Rs. 7,000
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9. If the equipment account has a balance of Rs. 22,500 and its accumulated depreciation account has a balance of Rs. 14,000,
the book value of the equipment is
(a) Rs. 36,500 (b) Rs. 22,500 (c) Rs. 14,000 (d) Rs. 8,500

10. Bank reconciliation is not a

(a) Ledger account (b) Memorandum statement
(c) Reconcile records (d) Procedure to prove cash book balance

11. The check which is deposited into bank but not cleared at the end of a particular year is called
(a) Omitted check (b) Unpresented check (c) Uncredited check (d) Dishonored check

12. An amount of Rs. 1000 is debited twice in the bank statement. When overdraft as per the cash book is the starting point.
(a) Rs. 1,000 will be deducted (b) Rs. 1,000 will be added
(c) Rs. 2,000 will be deducted (d) Rs. 2,000 will be added

13. Accrued expenses are also called

(a) Accrued liabilities (b) Expenses already incurred but not yet paid
(c) Both a & b (d) None

14. External Users of Financial Accounting Information include all of the following except
(a) Line Manager (b) Labor Union (c) Investors (d) General Public

15. An overstatement of closing inventory in one period results in:

(a) No effect on net income (b) An overstatement of net income
(c) An understatement of net income (d) An overstatement of the closing inventory of the next period

16. Which one of the following is an example of current Liability?

(a) Bank overdraft (b) Fixtures (c) Shares (d) Long term Bank Loan

17. Which account would be listed on a post-closing trial balance,

(a) A revenue account (b) The Amortization account
(c) The Discount allowed account (d) None of Above

18. Ahmed gives a cash discount of 40 to a customer. The discount is credited in Ahmed’s book. The effect of recording the
discount in this way is that profit will be
(a) Correct (b) Overstated by 80 (c) Understated by 80 (d) Understated by 40

19. A business received cash of Rs. 3,000 in advance for the service that will be provided later. At the end of the period Rs. 1,100
is still unearned. The adjusting entry for the situation well be
(a) Debit ‘Unearned Revenue’ and Credit ‘Revenue’ for Rs. 1,900
(b) Debit ‘Unearned Revenue’ and Credit ‘Revenue’ for Rs. 1,100
(c) Debit ‘Revenue’ and Credit ‘Unearned Revenue’ for Rs. 1,100
(d) Debit ‘Revenue’ and Credit ‘Unearned Revenue’ for Rs. 1,900

20. The first item listed under current liabilities is usually?

(a) Notes payable (b) Accounts payable (c) Salaries payable (d) Taxes payable

21. An overstatement of closing inventory in one period results in?

(a) No effect on net income (b) An overstatement of net income
(c) An understatement of net income (d) An overstatement of the closing inventory of the next period

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22. Which one of the following is an example of current Liability?
(a) Bank overdraft (b) Fixtures (c) Shares (d) Long term Bank Loan

23. At the end of the fiscal year, Accounts Receivable has a balance of $100,000 and Allowance for Doubtful Accounts has a
balance of $7,000. The expected net realizable value of the accounts receivable is:
(a) $ 100,000 (b) $ 93,000 (c) $ 107,000 (d) $ 7,000

24. The transactions of the following must be kept separate from the personal activities of the owners for accounting purposes?
(a) Proprietorship (b) Partnership (c) Corporation (d) Both a and b above

25. The payment of cash to supplier will?

(a) Reduce cash balance and reduce current liabilities (b) Increase receivables and reduce cash balance
(c) Reduce account payable and increase purchases (d) Increase payable and reduce cash balance

26. The effect of a credit entry on the payables account is to?

(a) Decrease the account balance (b) Decrease & increase the account balance
(c) Decrease or increase the account balance (d) Increase the account balance

27. Which of the following would not be regarded as an asset?

(a) A piece of equipment owned by a business (b) A building that has been used by the business
(c) An inventory of goods that have yet to be sold (d) A sum of money owed to the business

28. Which one of the following is not true for Profit & Loss Account?
(a) It shows whether a business has made a profit or loss over a financial year
(b) It shows the financial position of a business for the period
(c) It shows revenues and expenses for the period
(d) It is used to calculate surplus/deficit for a particular period

29. Which of the following is/are not shown in balance sheet?

(a) Fixed assets (b) Current liabilities (c) Profit sharing ratio (d) Long term assets

30. Specific business entity separate from personnel affair of the owner is?
(a) Objectivity principle (b) Stable currency principle
(c) Entity principle (d) Matching principle

Best of Luck

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 COMSATS Institute of Information Technology Abbottabad

Department of Management Sciences

Terminal Section B & C

Class: Date:
Subject: Accounting Instructor: Zaheer A. Swati
Total Time Allowed: 150 Minutes Max Marks: 70
Registration # Signature

SECTION-B
(Attempt all four questions, all questions carry equal marks 10 * 4 = 40)

Q1. From the following particulars write up the Cash Book for Muhammad Huzaifa Umar Trading Co. for the month of
June 2016 (Time should use 25 minutes).

2016
June 1 Favourable Cash Balance Rs. 18,000; Bank balance Overdraft Rs. 37,000
4 Paid Wages Rs. 200 by cash and Rent by check Rs. 1,000
6 Total sales of worth Rs. 10,000 in which 3,000 apply to credit customers Mr. Ali
9 Owner further investment Rs. 13,000, of which Rs. 10,000 was banked and the balance was retained
11 Received a check from Mr. Kazmi and deposited into the bank of worth Rs. 16,000
14 Withdrew from bank for office purpose Rs. 4,000 and for owner domestic use Rs. 2,000
18 Received check from Mr. Hamid of Rs. 22,000 and was not deposited in same date
21 Dated 6th June, 2010 Mr. Ali sent 3,000 check which was deposited in same date
23 Mr. Kazmi check of Dated 11th, June, 2010 was dishonoured and return by bank
28 Mr. Hamid check received on 18th June, 2010 were deposited into bank
30 Discount Received Rs. 300 and Discount allowed Rs. 200
Format
Muhammad Huzaifa Umar TRADING CO.
Cash Book
For the month ended June, 2016
Receipts Payments
Date Description Ref Cash Bank Dis Date Description Ref Cash Bank Dis

Q2. Make corrected Trial Balance after anticipating hidden errors for Amina Ghalib Khan Ltd. Financial year for this
company is July 1st, 2016 to June 30th, 2017 (Time should used 25 minutes).

Amina Ghalib Khan Ltd.

Trial Balance

As on 30th June, 2017

Amount (Rs.)

S. No Heads of Accounts Dr Cr
1 Purchases 35,000
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 2 Factory Overhead (Applied) 1,000
3 Octri and Taxes 100
4 Rebate received 500
5 Trade Mark 55,000
6 Sales 80,000
7 Share Capital 50,000
8 Return Outward 1,600
9 Bills Owed 6,500
10 Carriage Outward 3,700
11 Inventory (1.07.2016) 10,500
12 Motor Van 25,000
13 Claims Receivables 1,500
14 Sundry Debtors 9,000
15 Return Inward 2,000
16 Leasehold Premises 3,000
17 Discount on Sales 2,000
18 Petty Cash 800
19 Stock 30-06-2017 33,300
20 Sundry Creditors 10,000
21 Suspense Account 19,700

Total Rs. 175,100 Rs. 175,100

Errors in Trial Balance:

(i) Machinery bought Rs. 3,000 posted to as Trade Mark account

(ii) Credit sales of worth Rs. 1,200 was omitted to record in the book of original entry

(iii) Repairs to Motor Van Rs. 1,500 have been debited to Motor Van account

(iv) Unearned Sales of Rs. 15,000 was incorrectly credited to Sales Account

Following accounts are used for correction and adjusting the transactions.
Sales; Unearned Sales, Motor Van; Sundry Debtors; Motor Van Expense; Machinery; Trade Mark
Format

Amina Ghalib Khan Ltd.

Trial Balance
As on 30th June, 2017

Amount (Rs.)

S. No Heads of Accounts Dr Cr

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Q3. Following Data related to Shahrukh Shakeel Manufacturing at the end of June, 2017 (Time should used 25 minutes).

Cost incurred during the period

Cost of Goods Manufactured ………………105,000 Carriage in ……………………………………… 3,000
Carriage Outward …………………………. 3,000 Direct Labour………………………………….. 16,000
Direct Material Used ………………………. 78,000 Cost of Goods Sold …………………….……… 110,000

INVENTORIES
Ending Beginning
Direct Material ………………………………………………….. 9,000 ……………………………………... 19,000
Work in Process …………………………………………………. ? ……….…………………………….. 7,400
Finished Goods ………………………………………………….. 12,000 ……………………….…………….. ?

Net Sales of Rs. 400,000, Marketing Expense 2%, Administration Expense 1 % of Net Sales and Other Expense 7,000
and Other Income is 25,000; Factory overhead is applied 60% of direct labour cost and 15,000 units were completed
during year.

Requirements:
(a) Cost of Goods Sold (b) Per Unit Cost (c) Net Profit/Loss

Format
Shahrukh Shakeel Manufacturing
Cost of Goods Sold Statement

For the Ended June, 2017

Per unit Cost of goods manufactured =

Gross Profit =

Net Profit =

Q4. From the following particulars of Hassan Rehman Ltd. find out the errors in cash book and bank statement by
missing method and than prepare Bank Reconciliation Statement as on 30-06-2017 (Time should used 25 Minutes).

i. The bank overdrawn as per company cash book on June 30th, 2010 was Rs. 16,000.
ii. The bank statement debited Rs. 750 for insurance premium paid on June 20, on company’s standing order, but it
was recorded by company as Rs. 570.
iii. Credit side of the cash book over cast Rs. 1,000.
iv. A checks deposited by bank of worth Rs. 45,000 but Rs. 8,000 check was not collected by bank.
v. Check issued of Rs. 20,000, but cashed prior to 30.06.2010 amounting to Rs. 17,500.

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 vi. Bank received dividend on behalf of company and recorded correctly but recorded twice in the cash book of Rs.
3,500.
vii. A check of Rs. 5,000 issued to vendor was dishonoured due to some technical errors of accountant.
viii. A check for Rs. 1,200 was issued by the company for purchase of stationery and was paid by the bank but not
recorded in company’s book.
ix. Bill Receivable collected by the bank directly on the behalf of company Rs. 8,000.
x. Check recorded for collection but not sent to the bank Rs. 12,000.

Hassan Rehman Ltd.

Bank Reconciliation Statement
As on June 30th, 2017

Cash Book Bank Statement

SECTION-C
(Attempt any two questions, all questions carry equal marks 15 * 2 = 30)

Q1. Hashim Khan & Company purchased a factory machine of Rs. 51,000 on January 1, 2005. The machine is expected
to have a salvage value of Rs. 6,000 at the end of its 5 year useful life. During the useful life, the machine is expected to
be used for 5,000 hours. The machine was used as under

Years Hours used

2005 1,200
2006 800
2007 1,150
2008 850
2009 1,000

Required: Prepare Schedule of Depreciation on the basis of following methods (Time should used 25 minutes).
(a) Straight Line Method
(b) Units of Output Method
(c) Double Declining Balance Method
(d) Sum of Year Digit Method

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Q2. The following Trial Balance of Saba Nisar & Co. on December 31st, 2016, Prepare Financial Statement

Particular Dr Cr Particular Dr Cr
Owner’s Equity 4,000 Note Payable 560
Account Payable 5,200 Note Receivable 720
Plant and Machinery 5,000 Return Inward 930
Office Furniture & Fittings 260 Provision for Bad Debts 250
Opening Inventory 4,800 Drawing 700
Motor Van 1,200 Return Outward 550
Account Receivables 4,570 Rent 600
Factory Lighting and
Cash in Hand 40 Lighting 80
Cash at Bank 650 Insurance 630
Wages 15,000 General Expenses 100
Salaries 1,400 Bad Debts 250
Purchases 21,350 Discount 650 370
Sales 48,000 Total Rs. 58,930 Rs. 58,930

The following adjustments are to be made:

(i) Stock at the end of year Rs. 5,200 and Three months factor lighting and heating is due, but not paid Rs. 30
(ii) 5 percent depreciation to be written-off on furniture and write-off further bad debts Rs. 70
(iii) The provision for bad debts to be Rs. 300 and provision for discount on debtor @ 2 % to be made
(iv) During the year machinery was purchased for Rs. 2,000, but was debited to Purchase account

Format

Saba Nisar & Co.

Trading and Profit & Loss Account
For the Year ended 31st, December 2016

Expenses Debit Revenue Credit

Total Total

Saba Nisar & Co.

Balance Sheet
As on 31st, December 2016

Equities Amount Assets Amount

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Q3. Prepare Store Ledger Card (SLC) from the following information (Time should used 25 Minutes)..
2017
March 1 Beginning Inventory …………. 180 Pieces @ Rs. 30 …………………… Rs. 5,400
9 Sales ………………………….. 60 Pieces @ Rs. 45 …………………… Rs. 2,700
12 Purchases ……………..……… 50 Pieces @ Rs. 28 …………………… Rs. 1,400
18 Sale…………………………… 140 Pieces @ Rs. 60 …………………… Rs. 8,400
23 Purchases …………..…………. 80 Pieces @ Rs. 26 …………………… Rs. 2,080
24 Purchase ……………………….. 90 Pieces @ Rs. 20 ……………………. Rs. 1,800
30 Sales …………………………… 180 Pieces @ Rs. 65 …………………… Rs. 11,700

Required
Use Comparative Cost Sheet in order to determine the Cost of Sales, cost of Closing Stock, Sales and Gross profit / loss
under each of the following method by using perpetual inventory system.
a. Cost are assigned on the basis of FIFO
b. Cost are assigned on the basis of Weighted Average

Store Ledger Card (SLC)

Purchases Sales Balances
Date Description Units @ Amount Units @ Amount Units @ Amount

Comparative Cost Sheet

Methods Balance Purchases Closing Stock CGS Sales Gross Profit

Best of Luck

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