CVM5401 Rehearsal Exam Paper 19 06 2022

THE OPEN UNIVERSITY OF SRI LANKA
FACULTY OF ENGINEERING
BACHELOR OF TECHNOLOGY IN ENGINEERING
LEVEL 5 – ACADEMIC YEAR: 2021/2022
CVM5401 – ACCOUNTING FOR ENGINEERS
CVM5401: Accounting for Engineers – Rehearsal Examination
Index No
(MULTIPLE-CHOICE QUESTIONS)
Use the special answer script provided to answer into this paper
Answer all questions in this section. Choose the best answer for each question.
Questions 1 to 20 carry 05 marks each.
Date: 19.06.2022 Total Marks: 100 Time: 03.30pm to 4.30pm
1. Which of the following statement best describes the role of financial accounting in a
firm?
i. It records transactions of a firm into the primary books.
ii. It prepares financial statement according to the Sri Lanka Accounting Standards.
iii. It provides information of a firm to it its managers for decision-making.
iv. It prepares financial statements of a firm for its interested parties for decision-
making.
2. Select the correct accounting equation;

i. Assets = Liabilities + Capital + [Income +Expenses]
ii. Capital = Assets – Liabilities + [Income –Expenses]
iii. Capital – Liabilities = Assets + [Income –Expenses]
iv. Assets – Capital = Liabilities + [Income +Expenses]
3. The accounting concepts that facilitates comparison of financial statements of an entity

of one accounting period with another is:
i. Materiality concept ii. Consistency concept
iii. Money measurement concept iv Accrual concept
4. What is the correct sequence in which the following activities take place in the
accounting process?
P. – The transaction is recorded in the relevant primary book.
Q. – The business transaction take place.
R. – The source document is prepared for the transactions.
S. – Prepare Financial Statements.
T. – The transaction is posted to the ledger.
Page 1 of 5
i. Q, P , R , T, S ii. Q, R , T, P , S
iii. Q, R , P , T, S iv Q , T , P , R, S
5. The following information were extracted from the books of Sarasavi Edu (Pvt) Ltd.
for the year ended 31st March 2022
Sale during the year Rs.2,400,000
Gross profit out of the Sale 40%
st
Inventory as at 01 April 2021 Rs.280,000
Inventory as at 31st March 2022 Rs.540,000
Based on the above information, What is the purchase during the year ended 31st March
2022 would be :
i. Rs.1,180,000/-
ii. Rs.1,220,000/-
iii. Rs. 960,000/-
iv. Rs.1,700,000/-
6. Mr. Senevirathne, owner of Fair Traders, paid Rs. 110,000 loan installment to the
Bank. Which has Rs. 45,000 capitals and Rs. 65,000 interest component. What would
be the impact on profit?
i. Decrease by Rs. 110,000/=

ii. Decrease by Rs. 45,000/=
iii. Increase by Rs. 65,000/=
iv. Decrease by Rs. 65,000/=
7. The owner of a business paid to a business’s creditor Rs.100,000/- out of his personal
Cash while meeting the creditor in a Bank. At that time the satisfied creditor gave a
discount of Rs.10,000/-
What is the impact of this transaction on the accounting equation?
No Liability Equity
i Decrease by Rs.100,000 Increase by Rs.100,000
ii Decrease by Rs.90,000 Increase by Rs.90,000
iii Decrease by Rs.100,000 Decrease by Rs.100,000
iv Decrease by Rs.90,000 Decrease by Rs.90,000
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8. The Trial balance of XYZ PLC as at 31.03.2022 did not balance and the difference was
transferred to a suspense account. A subsequence investigation revealed the following:
 A payment of Rs.100,000 for salary has been credited only in the cash book no
debit entry has been recorded.
 The sales ledger account has been understated by Rs.30,000
The balance of the suspense account before rectifying the above error would be:
i. Rs.130,000 debit ii. Rs.130,000 credit
iii. Rs. 70,000 debit iv Rs.30,000 credit
9. The following information relates to Sun (Pvt) Ltd. for the year ended 31st March
2022
Inventory as at 01st April 2021 Rs.450,000
st
Inventory as at 31 March 2022 Rs.600,000
Purchases for the year Rs.900,000
Gross profit for the year 40% on Sales
If operational cost of the Sun (Pvt) Ltd is 60% from the Gross Profit, What is the
Sales value and Net profit value of the Sun (Pvt) Ltd.
No Sales’ Value (Rs.) Net Profit Value (Rs.)

i Rs.1,250,000 Rs.400,000
ii Rs.1,250,000 Rs.200,000
iii Rs.1,400,000 Rs.400,000
iv Rs.1,150,000 Rs.150,000
10. Hardy (Pvt) Ltd. acquired a plant on 01st April 2019 at a cost of Rs.600,000/- The
estimated useful life of the plant is six years and depreciation of the asset is charged on
the straight line basis. Its residual value at the end of useful life is zero. The accumulated
depreciation for the year ended 31st March 2022 would be:
i. Rs.600,000/-
ii. Rs.500,000/-
iii. Rs.300,000/-
iv. Rs.200,000/-
11. Which of the following is not a real asset?

i. Cash in Hand
ii. Debtors
iii. Land & Building
iv. Good will
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12. The Opening inventory balance of a business was understated by Rs.125,000/- while
the closing inventory balance was overstated by Rs.30,000/- The impact is:
i. Overstating of gross profit by Rs.95,000/-

ii. Understating of gross profit by Rs.155,000/-
iii. Overstating of gross profit by Rs.155,000/-
iv. Understating of gross profit by Rs.95,000/-
13. Which of the following is not a component of a complete set of financial statements?
i. Statement of Financial Position
ii. Statement of Cash Flows
iii. Statement of Budget
iv. Statement of Income
14. Which of the following is a liability asset?

i. Income receivable
ii. Bank Balance
iii. Rent Paid
iv. Salary payable
15. Owners withdrawal of Rs. 100,000 is impacted to

i. Income ii. Assets
iii. Equity iv. Liability
16. What is the ratio used to analyze financial position of a business firm?
i. Inventory Turn Over Ratio
ii. Interest Coverage Ratio
iii. Gross Profit Ratio
iv. Debt equity Ratio
17. What is the item not record in the main Journal?

i. Opening balances of a ledger.
ii. Fixed Assets acquisition.
iii. Return outwards
iv. Bad debt written off
18. The Sarasavi Book Shop acquired a Photocopty machine for Rs.1,000,000/- on 01st
April 2018 estimated useful life of this machine is 5 years. How ever this machined
was sold on 31st March 2022 for Rs.350,000
What is the accounting profit or loss on the disposal of the Photocopy machine?
i. Rs.350,000/-
ii. Rs.150,000/-
iii. (Rs.50,000/-)
iv. Rs.250,000/-
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19. What is the ratio used analyze Liquidity of a business firm?
i. PE Ratio
ii. Quick Ratio
iii. Net Profit Ratio
iv. Debt equity Ratio
20. Following information were taken as at 31.03.2022 from the final accounts of Smart
Traders, a sole proprietor who buys and sells fresh fruits and vegetables.
Sales Rs.4,000 000.00
Net Profit of the Year after Rs.500,000.00
Interest & Tax (PAIT)
Interest expense Rs.100,000.00
Income Tax for the year Rs.200,000.00
What is the net profit ratio and interest coverage ratio?

Note: Interest Coverage = (PBIT) / Interest
Net Profit Ratio % Interest Coverage - Times

i. 12.5 6
ii. 20.0 4
iii. 15.0 5
iv. 12.5 8
END
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THE OPEN UNIVERSITY OF SRI LANKA

CVM5401: Accounting for Engineers – Rehearsal Examination

Date: 19.06.2022 Total Marks: 100 Time: 03.30pm to 4.30pm

2. Select the correct accounting equation;

3. The accounting concepts that facilitates comparison of financial statements of an entity

i. Decrease by Rs. 110,000/=

No Sales’ Value (Rs.) Net Profit Value (Rs.)

11. Which of the following is not a real asset?

i. Overstating of gross profit by Rs.95,000/-

14. Which of the following is a liability asset?

15. Owners withdrawal of Rs. 100,000 is impacted to

17. What is the item not record in the main Journal?

What is the net profit ratio and interest coverage ratio?

Net Profit Ratio % Interest Coverage - Times

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