Fin 621 Final Term Papers 99%25 Sure Solved (2)

8/17/2019 Fin 621 Final Term Papers 99%25 Sure Solved (2)

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FIN621- Financial Statement Analysis

2 (a(ers (" 2)1) and * (a(ers o" 2))9

FINA./ER$ E0A$INA/IN

S(rin 2)1)

FIN621- Financial Statement Analysis 7Session - 18 9) min

$ar:s 69

Question No: 1 ( Marks: 1 ) - Please choose one

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http://vugoogle.com/

http://groups.google.com/group/vustudymania

http://groups.google.com/group/attock-vu-group



Which one of the following is NOT a type of a!usting entries"

# $ntries to recor accrue re%enues # $ntries to recor accrue e&penses # $ntries to istri'ute un-earne re%enue

# $ntries to recor re%enues

Types of !usting $ntriesi) $ntries to istri'ute e&peniture 'enefiting ore than one accounting perio e*g* fi&eassets+ pre-pai costs (if for ore than one year)* Pre-pai costs are initially taken assset an corresponing portion for an accounting perio is reuce there fro* ,n thecase of office supplies+ raw aterials+ the forula is: - opening 'alance purchasesclosing 'alance* This woul gi%e the aount.e&tent of official supplies+ raw aterialsconsue uring the accounting perio* ,t ust also 'e note that pre pai costs+ ifconsue entirely uring accounting perio+ are charge irectly to e&pense*/i&e assets are those which are use for ore than one ccounting perio*

ii) $ntries to istri'ute un-earne re%enue i*e* re%enue collecte in a%ance (eferrere%enue)* ,t is first recore as lia'ility+ an is graually reuce in the su'se0uentaccounting perio*iii) $ntries to recor accrue e&penses e*g* unpai salaries+ interest paya'le+ to 'e pai inthe su'se0uent accounting perio*i%) $ntries to recor accrue re%enues* These are first recore as ssets i*e* e%enueecei%a'le* /or e&aple if renering of ser%ices.eli%ery of goos is sprea o%er anu'er of accounting perios+ an 'illing is to 'e one at the copletion of reneringser%ices or eli%ering goos+ then corresponing a!usting entry for each accounting perio is ae for e%enue ecei%a'le+ 'ut not yet earne*Page 2 34

Question No: 3 ( Marks: 1 ) - Please choose one Which one of the following stateents is T5$ regaring istri'utions to stockholers"

# The payent of i%iens is not irectly relate to the profits of a gi%en perio

http:..wps*prenhall*co.'p6werner6ifa67.8.339.9;;339*cw.-.9;;33;.ine&*htlM<Q 2 => # ?hareholers can ini%iually ecie on their istri'utions # To recei%e a corporate i%ien+ stock ust 'e owne on the ate of eclaration # <orporate i%iens reuce contri'ute capital an therefore+ stockholers@ e0uity

Question No: 7 ( Marks: 1 ) - Please choose one <ash flow relating to in%esting acti%ities oes NOT present the cash effects of which ofthe following"



# Plant assets # ,ntangi'le assets # ,n%estents # Ae't financing

Question No: ( Marks: 1 ) - Please choose one Office supplies are purchase on account* The copany uses a perpetual in%entorysyste* What is the correct !ournal entry for this purchase of office supplies"

# Ae'it - PurchasesB <reit - <ash # Ae'it - Merchanise ,n%entoryB <reit - <ost of Coos ?ol # Ae'it - Office ?uppliesB <reit - ccounts Paya'le # Ae'it - Merchanise ,n%entoryB <reit - ccounts Paya'le


Which of the following is NOT true a'out the specific ientification etho" # ,t re0uires a %ery etaile physical count

# This etho allows anageent to easily anipulate ening in%entory cost # This etho is %ery har to use on interchangea'le goos # This results in an o%erstate in%entory account uring the perio of inflation

Question No: > ( Marks: 1 ) - Please choose one ,f sales re%enues are s* ==+===+ cost of goos sol is s* 71=+===+ an operatinge&penses are s* >=+===+ what is the gross profit"

# s* 7=+===

# s* 4=+===

C*P D ?E$? F <*C*?C*P D ===== F 71====C*P D 4=+===

# s* 7=+===

# s* ==+===

Question No: ; ( Marks: 1 ) - Please choose one Which of the following stateents 'est escri'es the nature of epreciation"

# egular reuction of asset %alue to correspon to the ecline in arket %alue asthe asset ages



# process of correlating the 'ook %alue of an asset with its graual ecline in

physical efficiency

# llocation of the cost in a anner that will ensure that plant an e0uipent ites

are not carrie on the 'alance sheet at aounts in e&cess of net realiGa'le %alue # llocation of the cost of a plant asset to the perios in which 'enefits are recei%e

Question No: 8 ( Marks: 1 ) - Please choose one Warner <orporation reporte net incoe in e&cess of its net cash flow fro operations* possi'le e&planation of this ifference is:

# Aepreciation e&pense

# Non operating gains

http:..highere*cgraw-hill*co.sites.==;374>881.stuent6%iew=.chapter17.ultiple6choice60uiG*htlM<Q 2 =

# ecrease in incoe ta& rates

# ecrease in accounts recei%a'le o%er the perio

Question No: 4 ( Marks: 1 ) - Please choose one ,n a stateent of cash flows+ the ac0uisition of lan 'y issuing capital stock:

# ,s not shown at all+ since no cash was recei%e or is'urse

# ,s shown as an in%esting acti%ity

# ,s shown as a financing acti%ity

# ,s shown in a suppleentary scheule as a non-cash in%esting an financingtransaction

Question No: 1= ( Marks: 1 ) - Please choose one Which of the following opinions state that the financial stateents o not present fairlythe financial position+ results of operations etc+ in confority with CP"

# 5n0ualifie opinion

http://highered.mcgraw-hill.com/sites/0072396881/student_view0/chapter13/multiple_choice_quiz.html






# Qualifie opinion

# a%erse opinion

%erse Opinion

/inancial stateents o not present fairly the financial position+ results of operations+ ancash flows in confority with CP*

# Aisclaier of opinion

Question No: 11 ( Marks: 1 ) - Please choose one Which one of the following is NOT a liitation of financial stateents"

# They always present past

# They always present the onetary ters # They help in assessent of future profita'ility

Page 2 1=7/inancial ?tateents ha%e the liitation that assessent of future profita'ility is not possi'le

# They gi%e no inforation a'out anageent an eployee relations

Question No: 13 ( Marks: 1 ) - Please choose one Which of the following 'usiness owner is personally lia'le for its e'ts" # <orporations

# ?ole proprietorship

?ole proprietorship 'usiness entity owne 'y a single ini%iual+ which is unincorporate* The owner of asole proprietorship is personally lia'le for any e'ts or o'ligations of the 'usiness*

http:..en*ii*hu.stockarket.sole6proprietorship*htl

# Ceneral partnership

# Eiite lia'ility copany

Question No: 17 ( Marks: 1 ) - Please choose one Which of the following characteristics is NOT generally regare as right of coonshareholers"



# Preepti%e right

# Hoting rights

# Preference in li0uiation

<oon shareholers are entitle only to the resiual interest in a li0uiationB creitorsan preferre shareholers ha%e the preference* ,n the a'sence of oification+ coonshares hol a preepti%e right+ ha%e %oting pri%ileges+ an are reaily transfera'le*

Q 2 =3http:..www*principlesofaccounting*co.0uestionsI3=-I3=I3=ultipleI3=choice.chapterI3=1I3=-I3=ultipleI3=choice*ht

# Transfera'ility of shares

Question No: 1 ( Marks: 1 ) - Please choose one What woul 'e the !ournal entry to recor the issue of 1+=== shares of s* 1 par-%aluecoon stock+ which is issue for s* per share"

# Ae'it <ash +===B <reit <oon ?tock +===

# Ae'it <ash +===B <reit <oon ?tock+ 1+===+ <reit Pai-in-<apital in $&cessof Par 7+===

7* '* The !ournal entry to recor the issue of J1 par-%alue coon stock for J per shareis:

<ash +=== <oon ?tock 1+=== Pai-in <apital in $&cess of Par 7+===

Q 2 =7http:..www*principlesofaccounting*co.0uestionsI3=-I3=I3=ultipleI3=choice.chapterI3=1I3=-I3=ultipleI3=choice*ht

# Ae'it <ash +===B <reit <oon ?tock+ 1+===+ <reit etaine $arnings 7+===

# Ae'it <ash +===+ Ae'it Pai-in-<apital in $&cess of Par 7+===B <reit <oon?tock +===




?uppose that an in%estor 'uys shares for s* 19per share fro a copany whose stockKs par %alue is state at s* 1= per share+ then what will 'e the %alue of pai in capital foreach share sol" # s* 39

# s* 9

http:..www*scri'*co.oc.3=9877.34-?tocks-an-?hares

# s* 3=

# s* 7=

Question No: 1> ( Marks: 1 ) - Please choose one ,n the %ertical analysis of incoe stateent+ all the accounts are e&presse as a

percentage of which of the following" # Net sales

(PC$ 138)When using %ertical analysis+ the analyst calculates each ite on a single financialstateent as a percentage of a total* The total use 'y the analyst on the incoe stateentis net sales re%enue

# Cross sales

# Net incoe

# Total e&penses Question No: 1; ( Marks: 1 ) - Please choose one The changes in the financial stateent ites fro a 'ase year to following years areoften e&presse as which of the following"

# Tren percentages

Page 2 138Tren percentages. LoriGontal nalysis. ,ne& nalysis: This analysis consiers changesin ites of financial stateent fro a 'ase year to the following years to show theirection of change* This is also calle horiGontal analysis*

# <oponent percentages

# <oon percentages



# oth tren an coponent percentages


Which of the following inicates the relati%e siGe of each ite inclue in a total" # Tren percentages

# <oponent percentages

Page 2 138<oponent percentages. Hertical nalysis. <oon- ?iGe nalysis: This type ofanalysis inicates the relati%e siGe of each ite in the /inancial ?tateents as a percentage of the total of that ?tateent i*e* Total ssets or total Eia'ilities ?hareholers e0uity in alance ?heet an ?ales in ,ncoe ?tateent*

# <oon percentages

# oth tren an coponent percentages Question No: 14 ( Marks: 1 ) - Please choose one ,f a fir has s* 1== in in%entories+ a current ratio e0ual to 1*3+ an a 0uick ratio e0ual to1*1+ what is the firKs Net Working <apital"

# s* =

# s* 1==

# s* 3==

# s* 1+=== Question No: 3= ( Marks: 1 ) - Please choose one copany can ipro%e (lower) its e't-to-total asset ratio 'y oing which of thefollowing"

# orrow ore

# ?hift short-ter to long-ter e't

# ?hift long-ter to short-ter e't

# ?ell coon stock

M<Q 2 =;



http:..we'*utk*eu.!wachowi.c0uiG.c>*htl Question No: 31 ( Marks: 1 ) - Please choose one risle an ringleKs e't-to-total assets ratio is I* What is its e't-to-e0uity ratio"

# 3I # ;I # >I

?ince the e't-to-total assets ratio is*+ then e0uity-to-total assets ratio is *>* The ratio ofe't to e0uity is then *.*> or *>>; (>>*;I)*http:..we'*utk*eu.!wachowi.c0uiG.c>*htlM<Q 2 1=

# 7I

Question No: 33 ( Marks: 1 ) - Please choose one $arnings per share+ return on sales+ an return on e0uity are all e&aples of which of thefollowing"

# Ee%erage ratios # Ei0uiity ratios # Turno%er ratios # Profita'ility ratios

PC$ 2 178

Question No: 37 ( Marks: 1 ) - Please choose one Which of the following coul account for a copanyKs gross profit ratio increasing froone perio to the ne&t"

# n increase in the cost of sales which has not 'een accopanie 'y an increase inthe selling price of goos sol

# n increase in the selling price of goos sol which has not 'een accopanie 'yan increase in the cost of sales

http:..wps*pearsone*co*uk.ea6uk6he6yson6accnas6;.>.1>18.3=7=>4*cw.ine&*htM<Q 2 33

# change in the i& of goos sol so that lower profit argin goos take a greater proportion of total sales

# change in stock %aluation etho at the year en which leas to a ecrease inthe closing stock figure



Question No: 3 ( Marks: 1 ) - Please choose one Which of the following is MO?T likely to offer you the highest rate of return together

with the highest risk" # <ash in a 'uiling society eposit account

# Preference shares

# Orinary shares

http:..wps*pearsone*co*uk.ea6uk6he6yson6accnas68.19.7;33.497=77*cw.content.ine&*htlM<Q 2 38

# Co%ernent 'ons

Question No: 39 ( Marks: 1 ) - Please choose one ssue that a copany total pai in capital of s* 9;+1>=+===+ Preferre shares s*13+===+=== an coons ?tock s* 1+===+===* <alculate the aount of total legalcapital of the copany*

# s* 3>+===+===

Total legal capital D 13+===+=== (preferre) 1+===+=== (coon) D s*3>+ ===+===PC$ 2 14

# s* 3===+===

# s* 9+1>=+===

# s* 7+1>=+===

Question No: 3> ( Marks: 1 ) - Please choose one < <opany has cuulati%e preferre stock an three years of i%iens are owe*5sing the following inforation+ calculate the 'ook %alue per share of the preferrestock* 4I preferre stock+ s* 1== par+ 7== shares authoriGe an issue s* 7+===<all price s* 1=4etaine $arnings s* 38+===



# s* 1=4

ook %alue.share: preferre stock D call price.reeption %alue . Nu'er of preferre shareD 7==1=4 D 1=4

7==PC$ 2 11>

# s* 3=3 # s* 311 # s* 118 Question No: 3; ( Marks: 1 ) - Please choose one copany has a cost of goos sol of s* 97=+===B the 'eginning in%entory is s*13=+===+ an ening in%entory is s* 18=+===* <alculate the nu'er of ays to sell thein%entory* (oun the figures to the nearest whole)

# 87 ays # 139 ays # 1= ays

%erage in%entory D opening in% ening in% . 3 D 13====18====. 3 D 19====,n%entory turno%er D <C? . a%erage in%entory D 97=+=== . 19==== D 7*97 Nu'er of ay to sell the in%entory D 7>9 . 7*97 D 1=7*74 # 1== ays Question No: 38 ( Marks: 1 ) - Please choose one Which one of the following stateent inicates the ,n%entory turno%er ratio"

# Low 0uickly copany prepare its in%entory # Low 0uickly copany con%erts its in%entory into cash # Low 0uickly copany purchases its in%entory # Low 0uickly copany sells its in%entory

,t shows how 0uickly in%entory is sol an is eterine 'y ,n%entory Turno%er atioPage 2 173 Question No: 34 ( Marks: 1 ) - Please choose one Operating cycle 'elongs to which group of ratios" # Ee%erage ratios # Ei0uiity ratios # Profita'ility ratios



# cti%ity ratios

$fficiency of operating cycle.process: ,t is eterine 'y acti%ity ratiosPage 2 19

Question No: 7= ( Marks: 1 ) - Please choose one Which of the following is the ieal position of e't ratio" # 7=I # >=I # 9=I # 9I Question No: 71 ( Marks: 1 ) - Please choose one What will 'e effect of purchase of in%entory on open account on 0uick ratio of thecopany"

# ,ncrease # Aecrease # No effect # <an not 'e foun fro the gi%en inforation Question No: 73 ( Marks: 1 ) - Please choose one What will 'e the effect on the in%entory turno%er ratio of the copany+ if it changefro /,/O to E,/O uring the perio of inflation"

# ,ncrease # Aecrease # No effect # <an not 'e foun fro the gi%en inforation Question No: 77 ( Marks: 1 ) - Please choose one What will 'e the effect on the $P? of the copany+ if it pai stock i%ien on coonstock"

# ,ncrease # Aecrease # No effect # <an not 'e foun fro the gi%en inforation Question No: 7 ( Marks: 1 ) - Please choose one Which of the following is essential to conuct 'usiness acti%ity+ particularly in ties ofa%ersity"

# Profita'ility # Ei0uiity



http:..'ooks*google*co.'ooks"iD-A?e53kheo<pgDP33lpgDP330DWhichofthefollowingisessentialto2%Donepage0DWhichI3=ofI3=theI3=followingI3=isI3=essentialI3=tofDfalse # ?ta'ility # ?ol%ency

Question No: 79 ( Marks: 1 ) - Please choose one /ailure to recor the receipt of a utility 'ill for ser%ices alreay recei%e will result inwhich of the following"

# n o%erstateent of assets # n o%erstateent of lia'ilities # n o%erstateent of e0uity # n unerstateent of assets Question No: 7> ( Marks: 1 ) - Please choose one

Which of the following woul 'e the proper !ournal entry to recor s* 1+=== ofAi%iens pai 'y < <orporation"

# Ae'it Ai%iens 1+===B <reit <ash 1+===

?,MPE$ RO5NE $NTS

# Ae'it ccounts Paya'le 1+===B <reit <ash 1+=== # Ae'it Ai%iens $&pense 1+===B <reit <ash 1+=== # Ae'it Ai%iens $&pense 1+===B <reit ?er%ice e%enue 1+=== Question No: 7; ( Marks: 1 ) - Please choose one Low oes the aci test ratio iffer fro the current ratio"

# ,t is concerne with future cash flows rather than historical cash flows # ,t oes not iffer fro the current ratio # ,t e&clues the %alue of stocks # ,t e&clues the trae e'tors Question No: 78 ( Marks: 1 ) - Please choose one Which of the following pro%ies the 'asis for the trial 'alance"

# ,ncoe stateent

# ?tateent of cash flow

# Eeger

# !usting entries



Question No: 74 ( Marks: 1 ) - Please choose one Which of the following is NOT norally re0uire for re%enue to 'e recogniGeaccoring to the re%enue principle for accrual 'asis accounting"

# The price is fi&e or eterina'le # ?er%ices ha%e 'een perfore # <ash that has alreay 'een collecte

http:..'ooks*google*co*pk.'ooks"iDfOe&H9t5<pgDP1=8lpgDP1=80Di2%Donepage0fDfalse

# $%ience of an arrangeent for custoer payent e&ists Question No: = ( Marks: 1 ) - Please choose one ,f onthly financial stateents are esire 'y anageent then:

# RournaliGing an posting a!usting entries ust 'e one each onth # RournaliGing an posting closing entries ust 'e one each onth # Monthly financial stateents can 'e prepare fro worksheetsB a!ustents anclosing entries nee not 'e entere in the accounting recors

http:..highere*cgraw-hill*co.sites.==;374>881.stuent6%iew=.chapter9.ultiple6choice60uiG*htlM<Q 2 =8

# !usting an closing entries ust 'e entere in the accounting recors 'efore preparation of interi financial stateents Question No: 1 ( Marks: 1 ) - Please choose one < <opany sol a plant asset that originally cost s* 9=+=== for s* 33+=== cash* ,fthe copany correctly reports a s* 9+=== gain on this sale+ the accuulate epreciationon the asset at the ate of sale ust 'e:

# s* 77+===

ook %alue D cash - gain D 33=== - 9=== D 1;===Aepreciation D 9====-1;=== D 77=== # s* 38+=== # s* 3;+=== # s* 37+=== Question No: 3 ( Marks: 1 ) - Please choose one

http://books.google.com.pk/books?id=fOAKexV5AtUC&pg=PA108&lpg=PA108&dq=i#v=onepage&q&f=false






Which of the following stateents is <O$<T regaring epreciation ethos" # ccuulate epreciation represents a fun 'eing accuulate fro thereplaceent of assets # The cost of a achine inclues the cost of repairing aage to the achineuring the installation process

# copany ay use ifferent epreciation ethos in its financial stateents anits incoe ta& returns # The use of an accelerate epreciation etho causes an asset to wear out ore0uickly than oes the straight line etho Question No: 7 ( Marks: 1 ) - Please choose one The actions taken 'y the anageent to ake copany appear as strong as possi'le inits financial stateents is tere as which of the following"

# Winow ressing

/irs can eploy winow ressingU techni0ues to ake their financial stateents lookstronger*PC$ 2 13 # 5nerstaning # <oprehensi%eness # Materiality Question No: ( Marks: 1 ) - Please choose one < <opany selecte V'ullah an ha <harte ccountants@ as its auitors .accountancy fir* fter auit the auitors state copany@s auit report as:We ha%e e&aine the accounts of < <opany up to the year ene 7=th Rune+ 3==4+an other recor 'ase on these accounts an we got all the inforation re0uire 'y us*,n our opinion the financial stateents an the accounts on which they are 'ase ha%e 'een prepare in confority with CP an present a true an fair position of the affairsof < <opany* What o you think the a'o%e case is which type of following auit reports" # Qualifie uit Opinion # 5n-0ualifie uit Opinion

5n0ualifie: ,t states that /inancial ?tateents present inforation in confority withCP*

5n-0ualifie uit <ertificate.OpinionU: We ha%e e&aine the accounts.financialstateents of66666666 up to the year ene 7=th Rune+ 66666+ an other recor 'ase onthese accounts an we got all the inforation re0uire 'y us* ,n our opinion the financialstateents an the accounts on which they are 'ase ha%e 'een prepare in conforitywith generally accepte accounting principles+ an present a true an fair position of theaffairs of 66666666666666666*PC$ 2 1=1



# %erse uit Opinion # Aisclaier uit Opinion Question No: 9 ( Marks: 1 ) - Please choose one

ll of the following users are %ery uch concerne with the ratio analysis $<$PT"

# <reit analyst+ incluing 'anks who want to know the crei'ility of copany # on rating copanies+ who analyGe ratios to help ascertain a copany@s a'ilityto pay its e'ts # <ustoers+ who want to know the esigns an 0uality of the proucts offere

PC$ 2 137+ 13atio analysis is use 'y three ain groups: (1) anagers+ who eploy ratios to helpanalyGe+ control+ an thus ipro%e their firs@ operationsB (3) creit analyst+ incluing 'ank loan officers an 'on rating analysts+ who analyGe ratios to help ascertain a

copany@s a'ility to pay its e'tsB an (7) stock analyst+ who are intereste in acopany@s efficiency+ risk+ an growth prospects*

# Managers+ to analyGe+ control+ an thus ipro%e their working operations Question No: > ( Marks: 1 ) - Please choose one ,n orer to know the percentage of assets finance 'y creitors+ which of the followingratio is calculate"

# Ae't atio # $0uity atio # Operating creit atio # Quick atio

Question No: ; ( Marks: 1 ) - Please choose one Which of the following stateent is the E$?T E,$ES to 'e correct"

# fir that has a high egree of 'usiness risk is less likely to want to incurfinancial risk # There e&ists little or no negotiation with suppliers of capital regaring thefinancing nees of the fir

http:..wps*pearsone*co*uk.ea6uk6he6wachowicG6funfinan613.3>.>>;4.1;=488*cw.content.ine&*htlM<Q 2 =4

# /inancial ratios are rele%ant for aking internal coparisons # ,t is iportant to ake e&ternal coparisons or financial ratios



Question No: 8 ( Marks: 1 ) - Please choose one Which of the following is E$?T likely to 'e presente in Notes to financial stateentsof a fir"

# ?ignificant pening lawsuits # Methos of <ost flow assuptions # fir@s capital resource nees an li0uiity # ?ales 'y region or 'usiness segent

Question No: 4 ( Marks: 7 ) What o you unerstan 'y the efficiency of the operating cycle" ,t is eterine 'y acti%ity ratios+ keeping in %iew the con%ersion process+ which is as

follows:-

N?W$

$fficiency of operating cycle.process: ,t is eterine 'y acti%ity ratios+ keeping in %iewthe con%ersion process+ which is as follows:-

<ash.assets ---- X ,n%entory ----X ecei%a'les ---- X <ashProcessing ?ales+ collection

Operating <ycleD,n%entory sale ays (a%erage) ecei%a'le <ollection ays (a%erage)*

The shorter the operating cycle+ the higher the 0uality of current assets an the greater theefficiency of anageent Question No: 9= ( Marks: 7 ) What will 'e the effect on the 'ook %alue per share of the coon stock of a copany+if the corporation o'tains a loan"

N?W$

When a corporation o'tains a 'ank loan there is no effect upon 'ook %alue per share ofcoon stock* ssets an lia'ilities 'oth increase 'y its aount* Therefore+ net assetswill reain unchange*

Question No: 91 ( Marks: 9 )



<urrent assets an current lia'ilities ata for copanies A an $ are suariGe asfollows:

<opany A <opany $<urrent assets s* ==+=== s* 4==+===

<urrent lia'ilities 3==+=== ;==+===Working capital s* 3==+=== s* 3==+=== e0uireent:$%aluate the relati%e li0uiity of the copanies* Which copany is ore fa%ora'le"

N?W$

1* /or <opany A:<urrent atio D <urrent ssets . <urrent Eia'ilities

D ==+=== . 3==+=== D 3

3* /or <opany $:<urrent atio D <urrent ssets . <urrent Eia'ilities D 4==+=== . ;==+=== D 1*389

?O <opany A is ore fa%ora'le then $*

Question No: 93 ( Marks: 9 ) /ollowing is the 'alance sheet of the < <opany*< <orporationalance ?heetMar* 71+ 1441 ssets<ash s* 13+9== Notes recei%a'les 1=+===ccounts recei%a'les (net) >8+9==,n%entories at cost 9=+===Plan e0uipent (net of epreciation) >>+===Total assets s* 881+===Eia'ilities ?tockholer@s e0uityccounts paya'le s* ;3+=== Notes paya'le 9+9==ccrue lia'ilities >+===<oon stock (>=+=== shares+ s* 1=par) >==+===etaine earnings 18+9==



Total lia'ilities an owner@s e0uity s* 881+===

e0uireent:<alculate the current ratio an 0uick ratio for 'oth years* (3*9 3*9) N?W$

1* <urrent atioD<urrent ssets . <urrent Eia'ilities D 379+=== . 173+9== D 1*;;

3* Quick atio D <urrent ssets - ,n%entories . <urrent Eia'ilities D (379+=== F 9=+===) . 173+9== D 189+=== . 173+9== D 1*74

Question No: 97 ( Marks: 9 ) Sou ha%e 'een gi%en the two years ata of SY copany as follows:

3==9 3== Net sales 1+47+>33 1+=7+37 ssets: eginning of the year 1+=74+;71 884+98 $n of year 1*17;=1 1+=74+;71 <alculate the Total ssets Turno%er ratio for 'oth years*

N?W$

1* /or Sear 3==9:Total ssets Turno%er atio D 1+47+>33 . 1+ 11+ 7;=1 D =*17 3* /or Sear 3==:Total ssets Turno%er atio D 1+=7+37. 1+=74+;71 D 1*74



2N< PAPER

/,NET$M $M,NT,ON?pring 3=1=

/,N>31 - /inancial ?tateent nalysis

Tie: 4= inMarks: >4

Student In"o

StudentI<

enter

E>am<ate /ue? Au 1)? 2)1)

3uestion No 1 7 $ar:s 1 8 - Please c!oose one

fter recoring the transactions in !ournal+ posting is ae to which of the following" @ Trial alance

@ /inancial ?tateents

@ Eeger

PC$ 2 =4Posting in leger which ean transferring e'its an creits fro !ournal to legeraccount This is also calle legerising or classification

@ fter-closing Trial alance


Which of the following is /RE a'out the preparation of Trial alance"

@ ,t is prepare at the 'eginning of the year

@ ,t is prepare at the en of the fiscal year

@ ,t is prepare at the 'eginning of the accounting perio

@ ,t is prepare at the en of the accounting perio



PC$ 2 1>t the en of accounting perio+ a list of all leger 'alances is prepare* This list is calletrial alance*

3uestion No * 7 $ar:s 1 8 - Please c!oose one

Prepai $&pense is a(n) 666666666 account an has a 666666666 noral 'alance*

@ e%enue+ creit

@ Eia'ility+ creit

@ sset+ e'it @ $&pense+ e'it

3uestion No B 7 $ar:s 1 8 - Please c!oose one

One purpose of closing entries is to gi%e Gero 'alances to which of the followingaccounts"

@ sset an lia'ility accounts

@ Eia'ility an capital accounts

@ e%enue an e&pense accounts

PC$279P5PO?$ O/ <EO?,NC $NT,$?1* 5pates the owner@s capital account in the leger 'y transferring net incoe (loss) anowner@s rawings to owner@s capital*3* Prepares the teporary accounts (re%enue+ e&pense+ rawings) for the ne&t perio@s postings 'y reucing their 'alances to Gero*

@ $&pense an capital accounts




Which of the following woul 'e consiere as cash flow fro in%esting acti%ities"

@ Procees fro issuance of long-ter e't @ $&peniture for sale of plant an e0uipent

PC$ 2 ;<ash flow fro in%esting acti%ities inclues cash receipts an payents that arise fro/i&e an Eong Ter assets of the organiGation* @ Payents to suppliers @ eceipts fro sale of goos or ser%ices


The cash flow fro in%esting acti%ities shows the cash effects of which of the following" @ ,ncoe stateent ites

@ Eong ter assets ites

PAGE # 47Cash Flow from Investing Activities

<ash flow fro in%esting acti%ities inclues cash receipts an payents that arise fro/i&e an Eong Ter assets of the organiGation*

@ Eong ter lia'ility stockholer@s e0uity

@ Eong ter lia'ility an long ter assets

3uestion No C 7 $ar:s 1 8 - Please c!oose one

,n a perpetual in%entory syste+ which of the following is N/ part of the series of !ournal entries ae when erchanise is sol on creit"

@ <reit the <ost of Coos ?ol account

http:..highere*cgraw-hill*co.sites.==;344>97>.stuent6%iew=.chapter9.interacti%e60uiG6a*htlM<Q 2 1;

http://highered.mcgraw-hill.com/sites/0072996536/student_view0/chapter5/interactive_quiz_a.html






@ <reit the ?ales account @ <reit the Merchanise ,n%entory account @ Ae'it the ccounts ecei%a'le account

3uestion No D 7 $ar:s 1 8 - Please c!oose one

Which of the following is N/ an e&aple of accelerate epreciation etho"

@ ?traight-line etho

Accelerated-Depreciation method ,n this etho higher epreciation rate is charge in

early years an lower rate in later years*

!traight "ine ethod5ner this etho+ a fi&e aount is calculate 'y a forula* That fi&e aount ischarge e%ery year irrespecti%e of the written own %alue of the asset

@ ?u-of-the-years igit etho @ Aou'le-eclining 'alance etho @ Moifie ccelerate <ost eco%ery ?yste


s state in the auit report+ or eport of ,nepenent ccountants+ the priaryresponsi'ility for a copany@s financial stateents lies with which of the following"

@ The owners of the copany @ ,nepenent financial analysts @ The auitors @ The copany@s anageent

PC$ 2 48uit of financial stateents is inepenent of the 'usiness issuing these* /inancial

?tateents preparation is Manageent@s responsi'ility

3uestion No 1) 7 $ar:s 1 8 - Please c!oose one

Which of the following is N/ a typical classification of partnerships"

@ Ceneral partnerships



@ Eiite partnerships

@ Eiite lia'ility partnerships

@ Eiite capital partnerships

http:..sall'usiness*finlaw*co.'usiness-structures.partnership.partnerships-types*htl


<apital stock is norally liste on which of the following financial stateents of a 'usiness enterprise"

@ <ash flow ?tateent

@ ,ncoe ?tateent @ ?tateent of etaine $arnings

@ alance ?heet

<apital ?tock is a preferre stock that a copany is authoriGe to issue+ accoring to theircorporate charter* <apital stock is norally liste on a copany@s 'alance sheet


The oney that a copany gets fro potential in%estors in aition to the state %alue ofthe stock is referre to which of the following"

@ Pai in capital

@ itional pai in capital

PC$ 2 117

@ <apital stock

@ <ontri'ute capital

3uestion No 1* 7 $ar:s 1 8 - Please c!oose one

Cenerally + in%estors want to 'uy shares at which of the following prices"



@ t face %alue

@ elow face %alue

@ 'o%e face %alue

@ t arket %alue

3uestion No 1B 7 $ar:s 1 8 - Please c!oose one

y coputing coponent percentages for se%eral successi%e 'alance sheets+ which of thefollowing can N/ 'e foun"

@ The increasing ites @ The ecreasing ites

@ The unchange ites

@ The future profita'le ites

PC$ 2 138


Which of the following are the ratios that are use to eterine an entity@s short-tere't paying a'ility"

@ Ties interest earne+ in%entory turno%er+ current ratio+ an recei%a'les turno%er

@ Ties interest earne+ aci-test ratio+ current ratio+ an in%entory turno%er

@ <urrent ratio+ aci-test ratio+ recei%a'les turno%er+ an in%entory turno%er

http:..www*scri'*co.oc.338=>4;1./?-nalysisQ5,Y 2 ;8

@ sset turno%er+ ties interest earne+ current ratio+ an recei%a'les turno%er

http://www.scribd.com/doc/22806971/FS-Analysis

http://www.scribd.com/doc/22806971/FS-Analysis




,f a copany ha a current ratio of =*9+ then which of the following stateents regaringthat copanyKs working capital woul 'e true"

@ The copanyKs working capital woul 'e positi%e @ The copanyKs working capital woul 'e Gero

@ The copanyKs working capital woul 'e negati%e

http:..www*principlesofaccounting*co.0uestionsI3=-I3=I3=ultipleI3=choice.chapterI3=I3=-I3=ultipleI3=choice*ht21=M<Q 2 1=

@ The copanyKs working capital woul 'e 3:1

3uestion No 1C 7 $ar:s 1 8 - Please c!oose one

copany has an in%entory turno%er ratio of 1*=9 ties+ an cost of goos sol of s*9=+===* <alculate the a%erage in%entory of the copany*

@ s* ;+ 9==

@ s* ;+ >14

,n%entory turno%er ratio D <C?. a%erage in%entory D 9=+=== . 1*=9

D ;>14

@ s* ;+ 9==

@ s* ;+ >9=

3uestion No 1D 7 $ar:s 1 8 - Please c!oose one

Which of the following is a possi'le reason for copanyKs a%erage e'tor@s collection perio falling fro one year to the ne&t"

@ n ipro%eent in the state of the econoy

http://www.principlesofaccounting.com/questions%20-%20%20multiple%20choice/chapter%204%20-%20multiple%20choice.htm#10






http:..wps*pearsone*co*uk.ea6uk6he6yson6accnas6;.>.1>18.3=7=>4*cw.ine&*htM<Q 2 3>

@ large creit custoer facing se%ere cash shortages

@ $conoic recession

@ shortening of the creit perio offere 'y suppliers


Which of the following ratio is calculate in orer to know the li0uiity of the accounts

recei%a'les"

@ ccounts recei%a'les turno%er

Page 2 177Ei0uiity of ecei%a'les: ,t shows ha%e 0uickly ccounts ecei%a'les are collecte i*e*con%erte into cash* ,t is eterine 'y ecei%a'le Turno%er atio (TO)* ,t is nu'erof ties ecei%a'lesU are con%erte into cash uring the year*

@ ccounts recei%a'les turno%er in ays

@ Operating cycle

@ cti%ity ratios

3uestion No 2) 7 $ar:s 1 8 - Please c!oose one

copany can ipro%e (lower) its e't-to-total asset ratio 'y oing which of thefollowing"

@ orrow ore

@ ?hift short-ter to long-ter e't

@ ?hift long-ter to short-ter e't

http://wps.pearsoned.co.uk/ema_uk_he_dyson_accnas_7/64/16418/4203069.cw/index.ht




@ ?ell coon stock http:..we'*utk*eu.!wachowi.c0uiG.c>*htlM<Q 2 =;


Nishat <orporation ha net incoe of s* 1==+===+ pai incoe ta&es of s* 7=+===+ anha interest e&pense of s* 8+===* What was NishatKs ties interest earne ratio"

@ 13*9

@ 1>*39

@ 1;*39

$imes interest earned %$IE& ratio ' E(I$)interest*' +,...)...' +7*/0

@ 1;*89


Most consuer-oriente stores an catalogue copanies are an e&aple of which of thefollowing type of 'usiness"

@ Manufacturing @ ?er%ice @ Merchanise

Most consuer-oriente stores an catalogue copanies are istri'utors or retailers

@ oth erchanise an anufacturing

3uestion No 2* 7 $ar:s 1 8 - Please c!oose one

ll of the following stateents are true regaring ratios that easure a copanyKs a'ilityto pay short-ter an long-ter e't E0EP/

http://web.utk.edu/~jwachowi/mcquiz/mc6.html




@ The a%erage e't ratio is 'etween =*9; an =*>; @ Ligh ties-interest-earne ratio inicates a copany can pay interest e&penseeasily @ Ae't ratio of >=I inicates >=I of assets are finance with e't @ Ae't ratio of 4=I inicates lower financial risk than a e't ratio of >=I

http:..wps*prenhall*co.ca6ph6horngren6accounting6;.>=.1981.74>7738*cw.content.in

M<Q 2 1=


Which of the following perforance easures woul 'e of ost irect interest toshareholers"

@ eturn on net assets

@ Cross profit argin @ Ae't ratio @ Ai%ien yiel


The total legal capital of the copany consists of which of the following" @ Only coon stocks issue @ Only preferre stocks issue @ <oon stocks an preferre stocks

Page 2 14Total legal capital D 13+===+=== (preferre) 1+===+=== (coon) D s*3>+ ===+===

@ <oon stocks an retaine earnings


What will 'e the i%ien re0uireent on outstaning preferre stocks+ if the nu'er of preferre shares is 9=+===+ nu'er of coon shares is =+=== an the i%ien pershare is s* 1=*

# s* 9==+===

9====1= D 9===== @ s* ==+=== @ s* 9+=== @ s* +===

http://wps.prenhall.com/ca_ph_horngren_accounting_7/60/15481/3963328.cw/content/in




3uestion No 2C 7 $ar:s 1 8 - Please c!oose one

Which of the following options inicate how 0uickly accounts recei%a'les are con%erteinto cash"

@ ccounts recei%a'le turno%er

Page 2 177Ei0uiity of ecei%a'les: ,t shows ha%e 0uickly ccounts ecei%a'les are collecte i*e*con%erte into cash* ,t is eterine 'y ecei%a'le Turno%er atio (TO)* ,t is nu'erof ties ecei%a'lesU are con%erte into cash uring the year* @ Aays to collect accounts recei%a'le @ Working capital

@ Total assets turno%er


Operating cycle 'elongs to which group of ratios"

@ Ee%erage ratios @ Ei0uiity ratios @ Profita'ility ratios @ cti%ity ratios

PC$ 2 19


,f current assets are s* 19*> illion+ current lia'ilities s* 11*3 illion an stocks s* 1*8illion+ what is the aci test ratio" @ 1*74 @ 1*37

Acid $est 1atio ' C2rrent assets- Inventories) C2rrent "ia3ilities ' +0* 5 +* )++*/ ' +*/,

@ 1*>9 @ =*84

3uestion No *) 7 $ar:s 1 8 - Please c!oose one



What will 'e effect of purchase of in%entory on open account on 0uick ratio of thecopany"

@ ,ncrease @ Aecrease

@ No effect @ <an not 'e foun fro the gi%en inforation

3uestion No *1 7 $ar:s 1 8 - Please c!oose one

What will 'e the effect of con%ersion of a portion of 'ons paya'le into coon stockon the interest co%erage ratio of the copany" @ ,ncrease

PC$ 2 17;

@ Aecrease @ No effect @ <an not 'e foun fro the gi%en inforation


What will 'e the effect on the in%entory turno%er ratio of the copany+ if it change fro/,/O to E,/O uring the perio of inflation"

@ ,ncrease @ Aecrease @ No effect @ <an not 'e foun fro the gi%en inforation

3uestion No ** 7 $ar:s 1 8 - Please c!oose one

ssue that a copany has current assets of s* >=+===+ current lia'ilities of s* 79+===an prepai e&penses of s* 9+===* <alculate the 0uick ratio of the copany"

@ 1*9;

Quick ratio D current assets F in%entory F prepai e&penses . current lia'ilitiesD >==== F 9=== . 79===D 99=== . 79===



D 1*9; @ 1*;1 @ 1*8> @ =*98

3uestion No *B 7 $ar:s 1 8 - Please c!oose one

coplete set of financial stateents for Lartan <opany+ at Aece'er 71+ 1444+woul inclue each of the following+ E0EP/

@ alance sheet as of Aece'er 71+ 1444 @ ,ncoe stateent for the year ene Aece'er 71+ 1444 @ ?tateent of pro!ecte cash flows for 3=== @ Notes containing aitional inforation that is useful in interpreting the financial

stateents


/ailure to recor the receipt of a utility 'ill for ser%ices alreay recei%e will result inwhich of the following"

@ n o%erstateent of assets @ n o%erstateent of lia'ilities @ n o%erstateent of e0uity

http:..www*principlesofaccounting*co.0uestionsI3=-I3=I3=ultipleI3=choice.chapterI3=3I3=-I3=ultipleI3=choice*htM<Q 2 =

@ n unerstateent of assets


Which of the following is the proper !ournal entry to recor anso <opanyKs 'illingof clients for s* 9== of ser%ices renere"

@ Ae'it <ash 9==B <reit ccounts ecei%a'le 9== @ Ae'it ccounts ecei%a'le 9==B ?er%ice e%enue 9==

http://www.principlesofaccounting.com/questions%20-%20%20multiple%20choice/chapter%202%20-%20multiple%20choice.htm






http:..www*principlesofaccounting*co.0uestionsI3=-I3=I3=ultipleI3=choice.chapterI3=3I3=-I3=ultipleI3=choice*htM<Q 2 =9

@ Ae'it ccounts ecei%a'le 9==B <reit <apital ?tock 9==

@ <ash 9==B <reit ?er%ice e%enue 9==

3uestion No *C 7 $ar:s 1 8 - Please c!oose one

Which of the following transaction ha%e an effect on e&pense account"

@ Purchase of office e0uipent on creit @ Payent on accounts paya'le @ epayent of principle of 'ank loan

@ Payent of wages

3uestion No *D 7 $ar:s 1 8 - Please c!oose one

/ailure to recor the receipt of a utility 'ill+ which ha%e alreay 'een recei%e forser%ices+ will result in which of the following"

@ n unerstateent of assets

@ n o%erstateent of assets

@ n o%erstateent of lia'ilities

@ n o%erstateent of e0uity

http:..www*principlesofaccounting*co.0uestionsI3=-I3=I3=ultipleI3=choice.chapterI3=3I3=-I3=ultipleI3=choice*htM<Q 2 =


'usiness has purchase achinery on creit+ what will 'e its !ournal entry"

@ <ash - (Ae'it)B Machinery - (<reit) @ Machinery - (Ae'it) B ccounts paya'le - (<reit)

?,MPE$ RO5NE $NTS











@ ccounts paya'le - (Ae'it) B Machinery - (<reit) @ Machinery - (Ae'it) B<ash - (<reit)

3uestion No B) 7 $ar:s 1 8 - Please c!oose one Which of the following is N/ norally re0uire for re%enue to 'e recogniGeaccoring to the re%enue principle for accrual 'asis accounting"

@ The price is fi&e or eterina'le @ ?er%ices ha%e 'een perfore @ <ash that has alreay 'een collecte @ $%ience of an arrangeent for custoer payent e&ists

3uestion No B1 7 $ar:s 1 8 - Please c!oose one

5sing the following inforation calculate Net ,ncoe: ?ales e%enue s*3==+ ===+ Eosson ?ale of $0uipent s*1=+ ===+ ortiGation $&pense s*3=+ === an <ost of Coos?ol s*9=+ ===*

@ s* 1;=+=== @ s* 13=+===

?ales 3==+===Eess cost of goos sol (9=+===)Cross profit 1+ 9=+===Eess Eoss on sale of e0uipent (1=+===)Eess aortiGation e&pense (3=+===) Net incoe 1+ 3=+===

@ s* 17=+=== @ s* 18=+===


Which of the following stateents is RRE/ regaring epreciation ethos"

@ ccuulate epreciation represents a fun 'eing accuulate fro thereplaceent of assets @ The cost of a achine inclues the cost of repairing aage to the achineuring the installation process



@ copany ay use ifferent epreciation ethos in its financial stateents anits incoe ta& returns @ The use of an accelerate epreciation etho causes an asset to wear out ore0uickly than oes the straight line etho

3uestion No B* 7 $ar:s 1 8 - Please c!oose one

The actions taken 'y the anageent to ake copany appear as strong as possi'le inits financial stateents is tere as which of the following"

@ Winow ressing @ 5nerstaning @ <oprehensi%eness @ Materiality

3uestion No BB 7 $ar:s 1 8 - Please c!oose one

Persons+ who sign articles.eoranu of the copany+ contri'ute in the initial sharecapital of the copany* They are calle as:

@ ?u'scri'ers

Page 11!23scri3ers ) !ponsors 6f $he Compan

?u'scri'ers . ?ponsors are the persons who sign articles an eoranu of thecopany an contri'ute in the initial share capital of the copany* @ 5nertakers @ ,n%estors @ ?hareholers


< <opany now wants to further raise its capitalB it is going to offer its shares first tocurrent shareholers* The issuance of further capital to Present ?hareholers is calle:

@ Pai-in capital @ Preferre-stock ,ssue @ ight ,ssue

Page 2 11



Where a copany wants to issue further capital (calle raising the capital)+ shares arefirst offere to current shareholers* The issuance of further capital to Present?hareholers is calle ight ,ssue

@ itional capital


Which one of the following ratios easures general li0uiity of a copany"

@ Quick ratio @ <urrent ratio

Page # +,.

,t shoul 'e note that current ratio easures general li0uiityU+

@ ,n%estents ratio @ Aefensi%e inter%al ratio

3uestion No BC 7 $ar:s 1 8 - Please c!oose one

Which of the following is $RE concerne with the short-ter sol%ency"

@ ?hort ter <reitors

PC$217=nalysis 'y short-ter creitors: ,nterest of short-ter creitors is to watch the a'ility of 'usiness to eet its e'ts as these 'ecoe ueB i*e* ?hort-ter sol%ency*

@ Eong ter <reitors @ ?hort ter Ae'tors @ Eong ter Ae'tors

3uestion No BD 7 $ar:s 1 8 - Please c!oose one

The increasing eturn on ?ales (O?) shows:

@ <opany is facing financial trou'les @ <opany is retaining ore than >9I of its profit for operational efficiency @ <opany is paying i%iens consistently o%er the past years



@ <opany is growing 'y leaps an 'ouns

PC$ 2 1

3uestion No B9 7 $ar:s * 8

,f a copany uses s*3=+ === to 'uy erchanise for in%entory* What o you thinkwoul 'e the effect on working capital" Ci%e reason*

3uestion No 5) 7 $ar:s * 8

ha ,ncorporation has Owner@s $0uity of aount s*;9+ === as an opening 'alance*Auring the perio+ three a!or transactions occurre:

,ssuance of stock: s*33+ ===Ai%ien istri'ution: s*1=+ === Net Eoss: s*>+ ===* ase on these transactions+ what woul 'e the ha@s ening 'alance of Owner@s$0uity" Anser

OwnerKs $0uity ('eg) ;9===B ?tocks ,ssue 33===EessB Ai%ien istri'ution 1====EessB Net Eoss >=== OwnerKs $0uity (en) 81=== 3uestion No 51 7 $ar:s 5 8

< <opany is faous for its autoo'iles* The 'usiness has unergone the followingchanges in the onth of March* Prepare the !ournal entries for the transactions*

1* Mar* 1 Owner eposite s* 9=+=== cash in a 'ank account in the nae of the 'usiness*

3* Mar* 9 Purchase lan for s* 1>=+===+ of which s* =+=== was pai in cash* short-ter note paya'le was issue for the 'alance of s* 13=+===

7* Mar* > n arrangeent was ae with the SY <opany to pro%ie parking pri%ileges for its custoers* SY <opany agree to pay s* 1+3== onthly+ paya'le ina%ance* <ash was collecte for the onth of March*



* Mar* ; rranges with Ties Printing <opany for a regular a%ertiseent in theTies at a onthly cost of s* 74=* Pai for a%ertiseent uring March 'y check+ s*74=

9* Mar* 19 Parking receipts for the first half of the onth were s* 1+87>+ e&clusi%e of the

onthly fee fro SY <opany

3uestion No 52 7 $ar:s 5 8

/ollowing ata is taken fro the < <orporation*

1999 7Rs8 2))) 7Rs8

Total assets ==+=== 7==+===

Total lia'ilities 7==+=== 18=+===

?hare capital (s* 1= par 1==+=== 4=+===Total e't 13=+=== 1=+===

Reuirement<alculate the following*

a) Ae't ratio (3*9) ') Ae't to total asset ratio (3*9)

3uestion No 5* 7 $ar:s 5 8 ssue that you wish to in%est in the stocks of a high-tech corporation an that one ofyour in%estents goals is to recei%e i%ien incoe fro the stocks that you purchase*Sou 'egin your research 'y e&aining Microsoft+ one of the worl@s ost successfulsoftware corporations* Sou 0uickly isco%er that+ as of 144;+ Microsoft ha ne%er pai ai%ien* /urtherore+ the copany@s 144; 'alance sheet reporte holings of nearly s*4 'illion in cash an highly li0ui securities* With all of these li0ui resources a%aila'le+why o you suppose that Microsoft has ne%er pai a cash i%ien to its stockholers"

*R< PAPER

FINA./ER$ E0A$INA/IN

Fall 2))9FIN621- Financial Statement Analysis 7Session - 18

3uestion No 1 7 $ar:s 1 8 - Please c!oose one Which of the following arrangeent is use to aintain the accounts"



# ?e0uentialy

# lpha'aticaly

@ $ont!ly

# Orerly

Page 2 8Orerly arrangeent of ccounts is to 'e aintaine* Nu'ering of ccounts is alsoone to facilitate proper recor-keeping an cross references*

3uestion No 2 7 $ar:s 1 8 - Please c!oose one Which of the following represents the ain step(s) of accounting cycle"

# ecoring the transactions

# <lassifying the transactions

# Orering+ suariGing+ counting the transactions

# ecoring+ classifying+ suariGing transactions

3uestion No * 7 $ar:s 1 8 - Please c!oose one

lankenship <opany pays its eployees e%ery /riay for work renere that week* The payroll is typically s*1=+=== per week* Which of the following !ournal entries woullankenship orinarily recor on the /riay payay"

@ Salary e>(ense Rs 1)?))) - <e#it Salary (aya#le Rs 1)?))) - redit

# ?alary e&pense s* 1=+=== - Ae'itB <ash s* 1=+=== - <reit

# ?alary paya'le s* 1=+=== - Ae'itB <ash s* 1=+=== - <reit

# ?alary paya'le s* 1=+=== - Ae'itB ?alary e&pense s* 1=+=== - <reit

3uestion No B 7 $ar:s 1 8 - Please c!oose one etaine earnings change o%er tie 'ecause of se%eral factors* Which of the followingfactors woul e&plain an INREASE in retaine earnings"

# Net ,ncoe



@ <ividends (ayment

# ,n%estent 'y the stockholers

# Net Eoss

3uestion No 5 7 $ar:s 1 8 - Please c!oose one Which one of the following stateents is /RE regaring istri'utions to stockholers"

# The payent of i%iens is not irectly relate to the profits of a gi%en perio

# ?hareholers can ini%iually ecie on their istri'utions

@ /o receive a cor(orate dividend? stoc: must #e oned on t!e date o"

declaration

# <orporate i%iens reuce contri'ute capital an therefore+ stockholers@ e0uity

3uestion No 6 7 $ar:s 1 8 - Please c!oose one Which of the following is the largest single e&pense of ost erchanising firs"

# <ost of goos sol

# ent $&pense

# ortiGation $&pense

@ Salaries E>(ense

3uestion No C 7 $ar:s 1 8 - Please c!oose one Which of the following is N/ the ost coon e&aple of cash e0ui%alents"

# ?a%ings eposits@ erti"icates o" <e(osit 7<s8

# ?tocks of other copanies

<ash an cash e0ui%alents ha%e the lowest risk aong the ost coon asset categories*$&aples of cash or cash e0ui%alents are treasury 'ills+ oney arket funs+ certificatesof eposit+ sa%ings eposits+ oney arket eposit accounts+ etc*



http:..www*stock-arket-in%estors*co.stock-in%esting-'asics.classes-of-assets-assetclass- efinition*htl # Money arket utual funs 3uestion No D 7 $ar:s 1 8 - Please c!oose one

The stateent of cash flow oes N/ assist in%estors+ creitors an others in assessing:

# The copany@s a'ility to generate positi%e cash flows in future perios # The copany@s a'ility to eet its o'ligations an to pay i%iens # The copany@s nees for e&ternal financing # The copany@s a'ility to forecast future losses 3uestion No 9 7 $ar:s 1 8 - Please c!oose one When using the perpetual in%entory syste+ each tie a sale is recore the:

# ,n%entory account is increase # ,n%entory account is ecrease

Perpetual ?yste1* Purchases increase Merchanise ,n%entory*3* /reight costs+ Purchase eturns an llowances an Purchase Aiscounts are incluein Merchanise ,n%entory*7* <ost of goos sol is increase an Merchanise ,n%entory is ecrease for each sale** Physical count one to %erify ,n%entory 'alance* @ ost o" oods Sold account is decreased # <ost of goos a%aila'le for sale ecreases

3uestion No 1) 7 $ar:s 1 8 - Please c!oose one ,n perpetual in%entory syste+ a return of efecti%e erchanise is recore 'y creiting 6666666666*

# Purchases# Purchase eturns# Purchase llowance# Merchanise ,n%entory

The efecti%e erchanise return woul 'e recore with a creit to Merchanise

,n%entory*http:..highere*cgraw-hill*co.sites.==;344>97>.stuent6%iew=.chapter9.interacti%e60uiG6a*htlM<Q 2 1> 3uestion No 11 7 $ar:s 1 8 - Please c!oose one Which factor woul N/ affect the gross profit rate" # n increase in the cost of heating the store

http://www.stock-market-investors.com/stock-investing-basics/classes-of-assets-assetclass-










http:..we'cache*googleusercontent*co.search"0Dcache:0t!cL3MoR:highere'cs*wiley*co.legacy.college.kiel.=;==8;;.self6stuy.ch=9*rtfNOTaffectthegrossprofitrateI7/I$3I4>Inincreaseinthecostofheatingthestore

I$3I 4>Inincreaseinthepriceofin%entoryitesI$3I4>Inincreaseinthesaleoflu&uryitesI$3I4>InincreaseintheuseofI$3I8=I4<iscountpricingI$3I8=I4AtosellerchanisecD1hlDenctDclnksourceDwww*google*coM<Q 2 11

# n increase in the price of in%entory ites

# n increase in the sale of lu&ury ites

@ An increase in t!e use o" Gdiscount (ricinH to sell merc!andise


ssets which ha%e N arket %alue are calle:

# Wasting assets

=astin assets inclue assets that are Zuse upZ as well as assets that otherwise lose%alue after a specific tie perio* ssets in the first category inclue natural resources+such as ti'er+ or oil+ which are consue or use up in the course of 'usiness* ssets in

the secon category inclue stock options which either e&pire at a certain ate or+ ue tochanging arket conitions+ 'ecoe worthless ('ecoe Zout of the oneyZ)

http:..www*solutionatri&*co.asset*htl

# /ictitious assets

sset create 'y an accounting entry (an inclue unerassets in the 'alance sheet) thathas no tangi'le e&istence or realiGa'le %alue 'ut represents actual cash e&peniture* The purpose of creating a fictitious asset is to account for e&penses (such as those incurre instarting a 'usiness) that cannot 'e place uner any noral account heaing* /ictitiousassets are written off as soon as possi'le againstthe firKs earnings*

http:..www*'usinessictionary*co.efinition.fictitious-asset*htl

# Quick assets

# Tangi'le assets

http://webcache.googleusercontent.com/search?q=cache:qBtmRjcH2MoJ:higheredbcs.wiley.com/legacy/college/kimmel/0470087447/self_study/ch05.rtf+NOT+affect+the+gross+profit+rate%3F+%E2%96%BA+An+increase+in+the+cost+of+heating+the+store+%E2%96%BA+An+increase+in+the+price+of+inventory+items+%E2%96%BA+An+increase+in+the+sale+of+luxury+items+%E2%96%BA+An+increase+in+the+use+of+%E2%80%9Cdiscount+pricing%E2%80%9D+to+sell+merchandise&cd=1&hl=en&ct=clnk&source=www.google.com








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http://www.businessdictionary.com/definition/value.html

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http://www.businessdictionary.com/definition/expenditure.html

http://www.businessdictionary.com/definition/account.html

http://www.businessdictionary.com/definition/expense.html

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3uestion No 1* 7 $ar:s 1 8 - Please c!oose one uit opinions can N/ 'e classifie as which of the following"

# %erse opinion

# 5n0ualifie opinion

# Qualifie opinion

# Aisagreeent of opinion

uitor@s eport+ Opinion.<ertificate: There are four types of uit certificates*i) 5n0ualifie: ,t states that /inancial ?tateents present inforation in confority withCP*ii) Qualifie: ,t 0ualifies the eport with certain o'ser%ations*iii) %erse: ,t states that financial stateents ha%e not 'een presente fairly in

accorance with CP*i%) Aisclaier: uitor e&presses his ina'ility to report on /inancial ?tateents for%arious reasons* 3uestion No 1B 7 $ar:s 1 8 - Please c!oose one The auit is N/ a necessary re0uireent for which of the following copanies"

# Eiste copanies # <orporations # ?ole proprietorship # Partnerships

3uestion No 15 7 $ar:s 1 8 - Please c!oose one Which of the following is N/ a part of the fi%e-year suary of a copany"

# Net incoe.Eoss

# Total assets

# Aiscontinue operations

Page 2 1=7

This is also a %ery iportant part of nnual eport prepare 'y the anageent of acorporation* ,t offers 0uick look at soe o%erall trens+ an it inclues net sales oroperating re%enues+ incoe.loss fro continuing operations+ total assets+ long-tero'ligations an cash i%ien per coon share*

# Net sales



3uestion No 16 7 $ar:s 1 8 - Please c!oose one Which of the following is N/ a liitation of financial stateents for an in%estor" # ,t pro%ies coplete 'asis for the analysis of a copany

# Past financial perforance oes not signify what will happen with the in%estor in

future

# The financial stateents are useless without the notes to the financial stateents

# 5nless the stateents are auite their authenticity is uner ou't

3uestion No 1C 7 $ar:s 1 8 - Please c!oose one Which of the following is N/ a feature of preferre shares"

# Aistri'uti%e

http:..en*wikipeia*org.wiki.Preferre6stock

# <alla'le

@ In arrears

# <uulati%e


Which of the following is a type of preferre stock that entitles the holer to a fi&ei%ien an+ in aition+ to the right to get any surplus profits after payent of agreele%els of i%iens to holers of coon stock"

@ ,n arrears preferre shares

# <all a'le preferre shares

# <uulati%e preferre shares

# Participating preferre shares

http:..www*0finance*co.ictionary.participating-preferre-stock

3uestion No 19 7 $ar:s 1 8 - Please c!oose one Which one of the following represents the %alue of shares in the arket at any point oftie" # Par %alue



# ook %alue

# /ace %alue

# Market %alue

3uestion No 2) 7 $ar:s 1 8 - Please c!oose one y coputing coponent percentages for se%eral successi%e 'alance sheets+ which of thefollowing can N/ 'e foun"

# The increasing ites

# The ecreasing ites

# The unchange ites

# The future profita'le ites

3uestion No 21 7 $ar:s 1 8 - Please c!oose one Which of the following woul N/ ipro%e the current ratio"

# ,ssue long-ter e't to 'uy in%entory

# ?ell coon stock to reuce current lia'ilities

# ?ell fi&e assets to reuce accounts paya'le

# orrow short ter to finance aitional fi&e assets

http:..we'*utk*eu.!wachowi.c0uiG.c>*htlM<Q 2 =7

3uestion No 22 7 $ar:s 1 8 - Please c!oose one risle an ringleKs e't-to-total assets ratio is I* What is its e't-to-e0uity ratio"

# 3I

# ;I

# >I

,f (A.T) D + then ($.T) ust e0ual >*





http:..we'* utk*eu.!wachowi.c0uiG.c>*htlM< 2 1=

@ *%

3uestion No 2* 7 $ar:s 1 8 - Please c!oose one copany e&periences a raatic fall in its gross profit ratio* This coul 'e the result ofwhich of the following" # n increase in copetition in the copanyKs ain prouct arket

http:..wps*pearsone*co*uk.ea6uk6he6yson6accnas68.19.7;33.497=73*cw.-.497=

77.ine&*htlM<Q 2 39

# n increase in the incience of 'a e'ts

@ An increase in over!ead e>(enses

# n increase in ean for the copanyKs proucts


Which of the following is N/ an o'!ecti%e of funaental analysis"

# To ake pro!ection on its 'usiness perforance # To preict the future stock price

http:..en*wikipeia*org.wiki./unaental6analysis/unaental analysis is perfore on historical an present ata+ 'ut with the goalof aking financial forecasts* There are se%eral possi'le o'!ecti%es: to conuct a copany stock %aluation an preict its pro'a'le price e%olution+ to ake a pro!ection on its 'usiness perforance+ to e%aluate its anageent an ake internal 'usiness ecisions+

to calculate its creit risk*

# To e%aluate its anageent an ake internal 'usiness ecisions @ /o calculate its credit ris: 3uestion No 25 7 $ar:s 1 8 - Please c!oose one Which of the following is N/ a goal of analysis of financial stateent"




http://wps.pearsoned.co.uk/ema_uk_he_dyson_accnas_8/145/37242/9534032.cw/-/9534033/index.html







# ssess the past perforance # sses the current financial position # Preict the future perforance of the copany # sses the working of anageent in the future

/inancial stateents shoul reflect an accurate picture of the financial position an perforanceof a 'usiness+ an shoul con%ey inforation useful to assess the past an preict the futurePC$ 2 1=7

3uestion No 26 7 $ar:s 1 8 - Please c!oose one ,n isolation+ which of the following is /RE a'out a financial ratio"

# 5seless piece of inforation

/inancial ratios are calculate fro one or ore pieces of inforation fro a copanyKsfinancial stateents* /or e&aple+ the Zgross arginZ is the gross profit fro operationsi%ie 'y the total sales or re%enues of a copany+ e&presse in percentage ters* ,nisolation+ a financial ratio is a useless piece of inforation

@ se"ul (iece o" in"ormation # 5seful only for past perforance # 5seful only for future preictions 3uestion No 2C 7 $ar:s 1 8 - Please c!oose one /inancial stateent ratio analysis ay 'e unertaken to stuy li0uiity+ turno%er+ profita'ility+ an other inicators* To which oes the current ratio ost relate"

# Ei0uiity

http:..www*principlesofaccounting*co.0uestionsI3=-I3=I3=ultipleI3=choice.chapterI3=1>I3=-I3=ultipleI3=choice*htM<Q 2 =1

# Turno%er # Profita'ility # Other inicator 3uestion No 2D 7 $ar:s 1 8 - Please c!oose one Which of the following woul N/ result in an ipro%e o%erall gross argin of a 'usiness"

# fall in raw aterial prices resulting in a lower cost of sales # Ligher iscounts offere to custoers # ,ncrease selling price of e&isting proucts # ,ntrouction of new proucts with a higher gross profit argin







3uestion No 29 7 $ar:s 1 8 - Please c!oose one Which of the following woul N/ ipro%e the return on in%estent ratio"

# eucing costs # ,ncreasing gains

# ccelerating gains # ,ssuing treasury stock 3uestion No *) 7 $ar:s 1 8 - Please c!oose one Which one of the following stateent inicates the ,n%entory turno%er ratio"

# Low 0uickly copany prepare its in%entory # Low 0uickly copany con%erts its in%entory into cash # Low 0uickly copany purchases its in%entory # Low 0uickly copany sells its in%entory

3uestion No *1 7 $ar:s 1 8 - Please c!oose one Which of the following is the ieal position of e't ratio"

# 7=I # >=I

Ae't ratio inicates the proportion of a copanyKs assets that is finance with e't* Thisratio easures a 'usinessKs a'ility to pay 'oth current an long-ter e'ts (totallia'ilities)* Eow e't ratio is safer than a high e't ratio* noral e't ratio in 5? is >=Ito ;=I

# 9=I # 9I 3uestion No *2 7 $ar:s 1 8 - Please c!oose one ,f current assets are s* 19*> illion+ current lia'ilities s* 11*3 illion an stocks s* 1*8illion+ what is the aci test ratio"

# 1*74 # 1*37

ci Test atio D <urrent assets- ,n%entories. <urrent Eia'ilities

D 19*> - 1*8 . 11*3 D 1*37

# 1*>9 # =*84 3uestion No ** 7 $ar:s 1 8 - Please c!oose one Which of the following is essential to conuct 'usiness acti%ity+ particularly in ties ofa%ersity"



# Profita'ility # Ei0uiity

Ei0uiity is essential to conucting 'usiness acti%ity+ particularly in ties of a%ersity+ such

as when a 'usiness is shut own 'y a strike

http:..'ooks*google*co*pk.'ooks"iD-A?e53kheo<pgDP33lpgDP330DEi0uiityisessentialtoconucting'usinessacti%ity+particularlyintiesofa%ersity+suchaswhena'usinessisshutown'yastrikesourceD'lotsDl;Tgh&LSsigDr6wfg9?/'E94SEO>>SNQuo=hlDeneiD3OYTeCAc-?heyycA$AQsaDoiD'ook6resultctDresultresnuD1%eD=<QQ>$w2%Donepage0DEi0uiityI3=isI3=essentialI3=toI3=conuctingI3='usinessI3=acti%ityI3<I3=particularlyI3=inI3=tiesI3=ofI3=a%ersityI3<I3=suchI3=asI3=whenI3=aI3='usinessI3=isI3=shutI3=ownI3='yI3=aI3=strikefDfalse @ Sta#ility

# ?ol%ency 3uestion No *B 7 $ar:s 1 8 - Please c!oose one Which of the following e&plains the e'it an creit rules relating to recoring re%enuesan e&penses"

# ealiGation an atching principle # The effect of re%enues an e&penses in the owner@s e0uity # $&penses appear on the left sie of the incoe stateent

# Eia'ilities are recore as e'it on the 'alance sheet 3uestion No *5 7 $ar:s 1 8 - Please c!oose one Which of the following e0uations properly represents a eri%ation of the funaentalaccounting e0uation"

# ssets lia'ilities D ownerKs e0uity # ssets D ownerKs e0uity # <ash D assets # ssets - lia'ilities D ownerKs e0uity

http:..www*principlesofaccounting*co.0uestionsI3=-I3=I3=ultipleI3=choice.chapterI3=1I3=-I3=ultipleI3=choice*htM<Q 2 =7 3uestion No *6 7 $ar:s 1 8 - Please c!oose one Low woul the purchase of erchanise on account 'e represente in the 'uyerKsrecors" # ,ncrease assets an increase e&penses

http://books.google.com.pk/books?id=-DSdeU2kheoC&pg=PA22&lpg=PA22&dq=Liquidity+is+essential+to+conducting+business+activity,+particularly+in+times+of+adversity,+such+as+when+a+business+is+shut+down+by+a+strike&source=bl&ots=l7TgKBhxHY&sig=r_wfgB5SFbL59YLOR6X6YXNQuo0&hl=en&ei=2OZdTeGDBc-ShAeyycDEDQ&sa=X&oi=book_result&ct=result&resnum=1&ved=0CBQQ6AEwAA#v=onepage&q=Liquidity%20is%20essential%20to%20conducting%20business%20activity%2C%20particularly%20in%20times%20of%20adversity%2C%20such%20as%20when%20a%20business%20is%20shut%20down%20by%20a%20strike&f=false



















# ,ncrease assets an increase lia'ilities # ,ncrease lia'ilities an increase pai-in capital

# ,ncrease lia'ilities an ecrease assets 3uestion No *C 7 $ar:s 1 8 - Please c!oose one

Which of the following is N/ an a%antage of the accrual 'asis of accounting"

# ,t is siple to see what payents to %enors are outstaning # ,t is easy to see how uch re%enue is ue the copany # ,t is uch easier to assess the o%erall financial health of the copany # ,t is uch easier an cheaper to aintain 3uestion No *D 7 $ar:s 1 8 - Please c!oose one < copany has ecie to change the in%entory syste fro /,/O to E,/O keepingin %iew the raising ay 'y ay inflation threat* What ifferent things.factors Mr li+ theauitor of the copany+ will ha%e to notify or report"

# The purpose of switching # The e&isting syste raw'acks # The new syste threats # ll of the a'o%e 3uestion No *9 7 $ar:s 1 8 - Please c!oose one Which of the following eleents of financial stateents is $S/ closely relate toeasureent of financial position"

# $0uity # ,ncoe

# $&pense # Aisclosures 3uestion No B) 7 $ar:s 1 8 - Please c!oose one

ll of the following steps are consiere uring the foration of a copany E0EP/:

# The eoranu an articles of association of articles shoul 'e prepare # ?uita'le persons shoul 'e appointe for the su'scription of eoranu ofassociation # The election of the <$O of the copany

# egistration fees shoul 'e eposite to registrar of copanies an receipt ofcertificate of incorporation shoul 'e collecte 3uestion No B1 7 $ar:s 1 8 - Please c!oose one The 'asic type of capital stock issue 'y e%ery corporation is known as: # <oon stock # Preferre stock # <lass



# <uulati%e ?tock 3uestion No B2 7 $ar:s 1 8 - Please c!oose one Which of the following ratios pro%ie a $RE penetrating easure of li0uiity thanoes the current ratio"

# ssets Test atio

ci Test atio D <urrent assets- ,n%entories. <urrent Eia'ilities This ratio ser%es as asuppleent to the current ratio in analyGing li0uiity* This ratio is the sae as the currentratio e&cept that it e&clues in%entories* Presua'ly the least li0ui portion ofcurrentassets- fro the nuerator* The ratio concentrates priarily on the ore li0uicurrent assets+ cash+ arketa'le securities+ an recei%a'les+ in relation to currento'ligations* Thus+ this ratio pro%ies a ore penetrating easure of li0uiity than oesthe current ratio*PC$ 2 17= 171

# Aefensi%e inter%al ratio # ,n%estents ratio # <urrent ratio 3uestion No B* 7 $ar:s 1 8 - Please c!oose one %erage payent perio is calculate as:

# 7>9 . ccounts paya'le turno%er # 7>9 ccounts paya'le turno%er # 7>9. Total purchases # ccounts paya'le turno%er . 7>9

3uestion No BB 7 $ar:s 1 8 - Please c!oose one Which of the following ratios inicates in ays how 0uickly in%entory is sol" # ,n%entory turno%er ate @ Inventory /urnover ratio # Operating <ycle # Aays sales of in%entory 3uestion No B5 7 $ar:s * 8

Low oes working capital help anageent in aking rationale ecisions"

3uestion No B6 7$ar:s 5 8

<onsier the following inforation*

<ash s* 19+===eginning net recei%a'les s* 99+===$ning net recei%a'les s* 9;+=== Net sales s* >=+===



Net creit sales s* 8=+===<ost of goos sol s* 74=+===%erage in%entory s* >3+===

Reuirement

<opute the recei%a'le turno%er to the nearest tenth*

ecei%a'les turn o%er ratio D Net creit sales .%erage Ae'torsD >=+=== . [(99+===9;+===).3\D >=+=== . 9>+=== 11B*

3uestion No BC 7$ar:s 5 8

ssue that you are a coercial loan officer at a large 'ank* One of your clients

recently su'itte an application for s* 7==+=== fi%e year loan* Sou ha%e worke withthis 'usiness 'efore on nuerous occasions an ha%e perioically 'een force to ealwith late an isse payents attri'ute to cash flow pro'les* Thus you are surpriseto see in the 'usiness plan accopanying the application that the anageent e&pects toreuce the copany@s operating cycle fro 14= ays to 4= ays* footnote to the 'usiness plan inicates that the reuction in the operating cycle will result fro a tightercreit policy an the ipleentation of a !ust-in-tie in%entory syste*

ReuirementWoul the copany 'e a'le to reuce the operating cycle 'y applying the new strategyan woul you gi%e the loan to the copany on this 'asis"

3uestion No BD 7$ar:s 5 8

ssue that you are a grauate stuent an going to for a we' page consultancy fir*Sou are %ery young an copassionate to for this copany* Sou nee a 'ank loan ofs*9=+=== for coputer e0uipent + as a collateral you ha%e a 'ike your father ga%e youafter securing 8=I arks in /?c* Not wanting to lose your 'ike an to protect yourselfyou ecie to organiGe a corporation* $&plain will it 'e 'eneficial iea for you or not*

3uestion No B9 7$ar:s 1) 8The ata shown 'elow were taken fro the financial recors of R Et at the en of theyear* The financial year of the copany ens on 71+ Aece'er each year*

ccounts Paya'le s 9=+=== ccrue Eia'ilitiess*

77+===

<ash 73+=== ,n%entories Ran 3+===



,n%entories Aec 78+=== Marketa'le ?ecurities 1=+===

Operating $&penses 13=+=== Prepai $&penses 39+===

Purchases (Net) 7>=+=== ccounts ecei%a'le Ran >1+===

ccounts ecei%a'le Aec >1+=== Eong Ter Eoan 19=+===

Plant ssets ==+=== ?ales >=+===

?ales eturns 3=+=== etaine $arning 177+===?hare <apital (s*1= Par) 92?))) Market Price 18,nterest e&pense 7=+===

On the 'asis of a'o%e inforation+ calculate the following*a* Ae't ratio () '* Ae't to e0uity ratio (3)

c* Ae't to total asset ratio () 3uestion No 5) 7 $ar:s 1) 8

Low any types of auit opinions are there" ssue that you ha%e 'een appointe as anuitor of the copany+ after the auit of the copany+ what can 'e your possi'le auitopinions* riefly e&plain each of the auit opinion*

B/ PAPER

/,NET$M $M,NT,ON

?pring 3==4/,N>31- /inancial ?tateent nalysis (?ession - 3)

Question No: 1 ( Marks: 1 ) - Please choose oneThe process of recoring the econoic effects of 'usiness transactions in a 'ook oforiginal entry is knows as which of the following"

• Aou'le entry syste

• Ae'it

• RournaliGing

PC$ 2 1

• Posting

•

Question No: 3 ( Marks: 1 ) - Please choose onen entry that affects ore than one accounts is knows as 6666666666666*

• Rournal entry



?oeties+ ore than two accounts are affecte 'y a transaction so ore than two linesare re0uire* ?uch a !ournal entry is known as a copoun !ournal entryhttp:..www*0uick'a*co.accounting.fin.!ournal-entries.

• <opoun entry

•!usting entry

• e%ersing entry Question No: 7 ( Marks: 1 ) - Please choose one,n which of the following for of ,ncoe ?tateent+ the total of all e&penses is euctefro the total of all re%enues"

• Multiple-step for

• ccount for

• eport for

• ?ingle-step for

single-step incoe stateent for a erchanising copany lists net sales uner

re%enues an the cost of goos sol uner e&penses*PC$ 2 ;7

Question No: ( Marks: 1 ) - Please choose oneWhich one of the following stateents is T5$ regaring istri'utions to stockholers"

• The payent of i%iens is not irectly relate to the profits of a gi%en perio

http:..wps*prenhall*co.'p6werner6ifa67.8.339.9;;339*cw.-.9;;33;.ine&*htlM<Q 2 =>

• ?hareholers can ini%iually ecie on their istri'utions• To recei%e a corporate i%ien+ stock ust 'e owne on the ate of eclaration

• <orporate i%iens reuce contri'ute capital an therefore+ stockholers e0uity

Question No: 9 ( Marks: 1 ) - Please choose onell of the following are true regaring the financing acti%ity section of the cash flowstateent $<$PT:

• /inancing acti%ities re0uire analysis of long-ter lia'ility an shareholersK e0uityccounts*

• The a'ility to issue large 0uantities of coon shares usually signals in%estor

confience in the future of the copany*• $&cessi%e 'orrowing has 'een the ownfall of any copanies*

• The eclaration an payent of a large cash i%ien ay signal an eergencyhttp:..wps*pearsone*co*au.au6'e6horngren6acc66upt.7.1117=.384781*cw.content.M<Q 2 =;

Question No: > ( Marks: 1 ) - Please choose one

http://www.quickmba.com/accounting/fin/journal-entries/

http://wps.prenhall.com/bp_werner_ifa_3/8/2254/577225.cw/-/577227/index.html

http://wps.pearsoned.com.au/au_be_horngren_acc_4_updt/43/11130/2849381.cw/content/


http://www.quickmba.com/accounting/fin/journal-entries/

http://wps.prenhall.com/bp_werner_ifa_3/8/2254/577225.cw/-/577227/index.html





The inirect etho shows the reconciliation fro net incoe to operating cash flows*?elect the a!ustent that is su'tracte uring the reconciliation*

• e%enues earne an recei%e in cash*

• Non-cash e&penses (e&penses incurre 'ut not pai) reporte on the

incoe stateent one e&aple is aortiGation e&pense*• Non-cash re%enues (re%enues earne 'ut payent not yet recei%e) reporte on

the ,ncoe stateent

http:..wps*prenhall*co.ca6ph6horngren6accounting6;.>=.1981.74>738*cw.content.inM<Q 2 13

• ecrease in ccounts ecei%a'le or another non-cash current asset

Question No: ; ( Marks: 1 ) - Please choose oneWhich of the following woul NOT 'e the cash inflow for the 'usiness"

• ?ale of lan for cash• ,ssuance of long ter 'ons

• The sale of coon stock

• etireent of long ter e't

Question No: 8 ( Marks: 1 ) - Please choose one5ner which cost flow assuption+ the ening in%entory is copose of the earliest purchase erchanise"

• /,/O

• E,/O

http:..highere*cgraw-hill*co.sites.==;374>881.stuent6%iew=.chapter8.online6tutorial60uiG*htlM<Q 2 71

• %erage cost

• ?pecific ientification

Question No: 4 ( Marks: 1 ) - Please choose oneWhich of the following woul affect the gross profit rate if sales reain constant"

• n increase in a%ertising e&pense

• ecrease in epreciation e&pense

• n increase in cost of goos sol

• ecrease in insurance e&pense

Question No: 1= ( Marks: 1 ) - Please choose one


http://highered.mcgraw-hill.com/sites/0072396881/student_view0/chapter8/online_tutorial_quiz.html







Nishat Mills Et* is a rapily growing copany that ac0uires ore e0uipent e%ery year*The copany uses straight line epreciation in its financial stateents an M<? in itsta& returns*Which of the following stateents is NOT correct"

•

5sing straight line epreciation in the financial stateents instea of accelerateetho increases the copany s reporte net incoe

• 5sing straight line epreciation in the financial stateents instea of accelerateetho increases the copany s annual net cash flow

• 5sing M<? instea of straight line in incoe ta& returns increases copany snet cash flow

• s long as the copany keeps growing+ it will report ore epreciation in itsincoe ta& returns each year than it oes in its financial stateents


stateent of cash flows woul 'e least useful in answering which of the following0uestions"

What was the a%erage 'alance in the <ash account uring the perio"


Ai operating acti%ities result in a positi%e or negati%e net cash flow"Low uch cash was pro%ie or use 'y financing acti%ities uring the perio"

Were cash i%iens pai 'y the copany ore or less than the net cash flow frooperations"

Question No: 13 ( Marks: 1 ) - Please choose oneWhich of the following is NOT a liitation of financial stateents for an in%estor"

• ,t pro%ies coplete 'asis for the analysis of a copany

• Past financial perforance oes not signify what will happen with the in%estor infuture

• The financial stateents are useless without the notes to the financial stateents

• 5nless the stateents are auite their authenticity is uner ou't

Question No: 17 ( Marks: 1 ) - Please choose oneWhich of the following is NOT an a%antage of a ?ole proprietorship"

• $asy to for an win up

• Airect oti%ation

• etter control

• Eiite lia'ility







Question No: 1 ( Marks: 1 ) - Please choose oneWhich of the following is a type of preferre stock that entitles the holer to a fi&ei%ien an+ in aition+ to the right to get any surplus profits after payent of agree

le%els of i%iens to holers of coon stock"

• ,n arrears preferre shares

• <all a'le preferre shares

• <uulati%e preferre shares

• Participating preferre shares

http:..www*0finance*co.ictionary.participating-preferre-stock

Question No: 19 ( Marks: 1 ) - Please choose oneThe current ratio will 'e e&cessi%ely %ery high in which of the following in%entory

costing ethos"

• /,/O

• E,/O

• %erage cost

• ?pecific ientification

•

Question No: 1> ( Marks: 1 ) - Please choose one, f a fir has s* 1== in in%entories+ a current ratio e0ual to 1*3+ an a 0uick ratio e0ual to1*1+what is the firKs Net Working <apital"

• s* =• s* 1==

• s* 3==

<.<E D1*3 an (<-1==).<ED1*1Trial $rror D 13==.1=== D 1*3(13==-1==).1=== D 1*1 Net Working <apital D 13== -1=== D 3==

• s* 1+===

Question No: 1; ( Marks: 1 ) - Please choose oneTo financial analysts+ Zworking capitalZ eans the sae thing as which of the following"

• Total assets

• /i&e assets

• <urrent assets

http://www.qfinance.com/dictionary/participating-preferred-stock

http://www.qfinance.com/dictionary/participating-preferred-stock



• <urrent assets inus current lia'ilities

Question No: 18 ( Marks: 1 ) - Please choose oneWhich of the following coul account for a copanyKs gross profit ratio increasing fro

one perio to the ne&t"

• n increase in the cost of sales which has not 'een accopanie 'y an increase inthe selling price of goos sol

• n increase in the selling price of goos sol which has not 'een accopanie 'yan increase in the cost of sales

http:..wps*pearsone*co*uk.ea6uk6he6yson6accnas6;.>.1>18.3=7=>4*cw.ine&*htM<Q 2 33

• change in the i& of goos sol so that lower profit argin goos take a greater

proportion of total sales• change in stock %aluation etho at the year en which leas to a ecrease in

the closing stock figure

Question No: 14 ( Marks: 1 ) - Please choose one Nestle Pakistan Eiite is an e&aple of which of the following types of 'usinesses"

• Manufacturing

• ?er%ice

• Merchanise

• Whole seller Question No: 3= ( Marks: 1 ) - Please choose oneWhich of the following represents the long ter e't paying a'ility of the copany asthey 'ecoe ue"

• Ei0uiity

• ?ol%ency

• Profita'ility

• ?ta'ility

•

Question No: 31 ( Marks: 1 ) - Please choose oneWhich group of ratios relates the financial charges of a fir to its a'ility to ser%ice the"

• Ae't ratios

• <o%erage ratios

Page 2 17;





<o%erage atio<o%erage ratios are esigne to relate the financial charges of a fir to its a'ility toser%ice+ or co%er+ the* One of the ost traitional co%erage

• Profita'ility ratios

• cti%ity ratios

Question No: 33 ( Marks: 1 ) - Please choose one,n isolation+ which of the following is T5$ a'out a financial ratio"

• 5seless piece of inforation

• 5seful piece of inforation

• 5seful only for past perforance

• 5seful only for future preictions

Question No: 37 ( Marks: 1 ) - Please choose onees <orporationKs net accounts recei%a'le were s* ;9=+=== on Aece'er 71+ 3=1+an s*1+39=+=== on Aece'er 71+ 3=3* Net cash sales for 3=3 were s* 7+7==+===*The accounts recei%a'le turno%er ratio for 3=3 was 1>* What were the total net sales for3=3"

• s* 13+8==+===

• s* 1>+===+===

• s* 1>+1==+===

• s* 14+7==+===

ccount recei%a'le turno%er D total creit sales . a%erage accounts recei%a'le 'alance

Total creit sale . (;9==== 139====).3Total creit sale . 1+===+===Total creit sale D 1+===+=== & 1> D 1+>==+===Total sale D 1+>==+=== 7+7==+=== D 14+7==+===

Question No: 3 ( Marks: 1 ) - Please choose oneLow is the accounts recei%a'le turno%er ratio calculate"

• Net creit sales . %erage total assets

• Net creit sales .Operating incoe

• Net creit sales .%erage accounts recei%a'les• Net creit sales .<ost of goos sol

Question No: 39 ( Marks: 1 ) - Please choose one<opany akes an operating profit argin of 9 I on sales of s* 3*9 illion*<opany has sales that are 3=I higher than <opany an achie%es an operating profit argin of 7*9I*Which copany akes the highest operating profit"



• <opany

• <opany

Company A operating profit margin = 2500, 000*5/100

= 125000Company B = 3,000,000 *3.5/ 100 = 105000

• oth ake the sae operating profit

• Not possi'le to calculate

Question No: 3> ( Marks: 1 ) - Please choose oneThe AuPont pproach 'reaks own the earning power on shareholersK e0uity (O$) aswhich of the following"

• Net profit argin ] Total asset turno%er ] $0uity ultiplier

http:..wps*pearsone*co*uk.ea6uk6he6wachowicG6funfinan613.3>.>>;4.1;=488*cw.content.ine&*htlM<Q 2 1

• Total asset turno%er ] Cross profit argin ] Ae't ratio

• Total asset turno%er ] Net profit argin

• Total asset turno%er ] Cross profit argin ] $0uity ultiplier Question No: 3; ( Marks: 1 ) - Please choose one

Which of the following stateent 'est escri'es the operating profit argin"

• ,t shows what portion of profits are 'eing istri'ute to shareholers

• ,t shows what return is 'eing ae on assets eploye in the 'usiness

• ,t shows how well a copany is controlling its costs+ incluing o%erheas

http:..'ooks*google*ae.'ooks"iDPRSAfR4o475<pgDP8lpgDP80DI33'est2%Donepage0DI33'estfDfalse

• ,t shows how efficiently a copany is turning profits into cash

Question No: 38 ( Marks: 1 ) - Please choose oneeturn on ?ales is also known as which of the following"

• Cross profit argin

• Operating profit argin

O? is also known as a firKs Zoperating profit arginZ*PC$ 2 1

http://wps.pearsoned.co.uk/ema_uk_he_wachowicz_fundfinman_12/26/6679/1709848.cw/content/index.html






• eturn on total assets

• eturn on in%estent

Question No: 34 ( Marks: 1 ) - Please choose oneWhich of the following is NOT a profita'ility easure"

• ccounts recei%a'le turno%er ratio

• eturn on total assets

• eturn on sales

• Ai%ien yiel

•

Question No: 7= ( Marks: 1 ) - Please choose oneWhich of the following is forula to easure the return on total assets"

• %erage total assets 'y operating incoe• %erage total assets 'y net incoe

• Operating incoe 'y a%erage total assets

Page # +4/1et2rn on total assets ' 6perating income ) Average assets

• Net incoe 'y a%erage total assets

•

Question No: 71 ( Marks: 1 ) - Please choose oneWhich of the following is NOT part of aitional pai-in-capital of the copany"

• Preferre stocks

• <oon stocks

• etaine earnings

• Ai%iens istri'ute

PC$ 2 18 Question No: 73 ( Marks: 1 ) - Please choose oneWhich of the following options inicate how 0uickly accounts recei%a'les are con%erteinto cash"

•

ccounts recei%a'le turno%er

PC$ 2 173

• Aays to collect accounts recei%a'le

• Working capital

• Total assets turno%er

•




Which one of the following stateent inicates the ,n%entory turno%er ratio"

• Low 0uickly copany prepare its in%entory

• Low 0uickly copany con%erts its in%entory into cash

• Low 0uickly copany purchases its in%entory

• Low 0uickly copany sells its in%entory

PAGE#132Inentory !"rnoer atio(,TO)* ,t is the nu'er of ties the copany sells (turns o%er) it in%entory uring theyear*

•

Question No: 7 ( Marks: 1 ) - Please choose onessue that a copany has current assets of s* >=+===+ current lia'ilities of s* 79+===an prepai e&penses of s* 9+===* <alculate the 0uick ratio of the copany"

• 1*9;

Quick ratio D < F in% F prepai e&p . <ED >====-9=== . 79===D 99===. 79===D 1*9;

• 1*;1

• 1*8>

• =*98 Question No: 79 ( Marks: 1 ) - Please choose one

What will 'e the effect on the $P? of the copany+ if it pai stock i%ien on coonstock"

• ,ncrease

• Aecrease

• No effect

• <an not 'e foun fro the gi%en inforation

•

Question No: 7> ( Marks: 1 ) - Please choose oneWhat will 'e the effect of appropriate retaine earnings on the rate of return onstockholerKs e0uity"

• ,ncrease

• Aecrease

• No effect

Neither the appropriation nor the return to un-appropriate etaine $arnings has noeffect on total ?hareholers@ $0uity



• <an not 'e foun fro the gi%en inforation

•

Question No: 7; ( Marks: 1 ) - Please choose oneWhich of the following is the 'asic purpose of an accounting syste"

• Ae%elop financial stateents in confority CP

• Pro%ie as uch useful inforation to ecision akers as possi'le

• ecor changes in the financial position of an entity

• Meet an organiGationKs nee for accounting inforation as efficiently as possi'le

Question No: 78 ( Marks: 1 ) - Please choose one coplete set of financial stateents for Lartan <opany+ at Aece'er 71+ 1444+woul inclue each of the following+ $<$PT:

• alance sheet as of Aece'er 71+ 1444

• ,ncoe stateent for the year ene Aece'er 71+ 1444• ?tateent of pro!ecte cash flows for 3===

• Notes containing aitional inforation that is useful in interpreting the financial?tateents

Question No: 74 ( Marks: 1 ) - Please choose oneWhich of the following e0uations properly represents a eri%ation of the funaentalaccounting e0uation"

• ssets lia'ilities D ownerKs e0uity

• ssets D ownerKs e0uity

• <ash D assets

• ssets - lia'ilities D ownerKs e0uity

Question No: = ( Marks: 1 ) - Please choose oneWhich of the following is T5$ regaring etaine $arnings"

• ,ncrease 'y net incoe

• ,ncrease 'y re%enues

• Aecrease 'y i%iens eclare

etaine $arnings are increase 'y Net ,ncoe (or ecrease 'y Net Eoss) an ecrease 'y Ai%iens Aeclare* The ONES thing that affects etaine $arnings irectly isAi%iens Aeclare

• Aecrease 'y gains an losses

•

Question No: 1 ( Marks: 1 ) - Please choose oneWhat are the effects of an a!usting entry on the financial stateents"



• Match re%enues an e&penitures

• ,ncrease net incoe

• ,ncrease the accuracy of 'alance sheet an incoe stateent

• Match re%enues an assets

•

Question No: 3 ( Marks: 1 ) - Please choose oneThe supplies account has a 'alance of s* 1+9== at year en* The actual aount ofsupplies in han at the en of perio is s* ==* The necessary a!usting entry is:

• Ae'it ?upplies on Lan s* 11==B <reit ?upplies $&pense s* 11==

• Ae'it ?upplies $&pense s* ==B <reit ?upplies on Lan s* ==

• Ae'it ?upplies $&pense s* 11==B <reit ?upplies on Lan s* 11==

• Ae'it ?upplies on Lan s* ==B <reit ?upplies $&pense s* ==

•

Question No: 7 ( Marks: 7 ),f the retaine earnings account has a e'it 'alance+ how is it presente in the 'alance

sheet an what is it calle" Question No: ( Marks: 7 )5sing the following inforation+ copute the i%ien yiel to the nearest tenth*,ncoe s* 17=+===eginning shares outstaning 39=+===$ning shares outstaning 3;=+===<urrent price per share s* ;*9=Ai%ien per share s* 1*3= Question No: 9 ( Marks: 7 )

What inforation is pro%ie 'y the 'alance sheet to the short ter an log tercreitors" Question No: > ( Marks: 9 )ssue that you are a coercial loan officer at a large 'ank* One of your clientsrecently su'itte an application for s* 7==+=== fi%e year loan* Sou ha%e worke withthis 'usiness 'efore on nuerous occasions an ha%e perioically 'een force to ealwith late an isse payents attri'ute to cash flow pro'les* Thus you are surpriseto see in the 'usiness plan accopanying the application that the anageent e&pects toreuce the copany s operating cycle fro 14= ays to 4= ays* footnote to the 'usiness plan inicates that the reuction in the operating cycle will result fro a tighter

creit policy an the ipleentation of a !ust-in-tie in%entory syste*e0uireent:Woul the copany 'e a'le to reuce the operating cycle 'y applying the new strategyan woul you gi%e the loan to the copany on this 'asis" Question No: ; ( Marks: 9 ),n each of the following situations+ inicate the for of organiGation that you woule&pect the 'usiness to take*



a) neigh'orhoo lawn-o%ing 'usiness operate 'y a teenager ') copany organiGe to anufacture an electric car c) sall retail clothing store+ owne an operate 'y a 'rother an sister ) eical group consisting of si& octors+ organiGe in a state that oes not allow professional practices to incorporate*

e) flight school owne 'y an airline pilot* The 'usiness is profita'le+ 'ut the owner usesthe profits to 'uy planes an e&pan the 'usiness* Question No: 8 ( Marks: 1= )The year en 'alance sheet of EaserTech+ ,nc inclues the following stockholer s e0uitysection* ?tockholer s e0uity:s* 8 cuulati%e preferre stock+ s* 1== par %alue+calla'le at s* 1=7+ 3==+=== shares authoriGes* >+===+===<oon stock+ s* 3 par %alue+ 9+===+=== sharesauthoriGe:

,ssue s*7+>==+===?u'scri'e 1+==+=== 9+===+===itional pai in capitalPreferre s* 3=+===<oon (incluing su'scri'e shares) 39+===+=== 39+3=+===etaine earnings 7+>4=+===Total stockholer s e0uity s* 74+47=+===ssets of the corporation inclue su'scriptions recei%a'le+ s* 9+>==+===*e0uireent:a* Low any shares of coons stock ha%e 'een issue or su'scri'e" (3) '* What is the total legal capital+ incluing shares su'scri'e" (3)c* What is the total pai in capital+ incluing shares su'scri'e" (7)* What is the 'ook %alue per share of the coon stock+ assuing that no i%iens inarrears* (7) Question No: 4 ( Marks: 1= )Eiste 'elow is the working capital inforation for < <opany+ at the 'eginning ofthe year*<ash s* =9+===Teporary in%estent in arketa'le securities 31>+=== Notes recei%a'les current 73+===ccounts recei%a'les 9=+===llowance for ou'tful accounts 3;+===,n%entory 73+===Prepai e&penses 9+=== Notes paya'le within one year 1>3+===ccounts paya'le 9+===ccrue lia'ilities =+9==



The following transactions are coplete uring the year:1* ?ol on account in%entory costing s* ;3+=== for s* >9+===3* ,ssue aitional shares of capital stock for cash+ s* 8==+===7* ?ol teporary in%estents+ s* >=+===+ for s* 9+=== cash* c0uire teporary in%estents costing s* 1=9+===* pai cash

9* Wrote off uncollecti'le accounts+ s* 18+===>* ?ol on account in%entory costing s* ;9+=== for s* 4=+===;* c0uire plant an e0uipent for cash+ s* 8=+===8* Aeclare a cash i%ien+ s* 3=+===4* Aeclare a 1=I stock i%ien1=* Pai accounts paya'le+ s* 13=+===11* Purchase goos on account+ s* 4=+===13* <ollecte cash on accounts recei%a'les+ s* 18=+===17* orrowe cash fro a 'ank 'y issuing a short ter note+ s* 39=+===e0uireent:a) <opute the aount of 0uick assets+ current assets+ an current lia'ilities at the

'eginning of the year shown 'y the a'o%e account 'alances (333)

') <opute the current ratio+ an 0uick ratio* (33)

5/ PAPER

/,NET$M $M,NT,ON?pring 3==4

/,N>31- /inancial ?tateent nalysis (?ession - 3)Marks: 81

Question No: 1 66 ( Marks: 1 ) - Please choose ones transactions an e%ents relate to financial resources occur+ they are analyGe withrespect to their effect on which of the following"

/inancial position of the copany

http:..e-articles*info.e.a.title.The-steps-of-the-accounting-cycle-an-coputeriGe-accounting-systes.

ccounting cycleTrial 'alance

Ei0uiity position of the copany Question

No: 3 ( Marks: 1 ) - Please choose one,f onthly financial stateents are esire 'y anageent then:

RournaliGing an posting a!usting entries ust 'e one each onthRournaliGing an posting closing entries ust 'e one each onthMonthly financial stateents can 'e prepare fro worksheetsB

http://e-articles.info/e/a/title/The-steps-of-the-accounting-cycle-and-computerized-accounting-systems/






a!ustents an closing entries nee not 'e entere in the accounting recors


!usting an closing entries ust 'e entere in the accounting recors 'efore preparation of interi financial stateents

Question No: 7 66 ( Marks: 1 ) - Please choose oneWhich of the following ites are NOT ae 'ack to the net incoe figure (which isfoun on the ,ncoe ?tateent) to arri%e at cash flows fro operations"

AepreciationAeferre ta&ortiGation,n%estents

Aepreciation (loss of tangi'le asset %alue o%er tie)Aeferre ta&ortiGation (loss of intangi'le asset %alue o%er tie)ny gains or losses associate with the sale of a non-current asset+ 'ecause associate cashflows o not 'elong in the operating section*(unrealiGe gains.losses are also ae 'ackfro the incoe stateent)

Question No: 66 ( Marks: 1 ) - Please choose oneWhich of the following woul 'e consiere as cash flow fro in%esting acti%ities"

$&peniture for sale of plant an e0uipentPayents to supplierseceipts fro sale of goos or ser%icesProcees fro issuance of long-ter e't

Question No: 9 ( Marks: 1 ) - Please choose one< <opany has a cost of goos sol of s* 9==+===* Auring the year the in%entoryincrease 'y s* 1=+=== an accounts paya'le increase 'y s*<19+ ===* The intereste&pense was s* 19+=== for the year an i%iens of s*<11+ === were pai uring theyear* What woul 'e the cash payents for the purchase of the erchanise"

s* 9=9+===s* 91>+===s* 4=+===s* 49+===

Question No: > 66 ( Marks: 1 ) - Please choose oneWhich of the following ites oes not result in an a!ustent in the erchanisein%entory account uner a perpetual syste"







purchase of erchanise return of erchanise in%entory to the supplier Payent of freight costs for goos shippe to a custoer Payent of freight costs for goos recei%e fro a supplier

Question No: ; 66 ( Marks: 1 ) - Please choose one,n a perpetual in%entory syste+ which of the following is NOT part of the series of !ournal entries ae when erchanise is sol on creit"

<reit the <ost of Coos ?ol account

http:..highere*cgraw-hill*co.sites.==;344>97>.stuent6%iew=.chapter9.interacti%e60uiG6a*htlM<Q 2 1;

<reit the ?ales account<reit the Merchanise ,n%entory accountAe'it the ccounts ecei%a'le account

Question No: 8 ( Marks: 1 ) - Please choose onessuing that net purchases cost s 39=+=== uring the year an that closing in%entorywas s +=== less than the opening in%entory of s 7=+===+ how uch was the cost ofgoos sol"s* 3;>+ ===s* 38=+===s* 39+===

7==== 39==== F 3>===D39===

s* 3>+===

Question No: 4 66 ( Marks: 1 ) - Please choose oneThe sale of a eprecia'le asset resulting in a loss inicates that the procees fro the salewere:

Eess than current arket %alueCreater than costCreater than 'ook %alueEess than 'ook %alue

Question No: 1= 66 ( Marks: 1 ) - Please choose one< <opany sol a plant asset that originally cost s* 9=+=== for s* 33+===cash* ,f the copany correctly reports a s* 9+=== gain on this sale+ theaccuulate epreciation on the asset at the ate of sale ust 'e:s* 77+===







ook %alue D cash -gain D 33===-9=== D 1;===Aepreciation D 9====-1;=== D 77===

s* 38+===s* 3;+===s* 37+===

Question No: 11 66( Marks: 1 ) - Please choose oneWhich of the following is NOT the part of annual report"

/inancial stateentsuitorKs report/i%e year suary

/uture in%estents report

nnual eport is part of /inancial eporting Process which contains /inancial?tateents+ Notes to financial stateents+ uitors@ eport+ /i%e-year suary of keyfinancial an non-financial ata+ an Manageent@s iscussion an analysis of operations(MA)PC$ 2 48

Question No: 13 66( Marks: 1 ) - Please choose ones state in the auit report+ or eport of ,nepenent ccountants+ the priaryresponsi'ility for a copanyKs financial stateents lies with which of the following"

The owners of the copany,nepenent financial analystsThe auitorsThe copanyKs anageent

uit of financial stateents is inepenent of the 'usiness issuing these* /inancial?tateents preparation is Manageent@s responsi'ility+PC$ 2 48

Question No: 17 ( Marks: 1 ) - Please choose onen auitor woul ost likely issue an ina'ility to for an opinion 'ecause whichof the following"

,nae0uate isclosure of aterial inforation in the financial stateentsThe oission of the stateent of cash flowManageentKs refusal to furnish written representations aterial eparture fro accounting stanars



Question No: 1 66 ( Marks: 1 ) - Please choose oneWhich of the following is a techni0ue in accounting that can 'e use to present thefinancial position of the copany in a fa%ora'le light"

Coo willele%ance<onsistencyWinow ressing

Question No: 19 66 ( Marks: 1 ) - Please choose oneWhich of the following %aluation ethos can istort the coparison 'etweencopanies",n%entory %aluation ethos

Page # 10$Different acco2nting practices can distort comparisons* As noted earlier8 inventorval2ation and depreciation methods can affect financial statements and th2s distortcomparisons among firms

ssets %aluation ethos?ales %aluation ethos$&penses %aluation ethos

Question No: 1> 66 ( Marks: 1 ) - Please choose oneWhich of the following is NOT a isa%antage of a ?ole proprietorship"

Eiite capital5nliite lia'ility?trong anagerial e&pertiseEack of continuity

Question No: 1; 66 ( Marks: 1 ) - Please choose oneWhich of the following types of preferre stocks carry the pro%ision that the issuer has the right to purchase 'ack the stock at a certain price+ an retire it whene%er he wants",n arrears preferre shares

<all a'le preferre shares

http:..www*in%estopeia*co.ters.c.calla'lepreferrestock*asp

<uulati%e preferre sharesParticipating preferre shares

http://www.investopedia.com/terms/c/callablepreferredstock.asp

http://www.investopedia.com/terms/c/callablepreferredstock.asp



Question No: 18 ( Marks: 1 ) - Please choose oneWhich of the following reains intact an unaffecte 'y the continuous changes in 'usiness"

<apital ?tock

http:..legal-ictionary*thefreeictionary*co.<apital?tock

ssetsEia'ilitiesetaine $arnings

http:..legal-ictionary*thefreeictionary*co.<apital?tock <apital stock is istinguisha'le fro the property an assets of the corporation* The property of a corporation fluctuates an ay 'e greater or less than the original capital

in%este+ 'ut the capital stock reains intact an unaffecte 'y the %icissitues of 'usiness*

Question No: 14 66 ( Marks: 1 ) - Please choose oneWhat will 'e the effect of purchases of its own shares 'y the 'usiness on the 'ook %alueof the 'usiness"

,ncrease the total 'ook %alueAecrease total 'ook %alue

The purchase of its own shares 'y the 'usiness will ecrease total 'ook %alue No effect on the total 'ook %alueMay or ay not change

Question No: 3= 66 ( Marks: 1 ) - Please choose oneWhen i%iens are pai to the shareholers they ust 'e appro%e 'y which of thefollowing authority"

oar of irectorsManageent<oon ?tockholersPreferre ?tockholers

6 Question No: 31 ( Marks: 1 ) F Please choose oneWhich one of the following represents the %alue of shares in the arket at any point of tie"Par %alueook %alue/ace %alue

http://legal-dictionary.thefreedictionary.com/Capital+Stock






Market %alue

http:..'ooks*google*co.'ooks"iDYW?S=7;5$<pgDP>=0D%alue2%Donepage0D%aluefDfalse

Question No: 33 66( Marks: 1 ) - Please choose oneWhich of the following stateents (in general) is <O$<T"

low recei%a'les turno%er is esira'leThe lower the total e't-to-e0uity ratio+ the lower the financial risk for a firn increase in net profit argin with no change in sales or assets eans a weaker O,The higher the ta& rate for a fir+ the lower the interest co%erage ratio

http:..we'*utk*eu.!wachowi.c0uiG.c>*htlM<Q 2 =8

Question No: 37 ( Marks: 1 ) - Please choose oneWhich group of ratios shows the e&tent to which the fir is finance with e't"

Ei0uiity ratiosAe't ratios

Page 2 17>Ae't FTo-Total-ssets: The e't-to-total assets ratio is eri%e 'y i%iing a fir@s totale't 'y its total assets: ,t inicates percentage of total assets finance 'y e't<o%erage ratiosProfita'ility ratios

Question No: 3 ( Marks: 1 ) - Please choose one$arnings per share+ return on sales+ an return on e0uity are all e&aples of which of thefollowing"Ee%erage ratiosEi0uiity ratiosTurno%er ratiosProfita'ility ratios

http:..highere*cgraw-hill*co.sites.==;=43144;.stuent6%iew=.chapter1>.ultiple6choice60uiG*htlM<Q 2 1=

Question No: 39 66( Marks: 1 ) - Please choose one,f a gross profit stays high+ 'ut net profit falls this iplies which of the following"

<opetiti%e pressures are increasingThe e&penses of the 'usiness ay 'e growing too rapily

http:..wps*pearsone*co*uk.ea6uk6he6yson6accnas6>.1>.3>1.1=4=48*cw.ine&*htl

http://books.google.com/books?id=ZWSRY0m37UEC&pg=PA60&dq=value+#v=onepage&q=value&f=false





http://wps.pearsoned.co.uk/ema_uk_he_dyson_accnas_6/16/4261/1090984.cw/index.html






http://wps.pearsoned.co.uk/ema_uk_he_dyson_accnas_6/16/4261/1090984.cw/index.html



M<Q 2 3=The arket is 'ecoing saturateThe e&penses of the 'usiness are firly uner control

Question No: 3> 66( Marks: 1 ) - Please choose one5sing the following inforation+ calculate the 'ook %alue per share of coon stock*<oon stock+ =*1= par+ 1=+=== shares authoriGe3=== share issue an outstaning s* 3==Pai-in capital in e&cess of par - coon s* 4+8==etaine $arnings s* 38+===

s* 39s* 74s* 9s* ;*8

$0uity of <oon ?tockholers . ?hares of <oon ?tock Outstaning(3==48==38===).3=== D 74

Question No: 3; 66( Marks: 1 ) - Please choose oneWhich of the following is the percentage change if a negati%e aount appears in the 'aseyear"

MisleaingPositi%e<an not 'e copute Negati%e

Question No: 38 ( Marks: 1 ) - Please choose oneWhich group of ratios relates the financial charges of a fir to its a'ility to ser%ice the"

Ae't ratios<o%erage ratios

http:..wps*pearsone*co*uk.ea6uk6he6wachowicG6funfinan613.3>.>>;4.1;=488*cw.content.ine&*htlM<Q 2 18

Profita'ility ratioscti%ity ratios

Question No: 34 ( Marks: 1 ) - Please choose oneOli%er ,ncorporate has a current ratio e0ual to 1*> an a 0uick ratio e0ual to 1*3*The copany has s* 3 illion in sales an its current lia'ilities are s* 1 illion*what is the %alue of copanyKs current assets"







1+>==+===

C"rrent ratio = %"rrent a&&et& / %"rrent 'ia(i'itie&C"rrent a&&et& = %"rrent ratio * %"rrent 'ia(i'itie&

= 1.)*1,000,000= 1,)00,000

1+3==+===7+3==+===3+==+===

Question No: 7= 66 ( Marks: 1 ) - Please choose one fir has 'eginning accounts recei%a'les of s* 7;9+===+ an ening accountsrecei%a'les of s* ==+===* The sales were s* 3+9==+=== incluing cash sales of s*>==+===*

<alculate the accounts recei%a'le turno%er ratio of the copany*

=*;>>*9*;9*4=

ccount recei%a'le turno%er D net creit sales . a%erage account recei%a'leD 1+4==+=== . 78;+9==D *4=

Question No: 71 66 ( Marks: 1 ) - Please choose oneWhich of the following perforance easures woul 'e of ost irect interest toshareholers"

eturn on net assetsCross profit arginAe't ratioAi%ien yiel

Question No: 73 66 ( Marks: 1 ) - Please choose oneLow is the copanyKs e't ratio calculate"

Total lia'ilities 'y total assets

http:..www*net'a*co.finance.financial.ratios.

Total assets 'y total lia'ilitiesTotal lia'ilities 'y net incoeTotal assets 'y operating incoe

http://www.netmba.com/finance/financial/ratios/

http://www.netmba.com/finance/financial/ratios/



Question No: 77 66 ( Marks: 1 ) - Please choose one?ales for 1441 ('ase year) were s* 8==+=== an the year-en total asset turno%er ratiowas 1*>* With which of the following stateents woul you agree"

The total assets ine& analysis %alue+ assuing s* 1*=9 illion of assets at the en of3===+ woul 'e 31=

http:..wps*pearsone*co*uk.ea6uk6he6wachowicG6funfinan613.3>.>>;4.1;=488*cw.content.ine&*htlM<Q 2 =;

The gross profit argin an the net profit argin are e&aples of 'alance sheet ratios,f total e't in 3=== was s* 3=+===+ the e't-to-e0uity ratio in 3=== woul 'e8I,ne& analysis suppleents the coon-siGe analysis 'y coparing key inustry ratios

Question No: 7 66 ( Marks: 1 ) - Please choose oneWhich of the following is NOT a profita'ility easure"

ccounts recei%a'le turno%er ratioeturn on total assetseturn on salesAi%ien yiel

Question No: 79 66 ( Marks: 1 ) - Please choose oneWhich one of the following stateent inicates the ,n%entory turno%er ratio"

Low 0uickly copany prepare its in%entoryLow 0uickly copany con%erts its in%entory into cashLow 0uickly copany purchases its in%entoryLow 0uickly copany sells its in%entory

Question No: 7> 66 ( Marks: 1 ) - Please choose oneOperating cycle 'elongs to which group of ratios"

Ee%erage ratiosEi0uiity ratiosProfita'ility ratioscti%ity ratiosPC$ 2 19

Question No: 7; 66 ( Marks: 1 ) - Please choose one what will 'e effect of payent of pre%iously eclare i%iens on the e't ratio of the copany"

,ncrease







Aecrease No effect<an not 'e foun fro the gi%en inforation


ll of the following stateents are T5$ regaring ratios that easure a copanyKsa'ility to pay current lia'ilities $<$PT:

higher current ratio is always preferre to a lower current ratio

http:..wps*prenhall*co.ca6ph6horngren6accounting6;.>=.1981.74>7738*cw.content.ine&*htlM<Q 2 =8

,n ost inustries+ a current ratio of 3*= is consiere ae0uateWorking capital D current assets - current lia'ilities

,n%entory an prepai e&pense are inclue in the nuerator of the current ratio

Question No: 74 ( Marks: 1 ) - Please choose oneWhich of the following e0uations properly represents a eri%ation of the funaentalaccounting e0uation"

ssets lia'ilities D ownerKs e0uityssets D ownerKs e0uity<ash D assetsssets - lia'ilities D ownerKs e0uityQuestion No: = 66( Marks: 1 ) - Please choose oneThe stateent of cash flows is esigne to assist users in assessing each of the following$<$PT:

The a'ility of the copany to reain sol%ent,n assessing the copanyKs profita'ilityMa!or source of cash receipt uring the perioThe reasons for ifference 'etween cash fro operating acti%ities an net incoe

Question No: 1 ( Marks: 1 ) - Please choose one/ailure to recor the receipt of a utility 'ill for ser%ices alreay recei%e will result inwhich of the following"

n o%erstateent of assetsn o%erstateent of lia'ilitiesn o%erstateent of e0uityn unerstateent of assets

Question No: 3 66 ( Marks: 1 ) - Please choose oneWhich of the following is NOT an a%antage of the accrual 'asis of accounting"

http://wps.prenhall.com/ca_ph_horngren_accounting_7/60/15481/3963328.cw/content/index.html






,t is siple to see what payents to %enors are outstaning,t is easy to see how uch re%enue is ue the copany,t is uch easier to assess the o%erall financial health of the copany,t is uch easier an cheaper to aintain

EN<

FIN621- Financial Statement Analysis

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FIN621- Financial Statement Analysis 5 PAPERS 99% sure solved it!

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