UNIVERSITY OF GUJRAT

Semester SPRING 2020 (Online Examination)

Course Code: MGT-205 Course Title: Fundamentals of Accounting

Time Allowed: 3 hours and 30 Minutes Marks: 50

Name: ----------------------------------- Roll #: -----------------------------------------

Q1: Eastern Federal Union (EFU) insurance company limited assigned a task to its investment manager to choose a
better company for investing the excess cash. What are the key important points to keep in mind so that this
investment increases the wealth of the owners? (2 marks)
Q2: Being an accountant of Al-Wahid cotton mill you are about to make Bank Reconciliation Statement for the
Month of July, 2020. What difficulties can you face in making it and how can they be overcome? Justify your answer.
(2 marks)
Q3: Mr. Zeshan an accounts supervisor of ABC Company is assigned with the responsibility to consider the impact of
flow of inventory costs. He submitted a report to his high ups about some inventory valuation problems. How
inventory valuation issues can affect ABC Company? (2 marks)
Q4: Internal controls are strategies set by the companies to ensure the integrity of financial and accounting
information, how can a business create a linkage between internal control system ,internal audit and internal check
system. How these elements can affect business information reliability? (2.5 marks)
Q5: Hashim & co is a textile company. Due to the recent corona virus pandemic the company shuts all of its
operations and went on liquidation. The company has total assets of 750,000 while the outstanding liabilities of
10,00,000 .How will the claims be settled now? Briefly explain in terms of priority. (2 marks)
Q6: Ali enterprise started business on 1st January,2019. During the month of January following transactions took
place.
Date and Particular No of units Cost /Unit Selling Price/Unit
$ $

2nd January Purchased 350 4.50

3rd January Purchased 350 5.50

4th January sold 400 8.50

9th January purchased 500 6.50

11th January sold 350 9.50

18th January purchased 300 7.50

25th January sold 500 11.50

Calculate value of ending inventory, cost of goods sold and gross profit for January 2019 using FIFO method.
(2.5 marks)
Q7: Based on the information available in above question no 06 Calculate value of ending inventory, cost of goods
sold and gross profit for January 2019 using LIFO method. (2.5 marks)
Q8: Based on the information available in above question no 06 Calculate value of ending inventory, cost of goods
sold and gross profit for January 2019 using Weighted Average method. (2.5 marks)

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Q9: Early in 2013, Pakistan Light waive company was organized with authorization of 20,00,000 shares of 15 par
value common stock and 40,00,000 shares of 200 par value preferred stock. 5,00,000 common shares were sold for
35 per share. 2,00,000 preferred shares were issued at Par. During the first five years (2013 -2017) Pakistan Light
waive earned a total of 545000 and paid dividends of 30 cents per common share outstanding each year. Prepare
statement of share holder equity at December 31,2017. (3 Marks)
Q10: Would the use of accelerated depreciation in the financial statements be more conservative or less
conservative? Explain with figurative work. (2.5 marks)
Q11: B&A Inc., recently purchased new Machinery for the business at a list price of Rs =95,000/-. Mr Nailson the
seller remained your old good friend so he offered you 13% discount. The policy requires Rs =77,00/-. as an insurance
coverage for in transit. Mr Nailson also incurred Rs =1550/- as a promotional activity in selling process related to this
particular machine. Freight charges totaled =990/- Rs incurred for delivery of the machine. Installation charges of
machinery is =2460/- Rs. After installation training cost of the machinery for assurance of proper working is Rs=750/-.
Right after machinery started working and produced some units the company incurred Rs=1200/- for service charges
for machinery. Compute the total cost debited to the B&A Inc, machinery account? (3 marks)
Q12: Being an accountant of B&A Inc., (reference to the information available in question no 11) you have been
provided with following additional information: the estimated useful life of the asset is 4.5 years, Residual value of
the asset is estimated Rs=5550/-. Prepare a straight lone depreciation table? (2.5 marks)
Q13: Based on the information available in question no 11 & 12, you are required to prepare a 200% declining
balance table? (2.5 marks)
Q14: Mr.Nadeem is an accountant of Huzaifa enterprises. The Following information is available to the for the month
of May,2020. Ledger account showed a balance at 31st may,2020 of Rs=251,136/-. While May bank statement
showed a closing balance of Rs=229,656/-. While Rs=32000/- Cash left at the bank as it was presented to the bank
after banking hours (bank kept it in the night deposit). May 2020, Bank statement also includes a debit memorandum
from the bank for Rs=100/- as a service charges. The bank statement of the April 30,2020 includes a debit
memorandum from the bank for Rs=200/- as a SMS alert charges. A credit memorandum enclosed with the bank
statement indicates that non-interest bearing note Rs= 8,000/- from Mr. Ali. Inspection of paid checks with
accounting record revealed that cheque no 1642 for Rs=189/- issues in May 15, has been erroneously entered in
ledger records as Rs=981/- included in the bank statement 400 NSF check. Three checks all issued in May are not still
presented in the bank for payment: no 107 for Rs=628/-; no 111 for Rs=1250/- and no 115 for Rs=350/-. Prepare bank
reconciliation for Huzaifa enterprises, at May 31. (4 marks)
Q15: Based on the information available in question no 14, Prepare journal entries to adjust the accounts at May 31.
(2 marks)
Q16: Based on the information available in question no 14, as an accountant of Huzaifa enterprises you are required
to devise some strategies to avoid this disagreement in (Bank statement and Ledger account) for June,2020. Discuss?
(2 marks)
Q17: On july 2019, Mehmood & sons limited borrowed Rs 5,00,000/- on a one year, 4% note payable from JS
Bank,Gujrat. The note is to be repaid after one year but interest was paid quarterly. How would you classify this
liability in balance sheet and on what amount? What will be the affect on 2019, 2020 balance sheets? (2.5 marks)
Q18: Use following information to prepare cash flow from operating activities statement: cash from issuing capital
=700,000/-.paying interest =15000/-, paying dividend=9000/-, dividend received=9000/-, receiving short term loan
from customer=50,000/-. Charging depreciation =7000/- for this year, paying income tax =9500/-, cost of goods
sold=72000/-, total sales= 750,000/-, credit sales =350,000/-, rent received=8000/-. (3 marks)
Q19: Prepare journal entry to record the following issuances of stock; A corporation issued 700 shares of no-par
common stock to its promoters in exchange for their efforts, estimated to be worth $800. The stock has a $1 per
share stated value. Why three dates are important in dividend relevance? (2.5 marks)

Q20: Generally accepted accountings Principles (GAAP) are important to consider while preparing financial
statements. Which principle do you think is most important and why? And if there is a situation for an accountant in
which violation from GAAP achieves the major goal of the organization, what will be your choice in this scenario?
(2.5 marks)

***Best of Luck***
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