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    ITA Questions Dec 22 by Permal Sajjad

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    areejayesha4
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    Introduction to Accounting Absorption ) Absorptid.> Actual ©) Budget> actual) Actual > Budgeted 48, Prime cost means 4) Sum of direct material ahd factoroyerhead costs ) Sum of direct material and selling costs ©) Sum of indirect matetial and.direct fabour costs ) Sum of direct material and direct labour costs 49. Which of the foll6Wing entries should be made for accmued expense at year end? a) Debit Expense a/c Credit: Accrued expenses b) Debit: Agcmed expenses Credit: Expense ave ©) Debit: Prepaid expenses Credit: Expense account @) Debit Expens@accomt Credit: Prepaid expenses 50, Which of the following entries should be made for prepaid expense at year end? a) Debit: Expense ae Credit: Accrued expenses b) Debit: Accmued expenses Credit: Expense a/c ©) Debit: Prepaid expenses Credit: Expense account @) Debit: Expense account Credit: Prepaid expenses Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 6 PRC4 - ITA December 2022 51, Which of the following statements are correct? (The good debis do not require any special accounting treatment unlike bad and doubtful debts. (ii) The doubsfial debts nmst stay in the accounting records so thatthe business continues to chase payment, ) Both statements are correct ) Only statement (is comect ©) Only statement (i) is correct 4) Both statements are not correct 52. Which of the following statements are correct? (i) Purchase order is issued by seller to buyer. (i) When am invoice is received from a supplier, it should be checked with goods received note ) Both statements are correct 'b) Only statement) is correct ©) Only statement (i) is correct 4) Both statements arenot correct 53. Which of the following statements are comect?” (@ Fuel cost used in transportation business is direct cost (i) Sum of direct costs should exceed indirect costs. a) Both statements are correct b) Only statemefit (pis correct ©) Only statement (i) is correct, 4) Both Statements are tot correct 54. Which of the following statements are correct?” (@ —Book-keeping is broader term than accountii@ (ii) Double entry bookkeeping is used to record cual aspect of franSaction® a) Both statements are correct ) Only staremeli (1) is comrect ©) Only statement (i) is correct 1d) Both statements are not comtect 55, Which of the following statements are comect?, (Accounting isa broader term than /bo0k-keéing. (ii) Book-keeping and accounting are two different but inter-connected functions. ) Both statements are correct ') Only statement (i) is correct ©) Only statement (i) is correct 4) Both statements are not correct 56. Which of the following statements.are coitect? (i) Specific idemtfication of costs i§necesSary forthe inventories which are not ordinarily interchangeable z00ds. (ii) Retail method in the retail inthustry for measuring inventories of large numbers of rapidly changing items swith similar margins for whic it is impracticable to use other costing methods. 2) Botiistatementsare correct bb) Only statement (i) is correct ) Only statement (i) 5 correct 4) Both statements are not correct 57. BalaneB6P which of the following groups of item would appear on opposite sides of atrial balance? 8) Carriage inward and carriage outward ‘b) Inventory and drawings 6) Sales and Refim outwards 4) Trade Receivable and Retum outwards 58, Which of the following statements are correct? (Debit notes issued are initially recorded in purchase day book. (ii) Sales invoices are recorded in sales day book, Select the most appropriate answer ) Both statements are correct bb) Only statement (j) is comrect ©) Only statement (i) is correct 4) Both statements are not correct Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 7 PRC4 - ITA December 2022 59. Why itis necessary to account for accrued expenses? Select the most appropriate answer a) So that current liabilities are not overstated bb) So that profit is not understated ©) So that current assets are not overstated 4) So that profit is not overstated 60. BTL purchased goods for Rs, | million on credit from SPL on Sth December. If BTL pays the full amount within 10 days, it will be allowed a settlement discount of 5%, BTL paid Rs, 950,000 on 12th December and availed the settlement discount. At the time of payment, the accountant at BTL posted Rs, 950,000 on the payment side of cash book. What will be the entry in the General Journal to record the discount? a) Dr: SPL by Rs, 50,000 "Cr: Purchases by Rs. 50,000 b) Dr SPL by Rs. 50,000 Cr: Other income by Rs 50,000 ©) Dr: Purchases by Rs. 50,000. Cr: SPL by Rs 50,000 @) No entry 61, A business is offering a settlement discount to customers, In which TWO of the following sittations, the revente is required to be recorded atthe full amount at the time of sale? a) The customer is not expected to pay early and does not pay early as expected b) The customer is expected to pay early and pays early as expected ) The customer is not expected to pay early but pays early d) The customer is expected to pay early but does not pay early 62, Which of the following statements are correct? (i) Sales account is patt of sales ledge Gi) Total of purchase retum day book is Pdsted to the debit sidé of return outward account. Select the most appropriate answer ) Both statements are correct ‘) Only statement (i is correct ©) Only statement (i) is correct 4) Both statements are not correct 63. Which of the following stateméiats"ite cottect? (Sum of digit method anineducing balance method gives higher depreciation in early years. Gi) Straight line methodiand sumof digitmethod compute depreciation over economic life Select the most approprfate answer a) Both statements are Coftect bb) Only statement (i) is correct ) Only statement (i) is correct, ) Both statements are not correct 64. WIEHOE the following reasbins require an bank account in your general ledger? (SA cheque fioit one of your customers amounting to Rs. 24,000 was returned by the bank as unpaid the ‘ustomer has sone bankrupt (i) A cheqte amounting Rs. 18.000 in the name of your brother was erroneously credited by the bank in your accor, Select the most appropriate answer a) Both statements are comect ‘v) Only statement (i is correct ©) Only statement (i) is correct 4) Both statements are not correct 65. An entity received electricity bill for the month of June 2020. The bill will be paid on 10 July 2020. The entity's financial year ends on 30 June, How would the payment be recorded? a) Debit: Utilities payable Credit: Electricity expense _—_b) Debit: Electricity expense Credit: Cash ©) Debit: Electricity expense Credit: Utilities payable ) Debit: Utilities payable Credit: Cash. Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 8 PRC4 - ITA December 2022 66, Raw materials which are incorporated into goods manufactured but are not easily identifiable to the goods being ‘made would be known as: Select the most appropriate answer a) Manufacturing overheads b) Direct Materials ©) Work in progress d) Direct overheads 67. Write down of inventories to net realizable value should be recognized as: Select the most appropriate answer 4) Deferred expenses and transferred to profit and loss account based on inventory movement to which write down, relates, bb) Am expense in the subsequent period in which such write down is wanranted. ©) An expense in the period in which write-down occurs ) Cument Liabilities 68, On 1 January 2020, an entity rents out part of its premises to a tenant for RS'64000\per month, As per agreement, rent is increased by 5% ftom start of each year, Payments totaling Rs.736000 were received from the tenant dug the year 202 /incliiding Fent for December 2020. Which figures should be reported in the entity's financial statementsat 31 December 2021? Select the most appropriate answer Income statement Current Assets a) Rs.806100 Rsi67200 b) —_Rs.803200 5128000 ©) Rs.803200 Bs.67200. d)——-Rs.806400 Rs.134400 69, Nader traders keeps an analyzed petty cash BOok using the inaprest system, The imprest amount is Rs.15000, The following information is available for the month of December 2021 [Date [Description Bs Decl | Balance 15000 Dec 5__| Bought office stationery 2500 Dec 7 | Paid for official Travel — Caréém Involve 1250 Dec 9 | Paid for refilling of printer cartridges from market fo procurement stal $000. Dec 10 _ | Received fromprocurementsiaff remaining balance — refilling of printer cartridges| 1500 Dec 15 | Paid for biseuits for owner's gtests 700 Dec 29 | Purchased stamp papers ftom market 2000 Petty cashbalance as on 31 December 2021 before replenishment would be? a) RSS750 ‘B)Rs.2050 ©) Rs.5050 a) Rs.9950 70, An entity imported @eomputer server machine having purchase price of Rs 8.5 million. The entity further incwred the following cost: [Expenditure ‘Amount Tmmport duties 3% of purchase price ‘Non-refundable taxes 5% of purchase price plus import duties Reftundable taxes 10% of purehase price plus import duties Tnsuwance in tansit s.240000 [carriage inward Rs. 450000) The server should be capitalized at Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 9 PRC4 - ITA December 2022 71. Depreciation is best described as: a) A means of estimating the amount needed to replace the assets. b) A means of spreading the net cost of non-current assets over their estimated useful life, ©) A means of spreading the net cost of current assets over their estimated useftl life ) None of these 72. Which of the following statements are correct? w@ Credit entries decrease liabilities and increase income (i) Credit entries decrease expenses and increase income Select the most appropriate answer a) Statement (iis correct only by Statement (i is cOttect only ) Both statements are correct ) Both statement§ are nOk.correct 73. Which of the following document would require a double entry? a) Sales order b) Sales invoice c) Delivery notes: d) Statement of a/c 74, Determine the balance as per bank statement using the followingnfertation: Rupees ( Balance as per eash book 49100 ‘Cheque received and deposited info the bank, but ndblyet credited in Me bankstatement | 4600 [Unpresented cheques 6300 [Credit transfers appearing in the bank statement but Rotenfered in Whe caabook 3400 ‘a) Rs.52500 b) Rs 54200, ©) RS58300 ‘@) Rs.50800 75, What entry should be recorded when actual o¥erhead expenditure is incurred? a) Debit; Cost of sales Gfedit; Production overheads b) Debit: Production overheads Gredit Cash'Accrual ¢) Debit: Inventory (WIP) Credit Production overheads 4) Debit: Production overheads CGredit, Cost sales 76. A company purchased affinyentofy item Sbpurchase price at Rs.1800 and also incurred freight in cost of Rs.155. The items will be sold at iaarginof 15% after incurring freight out and packing cost of Rs.200 and Rs.150 respectively. At which Value the item should be carried in the books? a) Rs.1800 by RS9ss ©) Rs.1950 a) Rs.2300 e) Rs.2150. 1)Rs.2100 77. Drawings ia cotieept of: a) Entity b) Matching ©) Prudence ) Material 78. A Transaction not recorded in any other books of original entry is recorded in: a) Prime entry book, by) Sales day book ©) Purchase day book 4) General Journal 79, Contra Asset account has what type of balance? a) Debit ) Credit, ©) Contra 4) All of these 80. Which of the following should not be shown as an intangible non-current asset? 4) Other intangible assets having readily ascertainable MV_b) Non-purchase goodwill c) Development cost meeting the criteria in [AS 38 d) Purchase Goodwill Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 10 PRC4 - ITA December 2022 81. Accrual basis of accounting records revenue when they are a) Readily available for use b) Contracted ©) Collected 4) Eamed 82. Favorable balance means: a) Credit balance in the cash book ‘b) Debit balance in the bank statement ©) Debit balance in the eash book d) All of these 83. The cost of a wastebasket having an estimated useful life of 5 years is charged off as an expense upon purchase ‘This is an example of the application of the: a) Consistency bb) Matching Principal ©) Materiality Conept d) Prudence concept 84, Which of the following is not source document? a) Sale Invoice b) Purchase Invoice ©) Ledger 4) Bank Statement 85. The matching Prineipal: a) Determine whether an item is an asset or a Liability bb) Addresses the relationship b/w the accounting data base and the balanc8lsheet ©) Requires that the account of assets equals the amount of liabilities inthe balance Shéet ) Determines that expenses related to revenue are to be reporteédin the period when the revenue is recognized 86. Which of the following statements are correct? (@® —_Diteciors are responsible for preparation of fiaancial-statements of compaily for public disclosuze. (i) Partners are required to prepare financial statement of a partnership for public disclosure a) Both statements are correct 'b) Only statement (i) is correct ©) Only statement (i) is correct, 4) Both statements are not correct 87, Which of the following statements are corre? (®——Amacerval is expense relating to next gearibut pail in the current year. Gi)__A prepaid is an expense refatinigto cultent yeas but not paid in cumrent year 4) Both statements are correct by) Only statement (i) is correct ©) Only statement (i) is comet 4) Both statements are not correct 88. Which of the followinig statements willot have an effect on business? (@ Goods purchased @n cash were returned to the supplier. Gi) _Qwner piarchased furniture for personal use on credit. a) Botifstatements by Only statement (i) ©) Only, statement (iy 4) Both statements will effect 89. Paymelitsf expenses ftom petty cash fund are reconded in: ) Cash book only 1b) Petty cash book only ©) Petty cash bookias well as in general journal 4) General joumal only 90. In which of the following case both transactions would decrease owner's equity? a) Purchase of asset on credit Payment of Liabilities by) Purchase of assets Payment of expenses ©) Distribution of assets to the owner Payment of expenses ) Payment of liabilities Sale of goods Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 11 PRC4 - ITA December 2022 91. Which of the following statements are correct? (Credit note issue to customers is the source document for sales day book (ii) Cheque and counterfoils are the source documents for cash book. ) Both statements are comect ) Only statement (is comect ©) Only statement (i) is correct 4) Both statements are not correct 92. Double entry accounting system can applied in ‘) Cash Accounting, bb) Acerual Accounting ©) Both Cash and Acerual Accounting 4) None of Casitand Accrual Accounting 93, Which of the following statements are correct? (i) Sales account is patt of sales ledger. (ii) Total of sale day book is posted to the debit side of trade receivables, ) Both statements are comect, b) Only stateent (Dis comeet ©) Only statement (i) is correct 4) Both starementsare to correct 94. How would a cheque received fom a supplier for retuming faulty go0tls be recorded\in cash book? 4) Recorded on payment side only b) Recordedion reteipt side only ©) Recorded on receipt as well as on payment side Ta) Not Fecordethin cash book 95. Which of the following statements are correct? (@ General joumal is a book of prime entry for all transactions, (ii) Sales day book is the book of prinfi¢entry for credit notes iss 10 customers a) Both statements are comect 'b) Only statement (i) is correct ©) Only statement (i) is correct, 4) Both statements are not correct 96, Which of the following statements are corre? (@.—_Costof inventory is determined at lover ofpnrchase price and net realizable value Gi) Cost of inventories does not inelude indirect eonversion cost. 4) Both statements are correct ') Only statement (i) is correct ©) Only statement (i) is comet 4) Both statements are not correct 97. Which of the following statements are Gorrect? @ — Allitems of property, plant and equipment must be depreciated. (ii) _Depreciafion ner sttaight line method is charged for the date the asset is available for use. a) Botlistatements.are correct ) Only statement (i) is correct ©) Only statement (iis correct 4) Both statements are not correct 98. A comply purchased a delivery van for Rs.1 700000 with a salvage value of Rs.260000 on 1 October 2021 Tr nas an estimated useftl life of 4 years using the straight line method, how much depreciation expense should the company recognize on 31 December 2021 a) Rs.90000 10) Rs.360000 ©) Rs.425000 a) Rs.106250 99, What isthe effect on profit forthe year and net assets when accrued income is not recorded? Profit for the year Assets a) Overstated Overstated b) Overstated Understated ©) Understated Overstated. Understated Understated Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 12 PRC4 - ITA December 2022 100. A trial balance consist of ) Two column financial statement intended for distribution to interested parties outside the business. b) A two columm schedule lasting names and balances of all ledger accounts, ©) A two colin schedule of all debit and credit entries posted to ledger accounts 4) A two columm schedule of all debits and credits made in journal entries, 101. Which of the following accounts would be debited to record a credit sale of goods under perpetual system? ) Only accounts receivable b) Accounts receivable and inventory ©) Accounts receivable, cost of goods sold and inventory 4) Accounts receivable and cost of goods sold 102. Which of the following statements are corect? (i) Retail method is used for measuring inventories of lage number of rapilyeins (ii) ‘Specific identification method is necessary for goods not ordinarily interchangeable’ 2) Both statements are correct by Only statement (as cores c) Only statement (ii) is correct d) Both statementsare notcorrect 103. As useful life decreases, depreciation value will: a) Increase ') Decrease ©) Both ) None 104. What will be the rlatiouship between useful LifWind scrap vallib, a) Direct, b) Inverse ©) Conisiant 4) None 105. Another name of capital: a) Owner's equity b) Net assets Bot 4) None 106. Land, Building and Machinery alwaysidepreciated: a) Comect by Incorrect 107. Which of the following stateuienf@are comect? (i) Debit notes issued or Gretlit note received. Gi) Credit noted issued by eustomer or Debit note is issued by supplier a) Both statements are cofftet bb) Only statement (i) is comect ©) Only statement (i) iSeorrect 4) Both statements are not correct 108. If during thelgccotinting Period the assets increased by Rs.7 million, and the owner's equity decreased by Rs million, then the liabilities must have; a) Inlereased by Rs. 10 million, b) Increased by Rs.4 million ©) Decreased by Rs 4 million 4) Decreases by Rs.10 million 109. Which ofthe following explains why lenders are interested in financial statements of a business? ) Lenders need information about financial stability of business +) Lenders need information about profitability of business ©) Lenders want to assess the entity's capacity to pay interest and repay loan on time @) All ofthe above 110. Purchase of machinery for cash. a) Increases total assets bb) Decreases total assets ) Increases assets and liabilities d) Keeps total assets unchanged Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 13 PRC4 - ITA December 2022 111. The investment of cash into the business results in a/an a) Increase in cash and a decrease in capital bb) Increase in cash amd an inerease in capital ©) Increase in fees earned and an inerease in capital «d) Decrease in cash and an increase in capital 112. Services rendered for cash will result in a/an a) Increase in cash and a decrease in capital by) Inerease in cash and an increase in fees earned ©) Decrease in cash and an increase in fees eamed ) Increase in fees eamed and an decrease in capital 113, The owner contributes his personal car to the business a) Increase an asset, increase owner's equity b) Increase an asset, increase liability 6) Decrease an asset, decrease owner's equity d) Decressefmasset decrease alnblity 114. In which book of prime entry debit notes issued are initiallrecorded? a) Purchase retum Jounal —_) Sales Return Journal ©) Burchige Journal | "ed) Sales Journal 115. In which book of prime entry credit notes received are iniilly recotdled?” a) Sales Journal 1) Purchase retumJoutrual ¢) Sales Return Jounal d) Purchase Joummal 116. In which book of prime entry does debit notes réoeived. worth Rs. 1001000 wuld be recorded? a) Accounts payable book ——_-b) Return @ufward journal” ¢¢) return inwaréljoumal d) Purchase journal 117. In which book of prime entry does purchasé§jon account o£ RS) 500,000 would be recorded? a) Cash book b) Accoumtspayablebook —¢) Purchase day book — d) None of the above 118. The process of transferring transaction from journal ledgers is called? ) Joumalizing v) Summarizing ©) Posting 4) Analyzing 119. Zahra determines at yearend that, Salaris paid during the year include Rs. 10,000 in advance What is the correct year ett adjustment for advance salary to be made? 1) Dr Salaries Rs. 10,000 Gr Advance salaties Rs. 10,000 b) Dr Salaries Rs. 10,000 Cr-Accruedisalaries Rs. 10,000 ©) Dr Advance salaries Rs, 10,000 Cr Salaries expense Rs, 10,000 @) Nogntrytequined 120. In thie year to 31 December 2018, Saira received Rs. 50,800 rental income. The amounts of rent received in advance id due in arrears were as follows: 31 Dec 2018 31 Dec 2017 Rs, Rs Rent received in advance 4,000 3,000 Rent due in arrears (accrnted) 2,500 1,700 What figure for rental income should be recorded in the statement of profit or loss for the year ended 31 December 2018? a) Rs. $0,800 b) Rs. 50,600 ©) Rs. $4,500 4) Rs. $6,000 Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 14 PRC4 - ITA December 2022 121. Helix Corporation has sublet part of its office and in the year ended 30 November 2008 the rent receivable was: Until 30 June 2008 Rs, 9,000 per year From 1 July 2008 Rs. 12,000 per year Rent was received quarterly in advance on 1 January, April, July, and October each year. What amounts should appear in the company’s financial statements for the year ended 30 November 20087 Rental income Statement of Financial Position a Rs, 10,800 Rs. 1,000 in sundry payables ») Rs, 10,900 Rs, 1,000 in sundry payables °) Rs, 10.250 Rs. 1,000 in sundry receivables, a Rs, 9,900 Rs, 2,000 in sundry receivables 122. Which of the following is not true? {) An acernal is an amount owing at the end of a period: a prepayment is an'amounitpaid imadvance b) An accrual is a liability; a prepayment is an asset ©) An accrual is a liability: a prepayment is always a non-current asset ) An accrual is a current liability: a prepayment is a current asset 123. The draft year end accounts were prepared withtitadjusting prepaymelg for Rent of Rs. 970. When the adjustment is made, which of the following would be efféet thereof” 4) Profit increased by Rs. 970 and Liability increased by. Rsw970 b) Profit decreased by Rs. 970 and Liabilityiincteased by RS. 970) ©) Profit increased by Rs. 970 and assets increased by RS. 970 ) Profit increased by Rs. 970 and assets decreased by Rs. 970, 124. An entity prepared the draft end year accotints, bitdid not adjust these for a prepayment of Rs, 1,500 and an acerval of RS. 400, How will profit and net assets be afféeted by iucludinthe prepayment and accrual? NET PROFIT WILL. ‘NET ASSETS WILL. 8) Increase by Rs. 1,100 Rediice by Rs. 1,100 b) Reduce by Rs. 1,900 lycreast by Rs. 1,900 ©) Inerease by RsS,100 Ingrease by Rs. 1,100 d) Reduce by Rs, 1,900 Reduce by Rs. 1,900 125. fille Rs, 800,000 of Boods ae sold with credit terms of 1/10, /30, How nmuch should the seller expect to reeeive ifthe buyef pays on June 8? 2) 720,000, ) 768,000 «) 792,000 4) No change 126. The allowance for receivables in the accounts at 31 October 2011 was Rs. 9,000. During the year ended 31 October 2012, batkdebts of Rs. 5,000 were written off. The receivables balauce at 31 October 2012 was Rs. 120,000 and, based on past experience, the entity wishes to set the allowance at 5% of receivables, ‘What is the total charge for bad debts and the allowance for receivables in the statement of comprehensive income for the year ended 31 October 2011? a) Rs. 2,000 b) Rs. 3.000 ©) Rs. 5,000 4) Rs. 8,000 Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 15 PRC4 - ITA December 2022 127. On Jume 1, Rs. 800,000 of goods are sold with credit terms of 1/10, n/30, On June 3, the customer returned Rs. 100,000 of the goods How much should the seller expect to receive if the buyer pays on June 8? a) 692,000 b) 693,000 ©) 694,000 4) 700,000 128. Under which of the following methods of depreciation the expense may be zero in the period in which asset is not used at all? 4) Straight line method b) Reducing balance method €) Units of production method 4) Sum of digits)nethod 129. Tom Limited runs a sports equipment manufacturing business with a year end of 3) December 2019. On | April 2019, Tom Limited acquired a delivery truck at a cost of Rs. 4,800,000 /The expected lite ofthe tk is 8 years and residual value is expected to be nil. What is depreciation charge for 2019 on stfaight line basis? 2) Rs. 600,000 ) Rs. $00,000 ©) Rs. 450,000 <) Rs, $00,000 130. A non-current asset was bought for Rs. 1,400,000 on 1 Janflary 2019, It has btifiated useful life of 3 years and residual value of Rs. 200,000. The entity uses reducing balance methodof depreciation. ‘What would be canying amount of this asset on 31 December 2021? a) Rs. 100,000 b) Rs. 200,000 Rs. 300,000) 4) Rs. 400,000 131. Prime cost means a) Sum of direct anaterial and factory overhead costs b) Sum oPdirect)uiaterial and selling costs ©) Sum of indirect material and direct laboutpcosts id) Sum of direét material and direct labour costs 132, Which item is a direct cost? ) Royalty paid on number of units of produenSK pioduced “ b) Cleaning materials for the factory ©) Factory rent <4) Wages of the factory manager 133, What entry should be recorded FoPunder absorbed overheads at the end of period? 1) Debit Production Overhend (Credit Cash / Acertal b) Debit Inventory (WIP) & Credit Proctuction Overheads ©) Debit Cost of sales (P&L) & Credit Production Ovetheads ) Debit Production Overheads & Gredit Cost of sales P&L) 134. What entry shouldbe retorded for over absorbed overheads atthe end of period? ) Debit Production Ovethieads Credit Cash / Accrual ») Debit Inventory (WIP) & Credit Production Overheads ¢) Debit Cost ofsales (P&L) & Credit Production Overheads 4) Debit Proditetion Overheads & Credit Cost of sales (P&L) 135. Which of th following equation is correct for calculating cost of goods manufactured? a) = Prime Cost+ Opening inventory (raw material) ~ Closing inventory (raw material) Prime Cost + Opening inventory (WIP) — Closing inventory (WIP) Factory Cost + Opening inventory (raw material) - Closing inventory (raw material) Factory Cost + Opening inventory (WIP) ~ Closing inventory (WIP) 136. If asset is idle, deprecation is: a) Zero b) Remain charged ©) High 4) None of these Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 16 PRC4 - ITA December 2022 137. In decreasing price trend highest value of inventory is in: a) FIFO ) LIFO ©) AVE. co 4) Botha &b 138. Which of the following debt has high risk? 8) 60 days old 10) 40 days old ©) 90 days old A) above 90 days 139. Which of the following statements is/are correct? (Trial balance assures accounting accuracy. Gi) Error of omission has effect om tril balance a) Both statements are comect b) Only statement is comrect ©) Only statement (i) is correct 4) Both statements arenot correct 140. Which of the following statements is/are correct regarding trial balance? (@ Tris one of the parts of accounting cycle (i) Tris just a start for Financial statement a) Both statements are correct b) Only statemefit (pis correct ©) Only statement (i) is correct, 4) Both Statements are tot correct 141. What is the use of the financial statements to the lenders? 4) They need information about the financial stability ¥ind profitability, b) They need to access the continuing ability of the borrower to pay infétest, af.its ability to repay the loan principal at maturity. ©) They can use the financial statements "assess how mitch cred tHeyemni ght safely allow to the entity @) They might use this information for the purpose of business restlation or deciding taxation policies 142. If during the accounting period the assets increased by RS.7m and owner's equity decreased by Rs.3m, then the liabilities nmst have: a) Increased by Rs.10m. b) Increased by RB4m ©) Decreased by Rs.4m d) Decreased by Rs.4m 143.Expense payments which anos recoftled ijeash day book, are recorded in: 1) General Joumal ) Purchase Day book ©) Petty cash day book d) Cash Day book 144. A cheque issued tgimburse the petty cash float is recorded in the cash day book: a) Not recorded in cash day book ») Only recorded in petty cash day book ©) Recorded only‘at payment Side 4) Recorded only at receipt side 145 Which of the Following is comect regarding tial balance?” ) Opening stock as well.as losing stock appear in trial balance b) Trial balance is not a book of prime entry ) Every credit balance represents income 4) Every debit balance represents expense 146. Debit alwaynean: a) Leftside of an account —_—b) Right side of an account) Asset a) Expense 147. For reconciliation bank balances, npresented cheques should be: a) Added to balance of bank statement and deducted fiom balance of cash book b) Deducted trom balance of bank statement or added to balance of cash book ©) Deducted from balance of bank statement and added to balance of cash book, ) Added to balance of bank statement or deducted from balance of cash book. Permal Sajjad (APFA,ACFMA) Rise School of Accountancy Page 17 PRC4 - ITA December 2022 148. A manufacturing entity has policy of holding no inventory of any type whether raw materials, WIP or finished goods. During an accounting period it only produced goods from raw material purchased by it. Its cost of sales shall be equal to: a) Cost of direct materials consumed b) Prime Cost ©) Direct labour + Production Overheads 4) Prime Cost + Production Overheads 149. Which of the following statements is/are correct? (i) Standard cost method takes into account normal levels of materials and supplies, labour, efficiency and capacity utilization. (ii) They are regularly reviewed and if necessary, revised in the light of current Gonditions, 1) Both statements are correct ) Only statement (i)is correct, ©) Only statement (ii) is correct 4) Both statement$ are nog correct 150. Which of the following statements is/are correct? (Inventory is measured at lower of cost and NRV. (2) Inventories include aw material and supplies, work in ifocess nd fnishédl #8ods held for resale 8) Both statements are comect ) Only statement (9 is eorect ) Only statement (i) is correct 4) Both statémentafe not correct 151. Which one is the accounting Equation Conect?} a) Assets = opening stock + Purchases - drawings “liabilities b) Assets liabilities - drawings ~ opening stock + Putehases ©) Assets + Purchases -

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