1. The numerator of the rate of return on total assets ratio is equal to:
(a) Net Income
(b) Income before taxes
(c) Income before interest expense
(d) Net income minus preferred dividends
Net income minus preferred dividends
2. Cheque is always crossed by:
(a) Drawer
(b) Drawee
(c) Holder
(d) None of these
Drawer
3. An agreement without consideration is:
(a) Void
(b) Valid
(c) Voidable
(d) Illegal
Void
4. Dishonored cheque means:
(a) Cheque cashed by ban
(b) Cheque presented to the bank and refused for the payment
(c) A cheque the amount has not been filled
(d) A cheque which is not signed
Cheque presented to the bank and refused for the payment
5. Books of original entry are called:
(a) Ledger
(b) Worksheets
(c) Journal
(d) None of these
Journal
6. The World Bank has been derived from?
(a) Bank
(b) Bancus
(c) Banco
(d) None of these
None of these
7. Which account is suitable for business community?
(a) Saving account
(b) Current account
(c) Profit and loss account
(d) Deposit account
Current account
8.The objective of central bank is:
(a) Welfare of public
(b) To earn profit
(c) Economic prosperity & development
(d) Receiving deposits
Welfare of public
9. The State Bank of Pakistan was inaugurated by:
(a) Liaqat Ali Khan
(b) Abdul Rub Nishter
(c) Allama Iqbal
(d) Quaid-e-Azam
Quaid-e-Azam
10. Commercial Banks following: creates the
(a) Metallic Money
(b) Credit
(c) Paper
(d) All of above
All of above
11. A cash sale of merchandise should recorded in the
(a) Sales journal
(b) General ledger
(c) Cash receipts journal
(d) Cash payments journal
Cash receipts journal
12. A trader with a bank account wants to make monthly payments for a trade journal. What is the most suitable payment method?
(a) Bank Draft
(b) Bank Notes
(c) Cable Transfer
(d) Standing Order
Standing Order
13. Which service is’ not, available to bank customer through ATM’s?
(a) Checking the balance of their accounts
(b) Organizing personal loans
(c) Requesting printed statements bank
(d) With drawing cash
With drawing cash
14. Which sources of finance are most suitable for ABC Corporation, a large manufacturer facing cash flow problems?
(a) Higher purchase
(b) Over draft
(c) Shares
(d) Trade Credit
Over draft
15. Using credit means that the customer:
(a) Always pays extra for the goods
(b) Gets goods repaired for nothing
(c) Obtain discounts on goods
(d) Uses of goods but pay later
Uses of goods but pay later
16. Which form of credit ensures a laptop becomes the customer’s property?
(a) Credit card
(b) Credit Transfer
(c) Higher Purchase
(d) Leasing
Credit card
17. What services can customers receive through telephone banking?
(a) Buying and selling shares
(b) Confirming account balances
(c) Organizing insurance cover (d) Safeguarding legal documents
Confirming account balances
18. What is a current account at commercial bank?
(a) An account for daily transactions
(b) An account requiring a passbook
(c) An account used for saving
(d) An accounting, which cannot, be overdrawn
An account for daily transactions
19. What is the meaning of the term “limited liability”?
(a) Shares are issued only to certain total value
(b) Shareholders are paid back only certain percentage of their investment
(c) Shareholders can lose only the value of their investment
(d) Shareholders can buy only a certain sum of share capital
Shareholders can lose only the value of their investment
20. A company raises finance, by issuing debentures. The debentures holders entitled to:
(a) Interest after the share solders have been paid
(b) One vote per share
(c) Repayment before shareholders if the company goes into liquidation
(d) Variable dividend
Repayment before shareholders if the company goes into liquidation
21. A contract comprises of:
(a) Offer + Acceptance
(b) Agreement + Consideration (c) Offer + Acceptance +
Agreement (d) Agreement + Enforceability
Offer + Acceptance
22. An agreement is void initio is called:
(a) Void contract
(b) Void Agreement
(c) Voidable contract
(d) Illegal agreement
Void Agreement
23. Which of the following is all offer?
(a) An invitation to offer an advertisement
(b) Both (a) & (b)
(e) (d) None of these
(d) None of these
24. Specific offer can be accepted by any person
(a)Any friend of offeror
(b) coworker
(c) made the person to whom offer is
(d) Anyone of the public made
25. What is the purpose of bank slip?
(a) To credit an overseas bank account
(b) To pay a creditor who does not have a bank account
(c) To pay money ‘into a bank account
(d) To with draw money from current account
To pay money ‘into a bank account
26. Consideration must move from:
(a) Promisor
(b) Promisee
(c) Third party
(d) Promisee or any other person .
Promisee
27 Incapacity of contract may be due to absence of legal formalities
(a)Majority
(b) Lack-of consideration
(c) Minority
(d) None of these
Minority
28. For preparing balance sheets prepaid expenses are shown as part of:
(a) Liability
(b) Equities
(c) Assets
(d) None of these
Assets
29. Quantum merit means:
(a) As much as is earned
(b) As much as is paid
(c) A non-gratuitous act
(d None of these
None of these
30. Each party to a contract is both promisor and promisee in case of:
(a) Present consideration
(b) Valid contract
(c) Reciprocal promises
(d) Part of consideration
Reciprocal promises
31. Income tax ordinance. 2001, was, promulgated on:
(a) 1st July 2001
(b) 13th September 2001
(c) 1st January 2001
(d) 1st July 2002
1st July 2002
32. Normal tax year starts from:
(a) 1st September each year
(b) 1″ July each year
(c) 1″ January each year
(d) 1″ March each year
1″ July each year
33. Income from property is taxable under:
(a) NTR
(b) FTR
(c) Both (a) & (b)
(d) None of these
NTR
34. A person shall be resident if he spends the following days in Pakistan:
(a) 182 days
(b) 180 days
(c) 181 days
(d) 183 days
183 days
35. Unpaid and oral expenses are’ called:
(a) Prepaid expenses
(b) Accrued expenses
(c) Additional expenses
(d) None of these
Accrued expenses
36. The rates of tax are specified in:
(a) 1″ Schedule
(b) 3rd Schedule
(c) 5th Schedule
(d) 7th Schedule
1″ Schedule
37. Employer’s contribution in case of Government well-prepared fund is:
(a) Taxable
(b) Exempt
(c) No treatment
(d) Exempt up to 10% of basic salary
Exempt up to 10% of basic salary
38. Income tax appellate tribunal is appointed by the:
(a) Federal board of revenue
(b) Federal Government
(c) Supreme court of Pakistan
(d) Income tax ordinance 2001
Federal Government
39. There can be no loss under the head:
(a) Income from salary
(b) Income from business
(c) Income from other sources..
(d) None of above
Income from salary
40. Revenues can be defined as:
(a) Economics resources owned by the entity that is expected to provide future benefits
(b) Inflows of assets in exchange for goods sold or services rendered by the entity
(c) Any increase in owner equity
(d) An increase in cash
Inflows of assets in exchange for goods sold or services rendered by the entity
41. The objectivity code requires that:
(a) Business transactions must be consistent with the objectives of the entity
(b) Accounting principles must meet the objectives of the securities commission and exchange
(c) Amounts recorded in the financial statement must be based on verifiable evidence independently
(d) FASH must be fair and unbiased in its deliberation over new accounting standards
Amounts recorded in the financial statement must be based on verifiable evidence independently
42. A liability in the amount of Rs. 500 js paid in cash, which of the following is true:
(a) An asset is increased an a liability is decreased
(b) An asset is increased and a liability is increased
(c) An asset is decreased and a liability is decreased
(d) A liability is decreased and owner’s equity is increased
An asset is decreased and a liability is decreased
43. An owner withdraws Rs. 300 each from the business. Which of the following is true?
(a) An asset is decreased and owner equity is decreased
(b) An asset is decreased and owner equity is increased
(c) An asset is increased and a liability is decreased
(d) There is no effect on any asset liability or owner’s equity
An asset is decreased and owner equity is decreased
44. An expense is experienced that will be paid for the next month. Which of the following is true?
(a) An asset is decreased and owner’s equity is decreased
(b) An asset is increased and a liability is increased
(c) A liability is increased and owner equity increased
(d) A liability is increased arid owner’s equity is decreased
An asset is increased and a liability is increased
45. A customer is billed for services reduced. Which of the following true?
(a) An asset is increasing ability is decreased
(b) An asset is increased owner’s equity is increased
(c) One asset is increased another asset is decreased
(d) There is no effect on any ability or owner’s equity
There is no effect on any ability or owner’s equity
46. The amount due from a custom whose was billed last month collected:
(a) An asset is decreased owner’s equity is decreased
(b) An asset is increased owner’s equity is increased
(c) One asset is increased another asset is decreased
(d) An asset is increased liability is increased and
One asset is increased another asset is decreased
47. Which one of the following account while most likely be included in accrual type adjusting entry?
(a) Insurance expense
(b) Prepaid rent
(c) Interest expense
(d) Unearned revenue
Insurance expense
48. The revenue recognition principle states that:
(a) Revenue should be recorded when earned
(b) Revenue should be recorded when the cash is collected
(c) Expenses should be recorded the same period as the associated revenue
(d) Revenue should be listed on the income statement first
Revenue should be recorded when the cash is collected
49. What is the proper year-end adjusting entry for a 1-year Rx 720 insurance policy purchased on June 1 and debited to prepaid insurance?
(a) As debit to insurance expense for Rs.300
(b) A credit to insurance expense for Rs.420
(c) A credit to prepaid insurance for Rs.720
(d) The credit to prepaid insurance for Rs.420
The credit to prepaid insurance for Rs.420
50. A company collected t year’s rent in advance on Oct.
(a) A debit to unearned revenue for Rs.900
(b) A debit to unearned, revenue for Rs.300
(c) A credit to unearned revenue for Rs.900
(d) A debit to revenue earned for Rs.900 41.
A debit to unearned, revenue for Rs.300
51. Which of the following items is a current asset?
(a) Unearned Revenue
(b) Real estate held for resale
(c) Temporary investments
(d) Patents
Real estate held for resale
52. When interest earned but not yet collected is accrues at year end, the proper adjusting entry includes a:
(a) Debit to interest receivable
(b) Debit to cash
(c) Credit to interest expense
(d) Credit to interest payable
Credit to interest expense
53. The operating cycle is:
(a) The average length of time between the purchase, of merchandise inventory and the realization of cash from the sale of the inventory:
(a) The length of time between the preparations statements of financial
(b) The estimate length of time that the entity will remain in business
(c) The average length of time between the sale of merchandise inventory and the replacement of inventory
(d) None of these
The length of time between the preparations statements of financial
54. Which one of the following accounts would usually have a credit balance?
(a) Cash
(b) Account payable
(c) Equipment
(d) Salaries Expense
Account payable
55. Which one of the following account would usually have a debit balance?
(Notes payable
(b) Jamal, capital
(c) Kamal, withdraws
(d) Service’s fees earned A trail balance is prepared to
Kamal, withdraws
56. The entire amount Rs.1,200 was credited to unearned revenue the proper adjusting- entry at the Dec 31 year end would to include:
(a) Prove that there were no error is made in recording the business transaction in the general journal
(b) Prove that there were no error is made in posting form general journal to the general ledger
(c) Prove that each account balance is correct
(d) Summarize the account balances as an aid in the preparation of the financial statements
Summarize the account balances as an aid in the preparation of the financial statements
57. Which of the following does not appear on a work sheet?
(a) The unadjusted trial balance
(b) Adjusting entries
(c) Closing entries
(d) The withdrawals account
The unadjusted trial balance
58. Which of the following indicates that a company earned a net income for the period?
(a) Adjusting entries were not made
(b) The sum of the debits exceed the sum of the credit in the income statements columns of the worksheet
(c) The sum of the credits exceeded the sum of the debits in the income statement columns of the worksheet
(d) The withdrawals account had a debit balance
The sum of the credits exceeded the sum of the debits in the income statement columns of the worksheet
59. Balance sheet accounts:
(a) Are called real accounts
(b) Represent amounts accumulated during a specific period of time
(c) Have zero balances after the closing process is complete
(d) Are called nominal, accounts
Represent amounts accumulated during a specific period of time
60. It is useful to make reversing entries
for: (a) Adjusting entries recording depreciation expense
(b) Adjusting entries, relate to acctuals
(c) Adjusting entries relate to deferrals that were recorded initially in a hability account
(d) All of the above
Adjusting entries, relate to actuals
61. What is the year-end adjusting entry on Dec 31 for Rs. 3600 rent collected in advance on Nov. 1 and credited to rental revenue?
(a) A credit to the rental revenue for Rs.600
(b) A debit to unearned revenue for Rs. 3000
(c) A debit to rental revenue for Rs 3000
(d) A debit to unearned rental revenue for Rs.6000
A debit to rental revenue for Rs 3000
62. Net income plus operating expenses is equal to.
(a) Net sales
(b) Cost of goods available for sale
(c) Cost of goods sold
(d) Gross profit
Gross profit
63. When purchase merchandise is returned, a credit would be made to:
(a) Merchandise inventory
(b) Purchase return and allowances
(c) Accounts payable
(d) Purchases
Merchandise inventory
64. A cash payment journal would not include a:
(a) Cash credit column
(b) Accounts payable debit column
(c) Sales discount credit column
(d) Sundry accounts debit column
Accounts payable debit column
65. A customer returns merchandise that was sold on account. The account has not been paid. This transaction should be recorded in:
(a) Sales journal
(b) Cash receipts journal
(c) Cash payments journal
(d) General journal
Sales journal
66. On what type of bank account may a trader draw cheques?
(a) Current Account
(b) Deposit Account
(c) Investment Account
(d) Loan Account
Current Account
67. When posting the column totals of cash payments journal a debit should be posted to
(a) Cash
b) Purchase discounts
(c) Accounts receivable
(d) Account payable purchase requisition is:
A Account payable purchase requisition is:
68.) An internal document (a indicate the quantity specification of goods needed and to request that the company acquire them
(b) Written authorization to pay vendor
(c) An internal document to indicate the quantity condition of good received an
d) Document send to a vender (requesting that goods to shipped One of the weaknesses of the direct
69. Written off method is that:
(a) It under states accounts receivable on the balance sheet
(b) lt violates the matching principles
(c) It is too difficult to use or many companies
(d) It is base on estimates
It is base on estimates
70. Shazaib Company receives a 10% Rs.15,000 note receivable from Habib Company the note is due in month The maturity value of the note is:
(a) Rs.13,500
(b) Rs.15,000
(c) Rs.15,750
(d) Rs.16,500
Rs.15,750
71. Which of the following inventory cost methods is most appropriate for a merchandise inventory with a relatively small number of unique items and a high cost per item?
(a) FIFO
(b) LIFO
(4) Specific identification
Specific identification
72. The inventory method that assigns the most recent costs to cost of goods sold
(b) LIFO
(4) FIFO
(2) Weighted average (d) Specific identification
In period of rising prices, the ventory method that results in the
LIFO
73.High net income is:
(a) FIFO
(b) LIFO
(c) Weighted average
(d) Specific identification
LIFO
74. The lower of cost or market rule for inventory is justified by the:
(a) Matching principle
(b) Consistency principle
(c) Conservation principle
(d) Historical cost principle
Conservation principle
75. Which of the following is an example of a capital expenditure?
(a) Cost of cleaning the carpet in the main office
(b) Cost of replacing light bulbs in the factory
(c) Cost of replacing the roof on the office factory
(d) Cost of turn up the delivery trucks
Cost of replacing light bulbs in the factory
76. The time period over which an intangible asset should be amortized
(a) Its estimate useful life
(b) Its estimated useful life or 40 years, whichever is shorter
(c) 40 years
(d) Its estimate useful life or 40 years, whichever is longer
Its estimate useful life
77. An advantage of a partnership form of business organization is:
(a) Unlimited liability
(b) Mutual agency
(c) Ease of formation
(d) Limited life
Ease of formation
78. Partnership liquidation occur when:
(a) A new partner is admitted
(b) The ownership interest of one partner is sold to a new partner
(c) The assets are sol, abilities paid and business operations terminated
(d) None of these
The assets are sol, abilities paid and business operations terminated
79. When a limited partnership is formed:
(a) The partnership activities are limited
(b) All of the partners have limited liabilities
(c) Some of the partners have limited liabilities
(d) None of the partners have limited liabilities
The partnership activities are limited
80. Which of the following is not possessed by common stockholders corporation?
(a) The right to vote in the election of the board of directors
(b) The right to receive the amount of dividends each year
(c) The right to sell their stock to they choose
(d) The right to purchase proportionate of any new stock Issue
The right to vote in the election of the board of directors
81. What is the credit to common stock when a corporation issues 2000 shares at Rs. 32,000 with a stated value of Rs. 10 per share? (a) Rs.20,000
(b) Rs.32,000
(c) Rs.12,000 (0)
(d) Rs.2,000
Rs.20,000
82. The par value per share of common stock represents:
(a) The minimum selling price of the stock established by the articles incorporation
(b) The minimum amount the stock holder will receive when the corporation is liquidated
(c) An arbitrary amount established in the articles of incorporation
(d) The amount of dividends to be received each year
The minimum selling price of the stock established by the articles incorporation
83. When a stock subscription at a price above par is recorded, which of the following accounts would be credited?
(a) Common stock
(b) Common stock subscribed
(c) Paid in capital, in excess of par common
(d) Both
Common stock
84. When common stock is issued exchange for a non-cash asset, the transaction should be recorded at:
(a) The par value of the stock issue
(b) The fair value of the stock issue
(c) The fair value of the asset acquired
(d) The fair value of the stock issue of the fair value of an asset acquired, whichever can be determined more objectively
The fair value of the asset acquired
85. How is treasury stock shown on the balance sheet?
(a) As an asset
(b) As a decrease in a stockholder’s equity
(c) As increase an stockholder’s equity in a
di Treasury stock is not shown on the balance sheet
As a decrease in a stockholder’s equity
86.If preferred stock has dividends in arrears, the preferred stock must be:
(a) Participating
(b) Callable
(d) Convertible
(c) Cumulative
Cumulative
87. Which of the following is not classified as paid in capital on the balance sheet:
(a) Common stock
(b) Common stock subscribed
(c) Donated capital
(d) Treasury stock
Donated capital
88 . An appropriation of retained earnings:
(a) Has no effect no total retain earnings
(b) Increases total retained earnings
(c) Decreases total retained earning
(d) None of these
Decreases total retained earning
89. When a small stock dividend is declared, which of the following account is credited?
(a) Common stock
(b) Dividends payables
(c) Stock dividend distributable
(d) Retain earnings on appropriate
Stock dividend distributable
90. Which of the following increase?
(a) Depreciation expense
(b) Acquisition of treasury stock
(c) The declaration of dividend
(d) Borrowing money by issuing s months note payable
Borrowing money by issuing s months note payable
91. The method of payment exchange depends on:
(a) Cash basis
(b) Credit basis
(c) Reserve basis
(d) None of the above Common size financial statements are credit basis
92. Which of the following generally is the most useful in analyzing companies of different size?
(a) Comparative financial statements
(b) Common size financial statements
(c) Constant dollar accounting
(d) The accounting policies note
The accounting policies note
93. Common stock holder’s equity ratio is equal to:
(a)Net income
(b) Net income minus’ preferred dividends
(e) Income before interest expense,
(d) Dividend per share of common stock.
Net income minus’ preferred dividends
94. Quick assents include which of the following?
(a) Cash
(b) Account receivable
(c) Marketable securities
(d) All of the above
All of the above
96. All of the following are true of product costs except:
(a) Product costs: are assets
(b) Product costs are the costs incurred to acquire products to sell
(c) Product costs are when incurred expensed
(d) Product costs may be fixed or variable
Product costs: are assets
97. Which of the following cost is not a period cost?
(a) Sales people’s salaries
(b) Factory rent
(c) General administrative costs
(d) Research and development costs
Sales people’s salaries
Total manufacturing costs for a period include all of the following costs except:
(a) Raw materials used
(b) Direct labor cost
(c) Cost of goods completed
(d) Factory overhead
Cost of goods completed
99. The total cost of units completed from work in process is transferred to which of the following accounts?
(a) Cost of Goods sold
(b) Finished Goods
(c) Cost of Goods Complete
(d) Merchandise inventory
Finished Goods
100. The amount of money in the account of account holder is called.
(a) Profit
(b) Interest
(c) Deposit
(d) Loan
Deposit
Auditing MCQs Past Papers
