ACCOUNTANCY & AUDITING, PAPER-I 2013

1. Double Entry Book Keeping was fathered by:
(a) Luca Paioli (b) Yoyji Ijiri (c) Micheal Hammer (d) Ishikawa
2. Accumulated loss of a company is shown in the balance sheet as:
(a) Liability (b) As an asset (c) As foot note to balance sheet (d) None of these
3. Under the Companies Ordinance 1984, disclosure of financial information is legally required for listed companies
under:
(a) Schedule 6 (b) Schedule 5 (c) Schedule 4 (d) Schedule 8
4. A company is considered sick under the Companies Ordinance 1984 where current ratio is:
(a) Below 0.5 : 1 (b) Below 3 : 1 (c) Above 2.5 : 1 (d) None of these
5. Banks are required to prepare their financial statements as per following legislation:
(a) Free to prepare with no legislative requirements (b) Under Companies Ordinance 1984
(c) Banking Ordinance 1962 (d) State Bank Laws
6. Preparation of financial statement of listed insurance companies in Pakistan is governed by:
(a) Insurance Act 1938 (b) Insurance Ordinance 2000 (c) Companies Act 1913 (d) Companies Ordinance 1984
7. Trading loss occurs when:
(a) Revenues exceed the matching relevant costs. (b) Revenue and matching costs are equal to each other.
(c) When relevant matching cost exceeds revenues (d) None of these
8. Accounting requirements governing NGOs are prescribed in:
(a) Partnership Act 1932 (b) Cooperative societies legislation (c) Companies Ordinance 1984 (d) None of these
9. Work sheet is equivalent to:
(a) Balance sheet (b) Income statement (c) Trial Balance (d) None of these
10. Work sheet does include:
(a) Fund flows statement (b) Cash gensation statement (c) Cash flow statement (d) None of these
11. Deffered tax is shown in the balance sheet as:
(a) Liability (b) Asset (c) An expenditure in income statement (d) None of these
12. The following represent tangible assets and are shown in the balance sheet as:
(a) People (b) Expenses (c) Revenue (d) Goodwill
13. Under the Rule of thumb a good current ratio is:
(a) 6 : 1 (b) 10 : 1 (c) .05 : 1 (d) 2 : 1
14. Financial analysis is a legislative requirement under:
(a) Companies Ordinance 1984 (b) Partnership Act 1932 (c) Voluntary act (d) None of these
15. Pakistan follows the following budgeting system at Federal level:
(a) Zero-Based Budgeting (b) Program Budgeting
(c) Responsibility Budgeting (d) Incremental / decremental budgeting
16. Preparation of budget by a company is compulsory under:
(a) No Law (b) Several laws (c) Securities & Exchange Ordinance 1969 (d) Companies Ordinance 1984
17. Depreciation must be accounted for:
(a) Revenues (b) Fixed Assets (c) Share Capital (d) None of these
18. Accelerated depreciation is allowed under:
(a) Income Tax Ordinance 2001 (b) Voluntary principals (c) Prudential Regulations (d) None of these
19. Partnerships are legally required to prepare their financial statements for distribution on wide basis under:
(a) Partnerships Act 1932 (b) Securities & Exchange Rules 2000
(c) Voluntary Act for Compliance (d) None of these
20. A company is considered sick if the market value compared to its par value is:
(a) 1 : 1 (b) 2 : 1 (c) 0.25 : 1 (d) None of these


ACCOUNTING & AUDITING, PAPER-II

1. Break-up value of a share can be determined by:
(a) Net assets method (b) Yield method (c) Stock exchange quotation (d) None of these
2. In case a company is solvent, the interest on debentures is paid up to the date of:
(a) The balance sheet (b) the commencement of winding up (c) Payment (d) None of these
3. Which of the following is not concerned with the valuation of goodwill?
(a) Earning capacity method (b) Super profit method (c) Average profit method (d) None of these
4. Debenture holders having a floating charges have priority in payment over:
(a) Preferential creditors (b) Secured creditors (c) Unsecured creditors (d) None of these
5. Two companies, X Co. and Y Co., go into liquidation and a new Co., Z Ltd, is formed. It is case of:
(a) Absorption (b) External Reconstruction (c) Amalgamation (d) None of these
6. Expenses of liquidation met by vendor Company are debited to (by the Vendor company):
(a) Realization account (b) Bank account (c) Goodwill account (d) None of these
7. In the books of consignee the expenses incurred by him on consignment are debited to:
(a) Consignment account (b) Sales account (c) Consignor’s account (d) None of these
8. Bonus in reduction of premium appears in the revenue account:
(a) As a expense (b) As an income (c) As a profit (d) None of these
9. A contributory is:
(a) A creditor (b) Shareholder (c) Debenture holder (d) None of these
10. Appropriations out of profits in case of a banking company are made in:
(a) Profit & loss app. A/c (b) Profit & loss A/c (c) Balance sheet (d) None of these
11. Rebate on bills discounted is:
(a) An expense (b) An income (c) A liability (d) None of these
12. Increase in amount of bills payable results in:
(a) Increase the cash (b) Decrease the cash (c) Has not effect on cash (d) None of these
13. Which of the followings is a non-operating income?
(a) Profit on the sale of used plant in manufacturing company
(b) Revenue from sales in trading concern (c) Dividends received by an investment company
(d) Premiums received from an insurance company
14. Which of the following is not a capital reserve?
(a) Premium on the issue of shares (b) Profit prior to Incorporation
(c) Dividend equalization reserve (d) Profit on the sales of fixed assets
15. Depreciation as the term is used in accounting means:
(a) Physical deterioration of a fixed asset (b) Decline in the market value of the asset
(c) Allocation of the cost of fixed asset, over its useful life
(d) Making a provision for the replacement of the fixed asset
16. Posting a wrong amount in ledger causes:
(a) The trial balance is out of balance (b) Dose not cause the trial balance to the out of balance
(c) Cause the ledger account to be out of balance (d) None of these
17. Bank over draft should be classified as:
(a) Current asset (b) Current liability (c) Fixed asset (d) None of these
18. The most important test of solvency of a business is calculated with the help of the following ratio:
(a) Net profit after taxes/Total assets (b) Total assets /Total outsideliabilities(c) Total fixed assets /Capital employed(d) Total fixed assets/ Total equity

19. Sales on account for company for the year ended December 31, 2012 amounted Rs. 50000, if the
opening balance receivable was Rs. 10000 and the closing balance was Rs. 20000, the cash collected
from customers must have been:-
(a) 40000 (b) 50000 (c) 60000 (d) 70000
20. Financial accounting reports are prepared primarily:
(a) To value the property of the company (b) To show managers the results of their departments
(c) To help people make decisions about resource allocation(d) To show the value of shares in the company