Sample Questions for Foundation Course (Accounts for Managers)

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Sample Questions for Foundation Course (Accounts for Managers) Top of Form

1. Decision makers need information. Which of the following groups rely on accounting information for decision making? 1. managers
2. investors
3. creditors
4. all of the above

2. Which type of business organization is a separate legal entity whose owners are not personally liable for the debts of the business? 1. [pic]proprietorship
2. partnership
3. corporation
4. all of the above

3. An automobile has a list price of Rs.4,00,000. The company representative is a good negotiator and only pays Rs. 380000 for the automobile. Which accounting concept/principle requires the automobile be recorded at Rs. 380000 in the accounting records of the business? 1. entity concept

2. cost principle
3. going-concern concept
4. stable-monetary-unit concept

4. If total liabilities is Rs.150,000 and owner's equity totals Rs.50,000, then assets must total --------------- 1. Rs.50,000
2. Rs.100,000
3. Rs.150,000
4. Rs.200,000

5. The financial statement that reports assets, liabilities and owners' equity is the -------- 1. income statement
2. statement of owner's equity
3. balance sheet
4. statement of cash flows

6.  Events are recorded by a business if assets, liabilities, or owner's equity are affected. Select the event(s) that should be recorded in the business records from those listed below. 1. Customer purchases merchandise and pays cash.

2. Customer purchases merchandise on account.
3. Company hires an employee who starts next month.
4. Both (1) and (2)

7.  Select the transaction(s) that result(s) in increasing total assets for Company ABC. 1. Company ABC purchases office equipment on account.
2. Company ABC pays rent expense with cash.
3. Company ABC purchases land for cash.
4. Both (1) and (3) increase total assets.

8.  Select the transaction(s) that result(s) in increasing total Owner's Equity for Child Care Company. 1. The owner invests Rs10,000 of her own money to start the business. 2. Child Care Company provides child care services and earns Rs5,000 of revenue. 3. Company ABC pays rent expense of Rs.2,000.

4. Both (1) and (2) increase total Owner's Equity.

9.  Using the following information, compute total assets: Cash Rs. 10,000, Accounts receivable Rs. 3,000, Accounts payable Rs. 4,000, and Equipment Rs.20,000. 1. Rs.30,000
2. Rs.33,000
3. Rs.34,000
4. Rs.37,000

10. Using the following information, compute net income: Sales Revenues Rs.10,000, Wage Expense Rs.4,000, Accounts Payable Rs.1,000, and Utilities Expense Rs.2,000. 1. Rs.3,000
2. Rs.4,000
3. Rs.6,000
4. none of the above

11. The financial statement(s) reporting net income include the -- 1. income statement.
2. statement of owner's equity.
3. balance sheet.
4. both (1) and (2)

12. A financial statement heading which includes a date of "as on March 31, 2008” must be the -- 1. income statement.
2. statement of owner's equity.
3. balance sheet.
4. statement of cash flows.
Bottom of Form

13. Determine a firm's Price-Earning Ratio if Market Price Per Share is Rs.250/- and Earning Per Share is Rs.10/-

1. 25
2. 2500
3. 2.5
4. Insufficient data

14.  Using the following information, compute total assets: Bills Receivable Rs.3,000, Accounts Payable Rs.4,000, Equipment Rs.20,000, and Sales Revenue Rs.50,000. 1. Rs.23,000
2. Rs.27,000
3. Rs.77,000
4. None of the above

15.  Using the following information, compute total liabilities: Bills Receivable Rs.30,000, Accounts Payable Rs.20,000, Wages Payable Rs.8,000, and Rent Expense Rs.40,000. 1. Rs.20,000
2. Rs.28,000
3. Rs.68,000
4. Rs.98,000

16.  Which of the following account type(s) normally have a debit balance? 1....
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