Multiple Choice Questions (MCQ's) of Accounting

[faisal_ali]

Bilanben Ltd manufactures grass-cutting equipment. The following was the cost of
production for the year ended 31 December 2003, based on a normal capacity of 4500 units.
$
Direct Materials 157 500
Direct Labour 270 000
Variable Overheads 54 000
Fixed Overheads 125 000
606 500
There are 30 production workers who each work a 30-hour week and have two weeks
unpaid holiday per annum.
Additional costs, based on a production of 5000 units, are administrative overheads of
$140 000, of which 50% are fixed, and $150 000 for advertising.
Selling price is $250 per unit.
The Sales Director has suggested that during 2004 he can sell 5000 units at $250 each.

Option 2
To hire new machinery for one year at a cost of $50 000. This would leave all variable costs
unchanged. This was already under consideration and $17 500 had been spent on market
research.


Required Calculate profit

[awaisaftab]

Which company can buy its own shares as buy back under corporate laws
a. Private company
b.Public listed company
c.Public unlisted company
d.Every Public Company

[faisal_desperado]

As per section 95A ,of company ordinance 1984 , only a listed company, subject to the provision of the aforementioned section, may buyback its own shares, in this regard, it is to be noted that buyback shal be authorized by Passing a Special Resolution.
(Provision & Conditions being omitted)

Best Rerards.

[faisal_ali]

The bookkeeper of a company has disappeared. There is no cash in the till and theft is suspected.
The following information is known




$
cash balance at beginning of period 750
total sales during the period 150000
decrease in debtors during the period 5500
receipts from debtors paid into the bank 96000
expenses paid from cash received 5000




How much has the bookkeeper stolen during the period?

[faisal_desperado]

Faisal the correct answer should be 1250, based on the assumptions shown below.
Begining Cash balance 750
Cash Receipts 5500
(decrease in debtors)
Total Cash would have been available if there had no expense Rs 6,250.
Less Cash expenditures 5000

Cash should have been available / Cash defalcation by book keeper 1250

<b>ASSUMPTIONS</b>
All sales has been made on credit,
Decrease in debtors indicates the cash receipt other than that , which has been received & deposited in bank ,
There are no begining debtors.
While calculation $ sign being omitted.

Best Regards,

[irfan kazim]

What is the treatment of normal and abnormal loss in costing accounting specially job order costing an process costing.

[irfan kazim]

Why we reverse provision of bed debts at the openning of the year. For example, At the year end, provision is 1000, debtors are 20000, we write off provision from debtors and closing balance of debtors are 20000-1000=19000 which is shown in the balance sheet. At th start of openning of a new year, provisions are add back and the balance sheet contains debtor balalanc which is 19000+1000=20000. why is happened. Tell me the solid reason according to IAS

[irfan kazim]

What are the meaning of these terms in simple words and with simple examples.
Materiality, consideration, going concerned,

[irfan kazim]

If company purchase other company's shares at premium for example share of 50000 for 60000. what will be the treatment of this case according to IAS

[hmmm]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by irfan kazim</i>
<br />What is the treatment of normal and abnormal loss in costing accounting specially job order costing an process costing.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
normal ooss included in the production cost and it is included in cost oof good sold and abnormal loss dosent included in that part

[awaisaftab]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by irfan kazim</i>
<br />What are the meaning of these terms in simple words and with simple examples.
Materiality, consideration, going concerned,
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

<b>Materialily</b>
Materiality refers to the significance or importance of an event,transaction and amount and their influence on the overall financial position of company.

Materiality concept is very important for tracing an asset. For instance if a small machinery is purchased for Rs.5000/- by a small company shall be treated as asset but if the same machinery is purchased by a large organization then it shall be treated as expense.

Materiality means the significant or degree of influence of a transaction on the financial position of a company.


<b>Consideration</b>
Consideration is an incentive that a receipient of goods or services give to person from whom he receives this goods or services. A consideration may be in cash or in kind or in shape of services.

<b>Example</b>
you purchase a house for Rs.200,000/- the amount 200,000/- that you will pay shall be treated as consideration. If you give the land in return of house then it will be alos consideration. If you provide employment services to the seller for one year for the value of house it will also be consideration.


<b>Going Concern</b>

It is the basic principle of accounting . Going concern is defined in the framework of IAS.

Going concern means that a business neither have intenssion nor need to wind up in foreseeable future.

you have seen that asset are shown in balance sheet at book value rather than at value at which they can be sold. It is because of the fact that a business has not intenssion to wind up.

Regrds,

Awais Aftab

[irfan kazim]

AOA,
why a specific quantity of ending stock is maintained while making production budget. Is any reason or any provision in accounting standard. explain fully.

[awaisaftab]

Actually no fixed quantity of closing stock is maintained but it is presumed/forecasted or budgeted to complete process of making production budget. Many cost accounting functions work like mathematical equation for instance you can determine the CGS with some known figures and some unavailable figures. Simmilarly while making Production budget with the known balance of opening stock,budgeted sales and required or desired closing stock it is determined how much quantity of an inventory item should be produced.

Production budget will be used to propose how much quantity you will manufacture so that you can compensate for the demand (identified on your sales budget).

For any query feel free to contact me.

Regards,

Awais Aftab