vu mgt411 Mid Term Subjective Solved Past Paper No.6

vu mgt411 Money & Banking Solved Past Papers

This subjective solved past paper is related to book/course code vu mgt411 Money & Banking which belongs to vu organization. We have 7 past papers available related to the book/course Money & Banking. This past paper has a total of 10 subjective questions belongs to topic Mid Term to get prepared. NVAEducation wants its users to help them learn in an easy way. For that purpose, you are free to get prepared for exams by learning subjective questions online on NVAEducatio.

NVAEducation also facilitates users to download these solved past papers with an affordable prices. However, users are not enforced to pay for money, rather they can use credits to buy such stuff on NVAEducation. Users can earn credits for doing some little tasks and then you will be able to use that credits to buy solved past papers on NVAEducation.

Question 1: Advantages and disadvantages of the periodic inventory system.

Answer:

Be the first to post an answer to earn 100 credits.

Question 2: An Accountant of the company computes that all company assets are depreciated onseveral different methods. But one note on the financial statements of the company thatall assets are depreciated by straight line method. Explain

Answer:

Be the first to post an answer to earn 100 credits.

Question 3: Assume that net income was Rs. 200,000, depreciation expense was Rs. 10,000, accounts receivable increased by Rs. 15,000, and accounts payable increased by Rs. 5,000. Calculate the cash flow from operating activities.

Answer:

Net Cash Flow from Operating Activities 200000Rs.
Net income 200,000
Added back
Deprecation 10,000
Increase in account receivable (15,000)
Increase in Account payable 5000
net cash flow from OP activity 200,000

Question 4: Can a company get a positive cash flow from operating activities even if the company has net loss during the period. Explain with the help of example.

Answer:

Be the first to post an answer to earn 100 credits.

Question 5: Classify the following activities as cash flow from operating, investing and financing activities.

Payments for repurchase of company shares
Collections on loan principal and sales of other firms' debt instruments
Tax payments
Expenditure for purchase of other firms' equity instruments
Payments to suppliers for goods and services

Answer:

Payments for repurchase of company shares: Financing activities

Collections on loan principal and sales of other firms' debt instruments: Investing activities

Tax payments: Operating activities

Expenditure for purchase of other firms' equity instruments: Financing activities

Question 6: Explain how the adoptions of FIFO method rather than LIFO will tend to raise or lower the quality of a company's earnings Assume the continuance of the inflation.

Answer:

During the period of inflation, prices increase. Under the FIFO method, valuation of closing inventory is made at most recent prices or at increased prices and closing inventory is shown at the credit side of trading & P&L account (income statement) with increased value, as a result of which net income of the company increases because of increase in the value of closing inventory ultimately company's earnings increases.

Where as under the LIFO method company's earnings decreases because of decrease in the value of closing inventory

Question 7: Hill Company adjusts its accounts at the end of each month. Prepare the adjusting entries required at December 31 based on the following information.

A bank loan had been obtained on December 1. Accrued interest on the loan at December 31 amounts to Rs. 1,050. No interest expense has yet been recorded.
Depreciation of the office equipment is based on an estimated life of five years. The balance in the office equipment account is Rs. 24,000; no change has occurred in the account during the year.
Interest revenue earned on US government bonds during December amounts to Rs. 750. This accrued interest revenue has not been recorded or received as of December 31.
On December 31, an agreement was signed to lease a truck for 12 months beginning January 1 at a rate of 35 cents per mile. Usage is expected to be 2,000 miles per month, and the contract specifies a minimum payment equivalent to 18,000 miles a year.

Answer:

Interest Expense A/C 1050
Accrued interest A/C 1050
Depreciation expense 4800
To accumulated deprecation 4800
Interest Receivable on Bonds A/C 750
Interest Income on Bonds A/C 750
OR
accrued interest 750
interest income 750
Accrued lease rent 630,000
Lease rent 630,000

Question 8: Listed below in random order are the items to be included in the balance sheet of the Myster y Mountain Lodge at December 31, 2001:

Equipment	Rs. 29,200
Buildings	Rs. 450,000
Land	425,000
Owner's capital	?
Accounts payable	54,800
Cash	21,400
Accounts receivable	10,600
Furnishings	58,700
Salaries payable	33,500
Snowmobiles	15,400
Interest payable	12,000
Notes payable	620,000

Requirement:

Prepare a Balance Sheet at December 31, 2001.
Mystery Mountain Lodge
Balance Sheet as at December 31, 2001

Answer:

Particulars	Amount (Rs.)
Current Assets Cash	21,400
Accounts Receivable	10,600
Snowmobiles	15,400
Fixed Assets: Land	425,000

Question 9: Nestle Pakistan has two conflicting objectives. Management wants to report the highest possible earnings to stockholders in the near future yet also wants to minimize the taxable income. Indicate the depreciation method that the company will probably use in its financial statements and its federal income tax return. Explain your answer with the reasons.

Answer:

Accelerated deprecation method will increase the earnings of stockholders and defer the tax liability to far future years and current tax liability will be minimum in near future.

Question 10: On 15, 2001, ABC Company sold 1,000 printers to another company. Immediately prior to this sale, the perpetual inventory records of the company for the printers included the following cost layers.