QUIZ NUMBER: 1

SUBJECT: FAIS CLASS: EMBA 3rd TRIMESTER DATE: 2nd SEPTEMBER, 2012
Allocated Time: 10 minutes
TOTAL MARKS: 15
NAME: _____________________________

REGISTRATION NO.:_____________________

1. Which of the following equations properly represents a derivation of the fundamental accounting
equation?
a. Assets + liabilities = owner's equity.
b. Assets = owner's equity.
c. Cash = assets.
d. Assets - liabilities = owner's equity.
Answer: __d_________________
2. Mr. Sharif owns land which cost Rs.100,000. If a "quick sale" of the land was necessary to generate
cash, Mr. Sharif feels it would receive only Rs. 80,000. Mr. Sharif continues to report the asset on the
balance sheet at Rs. 100,000. This is justified under which of the following concepts?
a. The historical-cost principle.
b. The value is tied to objective and verifiable past transactions.
c. Neither of the above.
d. Both "a" and "b".
Answer: ___d________________
3. Retained earnings will change over time because of several factors. Which of the following factors
would explain an increase in retained earnings?
a. Loss / Net loss.
b. Profit / Net income.
c. Dividends.
d. Investments by stockholders
Answer: ____b _______________
4. ABC Limited had beginning total stockholders' equity of Rs. 160,000. During the year, total assets
increased by Rs.240,000 and total liabilities increased by Rs.120,000. ABC Limiteds net income
(profit) was Rs.180,000. No additional investments were made; however, dividends did occur during
the year. How much were the dividends?
a. Rs.20,000.
b. Rs.60,000.
c. Rs.140,000.
d. Rs.220,000.
Answer: _______b____________

5. Accounting is a set of concepts and techniques that are used to measure and report financial
information about an economic unit.
6. The shortened form of the accounting equation is assets = liabilities plus owners equity.
7. Net Income (Profit) is the excess of a company's revenues over expenses for a given time period.
8. Accounting information is useful only to the owners of a business.

true or false

Answer: _____false_________
9. Many accounting measurements are based on the historical-cost principle, which holds that
assets and liabilities are initially entered into the accounting records at acquisition cost, but
subsequently change as market values change.
true or false
Answer: _________False_____
10. A company could experience a net loss and have dividends during the same accounting period.
true or false
Answer: _______true_______
11. Which of the following branches of accounting is concerned primarily with external reporting or
communicating the results of economic activities to parties outside the firm?
managerial accounting or financial accounting
Answer: ________financial accounting______
12. The historical cost principle holds that accounting valuations be tied to objective and verifiable
past transactions.
13. The economic resources owned by a company that are expected to benefit future periods are:
assets or liabilities
Answer: ______assets________
14. The residual ownership share of a particular entity may be referred to as:
assets or owners' equity
Answer: ________owners equity______
15. Withdrawals of assets by the stockholders ("dividends") causes retained earnings to:
increase or decrease
Answer: ____decrease__________