1) Which of the followings is Operating Expense?

a) Bad debts

b) Salary of General Manager

c )Expired Insurance

d) All of the above.

2) Liabilities of business are Rs.11220/-&Owners Equity Rs.15000/-What will be the assets of the
business?
a) Rs.11220

b) Rs.3780

c) Rs.15000

d) Rs.26220

3) A firm use LIFO Inventory method in 1st year, FIFO in 2nd year, Weighted Average Method in 3rd
year, which accounting principle is violated?
a) Cost

b) Consistency

c) Materiality

d) None

4) Generally, a firm first prepares following financial statement.

a) Income statement

b) Balance sheet

c) Retained Earnings statement d) Cash flow statement

5) Which of the cash flow assumption results in higher profits?

a) LIFO

b) FIFO

c) Average Cost method

d) Specific Identification

Q # 3. Amtex Spinning Mills purchased a new spinning machine at a cost of Rs. 2,440,000 on July 1, 2009.
The useful life of machinery is estimated to be 5 year from purchasing date. Experts estimated it has a
residual value of Rs. 40000.
Required: Prepare a depreciation schedule under each of the following methods.
a) Straight Line Method
b) Double (200%) declining Method