ARTT Business School

Certificate in Accounting and Finance (CAF)

60 Minutes – 50 Marks
Faculty: HM & JR
Quiz (Non-Profit Organization & MCQs)
CAF-5 – Financial Accounting And Reporting 1

Student Name: ___________________________ Father Name:____________________________

Section:________ ARTT ID/CRN:____________ No. of Answer Scripts Used:______________

Question 1: (20 Marks)

Following is the receipt and payment account of Bacha Lo Organization, which is engaged in the
preservation of environment and an activist against pollution, for 31 Dec 2109
Bacha Lo Organization
Receipt And Payments Account
For The Year Ended 31 Dec 2019
Receipt Rupees Payment Rupees
Op Bal 125,000 Electricity 184,000
Subscription Income ? Rent of Premises 57,000
Debtors 63,000 Repairs 47,000
Sale of Seed Plougher 124,500 Misc. expenses 125,000
Sale of merchandise 142,000 Purchase of merchandise 78,000
Wages and Salaries 38,000
Creditors 98,000
Office supplies 181,000
Furniture 128,000
Transportation for Merchandise 6,500
Closing Bal ?
Additional information is as follows
1) Bacha Lo has a membership program where the members are educated regarding gardening techniques
and other relevant knowledge. The subscription fees was Rs.150/month in the beginning but was
increased to Rs.200/month in May 2019. Details of members are as follows
 At December 31, 2019 there were 356 registered members out of which 34 members were
registered in March and 16 members in the month of September.
 24 members left the organization on 30 April, 2019. Bacha Lo decided not to increase the fees
for the year for ONLY those members who pay their subscription fee for the whole year in
advance.
 40% members pay the subscription fees in advance, 10% pay it in arrears and the remaining pay
it as and when incurred which was the case for members leaving the organization
 Advance and arrear subscriptions are received 5 Days before and after the due date respectively
and the option is only for those who have been with the organization for more than 5 years
2) Bacha Lo had following assets appearing in its balance sheet as at 31 December 2019
Assets NBV Rate
Vehicle 588,000 10%
Furniture 385,000 10 Years
Seed Plougher 642,000 15%
Tractor 284,800 12%
 Furniture was purchased on 31 July 2019 with a useful life of 10 Years
 Seed Plougher sold had a NBV of Rs.142,000

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3) Bacha Lo operates a canteen on its premises for its members as well as public which is operated by
volunteers and maintains a margin of 30%. The details of canteen operations were as follows
Particulars Op Bal. Cl. Bal
Inventory 34,000 42,000
Debtors 32,000 43,000
Creditors 64,000 48,500
Advance Salaries 46,000 55,000
 Rs.12,000 were written off as non-recoverable
4) Other account balances were as follows
Particulars Op Bal. Cl. Bal
Electricity – Prepaid 134,000 125,200
Rent of Premises - Prepaid 94,300 84,500
Repairs Payable 27,600 31,000
5) The canteen manager is entitled to a bonus of 25% of canteen profit after charging this bonus
6) During the year some of the merchandise of the canteen was damaged which resulted in NRV loss
Required
a) Prepare a subscription account for Bacha Lo Limited (7)
b) Prepare an Income and Expenditure Account for the year ended 31 December 2019 (13)
(NOTE: Pay attention to your presentation and workings for the question)

Question 2: (30 Marks)

NOTE: MARK YOUR ANSWERS ON QUESTION PAPER. Each Question carry 1 MARK
1. Asif, retailer of Lux Soap, entered into a contract with Saleem to sell him 10 cartons of the
product each month starting Jan 2019. The contract term state that the payments of Rs.50, 000
will be made on June 30 and Dec 31 and in case of cancellation, Saleem will be liable to pay a fine
of Rs.10, 000. Which of the following will be true on 31 Mar 2019
a. Contract does not exist therefore revenue shall not be recognized
b. Contract exist therefore revenue shall be recognized at the time of payment
c. Contract will be in effect only at the time of payment i.e. June 30
d. This type of contract will not fall under IFRS 15
2. Mr. A, engaged in the business of automobile parts, entered into a contract with Mr. B to sell
him, on his personal request, all of his defected parts at a discounted 50% discount. Mr. A should
recognize this income as
a. Revenue at a discounted price of 50%
b. Revenue at 100% less the losses incurred
c. Scrap sales in other income
d. Gain on disposal
3. Which of the following is not considered transaction with owners with reference to statement of
changes in equity
a. Share capital
b. Redemption of shares
c. Profit for the year
d. Bonus issue of shares
4. The maximum amount of share capital that a company is allowed to raise is called
a. Authorized share capital
b. Issued share capital
c. Subscribed share capital
d. Allowed share capital
5. A debit balance on the retained earnings account indicates that
a. The company has made more dividend payments than the profit earned.
b. the company has accumulated losses

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c. the company has redeemed some of its share capital
d. the company has issued bonus shares
6. Which TWO of the following are usually shown in statement of changes in equity when right
issue of shares is made?
a. Increase in share capital
b. Decrease in share premium
c. Increase in share premium
d. Decrease in retained earnings
7. Incremental depreciation has following effects on statement of changes in equity:
a. Increase in revaluation surplus and decrease in retained earnings
b. Decrease in revaluation surplus and increase in retained earnings
c. Decrease in revaluation surplus and decrease in retained earnings
d. Increase in revaluation surplus and increase in retained earnings
8. During the year ended 30 June 2021, a company's revaluation reserve increased from Rs.300,000
to Rs.380,000 as a result of a property (land) revaluation. At the start of that financial year, the
company's property had been valued at Rs.810,000. Assuming that no property was disposed of
during the year, which of the following statements is true?
a. The property's revalued amount was Rs.890,000.
b. The property's revalued amount was Rs.1,190,000.
c. The property's revalued amount was Rs.380,000.
d. The property's revalued amount was Rs.1,310,000
9. Income and expenditure account is based on;
a. Cash accounting
b. Accrual accounting
c. Government accounting
d. Management accounting
10. Examples of non-profit organization is:
a. Commercial banks
b. Civil hospital
c. Private educational institutions
d. Association of person
11. A business operates on a gross margin of 33 ¼ %. Gross profit on a sale was Rs. 800,000 and
expenses were Rs. 680,000. The net profit percentage is
a. 3.75%
b. 5%
c. 11.25%
d. 22.67%
12. Seaview Club started its operations on 1 February 2015. Total subscription received for the
period ended 31 December 2015 was Rs. 29,952,000. Annual subscription is Rs. 24,000. All new
members pay three years’ subscription in advance. The memberships were awarded as follows:
Month March June September December
No. Of Members 112 98 101 105
What is the amount of subscription income to be recognized in the Income and Expenditure
account for the year ended 31 Dec 2015?
a. 4,630,000 c. 4,360,000
b. 4,663,000 d. 4,330,000
13. Which of the following is an example of financing cost
a. Selling cost
b. Administrative cost
c. Loan interest cost
d. Research and development cost
14. Which of the following statement is incorrect?

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a. Variable cost per unit remains fixed but varies in total
b. Fixed cost per unit varies but remains fixed in total
c. Selling cost is included in the cost of product
d. Direct labor is a component of both prime cost and conversion cost
15. Which chart shows the unit cost behavior of straight-line depreciation costs?

16. A particular cost is fixed in total for a period. What is the effect on the cost per unit of a
reduction in activity of 50%?
a. Cost per unit increases by 50%
b. Cost per unit reduces by 50%
c. Cost per unit increases by 100%
d. Cost per unit is unchanged.
17. A company currently produces 6,000 units of its single product each period, incurring total
variable costs of Rs. 60,000 and fixed costs of Rs. 42,000. Production will increase to 8,000 units
per period if the company expands capacity resulting in changes both to the variable costs per
unit and to the total fixed costs. For production of 8,000 units per period total variable costs
would be Rs. 76,000 and fixed costs Rs. 50,000. What is the reduction in total cost per unit
comparing the costs for 8,000 units per period with the unit costs currently being incurred?
a. Rs.115 c. Rs.1.25
b. Rs.1.35 d.Rs.1.45
18. A semi variable cost would:
a. be zero when output is zero and would decrease in direct proportion to output
b. be more than zero if no products were made and would then increase in direct
proportion to output
c. be a fixed amount when output was zero and would not increase in direct proportion to
output

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 ARTT Business School
d. be zero when output is zero and would increase in direct proportion to output
19. Which of the following is an optional disclosure requirement of IAS 16?
a. Measurement bases for determining gross carrying amount
b. Depreciation method
c. Useful lives or depreciation rates
d. The carrying amount of temporarily idle PPE
20. When items of property, plant and equipment are stated at revalued amounts the following must
be disclosed:
i. the effective date of the revaluation
ii. whether an independent valuer was involved
iii. the methods and significant assumptions applied in estimating the items’ fair
values
iv. the extent to which the items’ fair values were determined directly by reference
to observable prices in an active market or recent market transactions on arm’s
length terms or were estimated using other valuation techniques
v. for each revalued class of property, plant and equipment, the carrying amount
that would have been recognized had the assets been carried under the cost
model;
vi. the revaluation surplus, indicating the change for the period and any restrictions
on the distribution of the balance to shareholders
a. (i), (ii) and (vi) only
b. (i), (ii), (v) and (vi) only
c. (i), (ii), (iii) and (iv) only
d. (i) to (vi) all
21. Which of the following statements is correct?
a. An entity may present PPE at gross carrying amount or net carrying amount under IAS
16
b. Either useful lives or depreciation rates are to be disclosed, both are not required.
c. Under revaluation model, PPE are revalued at end of each year
d. If an entity chooses revaluation model, it must apply revaluation model to all of its PPE.
22. If an asset increases in value, the increase is noted as?
a. An increase in net profit in the SOCI
b. An increase in retained earnings in SOFP
c. An increase in revaluation surplus in the SOFP and other comprehensive income in the
SOCI
d. An increase in “other profit” in SOCI
23. The following gains may legally be withdrawn from the company by shareholders:
i. gains that arise from the upward revaluation of non-current assets
ii. gains that arise from the sale of non-current assets
Which of the following is correct?
a. Both i. and ii are true
b. i. is true and ii. is false
c. Both i. and ii are false
d. ii. is true and i. is false
24. An entity purchased an investment property on 1 January 2013 for a cost of Rs. 35m. The
property had an estimated useful life of 50 years, with no residual value, and at 31 December
2015 had a fair value of Rs. 42m. On 1 January 2016 the property was sold for net proceeds of
Rs. 40m. Calculate the profit or (loss) on disposal under both the cost and fair value (FV) model.
a. Cost model: Rs. 7.1 m and FV model: (Rs. 2.0 m)

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b. Cost model: Rs. 2.0 m and FV model: Rs. 2.0 m
c. Cost model: Rs. 5.0 m and FV model: (Rs. 2.0 m)
d. Cost model: Rs. 7.1 m and FV model: Rs. 5.0 m
25. Which of the following properties owned by an entity would be classified as an investment
property?
a. A property that had been leased to a tenant, but which is no longer required and is now
being held for resale
b. Land purchased for its investment potential. Planning permission has not been obtained
for building construction of any kind
c. A new office building used as entity’s head office, purchased specifically in order to
exploit its capital gains potential
d. A bungalow used for executive training
26. If the fair value less costs to sell cannot be determined
a. The asset is not impaired.
b. The recoverable amount is the value-in-use.
c. The net realizable value is used.
d. The carrying value of the asset remains the same
27. In accordance with IAS 36 Impairment of Assets which of the following statements are true?
i. An impairment review must be carried out annually on all intangible assets.
ii. If the fair value less costs to sell of an asset exceed the carrying amount there is
no need to calculate a value in use.
iii. Impairment is charged to the statement of profit or loss unless it reverses a gain
that has been recognized in equity in which case it is offset against the
revaluation surplus.
a. All three
b. 1 and 2 only
c. 1 and 3 only
d. 2 & 3 only
28. Radium Limited (RL) acquired a non-current asset on 1 October 2019 at a cost of Rs. 100 million
which had a useful life of ten years and a nil residual value. The asset had been correctly
depreciated up to 30 September 2024. At that date the asset was damaged and an impairment
review was performed. On 30 September 2024, the fair value of the asset less costs to sell was Rs.
30 million and the expected future cash flows were Rs. 8.5 million per annum for the next five
years. The current cost of capital is 10% and a five year annuity of Rs. 1 per annum at 10% would
have a present value of Rs. 3.79. What amount would be charged to profit or loss for the
impairment of this asset for the year ended 30 September 2024?
a. 17,785 c. 17,885
b. 16,785 d. 17,685
29. Which of the following is not covered by IAS 36 – Impairment?
a. Goodwill
b. Investment property carried at cost
c. Investment property carried at fair value
d. Intangible assets
30. The accounting principle applied by IFRS 15 when determining whether or not revenue should
be recognized in respect of a repurchase agreement is
a. Prudence
b. Relevance
c. Substance over form
d. Verifiability

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