Pre-Requisite Competencies

2025
60 minutes
50 marks
Additional reading time – 10 minutes
Introduction To Accounting (ITA)
Instructions to examinees:
(i) Answer all MCQ’s.
(ii) Answer in black pen only.
Chapter-1 to 3
1. Which statements about accounting and bookkeeping are correct?
a) Bookkeeping is performed daily rather b) Preparation of financial statements is part of
than periodicall bookkeeping
c) Accounting relies on having accurate d) Financial transactions are recorded by
bookkeeping records using bookkeeping
.
2. Which of the following is correct representation of accounting equation?
a) Assets – Liabilities = Capital b) Liabilities – Assets = Capital
c) Capital – Liabilities = Assets d) Capital – Assets = Liabilities
3. Debit represents all of the following, except:
a) Increase in asset b) Decrease in liability
c) Decrease in equity d) Increase in equity
4. A trainee accountant has prepared the following list of expenses. Which of the following are correct in relation to
expenses?:
a) Carriage Inwards b) Carriage outwards
c) Commission received d) Salaries expense
5. Which of the following statement/s is/are correct.
a) Assets that provide economic benefits in b) Amounts payable more than 12 months after
the short term (usually one year) are the reporting date is treated as current liability
current asse
c) Equity is the residual interest in the d) Revenue is income arising in the course
assets of the entity after deducting all its of the ordinary activities of the entity
liabilit

6. Income arising in the course of the ordinary activities of the entity is:
a) Revenue b) Other income
c) Capital Receipt d) None of the above
7. Borrowing money for business purposes by owner and withdrawal of 50% amount on same day from borrowing
amount is business transaction. The effect on this business transaction on accounting equation shall be:
a) Increase in asset and increase in liabilit b) Increase in asset; increase in liability
and decrease in equity
c) Increase in asset and decrease in liabilit d) Increase in asset; decrease in equity and
decrease in liabili

8. Which of the following is/are not necessarily be considered as book of prime entry in small and medium size
businesses?
a) Cash book b) Purchase day book
c) Sales day book d) Cash receipt book
9. A merchant bought 100 bags of cement at retail price of Rs. 200 subject to 5% trade discount. 50% payment was made
on spot and balance was agreed to pay in 3 months-time. However, an offer of 2% discount was made if payment shall
be made in 1 month-time. It is reasonably certain that customer shall not avail this discount. At the time of
transaction, businessman shall recognize revenue after deducting from retail price:
a) Trade discount of Rs. 1,000 b) Cash discount of Rs. 400
c) Cash discount of Rs. 380 d) Trade discount of Rs. 1,000 and cash discount
of Rs. 400

10. Shadman Traders maintained petty cash float at Rs. 25,000. Petty expenses were paid during the month of March
2022, amounting to Rs. 18,210. On 31 March 2022, he decided to decrease the petty cash float to Rs. 20,000.
 What amount is required to maintain the cash float of Rs. 20,000?

a) Rs. 13,210 b) Rs. 8,290

c) Rs. 1,790 d) Rs. 6,790
11. Gulsher Limited purchased goods from Shergul Limited for Rs. 70,000 on 20 March, 2022 subject to term 5/10,
n/20. Shergul Limited expected that Gulsher Limited shall not avail the discount. Gulsher Limited paid their account
in full by cheque on 5 April, 2022.
What journal entry will be passed in the books of Shergul Limited on 5 April, 2022?
a) Bank account Debit Rs. 70,000, Gulsher b) Bank account Debit Rs. 66,500, Discount
Limited Credit Rs. 70,00 allowed Debit Rs. 4,500, Gulsher Limited
Credit Rs. 70,000.
c) Bank account Debit Rs. 70,000, Gulsher Limited d) Shergul Limited Debit Rs. 70,000, Bank
Credit Rs. 66,500, Discount allowed Rs. 4,500 account Credit Rs. 70,00
12. Safety Limited purchased a Machine for its production process on 1 February, 2022. Payment will be made after the
installation. The accountant of Safety Limited recorded this in purchases day book, but still confused about
accounting treatment.
Choose the correct option to help him.
a) He has correctly recorded b) ransaction will be recorded in cash boo
c) Transaction will be recorded in general d) Transaction will be recorded in assets journa
journal

13. Double entry for “cash received from supplier against goods returned after clearance of account” shall be:
a) Dr. Purchase Returns and Cr. Creditors b) Dr. Creditors and Cr. Purchase Returns
c) Dr. Creditors and Cr. Cash d) Dr. Cash and Cr. Purchase Returns
14. Naseem is customer and supplier of business and he buys and sells goods from/to our business. As per terms of
agreement, the account balances of both accounts shall be cancelled at month-end and remaining balance shall be
paid or received on 5th of month following the month of transaction. As at June 30, 2022 Naseem balance in
receivables ledger showed Rs. 25,500 and in payables ledger Rs. 22,000.
The double entry made at June 30, 2022 shall be:
a) Receivables Dr. 22,000 and Payables Cr. 22,000 b) Receivables Dr. 25,500 and Payables Cr.
25,500
c) Payables Dr. 22,000 and Receivables Cr. d) Payables Dr. 25,500 and Receivables Cr.
22,000 25,500

15. Which of the following is NOT a terminology used in maintaining petty cash book system?
a) Imprest System b) Reimbursement of expenses
c) Cash float d) Cash budgets
16. Which of the following best describes the imprest system of operating petty cash?
a) Expenses incurred on weekly basis shall not b) The exact amount of expenditure is
exceed the set limit reimbursed at intervals to maintain
fixed flo
c) Authorization of all vouchers must not be d) Regular equal amounts of cash are transferred
necessar into petty cash at interva

17. Which of the following best describes the purpose of sales invoice?
a) Issued to customer as request for b) Issued as request to receive stock
payment on due date
c) Issued as details of transactions made during d) Issued to customer as notification of payment
specific mont

18. Following information is extracted from the books of Zamin Stores for the month of January 2022:
a) Goods sold on credit to Abid for Rs. 25,000 b) Goods sold on credit to Sajid for Rs. 15,000
c) Goods sold to Nadir for cash for Rs. 20,000 d) Goods bought from Javed on credit for
Rs. 15,000

19. The statement including balances of ledgers and prepared normally at end of each month is termed as:
a) General ledger b) Statement of financial position
c) Trial balance d) Bank reconciliation statement
20. Which of the following statement/s is/are correct in relation to balance of ledger:
 a) Balance b/d shown on debit side of any ledger b) Balance b/d shown on debit side of any
represents credit balan ledger represents debit balan
c) Balance c/d shown on debit side of any ledger d) Balance c/d shown on debit side of any
represents debit balance ledger represents credit balance

21. Following data is taken from the books of Saman:

Rs.

Total sales (including 20% cash sales) 800,000

Cash received from credit customers 297,000

(After allowing 10% settlement discount, sales above was recorded assuming that customers might not
avail settlement discount)

Credit sales return 20,000

What will be the closing balance of receivables?
a) Rs. 290,000 b) Rs. 330,000
c) Rs. 356,000 d) Rs. 396,000

22. Which of the following account shall be balanced off rather than closed off?
a) Furniture b) Salaries
c) Sales d) Discount allowed
23. Which of the following statements is/are correct?
a) T account format of ledgers are balanced after b) Running balance account format of ledgers are
each transaction balanced periodicall
c) T account format of ledgers are balanced d) Running balance account format of
periodically ledgers are balanced after each
transaction

24. Mr. Rashid transferred computer from business to home for his kid. The computer was bought one year ago at Rs.
25,000 but its current market value is equal to its carrying value of Rs. 16,000.
What will be double entry for this transaction?
a) Dr. Capital Rs. 25,000 and Cr. Computer Rs. b) Dr. Drawings Rs. 25,000 and Cr. Computer
25,000 Rs. 25,000
c) Dr. Capital Rs. 16,000 and Cr. Computer Rs. d) Dr. Drawings Rs. 16,000 and Cr.
16,000 Computer Rs. 16,000

25. In “Balance c/d”, c/d stands for and represents:

a) Carried down; opening balance b) Carried down; closing balance
c) Closing debit; opening balance d) Closing debt; closing balance