VU Final Term Past Papers
ACC301 Past Papers — Final Term Past Papers & Solved MCQs
36 solved final term past paper MCQs for ACC301 at Virtual University, each with the correct answer marked. Use them to learn the VU question style and test your recall. An independent study tool — not affiliated with VU.
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Q1. A series of constant, or level, cash flows that occur at the end of each period for some fixed number of periods is called a/an:
- A.Present Value
- B.Future Value
- C.Ordinary Annuity✓ Correct
- D.Ordinary Share
Q2. The Ratios showing the ability of a firm to pay its bills in short-run are called:
- A.Leverage Ratios
- B.Liquidity Ratios✓ Correct
- C.Profitability Ratios
- D.Market Value Ratios
Q3. GAAP stands for:
- A.Generally Accepted Accounting Principles✓ Correct
- B.Generally All-rounder Accounting Principles
- C.General Accepting Accounts Principles
- D.None of the given options
Q4. A contract between the bond issuer and bond holder is called:
- A.Bond Indenture✓ Correct
- B.Bond Debenture
- C.Bond Value
- D.None of the given options
Q5. In which market, previously issued securities are traded among investors?
- A.Primary Market
- B.Secondary Market✓ Correct
- C.Tertiary Market
- D.None of the given options
Q6. Which of the following is the present value of a series of future net cash flows that will result from an investment, minus the amount of the original investment?
- A.Present Value
- B.Future Value
- C.Net Present Value✓ Correct
- D.Terminal Value
Q7. You earn a 5 percent real return. If the inflation rate is 4 percent, what is your nominal return?
- A.8.96 %
- B.9.05 %
- C.9.20 %✓ Correct
- D.9.92 %
Q8. Fee paid to the consultant for evaluating the option of launching a new product will be considered as:
- A.Sunk Cost✓ Correct
- B.Opportunity Cost
- C.Financing Cost
- D.Operating Cost
Q9. A risk that affects a single or at most a small number of assets is called:
- A.Unsystematic Risk
- B.Unique Risk
- C.Diversifiable Risk
- D.All of the given options✓ Correct
Q10. Which of the following is the required return on a firm's debt by its creditors?
- A.Cost of Equity
- B.Cost of Debt✓ Correct
- C.Cost of Preferred Stock
- D.Cost of Capital
Q11. Which one of the followings is the overall required return the firm must earn on its existing assets to maintain the value of the stock?
- A.AAR (Average Accounting Return)
- B.IRR (Internal Rate of Return)
- C.MIRR (Modified Internal Rate of Return)
- D.WACC (Weighted Average Cost of Capital)✓ Correct
Q12. The costs to store and finance the assets are known as:
- A.Carrying Costs✓ Correct
- B.Shortage Costs
- C.Manufacturing Costs
- D.None of the given options
Q13. The minimum level of inventory that a firm keeps on hand is called:
- A.Common stock
- B.Safety Stock✓ Correct
- C.Preferred Stock
- D.Dangerous Stock
Q14. Realization Principle is one of the basic principles of GAAP.
Q15. Whenever the word Dividend is used, it always refers to a long-term loan.
Q16. A preferred dividend is exactly like interest on bond.
Q17. By IRR rule, take a project when its IRR exceeds the required return.
Q18. Diversification is the group of assets such as stocks and bonds held by investor.
Q19. Standard format of Auditor’s Report as per the Companies Ordinance 1984 is described in which one of the following Legal Forms?
- A.Form31A
- B.Form32A
- C.Form30A
- D.Form35A✓ Correct
Q20. IFRS stands for which one of the following?
- A.International Financial Reporting Standards✓ Correct
- B.International Financial Recording Systems
- C.International Financial Recording Statements
- D.International Financial Reporting Systems International Financial Reporting Standards.
Q21. Which of the following is NOT one of the five major components of internal control? A. Risk assessment
- A.Control activities
- B.Information and communication system
- C.Human resource background checks✓ Correct
- D.Control environment
Q22. All of the following should be observed and inspected by the auditors during the risk assessment process of an entity EXCEPT:
- A.Observations of Activities and operations
- B.Inspection of Documents and records C. Reading Management reports
- C.Visit to other companies in the industry✓ Correct
- D.Analytical review of financial ratios
Q23. Which one of the following audit techniques ordinarily provides an auditor with the least assurance about the operating effectiveness of an internal control activity?
- A.Inquiry of client personnel✓ Correct
- B.Inspection of documents and reports
- C.Observation of client personnel
- D.Preparation of system flowcharts Inspection of documents and reports.
Q24. Which one of the following opinions advocates that the auditor should form an opinion only after obtaining sufficient audit evidence instead of blindly accepting any information given by the management?
- A.Auditor’s liability
- B.Professional ethics
- C.Professional Skepticism✓ Correct
- D.Auditor’s opinion Professional ethics.
Q25. Which one of the following is NOT required as part of the audit process?
- A.Substantive procedures
- B.Tests of control✓ Correct
- C.Assessment of materiality
- D.Procedures to obtain an understanding of the internal control structure
Q26. SECP stands for which one of the following?
- A.Securities and Exchange Collaboration of Pakistan
- B.Securities and Exchange Consortium of Pakistan
- C.Securities and Exchange Commission of Pakistan✓ Correct
- D.Securities and Exchange Constitution of Pakistan Securities and Exchange Commission of Pakistan.
Q27. One type of analytical procedure is the ‘Trend Analysis’. Which one of the following is the best example of trend analysis?
- A.Comparison of company financial ratios to that of its competitors
- B.Comparison of accounting records to budgeted amounts
- C.Comparison of inventory levels over the past 3 years✓ Correct
- D.Comparison of interest expenses to outstanding loan balances Comparison of inventory levels over the past 3 years.
Q28. While conducting operational audit, which one of the following auditing procedures does the auditor primarily rely upon?
- A.Inquiry and observation✓ Correct
- B.Analytical procedures
- C.Physical inspection D. Tracing and vouching Analytical procedures.
- D.Recalculation
Q29. Which one of the following cannot be considered as the essential feature of Auditing?
- A.An auditor is involved in the examination of financial statements
- B.The auditor is responsible for the preparation of the financial statements✓ Correct
- C.The end result of an audit is an opinion to assist the user of the financial statements.
- D.The auditor should be independent of the entity
Q30. Which one of the following best describes why an independent auditor is asked to express an opinion on the presentation of financial reports?
- A.It is difficult to prepare financial reports that fairly present a company’s financial position without the expertise of an external auditor
- B.It is management’s responsibility to seek available independent aid in the appraisal of financial information shown in its financial reports
- C.The opinion of an independent party is needed because a company may not be objective with respect to its own financial reports✓ Correct
- D.It is a customary courtesy that all shareholders of a company receive an independent report on management’s stewardship of the affairs of the business
Q31. The audit which is a review of any part of an entity’s operating procedures and methods is known as which one of the following?
- A.Financial statement audits
- B.Operational audits✓ Correct
- C.Technical Audits
- D.Compliance audits
Q32. Which one of the following is considered as the formal opinion, or disclaimer thereof, issued by an independent auditor as a result of audit or evaluation performed on a legal entity?
- A.Financial report
- B.Financial statement
- C.Director’s report
- D.Auditor's report✓ Correct
Q33. Which one of the following primary assertions is satisfied when an auditor ensures that there are no unrecorded assets, liabilities, transactions or events or undisclosed items in the client’s financial records?
- A.Valuation
- B.Completeness✓ Correct
- C.Existence
- D.Rights and obligations
Q34. Internal control is primarily established within a company to do which of the following?
- A.To prevent fraud in the company affairs
- B.To provide reasonable assurance that the company's objectives will be achieved✓ Correct
- C.To catch all errors that may occur in the company
- D.To aid in the effective auditing of the company
Q35. Fixation of remuneration of auditors can be determined by the following authorities EXCEPT: (Companies Ordinance, 1984)
- A.Directors
- B.Company secretary✓ Correct
- C.Commission
- D.Members
Q36. Which of the following is NOT one of the five major components of internal control?
- A.Risk assessment
- B.Control activities
- C.Information and communication system
- D.Human resource background checks✓ Correct