Q. What is Gross Profit Ratio? Answer: Gross Profit / Sales × 100
Q. Calculate GP Ratio if GP = 25,000 and Sales = 100,000 Answer: 25%
Q. What is Net Profit Ratio? Answer: Net Profit / Sales × 100
Q. Calculate NP Ratio if NP = 20,000 and Sales = 100,000 Answer: 20%
Q. What is Return on Investment (ROI)? Answer: Profit / Investment × 100
Q. Calculate ROI if Profit = 10,000 and Investment = 50,000 Answer: 20%
Q. What is Average Inventory? Answer: (Opening + Closing) / 2
Q. Calculate Average Inventory if Opening = 40,000 and Closing = 60,000 Answer: 50,000
Q. What is Inventory Turnover Period? Answer: 365 / Inventory Turnover Ratio
Q. What is Accounts Receivable Turnover? Answer: Credit Sales / Average Receivables
Q. What is Accounts Payable Turnover? Answer: Credit Purchases / Average Payables
Q. What is Capital Employed? Answer: Total Assets – Current Liabilities
Q. Calculate Capital Employed if Assets = 200,000 and CL = 50,000 Answer: 150,000
Q. What is Earnings Per Share (EPS)? Answer: Net Profit / Number of Shares
Q. Calculate EPS if Profit = 100,000 and Shares = 20,000 Answer: 5
Q. What is Dividend Yield? Answer: Dividend per Share / Market Price × 100
Q. What is Payback Period? Answer: Time required to recover investment
Q. Calculate Payback if Investment = 100,000 and annual return = 25,000 Answer: 4 years
Q. What is Margin of Safety? Answer: Actual Sales – Break-even Sales
Q. What is Fixed Asset Turnover? Answer: Sales / Fixed Assets
Q. What is Operating Ratio? Answer: (COGS + Operating Expenses) / Sales × 100
Q. What is Cash Ratio? Answer: Cash / Current Liabilities
Q. What is Fund Flow Statement? Answer: Statement showing movement of funds
Q. What is Error of Omission? Answer: Transaction not recorded
Q. What is Error of Commission? Answer: Wrong recording of amount/account
Q. What is Compensating Error? Answer: Errors that cancel each other
Q. What is Audit Working Paper? Answer: Record of audit procedures and evidence
Q. What is Test Checking? Answer: Checking selected transactions
Q. What is Materiality? Answer: Significance of an amount or error
Q. What is Analytical Procedure? Answer: Comparison and analysis of financial data
Q. What is Capital Gain? Answer: Profit from sale of asset
Q. What is Revenue Reserve? Answer: Profit kept for future use
Q. What is Deferred Tax? Answer: Tax payable in future
Q. What is Accrued Income? Answer: Income earned but not received
Q. What is Prepaid Expense? Answer: Expense paid in advance
Q. What is Double Entry System? Answer: Every transaction has two entries
Q. What is Journal Entry? Answer: First record of transaction
Q. What is Bank Reconciliation Statement? Answer: Matching bank and cash book balances
Q. What is Overdraft? Answer: Withdrawal more than bank balance
Q. What is Capital Structure? Answer: Mix of debt and equity
Q. What is Financial Statement Analysis? Answer: Evaluation of financial performance
Q. What is Cost Sheet? Answer: Statement showing cost details
Q. What is Standard Costing? Answer: Pre-determined cost system
Q. What is Variance Analysis? Answer: Difference between actual and standard
Q. What is Responsibility Accounting? Answer: Assigning responsibility for costs
Q. What is Budgetary Control? Answer: Controlling through budgets
Q. What is meant by Financial Leverage in corporate finance? Answer: The use of borrowed funds to increase the potential return on investment.
Q. In auditing, what is Inherent Risk? Answer: The risk that an account balance may contain material misstatements assuming no related internal controls.
Q. What is the Quick Ratio (Acid-Test Ratio) used to measure? Answer: A firm’s ability to meet short-term liabilities without relying on inventory.
Q. What is Window Dressing in financial reporting? Answer: The practice of manipulating financial statements to present a more favorable financial position.
Q. Which accounting standards are generally applied in Pakistan for corporate financial reporting? Answer: IFRS (International Financial Reporting Standards).
Q. What is Deferred Tax Liability? Answer: A tax obligation that arises due to temporary differences between accounting income and taxable income.
Q. What is Mezzanine Financing? Answer: A hybrid form of financing that combines features of debt and equity.
Q. In an audit report, which paragraph states the auditor’s final conclusion? Answer: The Opinion Paragraph.
Q. What is the Break-Even Point (BEP) in cost accounting? Answer: The level of sales at which total revenue equals total costs.
Q. What is Standard Costing used for in management accounting? Answer: Comparing actual costs with predetermined standard costs to analyze variances.
Q. What is Capital Gearing? Answer: The relationship between a company’s long-term debt and its equity capital.
Q. What is meant by Management Audit? Answer: An evaluation of management performance and organizational efficiency.
Q. What does Impairment of an Asset mean? Answer: A permanent reduction in the recoverable value of an asset below its carrying amount.
Q. What is Treasury Stock? Answer: Shares that a company has repurchased from its shareholders.
Q. What is Zero-Based Budgeting (ZBB)? Answer: A budgeting method in which every expense must be justified for each new budget period starting from zero.
Q. What type of asset is goodwill? Answer: Intangible Asset
Q. A debit balance in the bank statement usually indicates: Answer: Bank overdraft
Q. Which financial statement shows the financial position at a point in time? Answer: Balance sheet
Q. In accounting cycle, the first phase is: Answer: Identifying economic transactions
Q. Recording financial transactions in day‑to‑day order is done in: Answer: General Journal
Q. If cost of sales is Rs. 60,000 and sales are Rs. 95,000 with operating expenses Rs. 20,000, net profit is: Answer: Rs. 15,000
Q. Operating Profit Ratio measures: Answer: Profitability efficiency
Q. Contribution margin ratio helps calculate: Answer: Break-even point
Q. The formula for operating cycle is: Answer: Inventory period + Accounts receivable period
Q. Cash flow from a firm’s day-to-day operations is called: Answer: Operating cash flows
Q. Which bank is responsible for monetary policy in Pakistan? Answer: State Bank of Pakistan
Q. Verification of documentary evidence of transactions is called: Answer: Vouching
