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Financial Forensics · Transactions & the accounting equation

8 questions · 8 marks · 1 paper

Answer key

Indian Institute of Technology Madras

BS Degree Programme · Examination & Study Paper

Financial Forensics

Transactions & the accounting equation

Official Paper

Examination Instructions & Guidelines

Solve on notebook/paper first before checking solutions.
MCQ: Exactly 1 option is correct. Negative marking applies.
NAT: Numerical response. No negative marking.
Scientific calculator allowed for all calculations.
Official answer key is sealed at the end of this sheet.

Q1MCQ1 Mark·Choose one option
Key ↓
Which of the following transactions increases both cash and net income?
1. ACash receipts from a bank loan.
2. BCash receipts from sale of common stock.
3. CCash receipts from customers for services provided.
4. DCash payments for cost of goods sold.
Q2MCQ1 Mark·Choose one option
Key ↓
Which of the following properly describes the impact on the financial statements when a company borrows $20,000 from a local bank?
1. ANet income increases $20,000.
2. BAssets decrease $20,000.
3. CStockholders' equity increases $20,000.
4. DLiabilities increase $20,000.
Q3MCQ1 Mark·Choose one option
Key ↓
Which of the following statements is correct regarding activities and how they impact financial statements?
1. AThe payment of a cash dividend reduces net income.
2. BCash received from issuing common stock to stockholders is reported as a financing activity cash flow within the statement of cash flows.
3. CProviding services to a customer on account does not impact net income.
4. DThe purchase of manufacturing equipment is reported within the statement of cash flows as a financing activity.
Q4MCQ1 Mark·Choose one option
Key ↓
Which of the following transactions affects both the income statement and the statement of cash flows?
1. ASelling stock in exchange for cash.
2. BDeclaring and paying a cash dividend.
3. CSelling a product to a customer which creates an account receivable.
4. DPaying employee salaries as they are earned.
Read the passage below, then answer Q5–Q8
Answer the given subquestions based on the information below:
Fulton Company was established at the beginning of 2024 when several investors paid a total of $200,000 to purchase Fulton common stock. No additional investments in common stock were made during the year. By December 31, 2024, Fulton had cash on hand of $45,000, office equipment of $40,000, inventory of $156,000, and accounts payable of $10,000. Sales for the year were $812,000. Of this amount, customers still owed $20,000. Fulton declared and paid dividends of $25,000 to its stockholders during 2024.
Q5NAT1 Mark·Write the number
Key ↓
What is the Asset of the company as 31st, December 2024 (in $)?
Your answer:
Q6NAT1 Mark·Write the number
Key ↓
What is the Liability of the company as 31st, December 2024 (in $)?
Your answer:
Q7NAT1 Mark·Write the number
Key ↓
What is the Retained earnings of the company as 31st, December 2024 (in $)?
Your answer:
Q8NAT1 Mark·Write the number
Key ↓
Net income of the company for the given duration is ____. (in $)
Your answer:

Official Key

Master Answer Key & Explanations

Official answer keys from IIT Madras BS past papers. Click any question to review.

Reveal Key

Q1C

Q2D

Q3B

Q4D

Q5261000

Q610000

Q751000

Q876000

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