Midterm Spring 2020: Principles of

Accounting (Principles of
Accounting-ACCS2003-Section 1)
Midterm Consist of Two parts: First Part 20 MCQs, each 1 point, Second Part 10
Short Questions, Each 2 marks
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1.The asset account, Supplies, has a balance of $7550 at the beginning of
the year. If $1,500 of supplies is on hand at the end of the year, Supplies
Expense reported on the income statement for the year is:
(1 Point)
$6,050
$1,500
$5,600
$1,900
2.Depreciation Exp paid
(1 Point)
As per accounting period of the company
On monthly basis
Never paid
On regular time interval
3.ABC company pays weekly salaries of $5,000 each Friday for a five-day
week ending on that day. The accrual required for a fiscal period ending
on Thursday is:
(1 Point)
Debit Salary Expense, $4,000; credit Salaries Payable, $4,000
Debit Salary Expense, $4,000; credit Drawing, $4,000
Debit Salaries Payable, $4,000; credit Cash, $4,000
Debit Drawing, $4,000; credit Cash, $4,000
4.When we follow the Cost, Realization and Matching principle in our
bookkeeping this is called?
(1 Point)
Non of above
Going Concern Assumption
Cash Base Accounting
Objectivity Principle
5.ABC Service borrowed $10,000 from 3rd National Bank on November 1,
2001. The loan is for a term of three years and carries a 10% rate of
interest. Interest is due at the maturity of the loan. The entry to properly
accrue 2001 Interest Expense should include:
(1 Point)
A debit to Interest Expense and a credit to Loan Receivable.
A debit to Interest Expense and a credit to Interest Payable.
A debit to Interest Expense and a credit to Cash.
A debit to Interest Expense and a credit to Accounts Receivable.
6.Purchased truck for business and made partial payment.
(1 Point)
Debit Truck : Credit Cash and Account Payable
Debit Truck : Credit Cash
Debit Truck: Credit Account Payable
7.A company pays rent of $1,800 for three months in advance on
November 1, 2000. Which of the following statements is true for the
journal entry prepared on November 1?
(1 Point)
Cash is debited
Prepaid Rent is debited
Rent Expense is debited
Prepaid Rent is credited
8.Billed customers for services rendered.
(1 Point)
 Debit Account Receivable : Credit Revenue
Debit Revenue : Credit Account Receivable
Debit Cash : Credit Revenue
9.Declared dividend
(1 Point)
Debit Dividend Account : Credit Cash
Debit Dividend Account : Credit Dividend Receivable
Debit Dividend Account : Credit Dividend Payable
10.Rental Services, Inc. (RSI) pays $5,700 for three years' rent on its Office
Building on August 1, 2001. The entry to record this transaction involves
which of the following account titles and classifications?
(1 Point)
Debit: Rent Expense, Expense; Credit: Cash, Asset
Debit: Prepaid Rent, Asset; Credit: Cash, Asset
Debit: Cash, Asset; Credit: Unearned Rent, Asset
Debit: Unearned Rent, Asset; Credit: Cash, Asset
11.Prepare the adjusting entry of a month: Useful life of the Furniture of
Rs. 36000/- was 5 year.
(2 Points)
Debit -> De

12.ABC received Advance payments for services. Its called:

(1 Point)
Unrecorded Expenses
Prepaid Expenses
Unrecorded Revenues
Unearned Revenues
13.ABC Inc. pays $7,500 for four years' rent on its Office Building on
August 1, 2001. The adjusting entry required at December 31, 2001 is:
(1 Point)
Debit: Prepaid Rent; Credit: Cash
Debit: Rent Expense; Credit: Prepaid Rent
 Debit: Unearned Rent; Credit: Cash
Debit: Rent Expense; Credit: Unearned Rent
14.Prepare adjusting entry of June in CUST book : CUST received Tuition
fee in January of Rs. 78000 from Farhan and announced grad in June.
(2 Points)

15.Prepare general entry: Purchase Truck of Rs. 100,000 on partial

payment and cash paid of Rs. 20,000
(2 Points)

16.At December 31, 2002, interest expense of $960 is owed on a two-

year bank note that will not be paid until July 2003, what is the
appropriate accrual at the end of 2002?
(1 Point)
Interest Payable 960 and Interest Expense 960
Interest Expense 960 and Interest Payable 960
Cash 960 and Interest Expense 960
Interest Expense 960 and Cash 960
17.Which account head in Adjusted Trial balance could not updated and
why?
(2 Points)

18.Salaries earned by the employee during the month

(1 Point)
Debit Salaries Exp : Credit Cash
Debit Salaries Exp : Credit Revenue
Debit Salaries Exp : Credit Salaries Payable
19.Prepare the adjusting entry: Supplies on hand Rs. 300 at the end of
month but Un-adjusted trial balance shown Rs. 450
(2 Points)
20.A company pays rent of $1,800 for three months in advance on
November 1, 2000. Which of the following statements is true for the
journal entry prepared on December 31?
(1 Point)
Cash is credited
Rent Expense is debited
Prepaid Rent is debited
Rent Expense is credited
21.Prepare adjusting entry: Provide the services to customer of Rs. 15000,
who have paid in advanced.
(2 Points)
Debit -> Un

22.The Unearned Revenue account before adjustment at the end of the

month has a credit balance of $2,400, representing an advance payment
received on the first day of the month. If $1,600 of Revenue is earned
during the month, the balance in the Unearned Revenue at the end of
the month, after adjustments, is:
(1 Point)
$1,600 credit
$ 800 credit
$4,000 credit
$2,400 credit
23.Prepare the adjusting entry for December: A birthday party was
arranged in December. The customer will pay $200 in January.
(2 Points)
Debit -> Ac

24.ABC Rentals receives rent for January 2002 from a tenant in December
2001. This payment will be (for ABC Rentals):
(1 Point)
A 2002 Expense
A 2001 Expense
A 2001 Liability
 A 2001 Revenue
25.A transaction which have effect to decrease $15,000 in both total
assets and total liabilities. This transaction :
(1 Point)
Purchase of a delivery building for $15,000 cash.
An asset with a cost of $15,000 loss by fire
Repayment of a $15,000 liability
26.Prepare adjusting entry of June in Farhan book : Farhan paid his
Tuition fee in January of Rs. 78000 and earned grad in June.
(2 Points)
Debit -> Un

27.Prepare adjusting entry for December: Employee wages of $750 for

December will be paid in January.
(2 Points)

28.Warren, Inc. has wages that have been earned but not paid at the end
of the accounting period. The entry to properly accrue Wages Expense
includes:
(1 Point)
Wages Expense, debit; Wages Payable, credit
Wages Payable, debit; Wages Expense, credit
Wages Payable, debit; Wages Income, credit
Wages Income, debit; Wages Payable, credit
29.Prepare adjusting entry for December: Services provided to customers
for $2,600 were unrecorded at the end of December.
(2 Points)

30.The Unearned Rent account has a beginning credit balance of

$15,000. After adjusting entries at the end of the accounting period,
$5,000 of the $15,000 is unearned. The adjusting entry required at the
end of the period is:
(1 Point)
Debit: Unearned Rent; Credit: Rent Revenue
Debit: Unearned Rent; Credit: Rent Expense
Debit: Cash; Credit: Unearned Rent
Debit: Rent Expense; Credit: Cash