Alpha University College of

College Distance Studies

Degree Programme
Principle of Accounting I Examination (Course No ACCT 102)
Time allowed 1:30 hrs.
March 2021
Directions
Write your Name, Registration No., Department, Exam Center and put "✓" mark for the program
(Degree) you are attending in the space provided on the answer sheet.
Part I. True or False Questions
Write “True” if the statement is true or write “False” if the statement is false and write
your answer in the space provided on the answer sheet. (1 point(s) each)
1. Accounting is the process of identifying, measuring and communicating economic information to permit
informed judgments and decisions by users of the information.
2. In accounting system, all business transactions are first recorded in ledger before they are recorded in
journal.
3. Current liabilities are liabilities that will be due within one year or less and that are to be paid out of
current assets.
4. Trail balance proves the complete accuracy of accounting records and tests the equality of debits and
credits in the ledger.
5. Interim statements are monthly financial statements prepared when business usually closes its accounts
once a year.
6. Objective evidence principle says that entries in the accounting records and data reported on financial
statements must be based on objectively determined evidences.
7. Direct labor costs are costs other than direct material costs and direct labor costs incurred in the
manufacturing of a product.
8. Direct materials are materials that are physically identified as part of finished goods and that may be
traced to finished goods in an economically feasible way.
9. The process of transferring entries from the journal to the ledger is known as posting.
10. According to full disclosure, financial statements and their accompanying footnotes should contain all
the pertinent data believed essential to the reader’s understanding.
Part II. Multiple Choices Questions
Choose the best answer for the questions from the alternatives given and write the letter of
your choice in the space provided on the answer sheet. (2 point(s) each)
1. The functions of an accounting system include all of the following except to:
A. gather marketing data.
B. handle routine bookkeeping tasks.
C. structure information so that it can be used to evaluate performance of a business.
D. analyze transactions.
E. none of the above
2. An exchange of value between two entities is called:
A. the accounting equation. C. a business transaction E. net income
B. recordkeeping or bookkeeping. D. an asset
3. Which of the following would NOT be reported on the Capital statement for the current year?
A. Sales D. Additional Investment
B. Withdrawals for the current year E. Net income for the period
C. Capital Beginning Balance
ACDS: Principles of Accounting I Examination 1
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 Alpha University College of
College Distance Studies
4. Cash discount is offered:
A. To encourage customers to pay quickly
B. To encourage customers to buy larger amounts
C. To reward customers in a certain line of business
D. To reduce the amount of merchandise returned as defective
E. None of the above
5. Transportation costs incurred by the seller are recorded in the:
A. Sales account D. Transportation In account
B. Cost of merchandise sold account E. None
C. Transportation Out account
6. If merchandise is sold on account to a customer for $10,000,terms FOB shipping point, 2/10,n/30, and
the seller pays $500 in transportation costs, the amount of the discount for early payment would be:
A. $200 C. $3,000 E. None of the above
B. $1,000 D. $210
7. Which of the following would be classified in an income statement as Other Income or Other Expense?
A. Advertising Expense C. Cost of merchandise sold E. None
B. Interest Expense D. Transportation out
8. Assume that sales are $700,000, sales discounts are $2,000, and cost of merchandise sold is $300,000.
Gross profit on sales is:
A. $402,000 C. $200,000 E. None
B. $398,000 D. $320,000
9. If the two sides of a trial balance are equal:
A. Debit side total is equal to credit side total D. Account balances are errors free
B. Revenue is equal to expense E. None of the above
C. Asset is equal to capital
10. . On a worksheet, which account will not be extended to the balance sheet column?
A. Unearned rent C. Capital stock E. None
B. Accumulated depreciation D. Inventory, beginning of year
11. T he Capital account has a credit balance of Br 45,000 before closing entries are made ,if total revenue
for the period are Br 90,000, cost of goods sold of Br 48,000 and total expenses are Br 22,000 and
withdrawals are Br 6,000, what is the ending balance in the Capital account after all closing are made?
A. Br 65,000 C. Br 69,000 E. none of the above
B. Br 7 4,100 D. Br 59,000
12. In control procedure, “conversion of goods to personal use of the employees” can occur because of
violation of one of the following control procedures:
A. Separation of responsibility for related operations
B. Proof of security measure
C. Assignment of duty
D. Competent personnel and rotation of duty
E. None of the above
13. The worksheet prepared for a merchandise enterprise shows a certain item in the credit column of the
income statement section and also in the debit column of the balance sheet section. The item is:
A. The ending inventory
B. The beginning inventory
C. The net income for the accounting period
D. The income tax expense for the accounting period
E. None of the above

ACDS: Principles of Accounting I Examination 2

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 Alpha University College of
College Distance Studies

14. The ending capital balance and withdrawal of the period are birr 200,000 and birr 10,000 respectively. If
the additional investment and net income of the period are birr 40,000 and birr 60,000 respectively, what
was be the beginning capital balance?
A. Birr 290,000 C. Birr 120,000 E. None of the above
B. Birr 400,000 D. Birr 110,000
15. Prior to recording adjusting entries, the Office Supplies account had a $600 normal balance. A physical
count of the supplies showed $200 of unused supplies. The required adjusting entry is:
A. Debit Office Supplies Expense $400 and credit Office Supplies $400
B. Debit Office Supplies $200 and credit Office Supplies Expense $400.
C. Debit Office Supplies Expense $200 and cash $200.
D. Debit Office Supplies Expense $200 and credit Office Supplies $200.
E. Debit Office Supplies $400 and credit Office Supplies Expense $400.
Part III. Matching Questions
Match the items listed under column "A" with appropriate answer listed under column "B" and
write the letter of your choice in the space provided on the answer sheet (2 point(s) each)
Column "A" Column "B"
1. Business entity A. Responsible for establishing standards for
financial accounting
2. Accruals
B. Money as a common factor for all business
3. Accounting Period transactions
C. Helps management to pass decisions at
4. Unit of measurement
regular intervals
5. GAAPs D. It is an expense that has not been paid or
revenue that has not yet been received
E. Business and owner are considered separate
Part IV. Filling in the Blank Questions
Fill in the blanks with the most appropriate answer and write it in the space provided on the
answer sheet. (2 point(s) each)
1. ____________ deals with the recording of transactions for a business enterprise or other economic unit
and the periodic preparation of various reports from such records.
2. _____________ is the occurrence of an event that must be recorded.
3. _____________ is a chronological record of business transactions of a business enterprise.
4. _____________ distinguish each organization from its owners, financial records and reports are kept for
each separate entity.
5. ______________ is a multicolumn document used by accountants to aid in the preparation of the
financial statements.
6. The properties owned by a business enterprise are referred to as ______________.
7. _________________ is a cost that is constant per unit of volume but fluctuates in total in a direct
proportion to change in the total activity of volume.
8. A list of assets, liabilities and owner’s equity of a business entity as of a specific date, usually at the close
of the last day of a year is known as ______________.
9. A group of related accounts that comprise a complete unit that belong to a specific business enterprise is
called _____________.
10. ____________ is a medium of exchange that a bank will accept at face value and include items like
currency, checks and money orders.
ACDS: Principles of Accounting I Examination 3
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 Alpha University College of
College Distance Studies
Answer Sheet
Degree Program
Principle of Accounting I Examination (Course No ACCT 102)
March 2021
Name:__________________________
Registration No.: ________________
Program: Degree, Diploma 
Please Fill in the Necessary Information Here  10+1 , 10+2 , 10+3 , Level-3 , Level-4 
Department: __________________
Exam Center: ________________
Date __ __/___ __/__ __ __ __
Part I True or False Questions’ Answers (1 point(s) each)
1. ______ 3. ______ 5. ______ 7. ______ 9. ______
2. ______ 4. ______ 6. ______ 8. ______ 10. ______

Part II Multiple Choice Questions’ Answers (2 point(s) each)

1. _____ 4. _____ 7. _____ 10. _____ 13. _____
2. _____ 5. _____ 8. _____ 11. _____ 14. _____
3. _____ 6. _____ 9. _____ 12. _____ 15. _____
Part III. Matching Questions’ Answers (2 point(s) each)
1. ______ 2. ______ 3. ______ 4. ______ 5. ______
Part IV Filling in the Blanks Questions’ Answers (2 point(s) each)
1. ___________________________________

2. ___________________________________

3. ___________________________________

4. ___________________________________

5. ___________________________________

6. ___________________________________

7. ___________________________________

8. ___________________________________

9. ___________________________________

10. ___________________________________

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 Alpha University College of
College Distance Studies

ACDS: Principles of Accounting I Examination 5

March 2021