College of Administration and Finance Sciences

Assignment (1)
Deadline: Saturday 16/10/2021 @ 23:59

Course Name: Principles of

Student’s Name:
Accounting
Course Code: ACCT101 Student’s ID Number:
Semester: 1st CRN:
Academic Year: 1443 H

For Instructor’s Use only

Instructor’s Name:
Students’ Grade: /5 Level of Marks: High/Middle/Low

Instructions – PLEASE READ THEM CAREFULLY

 The Assignment must be submitted on Blackboard (WORD format only) via
allocated folder.
 Assignments submitted through email will not be accepted.
 Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
 Students must mention question number clearly in their answer.
 Late submission will NOT be accepted.
 Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No
exceptions.
 All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
 Submissions without this cover page will NOT be accepted.
 College of Administration and Finance Sciences

Assignment Question(s): (Marks 5)

Q1. Discuss three of the accounting principles and assumptions with examples. (1 Mark)
1) Consistency principle:

As per consistency principle the accounting policies adopted by the firm in preparation and presentation
of the financial statements should be consistently followed. For example: if the firm is reporting its
inventory using FIFO method the same method should be followed year on year basis because it will
ensure the results are consistently stated and the end users can make reliable decision based on the
consistent accounting policies applied. Similarly, depreciation method followed by a firm should be
consistent from one period to another period.

2) Conservatism principle:

As per conservatism principle all estimated business losses should be recognised in the books of
account. For example, if the net realizable value of the inventory is below its cost, the losses are
immediately recognised in books of account. This will ensure the business takes into account all possible
losses. At the same time the possible gains should not be accounted in books until it is actually realized.

3) Accrual principle:

As per accrual concept the events and transactions should be accounted in the books as and when they
happen irrespective of the actual cash inflows and outflows. For example: a bill received for the expense
at the end of the period should be accounted immediately on accrual basis by debiting expense and
crediting accrued liability. Similarly, any revenue received in advance should be accounted as a liability
till the time the actual goods is sold or service obligation is performed.

Q2. In chapter 3, slide 42, there is a summary of the accounting cycle. Describe each step. (2 Marks)
Ans 2)Steps in accounting cycle:::
Collection of data and analysis of transactions
Journalizing
Recording the journals into the ledger accounts
Creating unadjusted trial balance
Performing adjusting entries
Creating adjusted trial balance
Creating financial statements from the trial balance
Closing the books
Creating the post-closing trial balance....
 College of Administration and Finance Sciences

Q3. Explain the purpose and the importance of the income statement, and prepare the income
statement for ABC company based on the following information taken from the trial balance in 2020
(2 Marks)
Consulting revenue SAR50,000
Rental revenue 20,000
Supplies expense 5,000
Rent expense 30,000
Wages expense 15,000
College of Administration and Finance Sciences