Submission date 11/12/2017 G.

C
02/04/2010 E.C
Delaying have 2 mark
punishment per day
Group Assignment paper on Prepare financial Report level IV (35%)

1. Prepared expenses are:

a) Paid and recorded in an asset account before they are used or consumed.
b) Paid and recorded in an asset account after they are used or consumed.
c) Incurred but not yet recorded.
d) Incurred and already paid or recorded.
2. Unearned revenues are:
a) Recorded and recorded as liabilities before they are earned.
b) Earned and recorded as liability before they are received
c) Earned but not yet received or recorded
d) Earned and already received and recorded.
3. The village laundry company purchased Br. 6,500 worth of laundry supplies on June 2 and
recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated
only birr 30,000 on hand. The adjusting entry that should be made by the company:
a) Debit laundry supplied expense br. 3000 credit laundry supplies, Br. 3000
b) Debit laundry supplies expense Br. 3500 credit Laundry supplies, Br. N3,500
c) Debit laundry supplies Br. 3, 500, credit Laundry supplies expense Br. 3, 500
d) Debit laundry expense Br. 3, 500, credit Laundry supplies Br. 3, 500
4. Accrued Revenues are:
a) Received and recorded as Liabilities before they are earned.
b) Earned and recorded as liability before they are received.
c) Earned but not yet received or recorded
d) Earned and already received and recorded.
5. Accrued Expenses are:
a) Paid and recorded in an asset account before they are used or consumed.
b) Paid and recorded in an asset after they are used or consumed.
c) Incurred but not yet paid or recorded.
d) Incurred and already paid or recorded.
6. Which of the following methods will yield the highest depreciation expense during the
first year of an asset’s life.
a) Straight line method
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 Submission date 11/12/2017 G.C
02/04/2010 E.C
Delaying have 2 mark
punishment per day
Group Assignment paper on Prepare financial Report level IV (35%)

b) The sum-of-the-years-digits method

c) Double-declining balance method
d) a and b
e) b and c
7. If the effect of the debit portion of an adjusting entry is to decrease the balance of a
liability account, which of the following statement describe the effect of the credit portion
of the entry?
a) Increase the balance of an asset account
b) Increase the balance of an expense account
c) Increase the balance of a revenue account
d) Decrease the balance of an asset account
8. The trial balance of Cherub Company for December, 31, 2009. Includes, among other
items, the following account balances.
Debits Credits
Office supplies on hand …………………Birr ….6000
Prepaid rent………………………………Birr...25,200
Buildings…………………………………Birr. 200,000
Accumulated depreciation-building…………………………….Birr 33,250
Salaries expense………………………….Birr 124,000
Unearned delivery fees………………………………………….Birr….4,000

Additional Data:

9. Part of the supplies represented by the birr, 6000 balance of the office supplies on land
account have been consumed. An inventory count of the supplies actually on hand at
Dec.31 totaled to Birr 2,400.00.
10. On May 1 of the current year, a rental payment of Birr 25,200.00 was made for 12
months of rent; it was debited to prepaid rent.
11. The annual depreciation for the building s account less an estimated salvage value of Birr
10,000.00. The estimated useful lives of the buildings are 40 years each.

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 Submission date 11/12/2017 G.C
02/04/2010 E.C
Delaying have 2 mark
punishment per day
Group Assignment paper on Prepare financial Report level IV (35%)

12. The salaries expense of Birr, 124,000.00 does not include birr 6,000.00 of unpaid salaries
earned since the last payday.
13. One fourth of the unearned delivery fees have been earned by Dec. 31
14. Delivery services of birr 600.00 were performed for customer, but a bill has not yet been
sent.
Required:
a. prepare the adjusting journal entries for December 31, assuming adjusting entries
are prepared only of year-end
b. based on the adjusted balances shown in the accumulated depreciation-building
account, how many years has Cherub Company owned the building
15. Daniel is a barber who does his own accounting for his shop. When he buys supplies he
routinely debits supplies. Daniel purchased Br. 1, 500 supplies in Jan. and his inventory
at the end of Jan. shows Br. 600 of supplies remaining. What Adjusting entry should be
Daniel make on Jan 31.2010
16. Getu is a lawyer who requires that his clients pay him in advance of legal services
rendered. Getu routinely credits legal fees earned when his clients pay him in advance. In
June. Getu collected Br. 8, 000 in advance fees and completed 75% of the work related to
these fees. What adjusting entry is required by Getu’s firm at the end of June?
17. Which of the following items would be classified as plant assets on the balance sheet?
a. A truck held for sale by a truck dealer,
b. An office building that was once the company headquarters but is now to be sold.
c. A typewriter used by the secretary of the company.
d. A machine that is used in manufacturing operations.
e. Land held by the business for speculative purpose.
18. Haron Auto, Inc. Purchased a neighboring lot for a new building and parking lot.
Indicate whether each of the following expenditures is properly charged to
a) Land, b) Land Improvements, or c) Buildings.
1. Paving costs
2. Architects’ fee for building design.
3. Cost of clearing the property.
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 Submission date 11/12/2017 G.C
02/04/2010 E.C
Delaying have 2 mark
punishment per day
Group Assignment paper on Prepare financial Report level IV (35%)

4. Structure construction costs

5. Lights around the property
6. Building permit.
7. Interest on the construction.
8. The cost of leveling or permanently changing the contour.
The following data are taken from the income statement columns of the worksheet of a
merchandising business prepared for the year ended December 31, 2002.
Net Income Br. 12,500
Sales 45,000
Income Summary 10,000 Dr. and 6,000 Cr.
Gross Purchase 19,750
Purchase Ret. & Allowances 200
Purchase Discount 50
Based on the data given above answer questions 19 – 21
19. What is the total cost of goods sold for the year?
A. Br. 69,500 B. Br. 89,250 C. Br. 23,500
D. Br. 57,000 E. none
20. What is the amount of total operating expenses?
A. Br. 9,000 C. Br. 21,500 E. none
B. Br. 32,5000 D. Br. 36,000
21. What is the amount of gross profit for the year?
A. Br. 9000 C. Br. 23,500 E. none
B. Br. 21,500 D. Br. 25,000
22.

Key Laundromat
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 Submission date 11/12/2017 G.C
02/04/2010 E.C
Delaying have 2 mark
punishment per day
Group Assignment paper on Prepare financial Report level IV (35%)

Trial balance
July 31, 1991
Account Title Credit
Debit
Cash Br. 7,790
Laundry supplies 4,750
Prepaid insurance 2,825
Laundry equipment 85,600
Accumulated depreciation Br. 55,700
Accounts payable 4,950
Key, capital 30,900
Key, Drawing 18,000
Laundry Revenue 76,900
Wages expense 24,500
Rent expense 15,575
Utilities expense 8,500
Miscellaneous expense 910
Br. 168,450 Br. 168,450
Total
Adjustment data:
(a) Inventory of Laundry supplies at July 31............................................. Br. 1,840
(b) Insurance premiums expired during the year ....................................... 1,500
(c) Depreciation on equipment during the year .......................................... 5,720
(d) Wages accrued but not paid at July 31.................................................. 850
Instructions:
1. Record the trial balance on a ten-column worksheet and complete the worksheet.
2. Prepare an income statement, a statement of owner’s equity and a balance sheet. (No
additional investments were made during the year).
3. On the basis of the adjustment data in the worksheet, journalize the adjusting & closing
entries.

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