LEVEL FOUR

Matching One
Column A
1. Excise Tax
2. Unqualified audit opinion
3. Government Fund
4. Acquisition of goods and services by a governmental fund entity
5. Organization cost
6. Submit income statement and balance sheet to tax authority
7. Cumulative preferred shareholders
8. Home office and branch office
9. Bank debit memo
10. Production of voluminous similar products
11. Segregation of duty
12. Source of finance for the state
13. Management accounting
14. Quantity ordered, received, and remaining
15. Conversion manufacturing costs

Column B
a. Appropriations
b. Bank service charge
c. Capital project fund
d. Direct labor and overhead costs
e. Financial statements presented fairly
f. Group A tax payers
g. Group B tax payers
h. Indirect tax
i. Intangible asset
j. Internal control system
k. Job order costing
l. NSF Fund
m. Process costing
n. Product pricing decision
o. Purchase order report
p. Reciprocal accounts
q. Tax, loan, and donation
r. The right to take dividend in arrears
 LEVEL FOUR
Matching Two
Column A
1. The gross increases in owner’s equity resulting from business activities entered into for the
purpose of earning income.
2. Requires that only transaction data capable of being expressed in terms of money be included in
the accounting records of the economic entity.
3. Summarizes the changes in owner’s equity for a specific period of time.
4. Reports the assets, liabilities, and owner’s equity of a business enterprise at a specific date.
5. States that economic event can be identified with a particular unit of accountability.
6. Statement of Financial Performance
7. States that economic event can be identified with a particular unit of accountability.
8. Resources owned by the business.
9. The process of identifying, recording, and communicating the economic information of an
organization to interested users.
10. Economic events of the enterprise recorded by accountants.
11. Costs of assets consumed or services used in the process of earning revenue.
12. Creditor ship claims on total assets
13. A common set of rules, procedures, and guidelines (standards) used by accountants in reporting
economic events.
14. Business events, which may or may not necessitate an accounting entry.
15. States those assets should be recorded at their cost.

Column B
A. Transactions
B. Accounting
C. Revenues
D. Assets
E. Statement of financial positions
F. IFRS(International Financial reporting Standard)
G. Expenses
H. Liabilities
I. Owner’s equity
J. Owner’s equity statement
K. Monetary unit assumption
L. Economic entity assumption
M. Ownership claim on total assets
N. Cost principle
O. Presents the revenues and expenses and net income of company for specific period of time
P. Return on investment
Q. Financial statement
R. Balance
 LEVEL FOUR
CHOICE
1. Which of the following is not part of the accounting process?
a. Recording c. Financial decision making
b. Identifying d. Communicating
2. Internal users of accounting data include:
a. Economic planners c. Customers
b. Investors d. Company officers
3. The monetary unit assumption:
a. Provides that the unit of measure fluctuates over time
b. Is unimportant in applying the cost principles
c. Is only used for financial statements of banks
d. Requires that only transaction data capable of being expressed in terms of money be
included in the accounting records of the economic entity.
4. A proprietorship is a business:
a. Owned by one person
b. Owned by two or more persons
c. Organized as a separate legal entity under state corporation law
d. Owned by a governmental agency
5. A net loss will result during a time period when:
a. Assets exceed liabilities
b. Assets exceed owner’s equity
c. Expenses exceed revenues
d. Revenues exceed expenses
6. A company might carry on many activities that do not represent business transactions such
as:
a. Borrowing money from the bank
b. Placing an order for merchandise with a supplier
c. Using office supplies
d. Paying wages
7. Transactions are one type of business events, which may or may not be an accounting entry
is:
a. Payment of monthly rent
b. Sale of pizza and burgers to customers
c. Use of paper, pens, and other office supplies
d. Change of interest rate
8. As of December 31, 1996, Mohhamed nad Baubed Company has liabilities of Birr 5,000 and
owner’s equity of Birr 7,000. It received revenues of Birr 23,000 during the year ended
December 31,1996. What are the assets for Mohammed and Baubed Companmy as of
Decembwer 31, 1996?
a. Birr 2.000 c. Birr 25,000
b. Birr 12,000 d. Birr 35,000
9. The statement that reports revenues and expenses is the:
a. Statement of owner’s equity
b. Statement of financial position
c. Statement of financial performance
d. Statement of cash flows
10. Dashen bank buys a Birr 1,200,000 VAT on credit. The transaction will affect the:
a. Income statement only
b. Statement of financial position only
c. Income statement and owner’s equity statement only
d. Income statement , owner’s equity statement, and balance sheet
11. The financial statement that summarizes the financial position of a Dashen bank Plc is the :
a. Income statement
b. Balance sheet
c. Operating statement
d. Owner’s equity statement
12. Which of the following would not appear on the Mohammed and Baubed Company balance
sheet?
a. Accounts receivable
b. Mohamed and Baubed, capital
c. Utilities expense
d. Wages payable
13. Give two examples of adjustments made at the end of the accounting period
a. Depreciation expense and accounts payable
b. Provision for loan losses and accounts receivable
c. Current asset and non-current asset
d. Depreciation expense and provision for loan losses
14. What are the three elements which change equity:
a. Income, investments by owner(s) and distribution to owners(s)
b. Depreciation expense, accumulated depreciation and provision for loan losses
c. Investments by owner(s), long term liability and interest bearing deposits
d. Distribution to owner(s), interest income, current loans and cash
15. How should an accountant convert a previous sale on account to a note receivable?
a. Debit accounts receivable and credit owner’s equity
b. Debit accounts receivable and credit accounts payable
c. Debit notes receivable and credit accounts receivable
d. Debit notes receivable and credit notes payable
16. A company has decided to buy an expensive piece of equipment. The company can either
pay for it in full at the current time or with equal yearly payments over ten years. Which of
the following factors is most important to consider in making the decision about how to pay
for the equipment?
a. Standard cost and compounding rate
b. Amortization cost and annuity value
c. Leasing cost and assets valuation
d. Opportunity cost and interest rate