Muhammad Dzaki Aiman (2310111056)

CHAPTER 1:

1. Owners of business firms are the only people who need accounting information.

Answer:

2. Transactions that can be measured in dollars and cents are recorded in the financial information
system.

Answer:
3. The hiring of a new company president is an economic event recorded by the financial information
system.

Answer:

4. Management of a business enterprise is the major external user of information.

Answer:

5. Accounting communicates financial information about a business enterprise to both internal and
external users.

Answer:

6. Accounting information is used only by external users with a financial interest in a business
enterprise.

Answer:

7. Financial statements are the major means of communicating accounting information to interested
parties.

Answer:

8. Bookkeeping and accounting are one and the same because the bookkeeping function includes the
accounting process.

Answer:

9. The origins of accounting are attributed to Luca Pacioli, a famous mathematician.

Answer:

10. The State Administration of Taxation in the People's Republic of China is an example of an internal
user of accounting information.
 Answer:

Use the following information for questions no 11-13

Stahl Consulting started the year with total assets of €200,000 and total liabilities of €50,000. During the
year, the business recorded €160,000 in catering revenues and €80,000 in expenses. Stahl issued ordinary
shares of €30,000 and paid dividends of €50,000 during the year.
11.The equity at the end of the year was
a. €210,000.
b. €180,000.
c. €80,000.
d. €20,000.

12.The net income reported by Stahl Consulting for the year was
a. €160,000.
b. €110,000.
c. €80,000.
d. €30,000.

13. Equity changed by what amount from the beginning of the year to the end of the year?
a. €150,000
b. €140,000
c. €60,000
d. €30,000

14. During May, Brunhilde Company earned revenue of €318,000, incurred expenses of €204,000, of which
€144,000 were on account, and paid dividends of €48,000. Net income (loss) for the month is
a. (€60,000).
b. €66,000.
c. €114,000.
d. €174,000.

15. During 2020, Li & Fung Corporation earned revenue of HK$12,300,000, incurred expenses of expenses
of HK$9,260,000, and paid dividends of HK$840,000. Net income for 2020 is
a. HK$2,200,000.
b. HK$3,040,000.
c. HK$11,460,000.
d. HK$12,300,000.

CHAPTER 2

1.Currency signs are typically used only in the trial balance and the financial statements
Answer:

2.The general rules of debit and credit, and the steps in the recording process–the journal, ledger,
and chart of accounts–are the same under both GAAP and IFRS.
Answer:
3.A trial balance does not prove that all transactions have been recorded or that the ledger is
correct.
Answer:

4.The double-entry system is a logical method for recording transactions and results in equal
debits and credits for each transaction.
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5.The normal balance of an expense account is a credit.

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6.The journal provides a chronological record of transactions.

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7.The ledger is merely a bookkeeping device and therefore does not provide much useful data for
management.
Answer:

8.The chart of accounts is a listing of the accounts and the account numbers which identify their
location in the ledger.
Answer:

9. The primary purpose of a trial balance is to prove the mathematical equality of the debits and
credits after posting.
Answer:

10.The trial balance will not balance when incorrect account titles are used in journalizing or
posting.
Answer:

11. Which of the following statements is true regarding simple and compound entries?
a. Simple entries can be prepared by anyone whereas compound entries need to be prepared by a
skilled accountant.
b. Simple entries are recorded on the income statement whereas compound entries are recorded
on the statement of financial position.
c. Simple entries involve one account, whereas compound entries involved 2 or more accounts.
d. An example of a compound entry would be the purchase of a machine for $400 cash and a
$2,000 note payable.

12. Compound entries

 a. would include an entry to record the purchase of a computer for cash.
b. include at least two debits or two credits.
c. require that all credits be listed before the debits for entries affecting the statement of financial
position.
d. should be broken into their component parts and recorded as simple entries.

13. Accounts maintained within the ledger that appear on the statement of financial position
include all of the following except
a. Salaries and Wages Expense.
b. Interest Payable.
c. Supplies.
d. Share Capital-Ordinary.

14. Which of the following errors will prevent the trial balance from balancing?
a. A transaction is not journalized.
b. Transposition error related to the statement of financial position.
c. A journal entry is posted twice.
d. A journal entry to purchase $100 worth of equipment is posted as a $1,000 purchase.

15. Which of the following statements is false concerning use of currency signs?
a. Currency signs do not appear in journals or ledgers.
b. Currency signs are generally only shown for the first item in a column and for the column total.
c. Currency signs are not typically used in the trial balance.
d. All of these answer choices are correct.

CHAPTER 3:

1.The economic entity assumption states that economic events can be identified with a particular
unit of accountability.
Answer:

2.The monetary unit assumption states that transactions that can be measured in terms of money
should be recorded in the accounting records.
Answer:

3.The going concern assumption is that the business will continue in operation long enough to
carry out its existing objectives and commitments.
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4.A common application of materiality is weighing the factual nature of cost figures versus the
relevance of fair value.
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5.The expense recognition principle requires that expenses be matched with revenues.
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6.In general, adjusting entries are required each time financial statements are prepared.
Answer:

7.Every adjusting entry affects one statement of financial position account and one income
statement account.
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8.The Accumulated Depreciation account is a contra asset account that is reported on the
statement of financial position.
Answer:

9.Accrued revenues are amounts recorded and received but not yet earned.
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10. An adjusted trial balance should be prepared before the adjusting entries are made.

Answer:

11. Cara, Inc. purchased supplies costing €7,500 on January 1, 2020 and recorded the transaction
by debiting an expense. At the end of the year €3,000 of the supplies are still on hand. If Cara,
Inc. does not make the appropriate adjusting entry, what is the impact on its statement of
financial position at December 31, 2020?
a. Assets understated by €4,500.
b. Equity understated by €4,500.
c. Equity overstated by €3,000.
d. Assets understated by €3,000.

12. Wave Inn is a resort located in Canada. Wave Inn collects cash when guests make a
reservation. During December 2019, Wave Inn collected $90,000 of cash and recorded the
receipt by recognizing revenue. By the end of the month Wave Inn had earned one third of
this amount, the other two thirds will be earned during January 2020. The adjusting entry
required at December 31, 2019 would impact the statement of financial position by
a. Decreased Equity $60,000.
b. Decreased Liabilities $60,000.
c. Increased Assets $90,000.
d. Increased Equity $30,000

13.Myron is a barber who does his own accounting for his shop. When he buys supplies he
routinely debits Supplies Expense. Myron purchased €3,000 of supplies in January and his
 inventory at the end of January shows €800 of supplies remaining. What adjusting entry
should Myron make on January 31?
a. Supplies Expense.......................................................... 800
Supplies................................................................. 800
b. Supplies Expense.......................................................... 3,000
Cash...................................................................... 3,000
c. Supplies......................................................................... 800
Supplies Expense................................................. 800
d. Supplies Expense.......................................................... 2,200
Supplies................................................................. 2.200

14.Alternative adjusting entries do not apply to

a. accrued revenues and accrued expenses.
b. prepaid expenses.
c. unearned revenues.
d. prepaid expenses and unearned revenues.

15.Mike Conway is a lawyer who requires that his clients pay him in advance of legal services
rendered. Mike routinely credits Service Revenue when his clients pay him in advance. In
June Mike collected €20,000 in advance fees and completed 75% of the work related to
these fees. What adjusting entry is required by Mike's firm at the end of June?
a. Unearned Service Revenue ......................................... 15,000
Service Revenue .................................................. 15,000
b. Unearned Service Revenue ......................................... 5,000
Service Revenue .................................................. 5,000
c. Cash ............................................................................. 20,000
Service Revenue .................................................. 20,000
d. Service Revenue .......................................................... 5,000
Unearned Service Revenue ................................. 5,000

65. When a prepaid expense is initially debited to an expense account, expenses and assets are
both overstated prior to adjustment.

Answer: