TEST 1

PART A: (5 marks)
a/ Which concept or principle states that the life of a business can be divided into equal
time periods?
b/Which accounting principle/concept allows accountants to ignore other accounting
Question principle/concept if the amount in question is immaterial?
1 c/ A fixed asset costing $30,000 is depreciated over its estimated useful life of 15 years.
Which concept/principle is this action related to?
d/ Under the cash basis of accounting, when are revenues reported in the accounting
period?
a/ Resources owned by a company (such as cash, accounts receivable, vehicles) are
reported on the balance sheet and are referred to as __________
b/ Obligations (amounts owed) are reported on the balance sheet and are referred to
Question as __________
2 c/ Which of the following characteristics does not describe an asset? 1) Requires the
payment of cash or Controlled by an entity?
d/ Which of the following characteristics does not describe a liability? Present
obligation or Must be legally enforceable?
a/ When a company pays a bill, the account Cash will be Debited or Credited?
Question b/ What will usually cause an asset account to increase? Debit or Credit?
3 c/ Entries to expenses such as Rent Expense are usually Debits or Credits?
d/ What will usually cause the liability account Accounts Payable to increase? Debit or
Credit?
Make entries for the following transaction:
a/ ABC Ltd. purchased a motor vehicle with $5000 cash and $15,000 on bank loan.
b/ The charge for the year for depreciation on Office Equipment owned by ABC Ltd
Question was calculated to be $4,000
4 c/ ABC Ltd. paid their annual insurance premium of $1,500.
d/ ABC Ltd. purchased $2,000 of stock on credit from a supplier.
On 01/01/N, A Company had information about Merchandise K as follows: (CU: 1000
VND). Quantity of opening inventory 1.000 kg, unit cost: 15; On 12/1 purchased and
dispatched 1.500 kg to storage; On 21/1 issued 700 kg for sale; On 30/1 issued 900 kg
Question for sale. Total value of merchandise K issued: 30.000 (using weighted-average
5 method)
a/ Determine the unit cost of K at the time of being dispatched to storage.
b/ Determine total cost of K at the time of being dispatched to storage.
c/ Determine unit cost of K at the time of issued
d/ Determine the closing inventory value for K.
PART B: (5 marks)

Question 6: From the given transactions, calculate cost of closing inventories and cost of
goods sold Using FIFO method, LIFO method and Weight average cost Method
Date Transaction Units Cost (Rs.)
Jan. 1 Opening Balance 1500 24
Feb. 2 Sales 150
March 12 Purchases 400 23
April 1 Sales 700 -
April 28 Purchases 300 24
May 29 Purchases 250 25
June 30 Sales 1200 -
July 16 Sales 150 -
October 11 Purchases 400 22
December 31 Sales 250 -

Question 7
Business transactions during December of XYZ company are presented as follows:
1. The owner invested $30,000 cash in the corporation
2. Purchased $5,500 of equipment with cash
3. Purchased a new truck for $8,500 cash
4. Purchased $500 in supplies on account
5. Paid $300 for supplies previously purchased/
6. Paid February and March Rent in advance for $1,800
7. Performed work for customers and received $50,000 cash
8. Performed work for customers and billed them $10,000
9. Received $5,000 from customers from work previously billed
10. Paid office salaries $900
11. Paid utility bill $1,200
1/ Prepare Journal entries to record each of the above transaction
2/ Prepare T-accounts to record the above transaction
3/ Prepare trial balance at the end of December 31
4/ Prepare the Statement of Financial Position at the end of December 31
 TEST 2
PART A: (5 marks)
a/ In certain situations, companies might recognize losses but not gains. This action
belongs to which concept/principle?
b/ The John Marketing Company provides advertising services to an investment company
in year A but receives advertising fee in year B. The John Marketing Company recognizes
this revenue in year A. This action of John Marketing Company is justified by which
Question concept/principle?
1 c/ Which accounting concept or principle states that the transactions of a business must be
recorded separately from those of its owners or other businesses?
d/ When the accountant has to choose between two acceptable alternatives, the accountant
should select the alternative that will report less profit, less asset amount, or a greater
liability amount. This is based upon which principle/concept?
a/ Which of the following characteristics does not describe a liability? Present obligation
or Must be legally enforceable?
b/ Which of the following characteristics does not describe an asset? Requires the payment
of cash or Controlled by an entity?
Question c/ Obligations (amounts owed) are reported on the balance sheet and are referred to
2 as __________
d/ Resources owned by a company (such as cash, accounts receivable, vehicles) are
reported on the balance sheet and are referred to as __________
a/ If you receive a telephone bill, is your expense increasing or decreasing?
b/ If you purchase a motor vehicle, is your asset value increasing or decreasing?
Question c/ If you are informed that your last insurance bill was overstated and that you will receive
3 a credit, is your expense increasing or decreasing?

d/ If you receive notification from the bank that you have been charged bank fees, is your
asset (the bank account) increasing or decreasing?
a/ What type of accounts are Interest Receivable and Fees Receivable?
b/ What type of accounts are Deferred Revenues and Unearned Revenues?
Question c/ What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses?
4 d/ What type of accounts are Accumulated Depreciation and Allowance for Doubtful
Accounts?
a/ Assets total $20 000 and Equity is 40% of assets. The liabilities are:_____________
b/ Janette wants to find what portion of the business that she owns. Her asset and liability
accounts show: Cash $1000, Motor vehicle $25 000, Plant $3000, loan to the business by
Question a bank $20 000, Inventories $10 000, Debtors $5000 and Creditors $2000. The Equity of
5 the owner is:___________
c/ Olive started a business with cash of $30 000. She purchased inventories on credit for
$15 000 and for cash $5000. She purchased a computer with a bank loan for $4000. What
is the value of her Equity at this time?
d/Hattie Hen has an Equity balance of $1000 but she owes $6000. What is the value of her
assets?
PART B: (5 marks)
Question 6: From the given transactions, calculate cost of closing inventories and cost of
goods sold respectively Using FIFO method, LIFO method and Weight average cost
Method
Date Transaction Units Cost (Rs.)
Jan. 1 Opening Balance 400 7.50
Feb. 25 Sales 300
March 22 Purchases 600 8
April 16 Sales 500 -
April 20 Purchases 500 9
May 2 Purchases 400 8.50
June 30 Sales 400 -
July 6 Sales 500 -
September 11 Purchases 300 9.50
December 31 Sales 200 -

Question 7
Business transactions during December of XYZ company are presented as follows:
1. The owner invested $40,000 cash in the corporation
2. Purchased $7,500 of equipment with cash
3. Purchased a new truck for $9,500 cash
4. Purchased $800 in supplies on account
5. Paid $500 for supplies previously purchased
6. Paid Rent in advance for $2,100
7. Performed work for customers and received $40,000 cash
8. Performed work for customers and billed them $30,000
9. Received $7,000 from customers from work previously billed
10. Paid office salaries $1000
11. Paid utility bill $1,500
1/ Prepare Journal entries to record each of the above transaction
2/ Prepare T-accounts to record the above transaction
3/ Prepare trial balance at the end of December 31
4/ Prepare the Statement of Financial Position at the end of December 31