MCQ

1-A building is offered for sale at $500,000 but is currently assessed at $400,000.
The purchaser of the building believes the building is worth $475,000, but
ultimately purchases the building for $450,000. The purchaser records the building
at:
a-$50,000
b-$400,000
c-$450,000
d-$475,000
e-$500,000
2-On December 30, 2015, Hegazy % co. signs a $150,000 contract to provide
accounting services to one of its clients in 2016. Hegazy & co. has a December 31
year-end. Which accounting principle or assumption requires Hegazy & co. to
record the accounting services revenue from this client in 2015 and not 2014:
a-Business Entity assumption
b-Revenue recognition principle
c-monetary unit assumption
d-cost principle
e-Going-concern assumption
3-If the assets of a company increases by $100,000 during the year and its
liabilities increase by $35,000 during the same year, then the change in equity of
the company during the year must have been:
a-an increase of $135,000
b-A decrease of $135,000
c-A decrease of $65,000
d-An increase of $65,000
e-An increase of $100,000
4-Bisco misr borrows $50,000 cash from National bank of Egypt. How does this
transaction affect the accounting equation for Bisco misr?
a-Assets increase by $50,000; liabilities increase by $50,000; no effect on equity.
b-Assets increase by $50,000; no effect on liabilities ; equity increases by $50,000
c-Assets increase by $50,000; liabilities decrease by $50,000; no effect on equity
d-No effect on assets; liabilities increase by $50,000; equity increases by $50,000
e-No effect on assets; liabilities increase by $50,000; equity decreases by $50,000
5-Lebenese squad performs services for a customer and bills the customer for
$500. How would Lebanese squad record this transaction?
a-Accounts receivable increase by $500; revenues increase by $500
b-cash increases by $500; revenues increase by $500.
c-Accounts receivable increase by $500; revenues decrease by $500
d-Accounts receivable increase by $500; accounts payable increase by $500
e-Accounts payable increase by $500; revenues increase by $500.
Discussion Questions
1-what is the purpose of accounting in society?
2-Technology is increasingly used to process accounting data.
Why then must we study and understand accounting?
3-Identify four kinds of external users and describe how they use accounting
information?
4-what are at least three questions business owners and managers might be able to
answer by looking at the accounting information?
5-identify three actual businesses that offer services and three actual businesses
that offer products?
6-Describe the internal role of accounting for organizations?
7-Identify three types of services typically offered by accounting professionals?
8-what type of accounting information might be useful to the marketing managers
of a business?
9-why is accounting described as a service activity ?
10-what are some accounting related professions?
11-How do ethics rules affect auditors ’choice of clients ?
12-what work do tax accounting professionals perform in addition to preparing tax
returns?
13-what does the concept of objectivity imply for information reported in financial
statements? why?
14-A business reports its own office stationery on the statement of financial
position at its $400 cost, although it cannot be sold for more than $10 as scrap
paper. Which accounting principle and/or assumption justifies this treatment?
15-why is revenue recognition principle needed? What does it demand ?
16-Describe the thee business forms of business organization and their key
attributes?
17-Define(a)assets, (b)Liabilities,(c)equity,and(d)net assets
18-what events or transactions change equity?
19-Identify the two main categories of accounting principles?
20-what do accountants mean by the term revenue?
21-Define net income and Define its computation?
22-Identify the four basic financial statements of a business ?
23-what information is reported in an income statement?
24-Give two examples of expenses a business might incur?
25-what is the purpose of statement of owner’s equity?
26-what information is reported in a balance sheet ?
27-the statement of cash flows reports on what major activities?
28-Define and explain return on assets?
29-Define return and risk? Discuss the trade of between them?
30-Describe the three major business activities in organizations?
31-Explain why investing (assets) and financing(Liabilities and equity) totals are
always equal ?
32-Access Telecom Egypt’s IFRS financial statements for the fiscal year ended
December 31 , 2015, from its website (www.te.eg) to what level of significance are
the amounts rounded what time period does its income statement cover ?
33-Identify the amounts of telecom Egypt’s 2014 assets, liabilities , and equity as
reported in its statements on its website (www.te.eg)
34-Access Etisalat’s financial statements from its website (www.etisalat.com) and
refer to the balance sheet for the fiscal year ended December 31 ,2015. Confirm
that its total assets equal its total liabilities plus its total equity
35-Access (www.te.eg) and retrieve telecom Egypt’s 2015 IFRS financial
statements.
Identify its auditor. What responsibility does its independent auditor claim
regarding Telecom Egypt’s financial statements ?
Quick study
QS1-1 choose from the following list of terms / phrases to best complete the
following statements.
a-Accounting
b-Identifying
c-Recording
d-communicating
e-Recordkeeping(bookkeeping)
f-Technology
g-language of business
h-Governmental
1-Reduces the time, effort and cost of recordkeeping while improving clerical
accuracy.
2-business activities requires that we keep a chronological log of transactions and
events measured in dollars.
3-is the recording of transactions and events, either manually or electronically.
QS1-2 Identify the following users as either external users (E) or internal users(I)
a-customers
b-suppliers
c-Brokers
d-Business press
e-managers
f-District attorney
g-shareholders
h-lenders
i-controllers
j-FBI and IRS
k-consumer group
l-Sales clerks
QS1-3
a-Accounting professionals must sometimes choose between two or more
acceptable methods of accounting for business transactions and events .Explain
why these situations can involve difficult matters of ethical concern.
b-An important responsibility of many accounting professionals is to design and
implement internal control procedures for organizations.
Explain the purpose of internal control procedures. Provide two examples of
internal controls applied by companies
QS1-4
Identify each of the following terms / phrases as either an accounting : (a)principle
(b) assumption, or (c) constraint
1-materiality
2-time period
3-benefit exceed cost
4-Revenue recognition
QS1-5
Complete the following table with either a yes or no regarding the attributes of a
proprietorship, partnership or corporation
Attribute present proprietorship Partnership Corporation
1-Business taxed
2-Business entity
3-Legal entity
QS1-6
Identify which accounting principle, or assumption best describes each of the
following practices:
a-In December 2014,Arab contractors received a customer’s order and cash
prepayment to install sod at a new house that wouldn’t be ready for installation
until march 2015. Arab Contractors should record the revenue from the customer
order in march 2015, not in December 2014.
b-IF $51,000 cash is paid to buy land, the land is reported on the buyer’s balance
sheet at $51,000
c-Naguib Sawiras owns both Gouna passions and Orascom supplies. In preparing
financial statements for Orascom supplies, Sawiras makes sure that the expense
transactions of Gouna Passions are kept separate from Orascom’s transactions and
financial statements
QS1-7
a-Total assets of maraei Group equal $700,000 and its equity is $420,000. What is
the amount of its liabilities?
b-Total assets of Dubai Waterworld equal $500,000 and its liabilities and equity
amounts are equal to each other. What is the amount of its liabilities? What is the
amount of its equity?
QS1-8
 1-use the accounting equation to compute the missing financial statement amounts
(a),(b) and (c)
A B C D
1 company Assets = Liabilities + Equity
2 1 $75,000 $(a) $40,000
3 2 (b) 25,000 70,000
4 3 85,000 20,000 (c)
5
2-use the expanded accounting equation to compute the missing financial
statement amounts(a) and (b)
A B C D E F G
1 Company Assets Liabilitie Owner, Owner, Revenues Expenses
2 s Capital Withdrawal
s
3 1 $40,000 $16,000 $20,000 $0 (a) $8,000
4 2 $80,000 $32,000 $44,000 (b) $24,000 $18,000
5
QS1-9
Access Etisalat’s financial statements from its website (www.etisalat.com) for the
fiscal year ended December 31,2015.
a-identify the amounts (in millions AED) of Etisalat’s 2015 (1) assets,
Liabilities ,and (3) equity.
b-using Etisalat’s amounts from part a, verify that Assets = Liabilities + Equity
QS1-10
Create a table, using the following headings for columns : cash ; Accounts
Receivable; Accounts payable; Owner , capital ; Owner, withdrawals; Revenues;
and Expenses. Then use additions and subtractions to show the effects of each
transaction on individual items of the accounting equation (identify each revenue
and expense type, such as commissions revenue or rent expense)
a-the company completed consulting work for a client and immediately collected
$5,500 cash earned.
b-the company completed commission work for a client and sent a bill for $4000 to
be received within 30 days.
c-the company paid an assistant $1,400 cash as wages for the period.
d-the company collected $1000 cash as a partial payment for the amount owed by
the client in transaction b
e-the company paid $700 cash for this period’s cleaning services
QS1-11
Create a table, using the following headings for columns: cash ; supplies;
Equipment ; Land; Account payable; Notes payable; A. Fahad, capital , A. Fahad,
withdrawals ; Revenues ; and expenses. Then use additions and subtractions to
show the effects of each transaction on individual items of the accounting equation.
a-the owner (Amir Fahad ) invested $15,000 cash in the company.
b-the company purchased supplies for $500 cash
c- the company purchased $10,000 in equipment on credit (record liability as note
payable)
d-the company purchased $200 of additional supplies on credit
e-the company purchased land for $9,000 cash.
QS1-12
indicate in which financial statement each item would mostly likely appear:
Income statement (I), balance sheet (B), Statement of owner’s equity (E), or
statement of cash flows (CF)
a-assets
b-cash from operating activities
c-withdrawals
d-Equipment
e-expenses
f-Liabilities
g-Net decrease (or increase in cash)
h-revenues
i-Total Liabilities and Equity
QS1-13
Classify each of the following items as Revenues (R), expenses (EX), or
withdrawals (W)
1-cost of sales (expense)
2-Service Revenue
3-Wages expense
4-owner withdrawals
QS1-14
Classify each of the following items as assets (A) , Liabilities (L), or Equity (EQ)
1-Land
2-owner,capital
3-Equipment
4-Accounts payable
5-Accounts Receivable
QS1-15
In a recent year’s financial statements, Home Depot reported the following results.
Compute and interpret Home Center’s return on assets (assume competitors
average a 8% return on assets )
Sales 467,997 million
Net income 3,338 million
Average Total assets 40,501 million
QS1-16
Answer each of the following questions relating to international accounting
standards
a-the international accounting standards boards (IASB) issues preferred accounting
practices that are referred to as what ?
b- the FASB and IASB are working on a convergence process for what purpose?
QS1-17
Match each of the numbered descriptions with the term or phrase it best reflects.
Indicate your answer by writing the letter for the term or phrase in the blank
provided.
A-SASB
B-principles
C-social dimension
D-sustainability
E-Conceptual framework
F-Environmental Dimension
G-sustainability standards
H-Domini social index
1-Refers to environmental, social and governance governance dimensions of an
entity.
2-A structure to help guide development of sustainability standards.
3-An entity that creates and publishes sustainability accounting standards.
4-facet of an entity involved with donations to hospitals, colleges and community
programs.
Exercise 1-1
Accounting is an information and measurement system that identifies, records, and
communicates relevant, reliable and comparable information about an
organization’s business activities. Classify the following activities as part of the
identifying (I), Recording (R) , or communicating (C) aspects of accounting.
1-Analyzing and interpreting reports.
2-presenting financial information
3-keeping a log of service costs
4-measuring the costs of a product
5-preparing financial statements
6-seeing revenues generated from a service.
7-observing employee tasks behind a product.
8-registering cash sales of products sold
Exercise 1-2
1-what are reasonable payroll benefits and wages.
2-should we make a five-year loan to that business.
3-what are the costs of our product ingredient.
4-Do income level justify the current stock price.
5-should we spend additional money for redesign of our product.
6-which firm reports the highest sales and income
7-what are the costs of our service to customers.
Part B. identify the following users of accounting information as either an internal
(I) or an External (E) user.
1-Research and development director
2-Human resources director
3-Nonexcutive employee
4-shareholders
5-Distribution managers
6-creditors
7-production supervisors
8-purchasing manager
Exercise 1-3
Many accounting professionals work in one of the following three areas:
A-managerial accounting B-financial accounting C-tax accounting
Identify the area of accounting that is most involved in each of the following
responsibilities:
1-internal auditing
2-external auditing
3-cost accounting
4-Budgeting
5-invistigating violations of tax laws.
6-planning transactions to minimize taxes
7-preparing external financial statements
8-Reviewimg reports for stock market regulators.
Exercise 1-4
Math each of the numbered descriptions with the term or phrase it best reflects.
Indicate your answer by writing the letter for the term or phrase in the blank
provided.
A-Audit
B-GAAP
C-Ethics
D-Tax accounting
E-SEC
F-Public accountants
G-Net profit
H-IASB
Exercise 1-5
a-You are an accounting professional with audit clients that are competitors in
business
b-you are accounting professional preparing tax returns for clients
c-you are a manager with responsibility with several employees
d-you are a student in an introductory accounting course.
Assume the following role and describe a situation in which ethical considerations
plays an important part in guiding your decisions and actions.
Exercise 1-6
The following describe several different business organizations. Determine
whether the description refers to a sole proprietorship (SP) , partnership (P) , or
Corporation (C)
a-Ali Mohsen and Omar Mohanna own Amwal , a financial services provider.
Neither Mohsen nor Mohanna has personal responsibility for the debts of financial
services.
b-Kordy and wahid own Mashaweer, a courier service company. Both are
personally liable for the debts of the business.
c-IFC LCC does not have separate legal existence apart from the one person who
owns it.
d-Hoops Basketball is owned by Amr EL Gendy, who is personally liable for the
company debts.
e-Ownership of Etisalat company is divided into 1,000 shares of stock.
f-MTM does not pay income taxes and has one owner
g-AM pays its income Taxes and has two owners.
Exercise 1-7
Math each of the numbered descriptions with the principle or assumption it best
reflects. Enter the letter for the appropriate principle or assumption in the blank
space next to each description.
A-General accounting principle.
B-Cost principle.
C-Business Entity assumption.
D-Revenue recognition principle.
E-specific accounting principle.
f-matching (expense recognition principle)
G-Going-concern assumption
H-full disclosure principle
1-a company reports details behind financial statements that would impact users
decisions.
2-the financial statement reflects the assumption that the business continues
operating.
3-A company records the expenses incurred to generate the revenues reported.
4-Derived from long-used and generally accepted accounting practices.
5-Every business is accounted for separately from its owner or owners.
6-Revenue is recorded only when the earning process is complete.
7-usually created by a pronouncement from an authoritative body.
8-information is based on actual costs incurred in transactions
Exercise 1-8
Determine the missing amount in each of the separate situations a , b and c below:
A B C
1 Assets = Liabilities + Equity
2 (a) $ ? $20,000 $45,000
3 (b) 100,000 34,000 ?
4 (c) 154,000 ? 40,000
5

Exercise 1-9
Answer the following questions. (Hint: Use the accounting equation.)
a-at the beginning of the year, Nour company’s assets are $300,000 and its equity
is $100,000 During the year, assets increase $80,000 and liabilities increase
$50,000. What is the equity at the end of the year?
b-Magda store has assets equal to $123,000 and liabilities equal to $47,000 at
year-end. What is the total equity for Magda store at year-end.
c-at the beginning of the year, Rania company’s liabilities equal $70,000.During
the year, assets increase by $60,000, and at year-end assets equal $190,000.
Liabilities decrease $5,000 during the year. What are beginning and ending
amounts of equity?
Exercise 1-10
Ahmed began a new consulting firm on January 5. The accounting equation
showed the following balances after each of the company’s first five transactions.
Analyze the accounting equation for each transaction and describe each of the five
transactions with their amounts.

Assets Liabilitie Equity

s
Trans- cash Accounts Office Office Accounts Ahmed, Revenues
action Receivable Sup- Furni- payable Capital
plies ture
A $40,000 $0 $0 $0 $0 $40,000 $0
B 38,000 0 3,000 0 1,000 40,000 0
C 30,000 0 3,000 8,000 1,000 40,000 0
D 30,000 6,000 3,000 8,000 1,000 40,000 6,000
E 31,000 6,000 3,000 8,000 1,000 40,000 7,000

Exercise 1-11
the following table shows the effects of five transactions (a through e) on the
assets, Liabilities and equity on firas ’Boutique. Write short descriptions of the
probable nature of each transaction.
Assets = Liabilitie Equity
s
Cash +Accounts +Office +Land Accounts +Firas +Revenue
Receivable supplies payable Capital s
$21,50 +$0 +$3,000 + $0 +$43,000 +$0
0 $19,500
a -4,000 +4000
b +1,000 +1,000
c +1,900 +1,900
 d -1,000 -1,000
e +1,900 -1,900
$17,90 +$0 +4,000 $23,000 $0 +$43,000 +$1,900
0 +

Exercise 1-12
Provide an example of a transaction that creates the described effects for the
separate cases a through g
a-decreases an asset and decrease equity
b-increases an asset and increases a liability
c-Decreases a Liability and increases a liability
d-Decreases an asset and decreases a liability.
e-increases an asset and decreases an asset.
f-increases a liability and decreases equity
g-increases an asset and increases equity.
Exercise 1-13
Randa Abbas began a professional practice on June 1 and plans to prepare financial
statements at the end of each month. During June, Abbas (the owner) completed
these transactions
a-Owner invested $60,000 cash in the company along with equipment that had a
$15,000 market value.
b-the company paid $1,500 cash for rent of office space for the month.
c-the company purchased $10,000 of additional equipment on credit (payment due
within 30 days)
d-the company completed work for a client and immediately collected the $2,500
cash earned
e-the company completed work for a client and sent a bill for $8000 to be received
within 30 days.
f-the company purchased additional equipment for $6000 cash.
g-the company paid an assistant $3000 cash as wages for the month.
h-the company collected $5000 cash as a partial payment for the amount owed by
the client in transaction e
I-the company paid $10,000 cash to settle the liability created in transaction c
j-owner withdrew $1000 from the company for personal use.
Required
Create a table, using the following headings for columns ; Cash ; Accounts
Receivable; Equipment; Accounts payable; R. Abbas capital, Capital; R. Abbas ,
withdrawals, Revenues; and Expenses. Then use additions and subtractions to
show the effect of the transactions on individual items of the accounting equation.
Show new balances after each transaction.
Exercise 1-14
Gulf Group reports net profit of $40,000 for the current year. Gulf Group had
$200,000 in assets. By the end of the year, assets had grown to $300,000. What is
Gulf Group’s return on assets for the current year ? how would you assess its
performance if competitors average a 10% return on assets ?
Exercise 1-15
On October 1, Yossef Salem organized Salem consulting; on October 3, the owner
contributed $84,000 in assets to launch the business. On October 31, the
company’s records show the following items and amounts. Use this information to
prepare an October income statement for the business.
cash $11,360 Cash withdrawals by owner $2000
Accounts receivable 14,000 Consulting fees earned 14,000
Office supplies 3,250 Rent expense 3,550
Land 46,000 Salaries expense 7,000
Office equipment 18,000 Telephone expense 760
Accounts payable 8,500 Miscellaneous expenses 580
Owner investments 84,000

Exercise 1-16
Use the information in exercise 1-15 to prepare an October statement of changes in
equity for Salem Consulting.
Exercise 1-17
Use the information in exercise 1-15 (if completed, you can also use your solution
to exercise 1-16) to prepare an October 31 balance sheet for Salem consulting
Exercise 1-18
Use the information in exercise 1-15 to prepare an October 31statement of cash
flows for Salem consulting Also assume the following:
a-the owner’s initial investment consist of $38,000 cash and $46,000 in Land.
b-the company’s $18,000 equipment purchase is paid in cash.
c-the accounts payable balance of $8,500 consists of the $3,250 office supplies
purchase and $5,250 in employee salaries yet to be paid.
d-the company’s rent, telephone and miscellaneous expenses are paid in cash.
e-No cash has been collected on the $14,000 consulting fees earned.
Exercise 1-19
Indicate the section where each of the following would appears in the statement of
cash flows.
A-cash flows from operating activity.
B-cash flows from investing activity.
C-cash flows from financing activity.
1-Cash purchase of equipment
2-Cash withdrawal by owner
3-Cash paid for advertising
4-Cash paid for wages
5-Cash paid on an account payable to supplier
6-cash received from clients
7-cash investment by owner
8-cash paid for rent
Exercise 1-20
Nader Group, one of Africa’s largest car manufacturers, reports the following
Income statement accounts for the year ended December 31, 2013 euros in
millions.
Revenues € 68,821
Cost of sales 54,276
Sales and administrative costs 6,177
Other expenses 3,487
Use this information to prepare Nader’s income statement for the year ended
December 31, 2013
Exercise 1-21
Match each transaction or event to one of the following activities of an
organization : financing activities (F), investing activities (I), or operating activities
(O).
1-An owner contributes resources to the business
2-the organization borrows money from a bank.
3-An organization advertise a new product.
4-An organization sells some of its land.
5-An organization purchases equipment.
Problem Set A
Identify how each of the following separate transactions affects financial
statements. For the balance sheet, identify how each transaction affects total assets,
total liabilities and total equity. For the income statement, identify how each
transaction affects cash flows from operating activities, cash flows from financing
activities, and cash flows from investing activities. For increases, place a “+” in the
column or columns. For decreases place a “–“ in the column or columns. If both an
increase and a decrease occur, place a “+/-” in the column or columns. The first
transaction is completed as an example.
Balance sheet Income Statement of cash flows
statement
Transaction Total Total Total Net Operating Financing Investin
asset Liab. Equity income activities activities g
s activities
 1 Owner
invests cash
in business
2 Receives
cash for
services
provided
3 Pays cash
for
employee
wages
4 Incurs legal
costs on
credit
5 Borrows
cash by
signing
long-term
note payable
6 Buys land
by signing
note payable
7 Buys office
equipment
for cash
8 Provides
services on
credit
9 Owner
withdraws
cash
1 Collects
0 cash on
receivable
from (8)

Problem 1-2A
the following financial statement information is from five separate companies:
 Company Company Company Company Company E
A B C D
December
31,2014
Assets $55,000 $34,000 $24,000 $60,000 $119,000
Liabilities 24,500 21,500 9,000 40,000 ?
December
31,2015
Assets 58,000 40,000 ? 85,000 113,000
Liabilities ? 26,500 29,000 24,000 70,000
During year 2015
Owner 6,000 1,400 9,750 ? 6,500
investments
Net income 8,500 ? 8,000 14,000 20,000
(Loss)
Owner cash 3,500 2,000 5,875 0 11,000
withdrawals

Required
1-Answer the following questions about company A:
a-what is the amount of equity on December 31,2014 ?
b-what is the amount of equity on December 31,2015
c-what is the amount of Liabilities on December 31,2015
2-Answer the following questions about company B
a-what is the amount of equity on December 31,2014 ?
b-what is the amount of equity on December 31, 2015 ?
c-what is net income for year 2015 ?
3-calculate the amount of assets for company C on December 31,2015
4-calculate the amount of owner investments for company D during year 2015
5-calculate the amount of liabilities for company E on December 31 , 2014.
Problem 1-3A
The following is selected financial information for Elsewefy company as of
December 31, 2015 : Liabilities, $44,000 ; equity, $46,000; assets $90,000
Required
Prepare the balance sheet for Elsewefy company as of December 31,2015
Problem 1-4A
The following is selected financial information for El Masraweya company for the
year ended December 31, 2015: revenues $55,000; expenses, $40,000; net income,
$15,000
Required
Prepare the 2015 calendar-year income statement for El Masraweya Company.
Problem 1-5A
Following is selected financial information for Carmen Bishara Company for the
year ended December 31.
C.Bishara,Capital, Dec31,2015 C.Bishara,Withdrawals $1,000
$14,000
Net income 8,000 C.Bishara,Capital, Dec 31,2014 7000

Required
Prepare the 2015 statement of owner’s equity for Bishara Company.
Problem 1-6A
Following is selected financial information of Al-Aml Company for the year ended
December 31,2015
Cash used by investing activities $(2000)
Net increase in Cash 1,200
Cash used by financing activities (2,800)
Cash from operating activities 6000
Cash,December 31,2010

Required
Prepare the current year statement of cash flows for Al-Aml company
Problem 1-7A
Farid fahim started fahim consulting, a new business, and completed the following
transactions during its first month of operation.
May 1 F. Fahim invested $40,000 cash in the company.
1 the company rented a furnished office and paid $2,200 cash for may’s rent.
3 the company purchased 1,890 of office equipment on credit
5 the company paid $750 cash for this month’s cleaning services
8 the company provided consulting services for a client and immediately
collected $5,400 cash.
12 the company provided $2,500 of consulting services for a client on credit.
15 the company paid $750 cash for an assistant’s salary for the first half of
this month.
20 the company received $2,500 cash payment for the services provided on
(may 12).
22 the company provided $3,200 of consulting services on credit.
25 the company received $3,200 cash payment for the services provided on
(may 22).
26 the company paid 1,890 cash for the office equipment purchased on (may
3).
27 the company purchased $80 of advertising in this month’s (may) local paper
on credit ; cash payment is due June 1
28 the company paid $750 cash for an assistant’s salary for the second half of
this month
30 the company paid $300 for this month’s telephone bill.
30 the company paid $280 cash for this month’s utilities
31 F. Fahim withdrew $1,400 cash from the company for personal use.
Required
1-Arrange the following asset, liability, and equity titles in a table Cash ; Accounts
Receivable; Office Equipment ; Accounts payable; F. Fahim, Capital; F. Fahim,
withdrawals; Revenues; and Expenses.
2-show effects of the transactions on the accounts of the accounting equation by
recording increases and decreases in the appropriate columns. Do not determine
new account balances after each transaction. Determine the final total for each
account and verify that the equation is in balance.
3-prepare an income statement for may, a statement of owner’s equity for may , a
may 31 balance sheet, and a statement of cash flows for may.
Problem 1-8A
Amer Kassem started Najm consulting, a new business, and completed the
following transactions during its first year of operations.
a-Amer Kassem invests $70,000 cash and office equipment valued at $10,000 in
the company.
b-the company purchased a $150,000 building to use as an office. Najm consulting
paid $20,000 in cash and signed a note payable promising to pay the $130,000
balance over the next 10 years.
c-the company purchased office equipment for $15,000 cash.
d-the company purchased $1,200 of office supplies and $1,700 of office equipment
on credit.
e-the company paid a local newspaper $500 cash for printing an announcement of
the office’s opening.
f-the company completed a financial plan for a client an billed that client $2800 for
the service.
g-the company designed a financial plan for another client and immediately
collected a $4000 cash fee.
h-Amer Kassem withdrew $3,275 cash from the company for personal use.
i-the company received $1,800 cash as partial payment from the client described in
transaction F.
j-the company made a partial payment of $700 cash on the equipment purchased in
transaction d.
k-the company paid $1,800 for the office secretary’s wages for this period.
Required
1-Create a table using the following headings for the columns : Cash; Accounts
Receivable ; Office supplies ; Office Equipment ; Building ; Accounts payable;
Notes payable ; A. Kassem, Capital A. Kassem, Withdrawals; Revenues; and
Expenses.
2-Use additions and subtractions within the table created in part 1 to show the
dollar effects of each transaction on individual items of the accounting equation.
Show new balances after each transaction.
3-Once you have completed the table, Determine the company’s net income.
Problem 1-9A
Samy Samer started a new business and completed these transactions during
December.
Dec 1 Samy Samer transferred $65,000 Cash from a personal savings account to a
checking account in the name of Samer electric.
2 the company rented office space and paid $1,000 cash for the December rent.
3 the company purchased $13,000 of electrical equipment by paying $4,800
cash and agreeing to pay the $8,200 balance in 30 days.
5 the company purchased office supplies by paying $800 cash
6 the company completed electrical work and immediately collected $1,200
cash for these services
8 the company purchased $2,530 of office equipment on credit.
5 the company purchased office supplies by paying $800 cash.
6 the company completed electrical work and immediately collected $1,200
cash for these services.
8 the company purchased $2,530 of office equipment on credit.
15 the company completed electrical work on credit in the amount of $5000
 18 the company purchased $350 of office supplies on credit.
20 the paid $2,530 cash for the office equipment purchased on December 8.
24 the company billed a client $900 for electrical work completed; the balance
is due in 30 days.
28 the company received $5,000 cash for the work completed on (December
15).
29 the company paid the assistant’s salary of $1400 cash for this month.
30 the company paid $540 cash for this month’s utility bill.
31 Samy Samir withdrew $950 cash from the company for personal use.
Required
1-Arrange the following asset , Liability, and equity titles ; Cash ; Accounts
Receivable; office supplies; Office equipment; Electrical Equipment ; Accounts
payable ; S . Samer, Capital ; S. Samer, withdrawals; revenues; and Expenses.
2-use additions and subtractions to show the effects of each transaction on the
accounts in the accounting equation. Show new balances after each transaction.
3-use the increases and decreases in the columns of the table from part 2 to prepare
an income statement, a statement of owner’s equity , and a statement of cash flows
–each of these for the current month. Also prepare a balance sheet as of the end of
the month.
4-Assume that the owner investment transaction on December 1 was $49,000 cash
instead of $65,000 and that Samer Electric obtained another $16,000 by cash by
borrowing it from a bank. Explain the effect of this change on total assets, Total
Liabilities and Total Equity.
Problem1-10A
Kenzy manufactures, markets, and sells cellular telephones. The average total
assets for kenzy is $250,000. In its most recent year, kenzy reported net income of
$65,000 on revenues of $475,000.
Required
1-What is kenzy’s return on assets ?
2-Does return on assets seem satisfactory for kenzy given that its competitors
average 12% return on assets ?
3-what are total expenses for kenzy in its most recent year?
4-what is the average total amount of liabilities plus equity for kenzy ?
Problem 1-11A
Coca-Cola and Pepsico both produce and market beverages that are direct
competitors. Key financial figures for these businesses for a recent year follow.
Key figures ($ millions) Coca-Cola Pepsico
Sales $46,542 $66,504
Net income 8,634 6,462
Average assets 76,448 70,518

Required
1-compute return on assets for (a) Coca-Cola and (b) Pepsico
2-which company is more successful in its total amount of sales to consumers ?
3-which company is more successful in returning net profit from its assets invested
?
4-write a one-paragraph memorandum explaining which company you would
invest your money in and why. (Limit your explanation to the information
provided)
Problem 1-12A
All business decision involve aspects of risk and return.
Required
Identify both the risk and the return in each of the following activities :
1-Investing $2000 in a 5% savings account.
2-Placing a $2,500 bet on your favorite sports team.
3-Investing $10,000 in Yahoo! Stock.
4-Taking out a $7,500 college loan to earn an accounting degree.
Problem 1-13A
A start-up company often engages in the following transactions in its first year of
operations. Classify those transactions in one of three major categories of an
organization’s business activities.
F. Financing
I. Investing
O. Operating
1-Owner investing land in Business
2-Purchasing a building
3-purchasing land
4-Borrowing cash from a bank.
5-purchasing equipment.
6-selling and distributing products
7-paying for advertising
8-paying employee wages
Problem 1-14A
An organization undertakes various activities in pursuit of business success.
Identify an organization’s three major business activities, and describe each
activity.
Problem 1-1 B
Identify how each of the following separate transactions affects financial
statements. For the balance sheet, identify how each transaction affects total assets,
Total Liabilities , and total Equity. For the income statement, identify how each
transaction affects net income. For the statement of cash flows, identify how each
transaction affects cash flows from operating activities, cash flows from financing
activities and cash flows from investing activities. For increases place a “+” in the
column or columns. For decreases place a “-” in the column or columns.
If both an increase and a decrease occur, place +/- in the column or columns.
The first transaction is completed as an example.
 Balance sheet Income Statement of cash flows
statement
Transaction Total Total Total Net Operating Financing Investin
Asset Liab. Equity Income activities activities g
s activities
1 Owner invests cash + + +
in business
2 Buying building by
signing note
payable
3 Buys store
equipment for cash
4 Provide services for
cash
5 Pays cash for rent
incurred
6 Incurs utilities costs
on credit
7 Pays cash for
salaries incurred
8 Owner withdraws
cash
9 Provides services
on credit
1 Collects cash from
0 receivable from (9)

Problem 1-2B
The following financial statement information is from five separate companies.
Company Company Company Company Company
V W X Y Z
December
31,2014
Assets $54,000 $80,000 $141,500 $92,500 $144,000
Liabilities 25,000 60,000 68,500 51,500 ?
December
31,2015
 Assets 59,000 100,000 186,500 ? 170,000
Liabilities 36,000 ? 65,800 42,000 42,000
During Year
2015
Owner 5,000 20,000 ? 48,100 60,000
investments
Net income ? 40,000 18,500 24,000 32,000
or (Loss)
Owner cash 5,500 2,000 0 20,000 8000
withdrawals

Required
1-Answer the following questions about company V
a-what is the amount of equity of December 31,2014 ?
b-what is the amount of equity of December 31,2015 ?
c-what is the net income or loss for the year 2015 ?
2-Answer the following questions about company W :
a-what is the amount of equity of December 31,2014 ?
b-what is the amount of equity of December 31, 2015 ?
c-What is the amount of Liabilities on December 31,2015 ?
3-calculate the amount of owner investments for company X during 2015.
4-Calculate the amount of assets for company Y on December 31,2015.
5-Calculate the amount of Liabilities for company Z on December 31,2014.
Problem 1-3B
The following is selected financial information for Jebal company as of December
31, 2015.
Liabilities $64,000 Equity $50,000 Assets
$114,000

Required
Prepare the balance sheet for Jebal company as of December 31,2015
Problem 1-4B
Selected financial information for shams co. for the year ended December 31,2015
follows.
Revenues $68,000 Expenses $40,000 Net income $28,000

Required
Prepare the 2015 income statement for shams company.
Problem 1-5B
Following is selected financial information of Audi company for the year ended
December 31,2015
Audi, Capital Dec.31,2015 $47,000
Net income 5,000
Audi, withdrawals 7,000
Audi, Capital, Dec. 31,2014 49,000

Prepare the 2015 statement of owner’s equity for Audi company.

Problem 1-6B
Selected financial information of Bin Aly company for the year ended December
31,2015, follows
Cash from investing activities
$1,600
Net increase in cash 400
Cash from financing activities 1,800
Cash used by operating activities (3000)
Cash, December 31,2014 1,300

Required
Prepare the 2015 statement of cash flows for Bin Aly company.
Problem 1-7B
Nihal Naser launched a new business. Naser’s maintenance Co., that begin
operations on June 1. The following transactions were completed by the company
during that first month.
June 1 Nihal Naser invested $130,000 cash in the company.
2 the company furnished office and paid $6,000 cash for June ‘s rent.
4 the company purchased $2,400 of equipment on credit.
6 the company paid $1,150 cash for this month’s advertising of the opening of
the business.
8 the company completed maintenance services for a customer and
immediately collected $850 cash.
14 the company completed $7500 of maintenance services for sun city mall on
credit.
16 the company paid $800 cash for an assistant’s salary for the first half of the
month.
20 the company received $7,500 cash payment for services completed for sun
city mall on June 14.
21 the company completed $7,900 of maintenance services for wojooh Beauty
shop on credit.
24 the company completed $675 of maintenance services for Build-It Coop on
credit.
25 the company received $7,900 cash payment from Wojooh Beauty shop for the
work completed on June 21.
26 the company made payment of $2,400 cash for equipment purchased on June 4
28 the company paid $800 cash for an assistant’s salary for the second half of this
month.
29 Nihal Naser withdrew $4,000 cash from the company for personal use.
30 the company paid $150 cash for this month’s telephone bill.
30 the company paid $890 cash for this month’s utilities.
Required
1-Arrange the following asset, liability, and equity titles in a table Cash; Accounts
Receivable; Equipment ; Accounts payable; N . Naser, Capital; N. Naser ,
withdrawals ; Revenues; and Expenses
2-show the effects of the transactions on the accounts of the accounting equation
by recording increases and decreases in the appropriate columns. Do not determine
new account balances after each transaction. Determine the final total for each
account and verify that the equation is in balance.
3-prepare a June income statement, a June statement of owner’s equity, a June 30
balance sheet, and a June statement of cash flows.
Problem 1-8B
Farah Hammam started a new business, Hammam computing, and completed the
following transactions during its first year of operations.
a-farah Hammam invests $90,000 cash and office equipment valued at $10,000 in
the company.
b-the company purchased a $150,000 building to use as an office. It paid $40,000
in cash and signed a note payable promising to pay the $110,000 balance over the
next 10 years.
c-the company purchased office equipment for $25,000 cash.
d-the company purchased $1,200 of office supplies and $1,700 of office equipment
on credit.
e- the company paid a local newspaper $750 cash for printing an announcement of
the office’s opening.
f-the company completed a financial plan for a client and billed that client $2,800
for the service.
g-the company designed a financial plan for another client and immediately
collected a $4000 cash fee.
h-Farah hammam withdrew $11,500 cash from the company for personal use.
i-the company received $1,800 cash from the client described in transaction F
j-the company made a payment of $700 cash on the equipment purchased in
transaction d.
k-the company paid $2,500 cash for the office secretary’s wages.
Required
1-Create a table , using the following headings for the columns : Cash; Accounts
Receivable; Office supplies; Office equipment; Building; Accounts payable; Notes
payable ; F. Hammam, Capital; F. Hammam, withdrawals; Revenues and Expenses.
2-use additions and subtractions within the table created in part 1 to show the
dollar effects of each transaction on individual items of the accounting equation.
Show new balances after each transaction.
3-Once you have completed the table determine the company’s net income.
Problem 1-9B
Shaath Roofing company, owned by Randa Shaath , began operations in July and
completed these transactions during that first month of operations.
July 1 Randa Shaath invested $80,000 cash in the company.
2 the company rented office space and paid $700 cash for the July rent.
3 the company purchased roofing equipment for $5000 by paying $1000 cash
and agreeing to pay the $4000 balance in 30 days.
6 the company purchased office supplies for $600 cash.
8 the company completed work for a customer and immediately collected
$7,600 cash for the work.
10 the company purchased $2,300 of office equipment on credit.
15 the company completed work for a customer on credit in the amount of
$8,200.
17 the company purchased $3,100 of office supplies on credit.
23 the company paid $2,300 cash for the office equipment on July 10
25 the company billed a customer $5,000 for work completed; the balance is
due in 30 days.
28 the company received $8,200 cash for the work completed on July 15.
30 the company paid an assistant’s salary of 1,560 cash for this month.
 31 the company paid $295 cash for this month’s utility bill.
31 Randa Shaath withdrew $1,800 cash from the company for personal use.
Required
1-Arrange the following asset, liability, and equity titles in a table Cash; Accounts
Receivable; Office supplies; Office equipment ; Roofing equipment; Accounts
payable; R.shaath, Capital; R.shaath, withdrawals; Revenues; and Expenses.
2-use additions and subtractions to show the effects of each transaction on the
accounts in the accounting equation. Show new balances after each transaction.
3-use increases and decreases in the columns of the table from part 2 to prepare an
income statement , a statement of owner’s equity and a statement of cash flows –
each of these for the current month. Also prepare a balance sheet as of the end of
the month.
4-Assume that the $5,000 purchase of Roofing equipment on July 3 was financed
from an owner investment of another $5000 cash in the business (instead of the
purchase conditions described in the transaction). Explain the effect of this change
on total assets, Total Liabilities and total equity.
Problem 1-10B
Mahmoud company manufacturers, markets, and sells snowmobile and
snowmobile equipment and accessories. The average total assets for Mahmoud is
$3,000,000. In its most recent year, Mahmoud reported net income of $201,000 on
revenues of $1,400,000
Required
1-what is Mahmoud company’s return on assets ?
2-Does return on assets seem satisfactory for Mahmoud given that its competitors
average a 9.5% return on assets
3-what are the total expenses for Mahmoud company in its most recent year ?
4-what is the average total amount of liabilities plus equity for Mahmoud
company?
Problem 1-11B
 Rayan and B-Tic produce and market telecommunications products and are
competitors. Key financial figures for these businesses over the past year follow.
Key figures ($ million) Rayan B-Tic
Sales $126,723 $110,875
Net income 4,184 10,198
Average assets 269,868 225,233

Required
1-compute return on assets for (a) Rayan and (b) B-Tic.
2-which company is more successful in the total amount of sales to consumers?
3-which company is more successful in returning net profit from its assets
invested?
4-write a one paragraph memorandum explaining which company you would
invest your money in and why (Limit your explanation to the information
provided.)
Problem 1-12B
All business decisions involve aspects of risk and return.
Required
Identify both the risk and the return in each of the following activities:
1-stashing $500 cash under your mattress
2-placing a $250 bet on your favorite club winning the Egyptian national league.
3-investing $20,000 in shares of Vodafone.
4-investing $35,000 in Egyptian government bonds
Problem 1-13B
A start-up company often engages in the following activities during its first year of
operations. Classify each of the following activities into one of the three major
activities of an organization.
F. Financing
I. Investing
O. Operating
1-providing client services
2-obtaining a bank loan.
3-purchasing machinery.
4-Research of its products.
5-supervising workers.
6-owner investing money in business
7-Renting office space.
8-paying utilities expenses.
Problem 1-14B
Identify in outline format the three major business activities of an organization. For
each of these activities, identify at least two specific transactions or events
normally undertaken by the business’s owners or its managers.
Serial problem
On October 1, 2015 Hamza Selim launched a computer services company. Gulf
solutions, that is organized as a proprietorship and provides consulting services,
computer system installations, and custom program development. Selim adopts the
calendar year for reporting purposes and expects to prepare the company’s first set
of financial statements on December 31,2015.
Required
Create a table using the following headings for columns: Cash; Accounts
Receivable; computer supplies; computer system; office equipment; Accounts
payable; H. Selim, Capital ; H .Selim, withdrawals ; Revenues; and Expenses.
Then use additions and subtrations within the table created to show the dollar
effects for each of the following October transactions For Gulf solutions on the
individual items of the accounting equation. Show new balances after each
transaction.
Oct 1 H. Selim invested $45,000 cash, a $20,000 computer system, and $8000 of
office equipment in the company.
 3 the company purchased $1,420 of computer supplies on credit from Salama
office products
6 the company billed Corplease $4,800 for services performed in installing a
new web server.
8 the company paid $1,420 cash for the computer supplies purchased from
salama office products on October 3
10 the company hired Farida Mohsen as a part-time assistant for $125 per day, as
needed
12 the company billed Corplease another $1,400 for services provided
15 the company received $4,800 cash from Corplease as partial payment toward
its account.
17 the company paid $805 cash to repair computer equipment damaged when
moving it.
20 the company paid 1,728 cash for advertisements published in the local
newspaper.
22 the company received $1,400 cash from Corplease from its account.
28 the company billed IFM company $5,208 for services performed.
31 the company paid $875 cash for Farida Mohsen’s wages for seven days of
work this month.
31 H. Selim withdrew $3,600 cash from the company for personal use.
BTN1-1
key financial figures for telecom Egypt for the fiscal year ended December
31,2015, follow ; (USD 1 =EGP 7.8301, USD 1 = AED 3.6725)
Key Figure In Millions
Liabilities and Equity $4,386
Net income 329
Revenues and sales 1,556

Required
1-what is the total amount of assets invested in Telecom Egypt ?
2-what is Telecom Egypt return on assets ?
3-how much are total expenses for Telecom Egypt for the year ended December
31,2015 ?
4-Does Telecom Egypt’s return on assets seem satisfactory if competitors average
an 18% return ?
5-Access Telecom Egypt’s IFRS financial statements for fiscal years ending after
December 31,2015 , from its website (www.te.eg) and compute its return on assets.
Compare the December 31, 2015, fiscal year-end return on assets to any
subsequent years’ returns you are able to compute, and interpret the results.
BTN1-2
Key comparative figures for both Etisalat and Telecom Egypt follow:
($) Millions Etisalat ($) TE($)
Liabilities and Equity $34,926 $4,386
Net income 2,590 329
Revenues and sales 14,088 1,556

Required
1-what is the total amount of assets invested in (a) Etisalat (b) Telecom Eqypt ?
2-what is the return on assets for (a) Etisalat and (b) Telecom Egypt ? Etisalat’s
beginning of year assets equal $34,883 million and Telecom Egypt’s Beginning
year assets equal $4,108 million
3-how much are expenses for (a) Etisalat and (b) Telecom Egypt ?
4-Is return on assets satisfactory for (a) Etisalat and (b) Telecom Egypt ? what can
you conclude about Etisalat and Telecom Egypt from these computations?
BTN1-3
Maria Morcos works in a public accounting firm and hopes to eventually be a
partner. The management of Amwal company invites Hegazy to prepare a bid to
audit Amwal’s financial statements In discussing the audit fee. Amwal’s
management suggests a fee range in which the amount depends on the reported
profit of Amal. The higher its profit, the higher will be the audit fee paid to
Hegazy’s firm.
Required
1-identify the parties potentially affected by this audit and the fee plan proposed
2-what are the ethical factors in this situation ? Explain.
3-would you recommend that Hegazy accept this audit fee arrangement ? why or
why not ?
4-Describe some ethical considerations guiding your recommendation.
BTN1-4
Refer to this chapter’s opening feature about Facebook. Assume that mark
Zuckerberg desires to expand his online services to meet people’s demands. He
decides to meet with his banker to discuss a loan to allow Facebook to expand.
Required
1-prepare a half-page report outlining the information you would request from
Mark Zuckerberg if you were the loan officer
2-indicate whether the information you request and your loan Decision are affected
by the form of business organization for facebook.
BTN1-5
Visit the EDGAR database at www.sec.gov . Access the form 10-K report of rocky
mountain Chocolate factory (ticker RMCF) filed on may 29, 2013 covering its
2013 fiscal year.
Required
1-item 6 of the 10-K report provides comparative financial highlights of RMCF for
the year 2009-2013. How would you describe the revenue trend for RMCF over
this five-year period ?
2-Has RMCF been profitable (see net income) over this five-year period ? support
your answer.
BTN1-6
Teamwork is important in todays business world. successful teams schedule
convenient meetings, maintain regular communications, and cooperate with and
support their members. This assignment aims to establish support/ learning teams,
initiate discussions, and set meeting times.
Required
1-Form teams and open a team discussions to determine a regular time and place
for your team to meet between each scheduled class meeting. Notify your
instructor via a memorandum or e-mail message as to when and where your team
will hold regularly scheduled meetings.
2-Develop a list of telephone numbers and/or e-mail addresses of your team mates.
BTN1-7
Refer to this chapter’s opening feature about facebook. Assume that Mark
Zuckerberg decides to open a new website devoted to social networking for
accountants and those studying accounting this new company will be called
AccountBook.
Required
1-AccountBook obtains a $500,000 loan and mark Zuckerberg contributes
$250,000 of his own assets in exchange for common stock in the new company.
a.what is the new company’s total amount of liabilities plus equity ?
b-what is the new company’s total amount of assets ?
2-If the new company earns $80,250 in net profit in the first year of operation,
compute its return on asset (assume average assets equal $750,000) Assess its
performance if competitors average a 10% return.
BTN1-8
You are to interview a local business owner (this can be a friend or
relative)opening lines of communication with members of the business community
can provide personal benefits of business networking. If you do not know the
owner, you should call a head to introduce yourself and explain your position as a
student and your assignment requirements. You should request a thirty minute
appointment for a face-to-face or phone interview to discuss the form of
organization and operations of the business be prepared to make a good
impression.
Required
1-Identify and describe the main operating activities and the form of the
organization for this business
 2-Determine and explain why the owner(s) chose this particular form of
organization
3-identify and special advantages and/or disadvantages the owner(s) experiences
in operating with this form of business organization.
BTN1-9
Samsung (Samsung.com) is a leading global manufacturer, and it competes to
varying degrees with both Apple and Google. Key financial figure for Samsung
follow.
Key figure Korean won in millions
Average assets 168,435,917
Net income 23,845,285
Revenue 201,103,613
Return on assets 14.2%
*figures prepared in accordance with International financial Reporting standards as
adopted by the Republic of Korea.
Required
1-Refer to apple and google financial statements in Appendix A. identify any
concerns you have in comparing Samsung’s income and revenue figures to those of
Apple and google for purposes of making business decisions
2-refer to apple and google financial statements in Appendix A and compute the
return on assets ratio for both companies. Identify any concerns you have in
comparing Samsungs return on assets ratio to those of apple and google for
purposes of making business Decisions.
Apple financial report
Apple Inc
Consolidated Balance sheets
(In millions, Except number of shares which are reflected in thousands)
Assets September September
28,2013 29,2012
Current assets
Cash and Cash equivalents $14,259 $10,746
Shot-term marketable securities 26,287 18,383
Accounts receivable, Less allowances of $99 and 13,102 10,930
$98 respectively.
Inventories 1,764 791
Deferred Tax assets 3,453 2,583
Vendor non-trade receivables 7,593 7,762
Other current assets 6,882 6,458
Total current assets 73,286 75,653
Long-term marketable securities 106215 92,122
Property , Plant and Equipment, net 16,597 15,452
Goodwill 1,577 1,135
Acquired intangible assets, net 4,179 4,224
Other assets 5,146 5,478
Total assets 207,000 176,064