WACHEMO UNIVERSITY

COLLGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

Principle of Accounting - I

Final exam- for economics weekend students

Tim
e Allowed 2:00hr

Tot
al Points: 50%

NAME: ___________________________________________________

ID. NO: ____________ Section_________

 General Instruction

-Switch off your cell phone

-Write the Answer only on the answer sheet provided

-Don’t detach any part of the question paper

-Cheating and unnecessary mischief surely help you to score “F”

- Make sure that the examination paper has two parts.

-Use the answer sheet only for the answer

Do not turn this page until you are told to do so!

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 Part I: Multiple Choices Questions; Choose the Best Answer. (0.5pt
Each)

1. Which of the following accounts in the Adjusted Trial Balance columns of the work sheet
would be extended to the Balance Sheet columns?
A. Utilities Expense C. M. E. Jones, Drawing
B. Rent Revenue D. Miscellaneous Expense

2. Which of the following accounts would be classified as a current asset on the balance sheet?
A. Office Equipment C. Accumulated Depreciation
B. Accounts Receivable D. Land
3. Which of the following entries closes the owner’s drawing account at the end of the period?
A. Debit the drawing account, credit the income summary account.
B. Debit the owner’s capital account, credit the drawing account.
C. Debit the income summary account, credit the drawing account.
D. Debit the drawing account, credit the owner’s capital account.
4. Which of the following accounts would not be closed to the income summary account at the
end of a period?
A. Fees Earned B. Wages Expense C. Rent Expense D. Accumulated Depreciation
5. Which of the following accounts would not be included in a post-closing trial balance?
A. Cash B. Fees Earned C. Accumulated Depreciation D. J. C. Smith, Capital
6. The basic financial statements include all of the following except:
A. Balance Sheet. B. Income Statement. C. Statement of Owner's Equity.
D .Statement of Cash Flows E. Trial Balance
7. Assets created by selling goods and services on credit are:
A. Accounts payable. B. Accounts receivable. C. Liabilities D. Expenses. E. Equity
8. _________ a trial balance prepared after all the accounts have been closed.
A. Adjustments B. Work Sheet C. Trial Balance D. Post-Closing Trial Balance.
Balance
9. The type of account with a normal credit balance is:
A. An asset. B. A revenue C. Drawing D. An expense
10. A debit may signify:
A. an increase in an asset account. C. an increase in a liability account.
B. a decrease in an asset account. D. an increase in the owner’s capital account.
11. Which of the following accounts in the Adjusted Trial Balance columns of the work sheet
would be extended to the Balance Sheet columns?
A. Utilities Expense C. M. E. Jones, Drawing
B. Rent Revenue D. Miscellaneous Expense

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 12. Which of the following accounts would not be included in a post-closing trial balance?
A. Cash C. Accumulated Depreciation
B. Fees Earned D. J. C. Smith, Capital
13. _________ -the debits and credits recorded in the journal for one transaction.

A. Journal Entry B. Journal C. Ledger D. posting E. None

14. _______ the record includes beginning cash balance, cash payments & cash collections during the
period. A. an account. B. Debit C. Credit D. Title E. none
15. Under _________ method revenues are reported in the period in which they are earned, and
expenses are reported in the period in which they are incurred. A. cash basis B. Accrual basis
C. Matching D. None

Part-II 35pts: Work out Questions

1. Given below is a list of selected transactions performed by Bati Transport during the month
of January 2003.
The transactions were completed by Bati Transport in the month of January 2003.

January 1. Ato yimer took Birr 45,000 from his personal savings and deposited it in the name of
Bati transport.

January 2. Bati Transport purchased two used trucks for Birr 150,000 each, on cash.

January 4. Bati Transport received a check for Birr 650 for services given to Alem Trading.

January 4. Received an invoice for truck expenses Birr 90.

January 11. Paid Birr 600 for Awash Insurance Company to buy an insurance policy for
its trucks.

January 16. Ato Yimer issued a check for Birr 9,400 to the workers as a salary for two weeks.

January 20. Bati trading Billed Muradu Supermarket for goods transported from Djibouti to
Gondar Birr 2,650.

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 January 21. Ato Yimer wrote a check for birr 450 to have one of the trucks repainted

January 21. Bati trading purchased stationary materials and other supplies of Birr 740 on
account.

January 22. Office equipment of Birr 11,600 is bought on account.

January 23. Purchased an additional truck for Birr 250,000 paying birr 100,000 in cash and
issuing a note for the difference.

January 23. Recorded services billed to customers on account birr 14,600.

January 25. Received cash from customers on account Birr 15,000.

January 27. The owner withdrew Birr 500 in cash for his personal use.

January 28. Paid Birr 9,400 to workers as a salary for the last two weeks of the month.

January 30. Paid telephone expense of Birr 95 and electric expenses of Birr 125 for the month.

January 30. Paid other miscellaneous expenses Birr 50.

January 31. Paid Birr 4,000 as a rent for a building used for office space.

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 Part one: Answer sheet
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
11. 12. 13. 14. 15.

Required:
A. Record the Transactions above are journalized: 1pt each

Date Description Debit Credit

2003
Jan.1

11

16

20

21

21

22

5
 23

23

25

27

28

30

30

31

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 B. Prepare a trial balance 9Pts.

Bati Transport
Trial Balance
January31, 2003

Account Title Debit Credit

Cash
Accounts Receivable
Supplies
Prepaid Insurance
Office equipment
Truck
Accounts payable
Notes payable
Yimer capital
Yimer drawing
Service income
Salary expense
Rent expense
Utilities expense
Maintenance expense
Truck expense
Miscellaneous expense
Total

The data needed to determine year-end adjustments are as follows:

A. The supplies account has a debit balance of Birr 740. The cost of supplies
in hand on July 31 is determined to be Birr 300.
B. Analysis of the policy showed that three – fourth of the policy is expired.
That is only Birr 150 of the policy is applicable to future periods.
C. At the end of the month unbilled fees for services performed to clients
totaled Birr 5,500.
All the above adjusting entries will be inserted in the adjustment column of
the worksheet in front of the accounts affected

C. Prepare a worksheet. Assume the following adjustment for the

accounts and journalize them. 8pts

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 Bati transport
Work Sheet
For the month ended January.31, 2003

Account Title Trial Adjustm Adjusted Income Balance

Balance ent Trial statement sheet
balance…
1 Cash
2 Accounts
receivable
3 Supplies
4 Prepaid
Insurance
5 Office
equipment
6 Truck
7 Accounts
payable
8 Notes payable
9 Yimer Capital
10 Yimer drawing
11 Service
revenue
12 Salary expense
13 Rent expense
14 Utilities
expense
16 Truck expense
17 Miscellaneous
Expense
18 Total
19 Supplies
expense
20 Insurance
expense
21 Total
22 Net income
23 Total

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 D. Prepare a statement of owner’s equity. 2.5pts
E. Close the temporary accounts. 5pts