FACULTY OF ACCOUNTING AND AUDITING

PILOT TEST

Unit: PRINCIPLES OF

I. Multiple Choice Question:

Students must write the answers in the following table:

Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10

Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20

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. $400,000. c. $475,000.
b. $450,000. d. $500,000.
2. On December 30 of the current year, KPMG signs a $150,000 contract to provide accounting
services to one of its clients in the next year. KPMG has a December 31 year-end. Which
accounting principle or assumption requires KPMG to record the accounting services revenue
from this client in the next year and not in the current year?
a. Business entity assumption c. Monetary unit assumption
b. Revenue recognition d. Cost principle
3. If the assets of a company increase 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. c. A decrease of $65,000.
b. A decrease of $135,000. d. An increase of $65,000.
4. Brunswick borrows $50,000 cash from Third National Bank. How does this transaction affect
the accounting equation for Brunswick?
a. Assets increase by $50,000; liabilities b. Assets increase by $50,000; no effect on
increase by $50,000; no effect on equity. liabilities; equity increases by $50,000.
c. Assets increase by $50,000; liabilities d. No effect on assets; liabilities increase by
decrease by $50,000; no effect on equity. $50,000; equity increases by $50,000.
5. Geek Squad performs services for a customer and bills the customer for $500. How would
Geek Squad record this transaction?
a. Accounts receivable increase by $500; c. Accounts receivable increase by $500;
revenues increase by $500. revenues decrease by $500.
b. Cash increases by $500; revenues d. Accounts payable increase by $500;
increase by $500. revenues increase by $500.
6. Net income will result during a time period when:
a. assets exceed liabilities. c. expenses exceed revenues.
b. assets exceed revenues. d. revenues exceed expenses.
7. Adjustments for unearned revenues:
a. decrease liabilities and increase revenues. c. increase assets and increase revenues.
b. increase liabilities and increase revenues. d. decrease revenues and decrease assets.
8. According to IAS1, Presentation of Financial Statements, compliance with IFRS Standards
will normally ensure that:
a. The entity’s inventory is valued at net c. The entity’s financial statements are
realizable value prepared on the assumption that it is a going
b. The entity’s assets are valued at their concern
break-up value d. The entity’s financial position, financial
performance and cash flows are presented
fairly
9. Which of the following accounts is not shown on the Statement of Owner’s Equity?
a. Owner’s Capital c. Expenses
b. Revenues d. Withdrawals
10. The withdrawal of cash by the owner will
a. decrease net income. c. not affect total assets.
b. increase liabilities. d. decrease owner’s equity.
11. When a service has been performed, but no cash has been received, which of the following
statements is true?
a. The entry would include a debit to c. The entry would include a credit to
Accounts Receivable. Unearned Revenue.
b. The entry would include a debit to d. No entry is required until the cash is
Accounts Payable. received.
12. An $800 debit item is accidentally posted as a credit. The trial balance column totals will
therefore differ by
a. $0 c. $800
b. $400 d. $1,600
13. Which of the following is a business event that is not considered a recordable transaction?
a. A company receives a product previously c. A customer inquiry about the availability
ordered. of a service.
b. A company pays an employee for work d. A customer purchases a service.
performed.
14. Which of the following is not a Book of Prime Entry?
a. Sales Journal c. Purchases Journal
b. Cashbook d. Sales Ledger
15. A credit customer returned some damaged goods to the business. This transaction will record
in:
a. Sales Return Journal c. Purchase Journal
b. Purchase Return Journal d. Sales Journal
16. A receipt is used as a source document for
a. Credit sales c. Payment of cash
b. Credit purchases d. Return of goods to supplier
17. The controller for Tires and More, Inc. has recorded the following transactions during the
month: the purchase of equipment for $8,500 cash; payment of $6,300 for 3 months rent; and,
collection of $2,400 from a customer for services performed. At the beginning of the month the
owner established the business by making an investment of $15,000 cash. What is the balance in
the Cash account at the end of the month, and is the balance a debit or a credit?
a. $2,600 debit. c. $6,800 debit.
b. $2,600 credit. d. $15,200 debit.
18. A sole trader is £5,000 overdrawn at her bank and receives £1,000 from a credit customer in
respect of its account. Which element(s) of the accounting equation will change due to this
transaction?
a. Assets and liabilities c. Assets only
b. Liabilities only d. Assets, liabilities and capital
19. A sole trader had trade receivables of £2,700 at 1 May and during May made cash sales of
£7,200, credit sales of £16,500 and received £15,300 from his credit customers. The balance on
his trade receivables account at the end of May was:
a. £1,500 c. £8,700
b. £3,900 d. £11,100
20. Information is relevant if it is capable of making a difference in the decisions made by users.
According to the IASB's Conceptual Framework, financial information is capable of making a
difference in decisions if it has which of the following?
1 Predictive value
2 Comparative value
3 Historic value
4 Confirmatory value
a. 1 and 3 only c. 1 and 4 only
b. 2 and 4 only d. 2 and 3 only

II. Short question:

Given that Company ABC's fiscal year ends on December 31st, and the utility bill for the
month of December is expected to be received on January 5 th. Assuming that the estimated utility
expense for December is $2,000. Should the company record the utility expense in its financial
statements for the year ending December 31st? Provide explanation.
 Should the company record the utility expense in its financial statements for the year
ending December 31st? YES
Provide explanation.
Basing on accural basis, expenses should be recorded when its incurred. In this case, the
exp s incurred in Dec, then it should be recorded in Dec
III. Exercises:
Demo Exercise 1:
Andrew Joel is a market trader. The company’s trial balance as at 31 December 20X8, appears
below:
$ $
Sales 71,600
Purchases 29,050
Salaries 4,650
Rent and business rates 2,500
Prepay – Insurance 3,900
Motor expenses 21,860
Fixtures 35,000
Cash in hand 5,000
3,500
Cash at bank
Drawings 24,000
Capital 61,810
Account Receivable 23,450
Account Payable 19,500
152,910 152,910
During the month of January, the company completed the following transactions:
Januar Transfers $750 of his savings into a business bank account
y
1 Borrows $3,000 from LLoydwest Bank, repayable in three years’ time

2 Buys goods for resale on time, $78 from S.Holmes

3 Buys goods for resale, paying cash $55

4 Goods returned by us to S.Holmes, $18

5 Sale goods $630, customer paying by cheque $400

6 Sale goods on time, $98 to D.Moore

7 Goods returned to us by D.Moore $20

 8 Pays staff wages for January, $410 cash

9 Purchases goods from C.Swiff $500, less 10% trade discount, pays by
cash

10 Insurance is still unexpired of $3,000

11 Inventory on 31 January 20X9 is 7,547 (note: No Double entries)

Required:
a. Record all the transactions.
b. Prepare a Trial Balance as at the end of the month.
Accounts Dr Cr
Sales 72,328
Purchases 29,633
Salaries 5,060
Rent and business rates 2,500
Prepay – Insurance 3,000
Motor expenses 21,860
Fixtures 35,000
Cash in hand 4,085
Cash at bank 7,650
Drawings 24,000
Capital 62,560
Account Receivable 23,758
Account Payable 19,560
Loan 3,000
Ins. Exp 900
R.I 20
R.O 18
TOTAL 157,466 157,466

c. Prepare Income Statement for the month.

Sales 72,328
Less R.I (20)
Less COGS
Purchases 29,633
Less Closing Inv (7,547)
Less R.O (18)
(22,068)
Gross Profit 50,240
Less Expenses
Rent and Rates 2,500
Ins Exp 900
Salaries 5,060
Motor exp 21,860
(30,320)
Net Profit 19,920
d. Prepare a Balance Sheet at the end of the period.
ASSETS
Prepay – Insurance 3,000
Fixtures 35,000
Cash in hand 4,085
Cash at bank 7,650
Account Receivable 23,758
Inventory 7,547
TOTAL ASETS 81,040
LIABILITIES
A/P 19,560
Loan 3,000
TOTAL LIABILITIES 22,560
NET ASSETS 58,480
CAPITAL
Capital 62,560
Plus Net Profit 19,920
Less Drawings (24,000)
58,480

Demo Exercise 2:
Andrew Joel is a market trader. On the December 1, 20X8, he opened a hotel named Queen
Hotel. The company’s trial balance as at 31 December 20X8, appears below:
Rent revenue 64,100
Unearned Rent 29,050
Supplies 4,650
Prepay Insurances 2,400
Motor expenses 21,860
Fixtures 35,000
Cash in hand 34,050
Drawings 24,000
Capital 32,760
Account Receivable 23,450
Account Payable 19,500
145,410 145,410
During the month of January, the company completed the following transactions:
1. Insurance expires at the rate of $450 per month.
Dr Ins Exp 450
Cr Prepay Ins 450
 2. A count of supplies on Jan 31 showed $3,000 on hand.
Supplies Exp = 4650-3000=1,650
Dr Supplies Exp 1,650
Cr Supplies 1,650

3. Received cash from credit customers, $10,000.

Dr Cash 10,000
Cr A/R 10,000

4. Purchased a car by cash, $1,000.

Dr Car 1,000
Cr Cash 1,000

5. Rental of $1,600 were due from tenants at January 31.

Rent Revenue = 1,600
Dr A/R 1,600
Cr Rent Revenue 1,600

6. Unearned Rent of $10,000 was earned prior to 31 January.

Dr Unearned Rent 10,000
Cr Rent Revenue 10,000

7. Made a payment to suppliers by cash, $500.

Dr A/P 500
Cr Cash 500

8. Paid wages and salaries for the period by cash, $700.

Dr Wages 700
Cash 700
Required:
a. Record all the transactions.
b. Prepare a Trial Balance as at the end of January.
Trial balance as at 31/1
Accounts Dr Cr
Rent revenue 75,700
Unearned Rent 19,050
Supplies 3,000
Prepay Insurances 1,950
Motor expenses 21,860
Fixtures 35,000
Cash in hand 41,850
Drawings 24,000
Capital 32,760
 Account Receivable 15,050
Account Payable 19,000
Ins Exp 450
Supplies Exp 1,650
Wages 700
Car 1,000
TOTAL 146,510 146,510

c. Prepare Income Statement for the month ending 31st January.

Income Statement for the month ending 31st January

Rev 75,700
Less Expenses
Motor expenses 21,860
Ins Exp 450
Supplies Exp 1,650
Wages 700
(24,660)
Net Profit 51,040

d. Prepare Balance sheet at the end of January.

Balance sheet as at 31/1
Assets
Supplies 3,000
Prepay Insurances 1,950
Fixtures 35,000
Cash in hand 41,850
Account Receivable 15,050
Car 1,000
Total Assets 97,850
Liabilities
Unearned Rent 19,050
Account Payable 19,000
Total Liabilities 38,050
Net Assets 59,800
Capital
Opening Capital 32,760
Net Profit 51,040
Less Drawings (24,000)
59,800

Note:
1. Sinh viên phải điền đáp án phần trắc nghiệm vào bảng (phần I).
2. Phần bài tập có 2 đề mẫu, sinh viên có thể sử dụng để ôn tập. Đề mẫu thường khó hơn, và
nhiều thông tin về nghiệp vụ phát sinh hơn đề thi chính thức. Đề thi chính thức thì chỉ có
01 dạng bài tập và trong mỗi bài tập chỉ có thêm 05 nghiệp vụ phát sinh.
3. Cấu trúc đề thi gồm: 20 câu trắc nghiệm (4 điểm); 01 câu hỏi ngắn (1 điểm) và 01 bài tập
với 04 ý hỏi (5 điểm).