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Fundamental of accounting Mid exam (30%) 1:20
Target Group: - 3rd Year Management Extension Students
Name ----------------------------------------- Id No----------------- sec___
PART I write “true” if the statement is correct and write “False” if not
1. The journal is a format used to record transactions for the first time.
2. Revenue represents the gross outflow of economic benefits.
3. Business transactions have a single effect on the accounting equation.
PART II: Choose the best answer (1.5pts each)
1. Which Of The Following Statements About Partnerships Is True?
A. Partnerships Have Limited Liability.
B. Partnerships Are Highly Regulated By The Government.
C. Partnerships Are Typically Managed By A Single Individual.
D. Partnerships Involve Mutual Agency And Shared Responsibility.
2. What Is The Main Responsibility Of Financial Accounting?
A. Preparing Reports For Internal Use
B. Communicating Financial Information To External Users
C. Managing Day-To-Day Operations
D. Analyzing Market Trends
3. What Is The Primary Responsibility Of Auditors In Public Accounting?
A. Preparing Tax Returns
B. Analyzing Market Trends
C. Designing Accounting Systems
D. Examining Company Financial Statements
4. A Sole Proprietorship Has Total Assets Worth $80,000 And Total Liabilities Amounting To
$30,000. What Is The Equity Of The Sole Proprietorship?
A. $50,000 B. $110,000 C. $30,000 D. $80,00
5. A Sole Proprietor Withdrew $40,000 From The Business For Personal Use. If The Business's
Net Income Is $100,000 And Its Owner's Equity Was $200,000 Before The Withdrawal, And
The Owner Made An Additional Investment Of $50,000, What Is The Owner's Equity After
The Withdrawal And Additional Investment?
A. $210,000 B. $310,000 C. $260,000 D. $250,000
6. Which Of The Following Accounts Typically Has A Credit Balance Side?
A. Assets C. Owner's Drawing
B. Liabilities D. Expenses
7. Assume Woldia University purchase and hold a building at a cost of birr 1 million in Kobo
town and use it to teach management extension students. Based on IFRS asset classification
this building is classified as
A. Long-Term Asset Held For Sale C. Property Plant And Equipment
B. Current Asset D. Inventory
8. What Is The Term Used For The Process Of Entering Transaction Information From Source
Documents Into A Journal?
A. Analyzing C. Journalizing
B. Posting D. Ledgering
9. Powers Corporation Received A Cash Advance Of $500 From A Customer. As A Result Of
This Event
A. Assets Decreased By $500 C. Liabilities Increased By $500
B. Equity Increased By $500 D. Expense Increased By $500
10. Which One Of The Following Is The Correct Sequence Of The Accounting Cycle?
A. Analyzing Ledger Journalizing Financial Statement Closing
B. Analyzing Journalizing Ledger Financial Statement Closing
C. Analyzing Journalizing Ledger Closing Financial Statement
D. Journalizing Analyzing Ledger Financial Statement Closing
11. An Assumption That Deals With The Separation Of A Business And Its Owner Is______
A. Monetary Assumption C. Business Entity Assumption
B. Going Concern Assumption D. Periodicity Assumption
12. Which financial statement shows the revenues and expenses of a business over a specific
period of time?
A. Balance Sheet C. Statement of Cash Flows
B. Income Statement D. Statement of Owner's Equity
Part III Workout
Woldia Repairing and Maintenance Shop Had The Following Transactions During The First
Month Of Business.
May 1 Invested $22,000 Cash and $35,000 of Equipment In The Business.
May 3 Purchase Equipment on Account for $2,100.
May 5 Purchase Supplies On Account for $600.
May 7 Performed Services for Clients, For Which $2,300 Was Collected In Cash and $870
Was Billed To The Clients.
May 9 Receives $880 From Customers on Account.
May 12 Paid May Rent $400.
May 18 Bills Customers $300 for Work Done
May 23 Determined That Only $270 Of the Supplies is on Hand
May 30 Woldia Repairing and Maintenance Shop withdrew cash for personal
use, Br. 1,800.
Instruction
Journalize The Above Transactions. (Omit Explanations.) (9pts)
Answer Sheet
PART I “true” False”
1. _______ 2. _______ 3. _______
Part II Choice(18pts)
1. _____ 3. _____ 5. _____ 7. _____ 9. _____ 11. _____
2. _____ 4. _____ 6. _____ 8. _____ 10. _____ 12. _____
PART III Work Out (9pts)
