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TEST1

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TEST1

    Financial Accounting 1

    CLASS TEST 1

    Name:____________________ Class:___________

    Answer all the questions. Duration: 1 hourSection A (10 marks)

    1.A credit may signify .

    A.An increase in an asset account

    B.An decrease in the owner’s capital account

    C.An increase in the owner’s drawing account

    D.An increase in a liability account

    2.Which of the following concepts that does not belong to GAAP ?

    A.Business entity concept

    B.Matching concept

    C.Objectivity concept

    D.Historical concept

    3.A partnership is owned by .

    A.One individual

    B.Two individual

    C.Two or more individual

    D.The publics

    4.The main advantage of a company is .

    A.Easy to raise money

    B.Easy to set up

    C.Cheap to set up

    D.Easy to earn profit

    5.Which of the following accounts does not belong to accounting element “revenue”?

    A.Fees earned

    B.Unearned revenue

    C.Sales revenue

    D.Service fees

    6.Selects the following groups of accounts that have the same rule of debit and credit?

    A.accounts receivable , furniture , salaries payable

    B.sales revenue , travel expense , fees earned

    C.prepaid insurance , rent revenue ,depreciation expense

    D.unearned revenue, accounts payable , accumulated depreciation

    7.Selects the following items that belong to deferred expense (prepaid expense)?

    A.fees earned but not yet received

    B.taxes owed but payable in following month

    C.supplies on hand

    D.fees received but not yet earned

    8.The beginning balance of Prepaid Insurance is $3750, the amount of unexpired

    insurance at the end of the year is $2250, the adjusting entry is .

    A.Dr prepaid insurance 2250

     Cr insurance expense 2250

    B.Dr prepaid insurance 1500

     Cr insurance expense 1500

    C.Dr insurance expense 2250

     Cr prepaid insurance 2250

    D.Dr insurance expense 1500

     Cr prepaid insurance 1500

    9.The ending balance of unearned rent is $2500, if the accountant failed to record the

    adjusting entry for $800, what is the effect on income statement and balance sheet

    A.Overstate profit $1700, understate assets $1700

    B.Understate profit $1700, overstate liability $1700

    C.Overstate profit $800, understate assets $800

    D.Understate profit $800, overstate liability $800

    10.The accounting cycle follows the steps of .

    A.Transactions are posted to the ledger

    A trail balance is prepared, adjusting entries, worksheet

    Financial statements are prepared

    Transactions are analyzed and journalized

    B.Transactions are posted to the ledger

    A trail balance is prepared, adjusting entries, worksheet

    Transactions are analyzed and journalized

    Financial statements are prepared

    C.Transactions are analyzed and journalized

    Transactions are posted to the ledger

    Financial statements are prepared

    A trail balance is prepared, adjusting entries, worksheet

    D.Transactions are analyzed and journalized

    Transactions are posted to the ledger

    A trail balance is prepared, adjusting entries, worksheet

    Financial statements are prepared

Section B (20marks)

    On October 10, Koh Hui Hui established an interior decorating business, Mandarin Designs. During the remainder of the month, Koh Hui Hui completed the following transactions related to the business:

    Oct. 10. Hui Hui transferred cash from a personal bank account to an account to be used

    for the business, $15,000.

    10. Paid rent for period of October 10 to end of month, $1,600.

    11. Purchased a truck for $15,000, paying $5,000 cash and taking a bank loan for

    the remainder.

    13. Purchased equipment on account, $3,500.

    14. Purchased supplies for cash, $1,050.

    14. Paid annual premiums on property insurance, $750.

    15. Received cash for job completed, $3,100.

    21. Paid creditor for equipment purchased on October 13, $3,500.

    24. Recorded jobs completed on account and sent invoices to customers, $5,100.

    26. Received an invoice for truck expenses, to be paid in November, $280.

    27. Paid utilities expense, $1,205.

    27. Paid miscellaneous expenses, $180.

    29. Received cash from customers who owe $2,420.

    30. Paid salaries of employees, $2,500.

    31. Withdrew cash for personal use, $1,000.

    Instructions

    1. Journalise each transaction, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal)11 Cash 31 Capital

    12 Accounts Receivable 32 Drawing

    13 Supplies 41 Fees Earned

    14 Prepaid Insurance 51 Salaries Expense 16 Equipment 53 Rent Expense18 Truck 54 Utilities Expense21 Bank Loan 55 Truck expense22 Accounts Payable 59 Miscellaneous Expense2. Post the journals to the ledger

    3. Prepare a trial balance for Mandarin Designs as of October 31.

Answer:

    1(15marks)Oct.10.101113

    1414

    1521

    2426

    2727

    2930

    31

2.(items may be omitted)(4marks)

    Cash

     Balanc e

    DateItemDr.Cr.Dr.Cr.

    Oct.

    Accounts Receivable

    Oct.

    Supplies

    Oct.

    Prepaid Insurance

    Oct.

    Equipment

    Oct.

    Truck

    Oct.

    Bank Loan

    Oct. 11 10,000 10,000

    Accounts Payable22

     Balanc e

DateItemDr.Cr.Dr.Cr.

    Oct.

    Capital

    Oct.

    Drawing

    Oct.

    Fees Earned

    Oct.

    Salaries Expense

    Oct. 30 2,500 2,500Rent Expense

    Oct. 10 1,600 1,600Utilities Expense

    Oct. 27 1,205 1,205Truck Expense

    Oct. 26 280 280Miscellaneous Expense

    Oct.27........ 180 180

3.(1marks)

    MANDARIN DESIGNSTrial Balance

    October 31

    Cash

    Accounts Receivable Supplies

    Prepaid Insurance Equipment

    Truck

    Bank Loan

    Accounts Payable Capital

    Drawing

    Fees Earned

    Salaries Expense Rent Expense

    Utilities Expense Truck Expense

    Miscellaneous Expense...................................................................................

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