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Sheet (4)
First year
Midterm مزكرة مراجعة المتحان ال
Edited by/ Dr. magdy kamel
للتواصل على جروب الخاص كلمنى وتس اضيفك
Tel/ 01273949660
Chapter (1)
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Accounting is often called the language of business
يجب على الشركة ان تحدد االحداث االقتصادية ( العملية ) ثم تسجلها ثم تبلغها للمستخدمين المهتمين
)(سواء مستخدمين داخل الشركة او مستخدمين خارج الشركة
1- identify : to select economic events (transaction) relevant to its business
Assumptions
1- monetary unit assumption )فرض الوحده النقدية (او فرض استقرار العملة
The assumption that unit of measure remains sufficiently constant over time is
Owner’s Statement
Income Balance
Equity of Cash
Statement Sheet
Statement Flows
Debit credit
Left side right side
Journal entries
Notes
Simple entry : two accounts, one debit and one credit
Compound entry : three or more accounts
Exercise (1)
Determine the missing items.
Assets = Liabilities + Owner’s Equity
$75,000 $52,000 (a)
(b) $28,000 $34,000
$84,000 (c) $55,000
Question (2)
the items listed below for the month of September.
adam, Capital, September 1 $42,000
Accounts payable ……………………… 7,000
Equipment ………………………………… 30,000
Service revenue ……………………….. 25,000
adams, Drawings ………………………. 6,000
Dental supplies expense ………….. 3,500
Cash …………………………………………. 6,000
Utilities expense ………………………. 700
Dental supplies …………………………. 2,800
Salaries expense ……………………… 9,000
Accounts receivable ………………… 14,000
Rent expense ………………………….. 2,000
instruction
Prepare an income statement, an owner's equity statement, and a balance sheet
Solution
Adam company
Income Statement
For the Month Ended September 30, 2008
Revenues
Service revenue .......................................................... $25,000
Expenses
Salaries expense.................. $9,000
Dental supplies expense ..... 3,500
Rent expense ...................... 2,000
Utilities expense ................. 700
Total expenses ............................... 15,200
Net income ................................................................. $ 9,800
(T) 10. At the time an asset is acquired, cost and fair value should be the same.
(T) 11. The basic accounting equation is in balance when the creditor and ownership
claims against the business equal the assets.
(T) 12. External transactions involve economic events between the company and some
other enterprise or party.
(T ) 13. In the owner's equity statement, revenues are listed first, followed by expenses,
and net income (or net loss)
(T) 14. The purchase of office equipment on credit increases total assets and total liabilities
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(T) 15. The primary purpose of the statement of cash flows is to provide information about
the cash receipts and cash payments of a company during a period.
(F) 16. Net income for the period is determined by subtracting total expenses and
drawings from total revenues
(F) 17. Management of a business enterprise is the major external user of information.
(T) 18. Financial statements are the major means of communicating accounting
information to interested parties.
(F) 19. Bookkeeping and accounting are one and the same because the bookkeeping
function includes the accounting process.
(F) 20. The hiring of a new company president is an economic event recorded by the
financial information system.
(F) 22. The study of accounting will be useful only if a student is interested in working for a
profit oriented business firm
(T) 23. Even though a partnership is not a separate legal entity, for accounting purposes
the partnership affairs should be kept separate from the personal activities of the
owners
(F) 24. Identifying is the process of keeping a chronological diary of events measured in
dollars and cents.
4. Which of the following events cannot be quantified into dollars and cents and recorded
as an accounting transaction?
a. The appointment of a new CPA firm to perform an audit.
b. The purchase of a new computer.
c. The sale of store equipment.
d. Payment of income taxes.
7. Bookkeeping differs from accounting in that bookkeeping primarily involves which part
of the accounting process?
a. Identification.
b. Communication.
c. Recording.
d. Analysis.
10. The cost principle requires that when assets are acquired, they be recorded at
11. The historical cost principle requires that when assets are acquired, they be recorded at
a. appraisal value. b. cost.
c. market price. d. book value.
14. A basic assumption of accounting that requires activities of an entity be kept separate
from the activities of its owner is referred to as the
a. stand alone concept. b. monetary unit assumption.
c. corporate form of ownership. d. economic entity assumption.
15. The XYZ Company has five plants nationwide that cost a total of $100 million. The
current fair value of the plants is $500 million. The plants will be recorded and reported as
assets at
a. $100 million. B. $600 million.
c. $400 million. d. $500 million.
19. If total liabilities decreased by $15,000 and owner’s equity increased by $5,000 during a
period of time, then total assets must change by what amount and direction during that
same period?
a. $20,000 increase b. $10,000 decrease
c. $10,000 increase d. $15,000 decrease
20. As of June 30, 2020, habibo Company has assets of $100,000 and owner’s equity of
$5,000. What are the liabilities for habibo Company as of June 30, 2020?
a. $85,000 b. $90,000
c. $95,000 d. $100,000
23. external users of financial accounting information include all of the following except
…………….
a. lenders such as bankers
b. governmental agencies such as the IFR.
c. employees of a business.
d. potential investors
24. which of the following groups would have access to managerial accounting information?
a. bankers b. investors
c. competitors of the business d. managers
chapter (2)
Example (1)
Transactions for Ed Peter Company for the month of October are presented
below.
1. Invested an additional $40,000 cash in the business.
2. Purchased land costing $28,000 for cash.
3. Purchased equipment costing $12,000 for $3,000 cash and the remainder on
credit.
4. Purchased supplies on account for $800.
5. Paid $1,000 for a one-year insurance policy.
6. Received $3,000 cash for services performed.
7. Paid wages to employees for $2,500.
8. Petry withdrew $1,000 cash from the business.
Required
1) prepare the journal entries
Solution
Journal entries
Date Account title and explanation Ref. Debit Credit
1 Cash 40,000
E. Peter, Capital 40,000
2 Land 28,000
Cash 28,000
3. Equipment 12,000
Cash 3,000
Accounts Payable 9,000
4 Supplies 800
Accounts Payable 800
Example (2)
The ledger account balances for Jenkins Company are listed below.
Accounts Payable ………………….. $ 8,000
Accounts Receivable ………………… 7,000
Cash ………………………………………… 13,000
Jenkins, Capital ……………………….. 11,000
Jenkins, Drawing ………………………. 4,000
Repair Revenue ……………………….. 40,000
Salaries Expense ………………………. 25,000
Unearned Revenue …………………… 2,000
Utilities Expense ………………………. 12,000
Instructions
Prepare a trial balance in proper form for Jenkins at December 31, 2020.
Solution
JENKINS COMPANY
Trial Balance
December 31, 2020
Debit Credit
Cash $13,000
Accounts Receivable 7,000
Accounts Payable $ 8,000
2,000
Unearned Revenue 11,000
4,000
Jenkins, Capital 40,000
Jenkins, Drawing 25,000
Repair Revenue 12,000
Salaries Expense
Utilities Expense
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61,000 61,000
(F) 1. A new account is opened for each transaction entered into by a business firm.
(F ) 2. The recording process becomes more efficient and informative if all transactions are
recorded in one account.
(F) 3. When the volume of transactions is large, recording them in tabular form is more
efficient than using journals and ledgers.
(F) 8. Debit and credit can be interpreted to mean increase and decrease, respectively.
(F) 9. The double-entry system of accounting refers to the placement of a double line at
the end of a column of figures.
(F) 10. A credit balance in a liability account indicates that an error in recording has
occurred
(T) 11. The double-entry system is a logical method for recording transactions and
results in equal debits and credits for each transaction.
(F) 14. The ledger is merely a bookkeeping device and therefore does not provide much
useful data for management.
(T) 15. The chart of accounts is a listing of the accounts and the account numbers which
identify their location in the ledger.
(T) 16. The primary purpose of a trial balance is to prove the mathematical equality of
the debits and credits after posting.
(F) 17. The trial balance will not balance when incorrect account titles are used in
journalizing or posting.
(F) 19. The chart of accounts is a special ledger used in accounting systems
(T) 20. A general ledger should be arranged in the order in which accounts are presented
in the financial statements, beginning with the balance sheet accounts.
(T) 21. Each transaction must be analyzed in terms of its effect on the accounts before it
can be recorded in a journal.
(F) 22. Transactions are entered in the ledger accounts and then transferred to journals.
(F) 23. All business transactions must be entered first in the general ledger.
(T) 24. A simple journal entry requires only one debit to an account and one credit to an
account.
(F) 25. A compound journal entry requires several debits to one account and several
credits to one account.
(F) 28. The drawing account is a subdivision of the owner's capital account and appears as
an expense on the income statement.
(F) 30. Under the double-entry system, revenues must always equal expenses.
(F) 31. Transactions are entered in the ledger first and then they are analyzed in terms of
their effect on the accounts.
6. A ledger:
a. contains only asset and liability accounts;
b. should show accounts in alphabetical order.
c. is a collection of the entire group of accounts maintained by a company.
d. is a book of original entry.
7. Posting:
a. normally occurs before journalizing.
b. transfers ledger transaction data to the journal.
c. is an optional step in the recording process.
d. transfers journal entries to ledger accounts
8. Before posting a payment of $5,000, the Accounts Payable of Senator Company had a
normal balance of $16,000. The balance after posting this transaction was:
a. $21,000.
b. $5,000.
c. $11,000.
d. Cannot be determined
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9. A trial balance will not balance if
a. a journal entry is posted twice. b. a wrong amount is used in journalizing.
c. incorrect account titles are used in journalizing.
d. a journal entry is only partially posted
11. The trial balance of El Hady Company had accounts with the following normal balances:
Cash $5,000, Service Revenue $85,000, Salaries and Wages Payable $4,000, Salaries and
Wages Expense $40,000, Rent Expense $10,000, Owner's Capital $42,000; Owner's Drawings
$15,000; Equipment $61,000. In preparing a trial balance, the total in the debit column is:
a. $131,000.
b. $216,000.
c. $91,000.
d. $116,000.
12. At January 1, 2020, El badry Industries reported owner’s equity of $130,000. During
2020, Burton had a net loss of $30,000 and owner drawings of $20,000. At December 31,
2020, the amount of owner’s equity is
a. $130,000.
b. $140,000.
c. $100,000.
d. $80,000.
13. AL Hasan Company showed the following balances at the end of its first year:
Cash $ 7,000
Prepaid insurance 700
Accounts receivable 3,500
Accounts payable 2,800
Notes payable 4,200
Al Hasan, Capital 1,400
14. Cerner Company showed the following balances at the end of its first year:
Cash $ 5,000
Prepaid insurance 500
Accounts receivable 2,500
Accounts payable 2,000
Notes payable 3,000
Cerner, Capital 1,000
Cerner, Drawing 500
Revenues 15,000
Expenses 12,500
What did Cerner Company show as total credits on its trial balance?
a. $21,500 b. $21,000
c. $20,500 d. $22,000
15. In the first month of operations for S. Omran Industries, the total of the debit entries
to the cash account amounted to $8,000 ($4,000 investment by the owner and revenues of
$4,000). The total of the credit entries to the cash account amounted to $5,000 (purchase
of equipment $2,000 and payment of expenses $3,000). At the end of the month, the cash
account has a(n)
a. $2,000 credit balance.
b. $2,000 debit balance.
c. $3,000 debit balance.
d. $3,000 credit balance
16. At December 1, 2020, Marco Company’s accounts receivable balance was $1,200. During
December, Marco had credit revenues of $5,000 and collected accounts receivable of
$4,000. At December 31, 2020, the accounts receivable balance is
a. $1,200 debit.
b. $2,200 debit.
c. $6,200 debit.
d. $2,200 credit.
18. The usual sequence of steps in the transaction recording process is:
a. journal , analyze , ledger.
b. analyze , journal , ledger.
c. journal , ledger , analyze.
d. ledger , journal , analyze.
21. The Ryder’s Uptown Grill received a bill of $400 from the Erml Advertising Agency. The
owner, John Ryder, is postponing payment of the bill until a later date. The effect on
specific items in the basic accounting equation is
a. a decrease in Cash and an increase in Accounts Payable.
b. a decrease in Cash and an increase in J. Ryder, Capital.
c. an increase in Accounts Payable and a decrease in J. Ryder, Capital.
d. a decrease in Accounts Payable and an increase in J. Ryder, Capital.
22. James Company purchases $600 of equipment from Mundelein Inc. for cash. The effect
on the components of the basic accounting equation of James Company is
a. an increase in assets and liabilities.
b. a decrease in assets and liabilities.
c. no change in total assets.
d. an increase in assets and a decrease in liabilities
25. Ironton Company’s owner’s equity at the beginning of August 2020 was $300,000.
During the month, the company earned net income of $60,000 and owner’s drawings were
$20,000. At the end of August 2020, what is the balance in owner’s equity?
a. $260,000
b. $300,000
c. $340,000
d. $380,000
26. On January 1, 2020, Jackson Company reported owner’s equity of $470,000. During the
year, the owner withdrew cash of $20,000. At December 31, 2020, the balance in owner’s
equity was $500,000. What amount of net income or net loss would the company report for
2020?
a. Net income of $30,000 b. Net loss of $50,000
c. Net income of $10,000 d. Net income of $50,000
38. After transaction information has been recorded in the journal, it is transferred to the
a. trial balance. b. income statement.
c. book of original entry. d. ledger.
39. The final step in the recording process is to transfer the journal information to the
a. trial balance. b. financial statements.
c. ledger. d. file cabinets.
41. During 2008, its first year of operations, Jane’s Bakery had revenues of $60,000 and
expenses of $33,000. The business had owner drawings of $18,000. What is the amount
of owner’s equity at December 31, 2008?
a. $0 b. $18,000 debit
c. $9,000 credit d. $27,000 credit
42. On July 7, 2008, Reethink Enterprises performed cash services of $1,400. The entry to
record this transaction would include
a. a debit to Service Revenue of $1,400.
b. a credit to Accounts Receivable of $1,400.
c. a debit to Cash of $1,400.
d. a credit to Accounts Payable of $1,400
43. Jack Wiser withdraws $300 cash from his business for personal use. The entry for this
transaction will include a debit of $300 to
a. Jack Wiser, Drawing. b. Jack Wiser, Capital.
c. Owner's Salary Expense. d. Salaries Expense
44. Meenen Company purchases equipment for $1,200 and supplies for $400 from
Sanders Co. for $1,600 cash. The entry for this transaction will include a
49. An account is a part of the financial information system and is described by all except
which one of the following?
a. An account has a debit and credit side.
b. An account is a source document.
c. An account may be part of a manual or a computerized accounting system.
d. An account has a title.
53. Dawson’s Delivery Service purchased equipment for $2,500. Dawson paid $500 in cash
and signed a note for the balance. Dawson debited the Equipment account, credited Cash
and
a. nothing further must be done.
b. debited the Dawson, Capital account for $2,000.
c. credited another asset account for $500.
d. credited a liability account for $2,000
54. On January 14, Franco Industries purchased supplies of $500 on account. The entry to
record the purchase will include
a. a debit to Supplies and a credit to Accounts Payable.
b. a debit to Supplies Expense and a credit to Accounts Receivable.
c. a debit to Supplies and a credit to Cash.
d. a debit to Accounts Receivable and a credit to Supplies.
55. Able Company pays its employees twice a month, on the 7th and the 21st. On June 21,
Able Company paid employee salaries of $4,000. This transaction would
a. increase owner’s equity by $4,000.
b. decrease the balance in Salaries Expense by $4,000.
c. decrease net income for the month by $4,000.
d. be record
56. During February 2008, its first month of operations, the owner of Rutwing Enterprises
invested cash of $25,000. Rutwing had cash revenues of $4,000 and paid expenses of
$7,000. Assuming no other transactions impacted the cash account, what is the balance
in Cash at February 28?
a. $3,000 credit b. $22,000 debit
c. $29,000 debit d. $18,000 credit
57. At January 31, 2008, the balance in Prieto Inc.’s supplies account was $250. During
February, Prieto purchased supplies of $300 and used supplies of $400. At the end of
February, the balance in the supplies account should be
58. When three or more accounts are required in one journal entry, the entry is referred to
as a
a. compound entry. b. triple entry.
c. multiple entry. d. simple entry
59. When two accounts are required in one journal entry, the entry is referred to as a
a. balanced entry. b. simple entry.
c. posting. d. nominal entry