Principles Seifu Work Sheet

 

Part I: Write True if the statement is correct and False if the statement is not correct

 ________ 1. A group of related accounts that comprise all accounts of a specific business is called the ledger.  _______ 2. The capital account of a sole proprietorship at the end of the period doesn't show the ending balance of capital that should appear on the balance sheet if it is before closing.  _______ 3. During closing, the Income Summary account is credited and capital is debited if there is net loss for the year.  _______ 4. When preparing bank reconciliation for a period, the depositor has to notify the bank  

if there are any deposits in transit so that the bank will add them within that period.

 _______ 5. When goods are sold FOB shipping point, the goods become the property of the  buyer only when the buyer receives them at destination. Part II. Choose the best answer for the following questions

 _____ 1. Which of the following is/are not external users of accounting acc ounting accou nting information provided by a particular organization? A. Federal Inland Revenue Authority

C. Sales managers

B. Potential investors

D. None

 ______ 2. A debit may signify A. an increase in a liability account B. decrease in owner's equity C. increase in asset D. increase in an expense account E. all except A  ______ 3. The form which lists the balance and an d titles of accounts in the ledger of an organization on a given day is: A. income statement

C. balance sheet

B. income summary

D. trial balance

1

 

 ______ 4. If the appropriate adjusting entry for accrued salaries is omitted at the end of a fiscal year: A. assets for the period will be overstated B. liabilities for the period will be understated C. expenses for the period will be overstated D. owner's equity for the period will be understated  ______ 5. If the the effect of o f the debit portion p ortion of an adjusting entry e ntry is to decrease the balance of a liability account, which of the following statement describe the effect of the credit  portion of the entry? A. Increase the balance of an asset account B. Increase the balance of an expense account C. Increase the balance of a revenue account D. Decrease the balance of an asset account  ______ 6. Which of the following accounts will appear in the post-closing trial balance of a  business? A. Drawings

C. Wages expense

B. Accumulated depreciation

D. Sales revenue

The foll The followi owing ng data aree ta take ken n from from the the inco income me st stat atem emen entt co colu lumn mns s of th thee work worksh shee eett of a llow owin ing g da dattaa ar colum col umns ns merchandising business prepared for the year ended December 31, 2002.  Net Income

Br. 12,500

Sales

  

45,000

Income Summary

  

10,000 Dr. and 6,000 Cr.

Gross Purchase

  

19,750

Purchase Ret. & Allowances

200

Purchase Discount

  50 50

2

 

 Based on the the data given give n above answer answer questions quest ions 7 – 9 given questions

 ______ 7. What is the total cost of goods sold for the year? A. Br. 69,500

B. Br. 89,250

D. Br. 57,000

E. none

C. Br. 23,500

 ______ 8. What is the amount of total operating expenses? A. Br. 9,000

C. Br. 21,500

B.  Br. 32,5000

E. none

D. Br. 36,000

 ______ 9. What is the amount of gross profit fort the year? A. Br. 9000 B. Br. 21,500

C. Br. 23,500

E. none

D. Br. 25,000

 ______ 10. Which of the following reconciling items necessitate an entry in the depositors record? A. Bank service charge B. Deposit in transit C. Outstanding checks D. All of the above Part III. Workout Questions  Exercise 1 1

Presented below is the trial balance of Modesty General Service on June 30,2001, the end of the current fiscal year.

3

 

Modesty General Service Trial balance June 30.2001 Dr .  

Account Title

Cash

Cr.

Br. 22,600

Account Receivable

Br. 31,600

Office Supplies

10,000

Office Equipment

80,140

Account Payable

36,000

Mr. X Capital

102,000

Mr. X Drawing

36,980

Service Revenue

96,600

Wages Expense

24,000

Rent Expense Advertising Expense

19,200 5,000   5,000 251,720  

206,460

The trial balance is incorrect because of the following errors:

1.

The sum of the debits in the cash account is Br. 86,000 and the sum of  the credits is Br. 60,000.

2.

A Br. 550 payment from a credit customer was not posted to Accounts Receivable.

3.

A purchase of supplies on account acco unt nt for Br. 800 was not recorded at all. accou

4.

A transposition error was committed in copying the balance of Service Revenue account to the trail balance. The correct amount was 90,660.

5.

Utilities expense with a balance of Br. 2000 was omitted from the trail  balance.

6.

The balance of Mr. X Drawing was overstated by Br. 2000.

7.

A cr cred edit it of Br. Br. 25 2500 00 in Acco Accoun unts ts Pa Paya yabl blee was was over overlo look oked ed in determining the balance of the account.

4

 

8.

Accumulated Depreciation on equipment with a balance of Br. 1210  Accumulated was omitted from the trail balance

Required: Prepare a correct trail balance for the company as of June 30, 2001 assuming every account in

the ledger has a normal balance.  Exercise - 2

Connection Co. received a note from Hot Co. on July 24,2001. The company discounted the note at Disdain bank on August 23, 2001. A summary of the facts concerning the note follows: Face amount ……………………………….. ………………………… …….. …………………………… ….. Br. 720,000 Term of note …………………………………..120 …………………………………..120 days Date of note (issue date) ………………………7/24/2001 Interest rate on note ………………………… ……………………………..12% …..12% Date of discounting ………………………… ………………………….. 8/23/2001 Discount rate charged by bank…………………. 15%  Required:   Determine  Required:

a) The maturity value of the note  b)  Number of days from the discount date to maturity c)

Amount of the discount

d)

Cash proceeds received by the company

e)

Journal entry at each of the above dates

5