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Bahria University, Islamabad Campus: C. Line Managers

The document provides instructions for a mid-term examination in principles of accounting for BS Accounting & Finance 1(A) students at Bahria University, Islamabad Campus. It contains 3 questions testing students' knowledge of key accounting concepts through multiple choice, short definitions, and journal entries/accounting equation problems. Students are instructed to show work for all questions in the closed book exam.

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Ifrah Bashir
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378 views

Bahria University, Islamabad Campus: C. Line Managers

The document provides instructions for a mid-term examination in principles of accounting for BS Accounting & Finance 1(A) students at Bahria University, Islamabad Campus. It contains 3 questions testing students' knowledge of key accounting concepts through multiple choice, short definitions, and journal entries/accounting equation problems. Students are instructed to show work for all questions in the closed book exam.

Uploaded by

Ifrah Bashir
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Bahria University, Islamabad Campus

Department of Management Studies


Mid-term Examination
Class: BS Accounting & Finance 1(A)
(Semester Spring/Summer 2021)
Paper Type: Objective/Subjective

Course: Principles of Accounting Date: _20/05/2021______


Course Code: _ACC 101______________ Time: _09:00 to 10:30 am
Teacher Name: _Muhammad Kamran Khan Max Marks: _12.50______
Time Allowed: _90 Minutes_____ Total Pages: ____4_____

INSTRUCTIONS:
i. All questions are compulsory.
ii. There are total 3 questions.
iii. The paper is closed book.

Student’s Name: _______________________ Enroll No: ______________________


Q 1. Select the correct option. Total Marks (1)

i. External users of financial accounting information include all of the following


except:
a. Investors.
b. Labor unions.
c. Line managers.
d. General public.

ii. Which of the following is not a user of internal accounting information?


a. Store manager.
b. Chief executive officer.
c. Creditor.
d. Chief financial officer.
iii. Waterworld Boat Shop purchased a truck for $12,000, making a down payment of
$5,000 cash and signing a $7,000 note payable due in 60 days. As a result of this
transaction:
a. Total assets increased by $12,000.
b. Total liabilities increased by $7,000.
c. From the viewpoint of a short-term creditor, this transaction makes the business more
liquid.
d. This transaction had no immediate effect on the owners’ equity in the business.

iv. Sunset Tours has a $3,500 account receivable from the Del Mar Rotary. On January
20, the Rotary makes a partial payment of $2,100 to Sunset Tours. The journal
entry made on January 20 by Sunset Tours to record this transaction includes:

a. A debit to the Cash Received account of $2,100.

b. A credit to the Accounts Receivable account of $2,100.

c. A debit to the Cash account of $1,400.

d. A debit to the Accounts Receivable account of $1,400.

v. Assume Fisher Corporation usually earns taxable income, but sustains a loss in the
current period. The entry to record income taxes expense in the current period will
most likely (indicate all correct answers):

a. Increase the amount of that loss.

b. Include a credit to the Income Taxes Expense account.

c. Be an adjusting entry, rather than an entry to record a transaction completed during the
period.

d. Include a credit to Income Taxes Payable.


Q 2. Write short definition of any five of the following. Total Marks (1.5)
a. Asset b. Owner’s Equity c. Liability
d. Balance Sheet e. Depreciation f. Account Payable

Q 3. Attempt any two of the following. All questions carry equal marks.
Total Marks (10)
3.1 Herrold Consulting incorporated on February 1, 2011. The company engaged in the
following transactions during its first month of operations:
i. Feb. 1 issued capital stock in exchange for $750,000 cash.
ii. Feb. 5 borrowed $50,000 from the bank by issuing a note payable.
iii. Feb. 8 purchased land, building, and office equipment for $600,000. The value of the
land was $100,000, the value of the building was $450,000, and the value of the
office equipment was $50,000. The company paid $300,000 cash and issued a note
payable for the balance.
iv. Feb. 11 Purchased office supplies for $600 on account. The supplies will last for
several months.
v. Feb. 14 paid the local newspaper $400 for a full-page advertisement. The ad will
appear in print on February 18.
vi. Feb. 20 several of the inkjet printer cartridges that Herrold purchased on February 11
were defective. The cartridges were returned and the office supply store reduced
Herrold’s outstanding balance by $100.
vii. Feb. 22 Performed consulting services for $6,000 cash.
viii. Feb. 24 Billed clients $9,000.
ix. Feb. 25 paid salaries of $5,000.
x. Feb. 28 paid the entire outstanding balance owed for office supplies purchased on
February 11.
Required: Prepare Journal entries, ledger and trail balance.

3.2 Goldstar Communications was organized on December 1 of the current year and had
the following account balances at December 31, listed in tabular form:
Early in January, the following transactions were carried out by Goldstar
Communications:
1. Sold capital stock to owners for $35,000.
2. Purchased land and a small office building for a total price of $90,000, of which
$35,000 was the value of the land and $55,000 was the value of the building. Paid
$22,500 in cash and signed a note payable for the remaining $67,500.
3. Bought several computer systems on credit for $9,500 (30-day open account).
4. Obtained a loan from Capital Bank in the amount of $20,000. Signed a note payable.
5. Paid the $28,250 account payable due as of December 31.

Required: Record the effects of each of the five transactions in accounting equation.

3.3 Sweeney & Associates, a large marketing firm, adjusts its accounts at the end of each
month. The following information is available for the year ending December 31, 2011:
1. A bank loan had been obtained on December 1. Accrued interest on the loan at
December 31 amounts to $1,200. No interest expense has yet been recorded.
2. Depreciation of the firm’s office building is based on an estimated life of 25 years.
The building was purchased in 2007 for $330,000.
3. Accrued, but unbilled, revenue during December amounts to $64,000.
4. On March 1, the firm paid $1,800 to renew a 12-month insurance policy. The entire
amount was recorded as Prepaid Insurance.
5. The firm received $14,000 from King Biscuit Company in advance of developing a
six-month marketing campaign. The entire amount was initially recorded as Unearned
Revenue. At December 31, $3,500 had actually been earned by the firm.
6. The company’s policy is to pay its employees every Friday. Since December 31 fell
on a Wednesday, there was an accrued liability for salaries amounting to $2,400.
Required: Record the necessary adjusting journal entries on December 31, 2011.

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