Choose the correct answer

1. Balance side of cash, Account receivable, equipment ,Vehicle, prepaid insurance, land and
building
A. Debit side B. Credit side C. A&B D. All
2. Not permanent account
A. Asset account B. Liability C. Capital D. Revenue
3. Temporary Account
A. Asset account B. Liability C. Capital D. Revenue
4. Increased capital account
A. Expense B. Revenue C. Liability
5. Balance side of Capital , Revenue & Liability Account
A. Debit side B. Credit side C. A&B D. None
6. Opposite of balance side of Capital , Revenue & Liability Account
A. Debit side B. Credit side C. A&B D. None
7. Balance side of Capital , Revenue & Liability Account
A. Debit side B. Credit side C. A&B D. None
8. One of the following is true
A. An exchange of goods or services is called business transaction
B. A collection of cash increased the balance of cash account
C. An account used for recording of a transaction of goods sales is a sales account
D. All
9. An account used for recording for payment of electric consumption
A. Utilities expense B. Telephone expense C. Salary expense D. Maintenance expense
10. An account used for recording for payment of salary
A. Utilities expense B. Telephone expense C. Salary expense D. Maintenance expense
11. First book of account
A. Journal B. Ledger C. Trial balance D. Worksheet E. Balance sheet
12. A second book of account
A. Journal B. Ledger C. Trial balance D. Worksheet E. Balance sheet
13. A data that recorded in the journal is
A. Correcting B. Entry C. an adjustment
14. Up-to dating of account balance
A. Adjustment B. Correcting C. reversing D. Closing entry
15. Making of a temporary account zero
A. Closing B. up-to-dating C. reversing D. Adjusting
16. An entry that require for making of an account Zero is
A. Closing entry B. Adjusting entry C. correcting entry D. Reversing entry
17. Temporary account
A. Salary expense B. withdrawal account C. income summary d. Sales E. All
18. Permanent Account
A. Cash B. Account payable C. Building D. Vehicle E. All
19. An accounting cycle that made for verify an equality of total debit balance and total credit
balance account is
A. Trial balance B. posting C. Adjustment D. Worksheet
20. An accounting cycle that made for transferring of entry from Journal to ledger
A. Trial balance B. posting C. Adjustment D. Worksheet
21. Type of financial statement that made for presenting of financial position
A. Income statement B. Balance sheet C. Cash flow statement D. change of owner equity
22. Type of financial statement that made for presenting of financial condition
A. Income statement B. Balance sheet C. Cash flow statement D. change of owner equity
23. Type of financial statement that made for presenting the change of initial capital
A.Income statement B. Balance sheet C. Cash flow statement D. change of owner equity
24. A financial statement that prepared by using Specific date of fiscal period
A.Income statement B. Balance sheet C. Cash flow statement D. change of owner equity
25. An account that doesn’t used for preparation of income statement
A. Revenue B. expense C. CGS D. Asset
26. Taxable employee income
A. Salary B. overtime C. Housing allowance D. position allowance E. All
27. Nontaxable employee income
A. Pension contribution less that 15% of employee salary
B. Medical Allowance
C. Transportation allowance less than ¼ of basic salary but not more than Br 2,200
D. All
28. A reason of cash account ledger and bank statement makes out of balance
A. Delay of recording either by bank or depositor or by both
B. Error recording either by bank or depositor or by both
C. A&B
D. None
29. Outstanding check
A. Added to depositor cash balance
B. Deduct from depositor cash balance
C. Deduct from bank statement balance
D. Added to bank statement balance
30. Deposit in transit
A. Added to depositor cash balance
B. Deduct from depositor cash balance
C. Deduct from bank statement balance
D. Added to bank statement balance
31. Deposit in transit
A. Cash collected by depositor but not deposit at bank
B. Issued check by not deposit at bank
C. Service charge
D. All
32. Outstanding check
A. Cash collected by depositor but not deposit at bank
B. Issued check by not deposit at bank
C. Service charge
D. All
33. Bank service charge
A. Added to depositor cash balance
B. Deduct from depositor cash balance
C. Deduct from bank statement balance
D. Added to bank statement balance
34. True about accounting equation
A. A=L+C B. A-L= C C. A-C= L D. All
35. True consequence of Accounting cycle
A. Analyzing business transaction , Journalizing ,positing , Trial balance , Adjusting , Worksheet ,
Financial statement , closing entry ,post-closing trial balance
B. Analyzing business transaction , Journalizing ,positing , Trial balance , Adjusting , Worksheet ,
closing entry , Financial statement, post-closing trial balance
C. Analyzing business transaction , Journalizing , Trial balance ,positing , Adjusting ,
Worksheet , closing entry , Financial statement, post-closing trial balance
D. Analyzing business transaction , Journalizing , Trial balance ,positing , Worksheet
,Adjusting , closing entry , Financial statement, post-closing trial balance
36. Contra account of Account receivable
A. Allowance for doubtful account B. Account payable account C. Sales account. All
37. A form of business that made by two or more partners
A. Sole proprietorship B. Partnership C. corporation D. All
 1. Partnership liquidation statement

ABD partnership
Balance sheet
Nov 30,2012
Non cash Account Ashenafi Berhanu Dawit
Description cash asset payable capital capital capital

Balance 70,000 110,000 54,000 50,000 34,000 42,000

Realization from sales 140,000 -110,000 0 11904.76 8095.24 10000.00
Balance after realization 210,000 0 54,000 61,905 42,095 52,000
payment of liability -54,000   -54,000 0 0 0
Balance after payment of
liability 156,000 0 0 61,905 42,095 52,000
Distribution of cash -156,000     -61905 -42,095 -52,000
Balance after distribution of
cash 0 0 0 0 0 0

Distribution of loss or gain from realization of non-cash asset

Total capital =50,000+34,000+42,000=126,000
Ashenafi ratio=50,000/126000=40%*30,000=11904.76
Berhanu ratio=34,000/126000=27%*30,000=8095.24
Dawit ratio=42,000/126000=33%*30,000= 10,000
Gain from realization =140,000-110,000=30,000

Journal entry
1. Realization of non-cash asset to Br 140,000
Cash Dr 140,000
Non cash asst Cr 110,000
Ashenafi capital Cr 11,904.76
Berhanu capital Cr 8,095.24
Dawit capital Cr 10,000.00
2. Payment of liability
Account payable Dr 54,000
Cash Cr 54,000
3. Distribution of cash
Ashenafi capital Dr 61,905
Berhanu capital Dr 42,095
Dawit capital Dr 52,000.
 Project III. Bank reconciliation
Saba company
Bank reconciliation
As Nov 30,2007

Bank statement ending balance --------------------------------------------------------------------3,630.

Add: deposit in transit ……………………………………………………………………………1080.00

Bank error ………………………………………………………………………………………126.00

Total Addition ……………………………………………………………………………………………………..1,206.00

Deduct out standing check

CK# 1,260.00

Error recording 1,560.00

Total …………………………………………………………………………………………………………………………………(2,820.00)

Adjusted cash balance ……………………………………………………………………………………………………… 2,016.00

Depositor cash balance --------------------------------------------------------------------------------------------2,118.00

Addition Note collected by bank ------------------------------------------------------------ 0.00

Depositor error …………………………………………………………………………………. 300.00

Total Addition …………………………………………………………………………………………………………………..300.00

Deduction

☞ Depositor error……………………………………………………………………………………………………..54.00
☞ N/F……………………………………………………………………………………………………………………….210.00
☞ Depositor error……………………………………………………………………………………………………. 90.00
☞ Bank service charge …………………………………………………………………………………………….228.00

Total deduction …………………………………………………………………………………………………………….(582.00)

Adjusted depositor cash balance………………………………………………………………………………………………….1,836.00

Given error
Project Four :

Preparation of Periodic depreciation

Case use Double decline method

Given

☞ Cost of machinery =100,000

☞ Useful life 5years
☞ Salvage value =10,000
Date of purchased Jan 1,2001

Required every year depreciation by using of decline balance method

Periodic Accumulatio
depreciatio n Book
Year Cost rate n depreciation value
1/1/2021 100,000       100,000
Dec 31,2001 60,000 40% 40000 40000 60,000
Dec 31,2002 36,000 40% 24000 64000 36,000
Dec 31,2003 21,600 40% 14400 78400 21,600
Dec 31,2004 12,960 40% 8640 87040 12,960
Dec 31,2005 10,000 40% 2960 90000 10,000
100/5*2 40%
Every years =100,000*40%=40,000

Dec 31,2002= ( 100000-40000)*40%=24,000

Dec 31,2003=(100,000-40,000-24,000)*40%=14400

Dec 31,2004=(100,000-40,000-24,000-14400)*40=8460

Dec 31,2005=(100,000-40,000-24,000-14400,8460)=2960

2. Required every year depreciation by using of Straight line method

periodic Accumulatio
salvage Depreciabl Useful depreciatio n
Year Cost value e cost life n depreciation BV
1/1/2021 100,000       100,000 0 100,000
Dec 31,2001 100,000 10000 90,000 5 18,000 18,000 82,000
Dec 31,2002 100,000 10000 90,000 5 18,000 36,000 64,000
Dec 31,2003 100,000 10000 90,000 5 18,000 54,000 46,000
Dec 31,2004 100,000 10000 90,000 5 18,000 72,000 28,000
 Dec 31,2005 100,000 10000 90,000 5 18,000 90,000 10,000
3. Required every year depreciation by using of Sum of the yea method

periodic Accumulatio
salvage Depreciabl Depreciatio depreciatio n
Year Cost value e cost n rate n depreciation BV
100,00
1/1/2021 100,000       100,000 0 0
Dec 31,2001 100,000 10000 90,000 5/15 30,000.00 30,000 70,000
Dec 31,2002 100,000 10000 90,000 4/15 24,000.00 54,000 46,000
Dec 31,2003 100,000 10000 90,000 3/15 18,000.00 72,000 28,000
Dec 31,2004 100,000 10000 90,000 2/15 12,000.00 84,000 16,000
Dec 31,2005 100,000 10000 90,000 1/15 6,000.00 90,000 10,000

Depreciation rate=N(N+)/2=5(5+1)/2=15
 Almada texitle PLC
Payroll sheet
For the month ended Hidar 30,2007
S. Employee's Basic Employ Over Allowance Gross Taxable Income Pension Credi Total Net pay
N Name salary er time earn earn tax t deducti
O pensio assoc on
n iatio
contrib n
ution Positi Hous Hard
on ing ship Employe Employ
e er
1 Letay Kidane 8710 958.1   1500 1000   12168.1 11210 2423.5 958.1 609.7   3991.3 8176.8
2 Dawit G/hiwot 1250 137.5 117.19       1504.69 1367.19 76.719 137.5 87.5   301.72 1202.971
3 Mesfine Bekele 4242 466.62 397.69     1696. 6803.11 4639.69 625.438 466.62 296.94   1388.99 5414.112
8
4 Welday Niguse 2,308 253.88 230.8       2792.68 2538.8 238.32 253.88 161.56 550 1203.76 1588.92
  Total 16510 1816.1 745.68 1500 1000 1696. 23268.6 19755.7 3363.98 1816.1 1155.7 550 6885.78 16382.8
8

per
Basic Monthly time OT hrs Total
Over time salary hrs rate done period of OT done rate OT  
Letay Kidane 8710 160 54.44          
Dawit G/hiwot 1250 160 7.81 6 holiday 2.5 117.19  
12:00mo to
26.51 6 4:00eveing 1.25 198.84  
4:00 eveing to 12:00
Mesfine Bekele 4242 160 26.51 5 mor 1.5 198.84  
Welday Niguse 2,308 160 14.43 8 Week end 2 230.80  
1. Property owned by business enterprise is called
A. Liability B. Asset C. Shareholders’ equity
2. How it is possible for a firm to be profitable and still go bankrupt
A. A firm has a positive net income but has failed to generate cash flow from operation
B. Sales has not improved even through credit policy have been eased
C. Net income has been adjusted for inflation
D. Earning have been increased more rapidly than sales
3. Statement that summarized revenue and expense during an accounting period
A. Trial balance B. income summary C. balance sheet D. income statement
4. Which one of the following is a problem in monitory implementation of work plan
A. Preparing financial report annually
B. Principle of work planning and delegation
C. Staff recording and regular performance report
D. Difficulty customer service situation
5. The monitory value of economic resource used and consumed to generate a business revenue
is reported as
A. Expense B. income C. Account payable D. fee earned
6. Which of the following job checking account in the ledger and financial statement?
A. Budget analysis B. Audit C. Financial D. management
7. Tolcha company collected Br 14,250 of it Br 38,000 account receivable. How does the
transaction affected balance sheet
A. Account receivable and owner equity decline by Br 38,000
B. Cash increased br 14,250 Account receivable decreased by Br 14,250
C. No net change in total asset , Liability & Owner equity
D. Both cash and owner equity increased by 14,250
8. Which of the following is account appear on post closing trial balance
A. Salary expense B. Supplies C. rent revenue D. Adverting expense
9. Kanet PLC is a Vat registered business operating in Adama . During the current month kanet
make purchase of Br 1,250,000 before vat and sales to including vat of Birr 1,450,000.the net
Vat to be reported for the period would be
A. Birr 187,500.00 B. 189,130.43 C.1,630.43 D. 30,000.00
1250000*0.15=187500 VAT receivable
1450000*0.15=217500 VAT Payable
Net tax payable =217500-187500=30000
10. The monthly basic salary of Ato Roba is birr 4,600. During the current month he earned over
time income of Br 750.00. How much is employment income tax to be deducted from Ato
Roba ?
A. 617.50 B. Birr 772.50 C. Bir 650. D. Birr 767.50
Salary + over time= 4,600.00+750.00= taxable income 5350=5350*0.25-0.565=772.500
Over time= 750.00
11. Statement issued covered less than a fiscal year
A. Interim financial statement B. Income statement C. Annual report D. Consolidate annual
report
12. Listing of a business entity Asset ,Liability and owner equity as of specific date is
A. Statement of cash flow B. statement of owner equity C. balance sheet D. income
statement
13. The difference between bid price and ask price is
A. Reversed exchange B. Swap C. Spot D. Spread
14. According the schedules of A tax rate employees whose taxable income up to
________________ Br per month below threshold for paying employee income tax
A. Birr 280 B. Birr 150 C. Br 100 D. Birr 600.00
15. Land is Generally shown on the balance sheet under
A. Fixed asset B. Intangible asset C. investment D. Current asset
16. Which of information can be gain from source such as industry Normal and key business ratios,
annual statement studies , analyst handbook’s ,and industry survey ?
A. Elaboration of financial statement disclosures
B. A company’s relative position within the industry
C. Forecasts of earning
D. The general economic condition
17. The exchange of information between peoples ,e.g by means of speaking, writing or using of the
common system of sign or behaviors
A. Sign language B. communication channel C. Communication agency D. communication
18. Business income tax and turn over tax are _________________& _____________tax category
respectively
A. Direct & indirect B. Direct and direct C. Indirect and direct
19. The process of transferring data from journal to ledger
A. Identifying B. Journalizing C. Closing D. posting
20. Financial statement that present revenue and Expense account is
A. Statement of cash flow B. statement of owner equity C. balance sheet D. income
statement
21. On Jan 10,2010 ABC Manufacturing Company purchased raw material from various Vat
registered Suppliers .The cost of raw material excluding Vat was Br 40,000. After the Company
adds process cost and mark up of Br 20,000.00 The goods are sold to the whole seller at before
vat Birr 60,000.00. What is the amount of Vat to be collected and remitted to the tax Authority
A. 4175 B. 8250.00 C. 3750.00 D. 3000.00
Sales 60,000
Vat 60,000*0.15= 9,000
Purchase Material purchase =40000
Vat 40000*0.15 = 6,000
Net vat report 3,000.00
22. Assume that at the beginning of the period the balance of A/R and Allowance for doubtful
account Br 110,000( Dr)and 2000(CR) respectively . Credit sales and collection of account
 receivable during the period were Birr 160,000.00 and Birr 80,000 respectively Besides , During
period A/R of Birr 2,000.00 has been written off based on past experience, 1% of credit sales
expected to be uncollectable . Net realized Value equal is
A. Birr 192400 B. Birr 185200 C. Birr 191200. D. Birr 186400
A/R beginning balance 110,000
Credit sales during the period 160,000
Collected during the period (80,000)
Allowance for doubtful (2,800)
Written off ( 2,000)
Net realized 185,200

23. If revenue were Br 75000 and expense were Br 42500.00, and owners withdrawal were Br
2000.00 The amount of Net income /Net loss is
A. Br 12,500.00 net income
B. Br 32,500 net income
C. Br 52,500 net income
D. Br 32,500 net loss
75000-42500=32500
24. Which of the following is non-depreciable asset
A. Vehicle B. Building C. Land D. Air plane
25. From the following who are appropriately provide compliance
A. Media and communication C. Relevant body in the organization
B. Antidiscrimination legislation D. compliant customer
26. The book value an asset equal to
A. Asset’s cost less Accumulation depreciation
B. Replacement cost of the asset
C. Blue book value relied on by second market
D. Asset fair value less than its historical cost
27. Matching supplies invoice, the purchase order and received report normally should be the
responsibly of _____________
A. Purchasing function B. General accounting function C. Treasury function D. warehouse
receiving function
28. Kebede sole proprietorship for Jan 31,2010 Drawing br 8,000 from the business how can you
record the transaction
A. Cash debit and drawing credit
B. Drawing debit and capital credit
C. capital credit and Drawing debit
D. Drawing debit and Cash debit
29. A statement that used for comparing bank balance with company balance
A. Bank reconciliation B. statement of owner equity C. balance sheet D. income
statement
30. The first step in accounting cycle is
 A. Trial balance B. Adjustment C. Journalizing D. posting
31. It is a continues improving process
A. Providing supporting and encouragement
B. Evaluating on and monitoring effectiveness
C. Creating potential customer
D. Teaching another member by the team
32. How would short investment in the marketable security be classified
A. Cash B. Financial activities C. operational activities D. Investment activities
33. What is the creditors objective in performing an analysis of financial statement
A. To decides whether or not the borrower has the ability to repay interest or principal on
borrowed fund
B. To determine the company future earnings stream
C. To decides whether or not the firm has operating profitability in past
D. To determine the firms capital structure
34. If total asset increased by br 35,000 during the period and total liability increased by br 20,000
during the same , the amount and the direction (increased or decreased ) of the change in
owner equity for the period is a (an)
A. Birr 15,000 increased B. Birr 55,000 decreased C. Birr 55,000 increased D. Birr 15,000
decreased
35. Maturity value of Br 20,000 90 days , 13% note is
A. Br 20,000 B. Br 20650 C. Br 20065.00 D. Br 26,500
20000*90/360*13/100
36. Report can be prepared though
A. Hand prepared B. Security restriction C. regular records D. Storage facilities
37. A financial statement used for show Asset , liabilities and owner equity is
A. Income summary B. statement of owner equity C. balance sheet D. income statement
38. Which one of the following is an external party?
A. Bank B. owners C. Managers D. Accountant
39. Which one of the following entries will be entered in the general Journal
A. Purchased goods on credit
B. Goods purchased and paid cash
C. Sold goods on credit
40. The process of transfer data from journal to ledger
A. Posting B. Closing C. Journalizing D. identifying
41. Which of the following consider as an opportunity in SWOT analyzing?
A. Poor employee moral
B. Increased the competitor in the market
C. Increase demand for our product
D. Increased personal productivity
42. Which one of the following organizational policy and procedure?
A. Confirmation receipts
B. Authorization slip
 C. Computer system document
D. Relevant financial loss
43. What are internal source of cash?
A. Cash inflow from financial activities
B. Cash inflow from investment activities
C. Cash inflow from operational activities
D. Cash outflow from operating
44. Format that list account to their location in the ledger
A. Ledger B. Journal C. balance sheet D. Chart of account
45. An inflow of cash that would result from which of the following?
A. The decreased in an equity account
B. The increased in an asset account other than cash
C. The decreased in a liability account
D. The decreased in an asset account other than cash
46. Which of the following account is used to record the amount remain from net income and
dividend
A. Expense B. income summary C. revenue D. Retain earning
47. Which of the following statement about users of accounting information is incorrect?
A. Regulatory Authorities are internal users
B. Present creditors are external users
C. Taxing authorities are external users
D. Managements are internal users
48. A deduction from list price to encourage early payment is called
A. Purchase return and allowance
B. Sales return and allowance
C. Sales discount
D. net sales
49. The basis account in which all revenue earned and expense incurred are recorded in the account
A. Cash poor basis Accounting
B. Cash basis accounting
C. Credit basis accounting
D. Accrual basis accounting
50. Which one of the following considered in quality standards?
A. Self-environment aspect
B. Material specification
C. Fault identification
D. Material and component
51. Tax receivable is categorized as
A. Interest receivable B. Account receivable C. Note receivable D. Other receivable
52. Which one of the following not indirect tax
A. Business income tax and rental income tax
B. Turn over tax and Value added tax
 C. Business income tax and excise tax
D. Value added tax and employment income tax
53. What are external source of cash
A. Cash outflow to financial activities
B. Cash outflow to investment activities
C. Cash inflow from operational activities
D. Cash inflow from investment activities
54. Which of the following users assess the attractiveness of investment in the business
A. Employees B. Tax Authorities C. Financial analysis D. Bank
55. Which of the following highlight the correct order of the stage in the accounting cycle?
A. Journalizing , final account , posting to the ledger and trial balance
B. posting to the ledger and trial balance, final account and Journalizing
C. Journalizing, posting to the ledger, trial balance and, final account
D. posting ,Journalizing , final account and trial balance
56. A group of account for a business entity
A. Balance sheet B. Journal C. Ledger D. Income statement
57. Which one of the following principle state the revenue earned during the period matching with
the expense incurred during the period
A. Measurement principle B. Going concern C. Matching principle D. Revenue recognition
58. Which one of the following errors can be identified with the help of trial balance
A. Recording a single transaction twice
B. Posting an account to the wrong side
C. Omitting a transaction
D. Debit cash instead of account receivable in the same amount
59. The balance sheet shows
A. The Change in the owner’s capital account
B. The change in cash account
C. The financial position of the business
D. The result of the business
60. Which profit margin measures the overall operation efficiency of the firm
A. Return on equity
B. Operating profit margin
C. Gross profit margin
D. Net profit margin
61. The plant asset is purchased by total amount of Br 100,000. The estimated useful life years and
salvage value 10 years and Br 10,000 respectively. If the company used double decline method
what is the depreciation rate ?
A. 10 percent B. 5 percent C. 15 percent D. 20 percent
(100/10)*2=20*100/100=20%
62. Expense paid in advance are to be
A. Accrual and deferral
B. Deferral
 C. Unearned revenue
D. Accrual
63. Gross amount received or to be received from customer from service provided
A. Service revenue B. rent revenue C. interest revenue D. Sales revenue
64. A maturity date of a 60 days note dated Feb 12 is
A. April 11 B. March 13 C. April 12 D. Feb 20
Feb=17 + March =31 + April =12
65.