PALESTINE POLYTECHNIC UNIVERSITY

College of Dual Studies

Business Technology
First Semester 2023/2024
Accounting Principles (I) -----------------------------------------------------Homework
Instructor name: Mohammed Shalalfeh Student name…………………………… Date: October
31, 2023 Student number………………………… Deadline: November 3, 2023
Section………………………………………

Question 1: Choose the Correct Answer (12 marks)

1. Which of the following would not be considered an external user of accounting data for the
Company?
a. Labor union
b. Management
c. Creditors
d. Customers

2. Bookkeeping differs from accounting in that bookkeeping primarily involves which part of
the accounting process?
a. Identification
b. Communication
c. Recording
d. Analysis

3. Generally accepted accounting principles are

a. Income tax regulations of the Internal Revenue Service.
b. Standards that indicate how to report economic events.
c. Theories that are based on physical laws of the universe.
d. Principles that have been proven correct by academic researchers.

4. Liabilities
a. Are future economic benefits.
b. Are existing debts and obligations.
c. Possess service potential.
d. are things of value used by the business in its operation

5. Sources of increases to owner's equity are

a. Additional investments by owners.
b. Purchases of merchandise.
c. Withdrawals by the owner.
d. Expenses.

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 6. 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

7. The time period assumption states that the economic life of a business entity can be
divided into artificial time periods.
a. True b. false

8. The revenue recognition principle dictates that revenue be recognized in the accounting
period in which cash is received
a. True b. false

9. Debit and credit can be interpreted to mean increase and decrease, respectively.
a. True b. false

10. The normal balance of any account is the

a. left side.
b. right side.
c. side which increases that account.
d. side which decreases that account

11. Which one of the following is not a part of an account?

a. Credit side
b. Trial balance
c. Debit side
d. Title

12. An adjusting entry

a. affects two balance sheet accounts.
b. affects two income statement accounts.
c. affects a balance sheet account and an income statement account.
d. is always a compound entry

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Question 2 (12 marks)
On January 31, 2023 Ahmed decide to start his business - Hebron Company The following

events & transactions occurred during February, 2023 in Hebron Company.

Feb. 1- Ahmed invested $50,000 cash to start a business.

3- Purchased office equipment for $15,000 paid $6,000 cash & signing notes payable for the
remainder amount
5- Performing services of $8000, received $3,000 cash & the remainder on account. 7-
Purchased supplies of $2,000 on account from Read Supply Company. 8- Received
$1,600 cash from customers in advance.
9- Incurred utility expense on account $500
10- Received $4,000 cash from customers on account
14- Paid 40% of Accounts payable due to Read Supply Company
15- Received $1,000 cash from customers for services performed
20- Withdrew $800 cash for personal use
28- Paid $2,400 cash for one-year insurance policy
28- Paid salaries to employees for the month of February $2,200.

Instructions:
1- Journalize the February transactions
2- Post to cash account only & determine the cash balance at February 28
Date Accounts Titles Debit Credit

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Question 3 (6 marks)
AL Azhar Company was started on January 1, 2023 by Omer. The trial balance at January 31,
2023 presented below:
AL Azhar Company
Trial Balance
January 31, 2008
Debit Credit
Cash $7,000
Accounts Receivable 5,000
Prepaid insurance 2,400
Supplies 3,500
Office Equipment 14,500
Accounts Payable $2,500
Unearned Service Revenue 5,500
Omer capital 20,000
Service Revenue 4,400
$32,400 $32,400

An analysis of the Trial Balance Accounts shows the following:

1. The insurance was paid on January 1,2023 for one year
2. Supplies on hand at January 31,2023 $1,400
3. Office Equipment depreciates at $250 per month.
4. $3,000 of Unearned Service Revenue have been earned during the month
 5. Services provided but not yet received in cash or recorded $800.
6. Accrued salaries for the month $1,800.
Instructions:
Prepare the Adjusting entries at January 31, 2023. Assuming Adjusting entries are made monthly
Date Accounts Titles Debit Credit

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Question 4 (10 marks)

Jerusalem Company closes its books quarterly. At the end of the third quarter of 2023 the
Adjusted Trial Balance was as follows

Jerusalem Company
Adjusted Trial Balance
September 30, 2023
Dr. Cr.

Cash ......................................................... $ 2,500 $2,400

.... Accounts 3,800 3,100
Receivable ................................... 1,200 600
Supplies ................................................... 16,400 400
.... 15,000
Equipment ............................................... 7,800
.... Accumulated depreciation
Accounts Payable ........................................
Unearned Service
Revenue.......................... Salaries
 Payable ........................................... J.
Rand, Capital............................................
Service
Revenue ..........................................
Depreciation $29,300
Expense .................................. Supplies
Expense.........................................
250
Salaries
2,000
Expense .......................................... Rent
2,650
Expense ...............................................
500
$29,300

Instructions:
1. Prepare the income statement for the quarter ended September 30, 2023. 2.
Prepare the owner’s equity statement for the quarter ended September 30, 2023. 3.
What are the total assets at September 30, 2023
4. What are the total liabilities at September 30, 2023

With our best wishes

Mohammed Shalalafeh