ANSWER SHEET

Course: Orientation Accounting (OBRW)

Lecturer: Prof. Dr. Marius Gros
Semester: Winter Semester 20XX
Exam: Midterm Mock Exam (just until the beginning of Chapter 3)

Full name
Matriculation number
Major

Please note that:

1. This is a closed-book exam. Cheat sheet and course materials are not permitted.
2. Only non-programmable calculator is permitted in the exam room.
3. Only the answers on the answer sheet will be graded.

Results: Part I (______/19) Part II (______/52) Part III (______/29)

Total: (______/100)
Grade:

ANSWER:

Part I: Fill in the correct answer.

(a) True: T/ False: F (9 points)

1 2 3 4 5 6 7 8 9
T F T F F T F T F
10 11 12 13 14 15 16 17 18
F T F F F F T F T
(b) (10 points)
19 20 21 22 23 24 25 26 27 28
C C C B D B D D A A

1
Part II: Brief exercises and short answer questions.

29. (4.5 points)

1. Decrease in assets and decrease in equity

2. No net change in assets
3. Decrease in assets and decrease in equity
4. Increase in assets and increase in equity
5. No net change in assets
6. Decrease in assets and decrease in equity
7. Increase in liabilities and decrease in equity
8. Decrease in assets and decrease in equity
9. Increase in assets and increase in equity
30. (5 points)

Debit or Credit
1. An increase in Salary Expense. Debit
2. A decrease in Accounts Payable. Debit
3. An increase in Prepaid Insurance. Debit
4. An increase in Share Capital-Ordinary. Credit
5. A decrease in Office Supplies. Credit
6. An increase in Dividends. Debit
7. An increase in Service Revenue. Credit
8. A decrease in Accounts Receivable. Credit
9. An increase in Rent Expense. Debit
10. A decrease in Store Equipment. Credit

31. (5 points)

1. Cash 50,000
Share Capital-Ordinary 50,000

2. No entry, not a transaction

3. Prepaid Rent 7,200

Cash 7,200

4. Wage Expense 400

Cash 400

5. Cash 1,500
Service Revenue 1,500

2
32. (4 points)

1. Accounts Receivable 5,000

Service Revenue 5,000
2. Equipment 20,000
Accounts Payable 20,000
3. Cash 3,000
Accounts Receivable 3,000
4. Dividends 1,000
Cash 1,000

33. (5 points)

34. (4 points)

M. CARIA AND ASSOCIATES

Trial Balance
December 31, 20X1
Debit
Credit
Cash $ 21,500
Accounts Receivable 19,000
Office Supplies 800
Notes Receivable 8,100
Computer 22,000
Computer Software 4,200
Technical Library 2,200
Office Furniture 15,400
Automobiles 27,500
Building 120,000
Land 42,000
Accounts Payable $ 8,000
Notes Payable 95,000
Share Capital-Ordinary 179,700
Totals $282,700 $282,700

3
35. (5 points)

a) Paid cash to creditors.

b) Received cash from customers on account

c) Bought equipment on account

d) Issued ordinary shares in exchange for cash.

e) Services rendered on account

36. (3 points)

Single Financial Statements (German GAAP)

Consolidated Financial Statements (IFRS)
+ Ad-hoc releases
+ Semi-Annual Reports (IFRS)
+ Some quarterly financial information (IFRS)

37. (2 points)

Supervisory board (board of non-executive directors, in German: Aufsichtsrat). Auditor gives an

audit opinion and thereby assists the supervisory board in supervising the management board.

38. (3 points)

Single financial statements comprise only of the assets, liabilities and the equity of the single legal
entity. Consolidated financial statements comprise of the assets, liabilities and the equity of a group
of companies which is controlled by a parent company (Economic entity assumption)

39. (2 points)

IASB is private body without any legislative legitimation

Approach to accept/approve/recognize IFRS Standards in the EU or other jurisditions
After endorsement, IFRS as applicable EU-law without discretion on country-level (no transformation
needed)
In general, jurisdictions could also make changes to IFRS and create their own version/adaption of
IFRS

40. (4 points)

4
Public/capital market-oriented companies (for example in EU and U.S.) are required to release
important news, which are not already public, if the news might have a substantial influence for the
share price.
This so-called ad-hoc-disclosure is intended to avoid insider trading.
Continuous reporting like ad-hoc-disclosures helps to understand the business and economic situation
of a company and adds to the information out of the financial statements. The latter are prepared as of
a certain date only.

41. (3 points)

Answers the questions

Where did cash come from?

What was cash used for?

What was the change in the cash balance?

42. (2.5 points)

-Basic Difference
• Rule based (US GAAP) vs. Principle based (IFRS) vs. Principles only (HGB)

-Differences in recognition and measurement

• Tendency of historical cost principle (HGB) vs. fair value approach (IFRS)

• Tendency of conservatism, prudence (HGB) vs. fair presentation (IFRS))

-Differences in revenue recognition
• completed contract method (HGB) vs. percentage-of-completion method
(IFRS)

-Presentation (form) and elements of financial statements

• balance sheet classification

• Management report

5
Part III: Bookkeeping Exercises

43.
(a) (12 points)

Trans. Account Titles Debit Credit

1. Cash 70,000
Share Capital—Ordinary 70,000

2. Furniture & Equipment 30,000

Cash 20,000
Accounts Payable 10,000

3. Prepaid Insurance 1,500

Cash 1,500

4. Prepaid Rent 24,000

Cash 24,000

5. No entry—Not a transaction

6. Utility Expense 600

Accounts Payable 600

7. Cash 900
Accounts Receivable 11,000
Service Revenue 20,000

8. Accounts Payable 400

Cash 400

9. Office Supplies 500

Accounts Payable 500

10. Office Supplies 1,500

Cash 1,500

6
11. Salaries Expense 6,000
Cas 6,000

12. Cash 2,500

Accounts Receivable 2,500

7
(b) (7 points)
Cash Furniture & Equipment
(1) 70,000 (2) 30,000
30,000
(2) 20,000
Accounts Payable
(3) 1,500 (2) 10,000

(4) 24,000 (6) 600

(7) 9,000 8) 400

(8) 400 (9) 500

(10) 1,500 10,700

(11) 6,000 Share Capital—Ordinary

(1) 70,000
(12) 2,500
70,000
28,100

Service Revenue
Accounts Receivable
(7) 20,000
(7) 11,000
(12) 2,500
20,000
8,500

Office Supplies Salaries Expense

(9) 500 (11) 6,000
(10) 1,500 6,000
2,000
Utility Expense
Prepaid Insurance (6) 600
(3) 1,500 600
1,500

Prepaid Rent
(4) 24,000
24,000

8
(c) (4 points)

ALL-YOU-NEED SERVICES
Trial Balance
April 30, 20X1
Debit Credit
Cash $28,100
Accounts Receivable 8,500
Office Supplies 2,000
Prepaid Insurance 1,500
Prepaid Rent 24,000
Furniture & Equipment 30,000
Accounts Payable $10,700
Share Capital—Ordinary 70,000
Service Revenue 20,000
Salaries Expense 6,000
Utility Expense 600
$100,700 $100,700

9
(d) (6 points)
ALL-YOU-NEED SERVICES
Statement of Cash Flows
For the month Ended April 30, 20X1

Cash flows from operating activities

Net cash provided by operating activities......................................... +2,100

Cash flows from investing activities

Net cash provided by investing activities ......................................... -44,000

Cash flows from financing activities

Net cash provided by financing activities......................................... +70,000

Net increase in cash ........................................................................ 28,100

Cash at the beginning of the period .............................................. 0

Cash at the end of the period ......................................................... 28,100

10