FINAL EXAMINATIONS JUNE 2011

_________________________________________________________________________ COURSE CODE AND NAME: DATE AND TIME: ACC 100 INTRODUCTION TO ACCOUNTING

WEDNESDAY 8TH JUNE 2011 (1:00PM 4:00PM)

DURATION OF EXAMINATION: THREE (3) HOURS _________________________________________________________________________ INSTRUCTION TO CANDIDATES: 1. Follow carefully all instructions in the Examination Booklet. 2. Read all questions carefully. 3. Answer three questions. 4. Begin each answer on a new page. 5. DO NOT write your name on the Examination Booklet.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

QUESTIONS Answer three questions only. 1. (a) Describe and state the journal entries (i.e. accounts to be debited and credited) for the four (4) general types of adjusting entries. (12 marks) (b) A fifth category of adjusting entries consists of adjustments related to the valuation of certain assets, such as (i) marketable securities and (ii) accounts receivable Required: State and explain two (2) journal entries which are applicable to (i) and (ii) above. (8 marks)

2. Multiple choice questions Do not rewrite the question; indicate the ALPHABET letter related to your selected answer. (i) An account that will have a zero balance after closing entries have been journalised and posted is: a. Unearned fees b. Advertising supplies c. Prepaid Insurance d. Rent Expense When a net loss has occurred, income Summary is: a. b. c. d. (iii) credited and retained earnings is debited. Debited and retained earnings credited. Debited and common stock is credited. Credited and common stock is debited.

(ii)

The closing process involves separate entries to close (1) expenses, (2) dividends, (3) revenues and (4) net income (or loss). The correct sequencing of the entries is: a. (4), (3), (2), (1) b. (1), (2), (3), (4) c. (3), (2), (1), (4) d. (3), (1), (4), (2) Current assets are listed: a. by importance. b. by liquidity. c. by longevity.

(iv)

Cipriani College of Labour & Co-operative Studies

ACC 100

June 2011

d. Alphabetically. (v) All of the following are required steps in the accounting cycle except: a. Preparing a work sheet b. Journalizing and posting closing entries. c. Preparing an adjusted trial balance. (vi) Cash of $100 received at the time the service was rendered was journalised and posted as a debit to Cash $100 and a credit to Accounts receivable $100. Assuming the incorrect entry is not reversed, the correcting entry is: a. b. c. d. Debit Fees Earned $100 and credit Account Receivable $100. Debit Cash $100 and credit Fees Earned $100. Debit Accounts Receivable $100 and credit Fees Earned $100. Debit Accounts Receivable $100 and credit Cash $100.

(vii) In a classified balance sheet, assets are usually classified as: a. Current assets; long-term assets; property, plant, and equipment; and intangible assets. b. Current assets; long-term investments; property, plant and equipment; and other assets. c. Current assets; long-term investments; property, plant, and equipment; and intangible assets. d. Current assets; long-term investments; tangible assets; and intangible assets. (viii) On December 31, the Scott Company correctly made an adjusting entry to recognise $2,000 of accrued salaries payable. On January 8 of the next year , total salaries of $3,500 were paid. Assuming the correct reversing entry on January 8 will result in a credit to Cash $3,500, and the following debit(s): a. Salaries Payable $3,500. b. Salaries Expense $3,500. c. Salaries Payable $2,000. d. Salaries Payable $1,500 and Salaries Expense $2,000. (ix) (i) A company fails to recognise revenue earned but not yet received. Which of the following accounts are involved in the adjusting entry (a) asset (b) liability (c) revenue or (d) expense? (ii) For the accounts selected, indicate whether they would be debited or credited in the entry. (20 marks)

Cipriani College of Labour & Co-operative Studies

ACC 100

June 2011

3. At the end of its first month of operations Harpers General Service Ltd, has the following unadjusted trial balance Harpers General Service Ltd October 31, 2010 Trial Balance

Debit Cash Account receivable Prepaid Insurance Supplies Equipment Notes payable Account payable Common Stock Dividends Fees Earned Salaries Expense Utilities expense Advertising Expense $ 5,400 8,800 2,400 1,300 60,000

Credit

$ 40,000 2,400 30,000 1,000 10,900 3,200 800 400 ________________________________ 83,300 83,300

Other data consists of the following: Insurance expired at the rate of $200 per month 2. There are $1000 of supplies on hand at October 31 3. Monthly depreciation is $900 on the equipment 4. Interest of $500 has accrued during October on the notes payable
1.

Required: a. Prepare a work sheet. b. Journalize the closing entries. (12 marks) (8 marks)

Cipriani College of Labour & Co-operative Studies

ACC 100

June 2011

4. On February 01, 2011 Tgonian Enterprises Ltd. purchased new equipment at a cost of $325,000. Useful life of this equipment was estimated at 5 years, with a residual value of $25,000. Required: Compute the annual depreciation expense for each year until this equipment becomes fully depreciated under each depreciation method listed below; a. Straight-line, with depreciation for fractured years rounded to the nearest whole month. (10 marks) b. 200% - declining balance with the half-year convention, Limit depreciation in 2016 to an amount which reduced the un-depreciated cost to the estimated residual value. (10 marks) 5. A companys inventory at December 31, 2010 amounted to $44,000. During the first week in January 2011, the company made only one (1) purchase and one (1) sale. These transactions are as follows: Jan 03. Sold a computer system for $20,000 cash. The system consisted of different devices which had a total cost to the company of $11,2000 Jan 07. The company purchased two (2) model 400 and four (4) model 800 satellite Dishes at a total cost of $10,000; terms 2/10, n/30

The company records purchases of merchandise at net cost. The company has full-time accounting personnel and uses a manual accounting system; Required: a. Prepare journal entries to record these transactions assuming the company uses a perpetual inventory system. (5 marks) b. Compute the balance of the inventory account at January 07. (5 marks)

c. Prepare journal entries to record the two transactions assuming that the company uses a periodic inventory system. (5 marks) d. Compute the cost of the goods sold for the first week of January, assuming use of the periodic system. As the amount of ending inventory- use your answer to part b. (5 marks)

END OF EXAMINATION PAPER

5 Cipriani College of Labour & Co-operative Studies ACC 100 June 2011

FINAL EXAMINATIONS JUNE 2011

_________________________________________________________________________ COURSE CODE AND NAME: DATE AND TIME: ACC 100 INTRODUCTION TO ACCOUNTING

WEDNESDAY 8TH JUNE 2011 (1:00PM 4:00PM)

DURATION OF EXAMINATION: THREE (3) HOURS _________________________________________________________________________ INSTRUCTION TO CANDIDATES: 1. Follow carefully all instructions in the Examination Booklet. 2. Read all questions carefully. 3. Answer three questions. 4. Begin each answer on a new page. 5. DO NOT write your name on the Examination Booklet.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

QUESTIONS Answer three questions only. 1. (a) Describe and state the journal entries (i.e. accounts to be debited and credited) for the four (4) general types of adjusting entries. (12 marks) (b) A fifth category of adjusting entries consists of adjustments related to the valuation of certain assets, such as (i) marketable securities and (ii) accounts receivable Required: State and explain two (2) journal entries which are applicable to (i) and (ii) above. (8 marks)

2. Multiple choice questions Do not rewrite the question; indicate the ALPHABET letter related to your selected answer. (i) An account that will have a zero balance after closing entries have been journalised and posted is: a. Unearned fees b. Advertising supplies c. Prepaid Insurance d. Rent Expense When a net loss has occurred, income Summary is: a. b. c. d. (iii) credited and retained earnings is debited. Debited and retained earnings credited. Debited and common stock is credited. Credited and common stock is debited.

(ii)

The closing process involves separate entries to close (1) expenses, (2) dividends, (3) revenues and (4) net income (or loss). The correct sequencing of the entries is: a. (4), (3), (2), (1) b. (1), (2), (3), (4) c. (3), (2), (1), (4) d. (3), (1), (4), (2) Current assets are listed: a. by importance. b. by liquidity. c. by longevity.

(iv)

Cipriani College of Labour & Co-operative Studies

ACC 100

June 2011

d. Alphabetically. (v) All of the following are required steps in the accounting cycle except: a. Preparing a work sheet b. Journalizing and posting closing entries. c. Preparing an adjusted trial balance. (vi) Cash of $100 received at the time the service was rendered was journalised and posted as a debit to Cash $100 and a credit to Accounts receivable $100. Assuming the incorrect entry is not reversed, the correcting entry is: a. b. c. d. Debit Fees Earned $100 and credit Account Receivable $100. Debit Cash $100 and credit Fees Earned $100. Debit Accounts Receivable $100 and credit Fees Earned $100. Debit Accounts Receivable $100 and credit Cash $100.

(vii) In a classified balance sheet, assets are usually classified as: a. Current assets; long-term assets; property, plant, and equipment; and intangible assets. b. Current assets; long-term investments; property, plant and equipment; and other assets. c. Current assets; long-term investments; property, plant, and equipment; and intangible assets. d. Current assets; long-term investments; tangible assets; and intangible assets. (viii) On December 31, the Scott Company correctly made an adjusting entry to recognise $2,000 of accrued salaries payable. On January 8 of the next year , total salaries of $3,500 were paid. Assuming the correct reversing entry on January 8 will result in a credit to Cash $3,500, and the following debit(s): a. Salaries Payable $3,500. b. Salaries Expense $3,500. c. Salaries Payable $2,000. d. Salaries Payable $1,500 and Salaries Expense $2,000. (ix) (i) A company fails to recognise revenue earned but not yet received. Which of the following accounts are involved in the adjusting entry (a) asset (b) liability (c) revenue or (d) expense? (ii) For the accounts selected, indicate whether they would be debited or credited in the entry. (20 marks)

Cipriani College of Labour & Co-operative Studies

ACC 100

June 2011

3. At the end of its first month of operations Harpers General Service Ltd, has the following unadjusted trial balance Harpers General Service Ltd October 31, 2010 Trial Balance

Debit Cash Account receivable Prepaid Insurance Supplies Equipment Notes payable Account payable Common Stock Dividends Fees Earned Salaries Expense Utilities expense Advertising Expense $ 5,400 8,800 2,400 1,300 60,000

Credit

$ 40,000 2,400 30,000 1,000 10,900 3,200 800 400 ________________________________ 83,300 83,300

Other data consists of the following: Insurance expired at the rate of $200 per month 2. There are $1000 of supplies on hand at October 31 3. Monthly depreciation is $900 on the equipment 4. Interest of $500 has accrued during October on the notes payable
1.

Required: a. Prepare a work sheet. b. Journalize the closing entries. (12 marks) (8 marks)

Cipriani College of Labour & Co-operative Studies

ACC 100

June 2011

4. On February 01, 2011 Tgonian Enterprises Ltd. purchased new equipment at a cost of $325,000. Useful life of this equipment was estimated at 5 years, with a residual value of $25,000. Required: Compute the annual depreciation expense for each year until this equipment becomes fully depreciated under each depreciation method listed below; a. Straight-line, with depreciation for fractured years rounded to the nearest whole month. (10 marks) b. 200% - declining balance with the half-year convention, Limit depreciation in 2016 to an amount which reduced the un-depreciated cost to the estimated residual value. (10 marks) 5. A companys inventory at December 31, 2010 amounted to $44,000. During the first week in January 2011, the company made only one (1) purchase and one (1) sale. These transactions are as follows: Jan 03. Sold a computer system for $20,000 cash. The system consisted of different devices which had a total cost to the company of $11,2000 Jan 07. The company purchased two (2) model 400 and four (4) model 800 satellite Dishes at a total cost of $10,000; terms 2/10, n/30

The company records purchases of merchandise at net cost. The company has full-time accounting personnel and uses a manual accounting system; Required: a. Prepare journal entries to record these transactions assuming the company uses a perpetual inventory system. (5 marks) b. Compute the balance of the inventory account at January 07. (5 marks)

c. Prepare journal entries to record the two transactions assuming that the company uses a periodic inventory system. (5 marks) d. Compute the cost of the goods sold for the first week of January, assuming use of the periodic system. As the amount of ending inventory- use your answer to part b. (5 marks)

END OF EXAMINATION PAPER

5 Cipriani College of Labour & Co-operative Studies ACC 100 June 2011