The Islamic University of Gaza
Faculty of Commerce
Accounting Department
Accounting Principles (1)
Final, First Semester 2014/2015
Time Allowed: TWO hours
Student Name
…………………………………………………….
Student No.
..………………………………………………….
Prof. Salem A Helles
10 January 2015
1
Answer Questions One, Two and Require (1) in Question Three on the exam paper:
Question One: Choose the correct answer
(7 Marks)
(1) Which of these best describes non-current assets?
(a) Items bought to be used in the business.
(b) Items which will not be used quickly.
(c) Expensive items bought for the business.
(d) Items having a long life and not bought specifically for resale.
(2) Which of the following is a liability?
a. Cash in hand
b. Office equipment
c. Accounts payable for goods purchased on credit
d. d. Inventory
(3) The total of the sales journal is entered on
(a) The credit side of the Sales Account is the General Ledger.
(b) The credit side of the General Account in the Sales Ledger.
(c) The debit side of the sales Account in the General Ledger.
(d) The debit side of the Sales Day Book.
(4) An alternative name for a Sales Journal is
(a) Sales Invoice.
(b) Sales Day Book.
(c) Daily Sales.
(d) Sales Ledger.
(5) Entered in the Purchases Journal are
(a) Payments to suppliers.
(b) Trade discounts.
(c) Purchases invoices.
(d) Discounts received.
(6) Credit notes issued by us will be entered in our
(a) Sales Account.
(b) Returns Inwards Account.
2
(c) Returns Inwards Journal.
(d) Returns outwards Journal.
(7) A cash discount is best described as a reduction in the sum to be paid
(a) If payment is made within a previously agreed period.
(b) If payment is made by cash, not cheque
(c) If payment is made either by cash or cheque.
(d) If purchases are made for cash, not on credit.
(8) Discounts received are
(a) Deducted when we receive cash
(b) Given by us when we sell goods on credit
(c) Deducted by us when we pay our accounts
(d) None of these
(9) Carriage inwards is always added to the cost of Purchases in the
(a) Trading A/C
(b) Profit and loss A/C
(c) Income statement
(d) Purchases A/C
(10) Carriage outwards is shown as an expense in the:
(a) Trading A/C
(b) Profit and loss A/C
(c) Income statement
(d) Purchases A/C
(11) Capital increases by profit and decreases by:
(a) Purchase goods
(b) Purchase assets
(c) Drawings
(d) a+b
12. The term “sales” refers to
a. Sale of old assets that are no longer needed by the business.
3
b. Sales of goods that were bought for resale.
c. Sale of part of the business.
d. Cash sales only.
13. The term “purchases” refers to
a. Credit purchases only.
b. Cash purchases only.
c. Goods purchased for resale.
d. Purchase of non-current assets for use in the business.
14. Which of the following is not an asset?
a. Buildings
b. Cash at Bank
c. Loan from the Bank
d. d. Accounts Receivable
Question Two:
7 Marks
First Option Company uses special journals ( Cash Day Book, Sales
Day Book, Purchases Day Book) and a General Journal. Identify the
journal in which each of the following transactions is recorded.
(a) Cash sales.
(b) Owner withdrawal of cash.
(c) Sold goods on account.
(d) Receipt of cash for goods sold.
(e) Purchase supplies on account.
(f) Cash sale of equipment.
(g) Credit sales.
(h) Purchase of goods on credit.
(i) Opening entries
(j) Bought fixtures on credit.
(k) Paid motor expenses by cheque.
(l) A debt owing to us by P. Adel is
written off as bad debt.
(m) Correction of errors.
(n) Purchase of goods by cheque.
4
____________
____________
____________
____________
____________
____________
____________
___________
____________
____________
_____________
_____________
_____________
______________
Question Three:
2014
Oct. 1
Oct. 10
Oct. 25
(6 Marks)
Sales
Sales
Sales
A. Yousif Account
$
2014
250
Oct. 15
320
Oct. 30
180
Bank
Cash
$
200
400
Required:
1- Balance off A. Yousif account at the end of the month .
2- Redraft A. Yousif account in Three – Column Ledger style account.
Question Four
(20 Marks)
You are required to open the books of F. Bader, a trader, via the journal to
record the assets and liabilities; then to record the following transactions for
the month of May 2014; and Post to Bank Account Only.
May, 2014
1
Assets: Premises $30,000; Van $5,000; Fixtures $800;
Inventory $6,000; accounts Receivable: B. Muhsen $140; F.
Lamia $300; Cash at Bank $6240; Cash in hand $560.
Liabilities: Accounts Payable; S. Hani $215; J. Barhoum $640.
2
Paid rent by cheque $400.
3
Goods bought on credit from: S. Hani $145; D. Mabrouk $206.
4
Goods sold on credit to: J. Walid $112; T. Kamal $164.
5
Paid for motor expenses in cash $60.
7
Cash drawings by proprietor $150 for personnel use.
11
Goods returned to us by: J. Walid $32; F. Sami $48.
12
Withdrew $100 from the bank and paid into Cash.
14
Bought another van on credit from Abed Motors Ltd. $5,000.
16
J Walid paid us his account by cheque less 5% cash discount.
19
Goods returned to S. Hani $6; Mabrouk $56.
20
Paid $200 from Cash into Bank.
27
Salaries paid by cheque $740.
30
Purchased office computer from Modern Computers Ltd and
paid by cheque $1,400.
31
Paid Abed Motors Ltd their account by cheque less 5% cash
discount.
5
Question Five:
(4 Marks)
Ahmd, a trader, has an inexperienced accountant. During the first 2 weeks
on the job, the accountant made the following errors in journalizing
transactions. Correct these errors using the short method.
1) A payment on account of $630 to a creditor was paid in cash. It was
debited to accounts payable $360 and credited to cash $360.
2) The purchase of equipment on account for $560 was debited to
purchases $560 and credited to accounts payable $560.
3) A $400 withdrawal of cash for private use was debited to salaries
expense $400 and credited to cash $400.
4) Invested $36,000 cash in the business was debited to cash 63,000
and credited to capital $63,000.
Question Six
(16 Marks)
The following balances were extracted from the books of S. Kamel, a trader,
on 31 December, 2014. You are required to prepare Kamel’s Income
Statement for the year ended 31 December 2014 and the Statement of
Financial Position as at that date.
Account Title
Inventory 1 Jan, 2014
Purchases
Purchases Returns
Wages and Salaries
Insurance
Sundry Expenses
Accounts Receivable
Furniture and Equipment
Cash in hand
Capital
US$
52,800
141,300
3,762
63,400
5,500
398
45,900
1,500
276
210,516
Account Title
US$
Sales
276,400
Sales Returns
2,800
Delivery Expenses
5,690
Communication Expenses
714
Commissions paid
1,930
Buildings
125,000
Accounts Payable
24,870
Cash at Bank
31,020
Drawings
37,320
Inventory at 31 Dec.,
2014 was $58,440
Good Luck
6