ASSOSA UNIVERSITY
College Of Business and Economics
Department of Accounting and Finance
Final examination
Name: ----------------------------------------------------------Id No. -----------Sect. ----------
Course Name: Principle Of Accounting II
Department: 2nd year, Management
Instructor: Gemachis D.
Time Allowed: 2:30 minute.
Course code: AcFn 2112
Academic year: Feb, 2019.
Program: Regular
Grand mark: Only 40%
General instruction:
 The exam has contain with four parts
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Part I: True or False (6 pts.)
Part II: Multiple choices (20 pts.)
Part III: Workout Questions (7 pts.)
Part IV: Essay (7 pts.)
Check whether you receive the total of 6 page including cover page.
For part two encircle your answer on your letter of choice.
Do not forget to write your name and Id no on the cover page of this exam.
Eligible and neatly hand writing has a value both for workout and essay parts.
USING MOBILE PHONE AND SHARING OF CALCULATOR IS NOT ALLOWED.
Cheating is strictly forbidden and he or she who will attempt for cheating will score
“F” grade.
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Part I: Say “true” if the statement is correct and “false” if incorrect.
1. --------Dissolution of a partnership necessarily mean winding up the affairs of the
business.
2. --------All assets other than cash should be valued historical cost at the date of investment
under Partnership accounting.
3. --------The process of terminating the operation of the partnership may be called
liquidation.
4. --------A number of issued stock that are reacquired under various circumstances is a
treasury stock.
5. ---------When stock is issued for a price less than its par value, the stock is said to be sold
at a premium.
6. ---------As a “person” a partnership has the right to own property and the responsibility to
use that property in a legal way.
Part II: Select the best answer from each of the following provided alternatives
1. One of the following is considered as the disadvantage of corporate form of business
organization
A) Unlimited life B) Double taxation C) Mutual-agency D) Limited liability
E) None
2. Which of the following is normally considered as liquidation of a partnership?
A)
Admission of a new partner B)
Withdrawal of all existing partners
C)
Winding up of the operation of the business D) None
3. ABC Company reports net loss of Br 80,000. If partners A, B, and C have an incomesharing ratio of 1:2:2 respectively, C’s share of net loss is:
A) Br 16,000
B) Br 64,000
C) Br 32,000
D) Br 40,000
4. The term unlimited liability used in connection with a partnership refers to the fact that:
A) Contract entered into by one partner is binding on all partners.
B) Creditors can look beyond the partnership assets to the individual assets of the partners
for satisfaction.
C) The partnership has an unlimited obligation to provide professional services.
D) The partnership is liable for all actions of the partners even when conducting personal
business.
E) All except D.
5. Which of the following is considered as the an advantage partnership form of business
organization
A) Limited life B) Double taxation C) Mutual-agency D) Unlimited liability
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6. A and B agree to form a partnership. A is to contribute birr 60,000 in cash and to spent one –
half time to the partnership. B has agreed to contribute birr 40,000 and to devote full time to the
partnership. How will A and B share in the division of net income or net loss where no clear
agreement of Profit and loss sharing exist?
A) 1:2
C) 3:2
B) 2:1
D) 1:1
E) None of the above
7. Zinash, Almaz and Aster are partners in a partnership with income sharing ratio of 2:2:1.
Revaluation of assets for admission of Lakech has resulted in an increase in the value of
equipment by Br 4,200 and increase in value of allowance for doubtful by Br 4,200. By what
amount is Aster’s capital increased after revaluation?
A) Br 4200
B) Br 840
C) Br 1680
D) None
8. Why a corporation may buy its own stock?
A. To provide share for resale to employees
B. To provide shares for reissuance to employees as a bonus
C. To support the market price of the stock
D. All of the above
9. One of the following is not rue about a partnership.
A) Each partner can act as an agent of a partnership
B) It has limited life
C) it is easy to form
D) None of the above
D) It is a taxable entity
10. The length of time covered by each payroll payment is
A. Payday
B. Maturity date
C. Net pay
D. Gross Earning E. None
11. The money paid monthly to an employee for special reasons is.
A. Overtime Earning B. Allowance
C. Net pay
D. Basic salary
E. None
12. The work performed by an employee beyond the regular working hours is
A. OT Earning
B. OT work
C. Time card
D. Punched card
E. None
13. The electronically recorded card, where each employee will have his/her own card for
registering both at the time entering and leaving the working place is called
A. Time card
B. Punched card
C. Attendance sheet D. OT earning
E. None
14. The excess of gross earning over the total deduction is called------A. Gross earning
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B. Net pay
C. Total Deductions
D. Payroll sheet
Salini Construction that build Grand Ethiopian Renaissance Dam Project pays the salary of its
employees according to the Ethiopian Calendar month. The forth coming data relates to the
month of Tir, 2011.
Name of
Basic
Allow
ance
OT Hrs
worked
Duration of
S.No.
Employee
Salary
01
Ermiyas
3,200
100
10
6 AM to 10 PM
02
Fenet
1,600
__
8
10 PM to 6 AM
OT work
Additional Information:
NB. The management of the Salini Construction usually expects an employee to work 40 hours
in a week and during a month all employees have worked as they have been expected. Besides,
Ermiyas is a Salini Construction permanent workers whereas Fenet is contractual worker.
Refer to the above information answer questions No.14, 15, 16 and 17.
15. What is the amount of the OT earning for Fenet and Ermiyas respectively?
A. Br. 1600 and 3300 B. Br. 12 and 12.5 C. Br. 1200 and 2500
D. Br. 12.5 and 12 E. None
16. What is the amount of the gross earning for Fenet and Ermiyas respectively?
A. Br. 2412 and 3212.5 B. Br. 3200 and 1600 C. Br. 3300 and 1720
D. All
E. None
17. What is the amount of the total deduction for Fenet and Ermiyas respectively?
A. Br. 115.5 and 631.5 B. Br. 407.5 and 105.5 C. Br. 2918.5 and 1604.5 D. Br. 224 & 320.23
18. What is excess of gross earning over the total deduction received by Fenet on pay day?
A. 1406.50
B. Br. 2981.5
C. 16004.5
D.
Br. 2198.20 E. None of the above
19. When stock is issued for the price more than its par, the stock is said to be sold at
A. Premium
B. Discount
C. Both A & B
D. Par
E. None of the above
20. The inventory costing methods that assumed the cost of ending inventory is the oldest
purchases or earliest costs is
A.LIFO
B. FIFO
C. WAM
D. Periodic
E. Perpetual
Part III: Workout (Show all the Necessary steps)
1. Zinash and Miheret agreed to form a partnership. Zinash contributed Br.150,000 in cash, and
Miheret contributed assets with a fair market value of Br.200,000. The partnership, in its initial
year, reported net income of Br. 100,000. Refer to the above information, prepare the schedule
of income division and record the income division to distribute the first year’s income to the
partners under each of the following condition.
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a) Zinash and Mihrete agreed to share income and losses in a 3:2 ratio (1.5 pts).
b) Zinash and Miheret agreed to share income and losses by allowing 10 percent
interest on their original investments and sharing any remainder equally (1.5
pts)
2. On January 1, 2017 VAR Corporation received subscription to 100000 shares of Br 100
par common stock form various subscribers at Br 15 with a down payment of 40% of the
subscription price. On June 1 and October 1, 2017 the corporation received the remaining
40% and 20%, respectively and the stock certificate was issued on October 1.
Required: Record the stock subscription and the related transaction. (4 pts)
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Part IV: Essay type questions.
1. As a legal entity, the corporation has certain characteristics that make it different from
other types of business organizations. At least list four basic features of corporate forms
of business organizations.(3 pts)
2. The general term applied to the shares of ownership of a corporation is called Capital
Stock. Discuss the three major rights that accompany ownership of a share of stock. (2
pts).
3. Dissolution of a partnership necessarily the affairs of the business is on the stepping stone
either to wind up the business or to introduce changes to partnership. List the basic causes
of dissolution of Partnership.(3 pts)
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