Accounting Project Level IV
Accounting Project Level IV
ACCOUNTING LEVEL IV
Additional information
1. All employees are permanent except Nega Teka
2. The workers are expected to work 40 hours in week or 160 hours per month
3. Allowance is excess 800 are taxable
4. All permanent employees contribute 10% of their basic salary to Ethiopian Renaissance
Dam in this month.
5. pension is 70% and 11% employee and employer respectively
Required
a. prepared payroll register sheet
b. Prepared necessary journal entry for preparation of payroll and payments of deduction
to concerned party.
Solution
Gross Earning = BS + Allowance + OT
Basic salary x given hourly rate X relevant OT rate
𝐎𝐯𝐞𝐫𝐭𝐢𝐦𝐞 =
160 ℎ𝑜𝑢𝑟𝑠
1. Turu Tedla = 0
680 x 20 X 2 27,200
2. Nega Teka = = = 170
160 ℎ𝑜𝑢𝑟𝑠 160
4,500 x 10 X 1.25 56,250
3. Geleta Temam = = = 351.56
160 ℎ𝑜𝑢𝑟𝑠 160
2,600 x 15 X 1.50 58,50
4. Yemar Abat = = = 365.63
160 ℎ𝑜𝑢𝑟𝑠 160
1,100 x 10 X 2.50 55,000
5. Kuli Adamu = = = 343.75
160 ℎ𝑜𝑢𝑟𝑠 160
Journal Entries
b. If salary is paid in may next month, Journalize
1. To record the Payment of salary expenses for the month
Salary Expenses -----------------------23,746
Income Tax Payable ----------------------------5,598.90
Pension Contribution payable -----------------1,282.02
Cash -----------------------------------------------16,838.04
2. Payment of payable
To record the payroll Tax (employer Pension) expenses
Payroll Tax expenses (18,880*0.11) -------------2,002
Pension Contribution payable----------------------------2,002
3. To record the Ethiopian renaissance dam
Abay Dam Payable---------------------1,820
Cash --------------------------------------------1,820
4. Payroll tax or company pension contributions
To record the payment of payroll tax and withholding tax to the Inland Revenue authority
Income Tax Payable ----------------------------5,030.16
Pension Contribution payable------------------3,276
Cash------------------------------------------------------8,306.16
Unearned rent Rent income Fees revenue Salary exp. Advert. exp
300 1,000 9,100 62,250 41,700 750 10,340
700 300 7,750 1,140 750
9,400 70,000 42,840 11,090
Pointer PLC
Bank Reconciliation
March 31, 2012
Balance per Bank statement ………………………………………………………… 7,947.20
Add: outstanding deposit ………………………………………….…………………. 690.25
Total ……………………………………………………………………. 8,637.45
Deduct: outstanding checks
Ck. 731 …………………………………………. 162.50
Ck. 736 ………………………………………… 345.95
Ck.738 ………………………………………… 251.40
Ck. 739 ………………………………………….. 60.55 820.05
Adjusted Balance ……………………………………………………………………….. 7,817.40
Balance per depositors ………………………………………………………………….. 7,832.50
Deduct: service charge ……………………………………………………………………. 15.10
Adjusted Balance ………………………………………………………………………… 7,817.40
Required
1. Prepare Bank Reconciliation statement for the Month of April 2012
2. Record the necessary Journal entries
Answer
1. The bank was record up to April 25, 2012 only therefore April 29, 2012 the amount
510.06 is not recorded by bank.
2. The check registered by bank not cleared from bank is check No. 749, 751 and 752
which amounted = 172.75 + 359.60 + 601.50 = 1,133.85
3. The other check No. 736, amounted 345.95 was not cleared from bank
Then the Total check outstanding = 1,133.85 + 345.95 = 1,479.80
4. Cash book account (balance per bank statements) = cash balance of April 1, 2012,
plus cash receipt deduct the total amount of check registered.
= 7,817.40 + 7,847.58 – 8555. 51 = 15664.83 - 8555. 51 = 7, 109. 32
Solution
1. Record the necessary journal entry for the above transaction
I. Raw material Purchase
Sand --------------------------------------- 500
Steel ----------------------------------------790
Chemicals ---------------------------------4,500
Account payable -------------------------------------------5,790
II. (A) Materials issued (used) to work in process
Job #1 work in process --------------------227.50
Direct material inventory-----------------------------227.50
Job #3 work in process --------------------780
Direct material inventory-----------------------------780
Job #3 work in process --------------------3,900
Direct material inventory-----------------------------3,900
Project six
Maru Merchandising is a VAT registered company has the following transaction for the of
month march 2013
XYZ Company Purchase commodity A for resale during the month of October 2015 during
the month of October the following transaction is occurred in relation to company A
Additional information
1. All employees are permanent Except Nuguse Yidego and worked 40hrs per week
2. During Ginbot 2007 all workers have done as they have been expected
3. Yohanis Abera monthly pay birr 750 from his basic salary for credit Association
4. Assuming that pension contribution 7% of employee and 11% of Employer.
Required
a. Prepare payroll register sheet
b. Prepared journal entries for Preparation payroll and payment of deduction to
concerned party
Solution
Gross Earning = BS + Allowance + OT Pension Contribution
03 Yohans 5,052 2,202.8 252.60 7,325.40 1,194.11 353.64 750 2297.75 4932.92
04 Niguse 1,455 ----- 218.25 1,673.25 217.15 ----- --- 217.15 1456.10
Total 16,834 6,618.9 691.71 24,049.89 4,556.205 1,076.53 750 6,759.76 17,384.85
Required
1. Prepare sales budget
2. Prepare sales collection budget
3. Determine the receivable balance
Journal entries
3. Cash in bank --------------------------------620
Collection from customer -------------------------------530
Account Payable ------------------------------------------90
4. Payment creditors -------------------------1,240
Miscellaneous expenses-------------------60
Refers return drawer-----------------------300
Account payable ---------------------------13,170
Cash in bank ---------------------------------------14,770
Project Four Inventory
Consider the following data for XYZ Company:
Date purchase Sold units
Jan1 Balance 200 units@ birr 9
Jan 15 300 units @ birr 10
Jan 18 400 units @ birr 11
Jan 19 No purchase 600 units
Jan 25 100 units @ birr 12
SP – VC – FC = 0 SP – VC – FC = 0
120Q – 80Q – 8,000 = 0 120Q – 60Q – 12,000 = 0
120Q – 80Q = 8,000 120Q – 60Q = 12,000
40Q/40= 8,000/40 60Q/60= 12,000/60
Q = 200 units Q = 200 units
If 150 customer attended
Addis Ababa exhibition centres millennium hall exhibition centres
SP*Q – VC *Q– FC = 0 SP*Q – VC *Q– FC = 0
120*150 – 80*150 – 8,000 120*150 – 60*150 – 12,000
18,000 – 12,000 – 8,000 = (2,000) 18,000 – 9,000 – 12,000 = (3,000)
Solution
Huluka Company
Income Statements
For the year ended July 31, 2010
Revenue
Fees Earned --------------------------------------------------------------------60,625
Operating Expenses
Wage Expenses ---------------------------------22,855
Rent Expenses ----------------------------------4,200
Utilities Expenses ------------------------------2,715
Deprn. Expenses ---------------------------------4,950
Supplies expenses --------------------------------890
Insurance expenses ------------------------------315
Misc. expenses ----------------------------------1,505
Total Expenses ------------------------------------------------------------- (37,430)
Net Income -------------------------------------------------------------------23,195
Huluka Company
Statements of Owners Equity
For the year ended July 31, 2010
Beginning Capital ------------------------------------------------------29,000
Net Income -------------------23,195
Less Drawing-----------------------5,200
Increase Owners Equity by --------------------------------------------17,995
Ending Capital of Huluka Company July 31, 2010 -------------------------46,995
Huluka Company
Post-Closing Trial balance
For the year ended July 31, 2010
Account Title Dr Cr
Cash ------------------------------------------------3,425
Fees/R ----------------------------------------------8,000
Supplies --------------------------------------------380
Prepaid insurance ---------------------------------305
Office equipment’s -------------------------------51,650
Accumulated depreciation -----------------------------------------------------14,650
A/P --------------------------------------------------------------------------------925
Wage Payable --------------------------------------------------------------------440
Unearned Fees -------------------------------------------------------------------750
Capital ---------------------------------------------------------------------------29,000
Total 63,760 63,760
Additional information
1. The managements of the company except all employees to work 40hrs per week and all
employees have worked as they have expected.
2. Bontu is a causal employee
3. Tola and Chala contribute 10% of their basic salary to credit Association as monthly
saving whereas Kena contribute 5% of his basic salary
4. Up to 1000 birr fuel allowance is exempted from tax and the swelling price of one litters
is birr 20
5. Assuming that pension contribution 6% of employee and 9% of Employer.
Required
a. Prepare payroll register sheet
b. Pass the necessary journal entry
Solution
Gross Earning = BS + Allowance + OT
02 Chala 3,500 350 3000 262.50 7,112.50 1,354.38 210 350 1,914.38 5,198.12
03 Bontu 850 --- ----- 79.6875 929.6875 91.95 ---- -- 91.95 837.74
04 Kena 2,800 150 2000 262.50 5,212.50 806.25 𝟏𝟔𝟖 75 1,049.25 4,163.25
05 Hord. 1,500 --- 1000 140.625 2,640.625 210.63 90 ---- 375.63 2,265
Total 14,150 1,250 10,000 745.3125 26,145.32 4,775.71 798 975 6,623.71 19,521.61
Project Four
Bank Reconciliation
The following information is given
Balance per bank statements is 26,465.50
Deposit in transit is 2.148.21
Bank error which will be added is 270
Checks outstanding is 8,003.84
Balance per depositor recorded is 17,324.40
Notes plus Interest of 150 is 3,650
Depositor error which will be deducted is 75.78
Bank service charge is 18.75
Instruction
1. Prepare bank Reconciliation
2. Pass the necessary journal entries
XYZ Company
Bank Reconciliation
For ended June 30, 2015
Balance per bank statements is ------------------------------------26,465.50
Add. Deposit in transit -------------------------- 2,148.21
Bank error ----------------------------------270--------------------2,418.21
Subtotal ------------------------------------------------------------ 28,883.71
Deduct; checks outstanding-----------------------------------------------8,003.84
Adjusted Balance ---------------------------------------------------------20,879.87
a. Cash in bank…………………………..3650
N/R………………………..………………….3000
Interest income…………………………………360
b. Misc. expenses -----------------------------18.75
A/p--------------------------------------------75.78
Cash in bank --------------------------------------------94.53
Project Five
Revenue Recognition method
Assume that in the first year operation a dealer in house hold appliances had total instalment
sales of birr 300,000 and the cost of the merchandise sold amounted birr 180,000. Assume
also that collection of the instalment account receivable were spread over three years as
follows
1st year birr 140,000
2nd year birr 100,000
3rd year birr 60,000
Instruction
1. Find the Gross profit at points of sales method
2. Find the Gross profit under instalments method
The physical account on December 31 shows that 300 units of particular commodity are on
hand using periodic FIFO method
1. Calculate the cost of Goods sold
2. Calculate the Gross profit if selling price per unit is birr 15
3. Calculate the business profit tax assume the administration cost is 2,500 from this birr
900 birr is for personal investment. ( use 30% profit tax rate)
4. Find the Gross profit under instalments method
Solution
1. Calculate the cost of Goods sold
FIFO method is the most recent
Jan.29 purchase----------------------------100 units @12----------1,200
Jan.15 purchase----------------------------200 units @11----------2,200
Total ----------------------------------------300 23 3,400
Cost of Ending Inventory = 3,400
Cost of merchandise available for sales
Jan.1 beginning Inventory -------------200 units @9-------------- 1,800
Jan.10 purchase--------------------------300 units @10-------------3,000
Jan.15 purchase--------------------------400 units @11-------------4,400
Jan.29 purchase--------------------------100 units @12-------------1,200
Total --------------------------------------1,000 42 10,400
NB; -
Cost of Direct Material Used in Production = Direct Material Purchases + Direct Material
Beginning Inventory − Direct Material Ending Inventory
The next step is to calculate the budgeted cost of goods manufactured as follows:
Manufacturing Cost = Cost of Direct Material used in Production + Direct Labour Cost
+ Factory Overhead Cost
Cost of Goods Manufactured = Manufacturing Cost + Beginning Work in Process − Ending
Work in Process
Assume XYZ Company manufacturing and sells adding machine. The companies income
statements for the most recent year is given below
Task 1.2 based on the above data perform the following task compute the companies Break
even points both in unit and sales birr.
Solution
𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡
Breakeven points in units =
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑚𝑎𝑟𝑔𝑖𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡
Contribution Margin per units = selling price per unit – variable cost per unit
Contribution Margin per units = 40-30 = 10 units
𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡
Breakeven points in units =
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑚𝑎𝑟𝑔𝑖𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡
240,000
Breakeven points in units = = 24,000 units
10
Breakeven points in dollar (sales) = Breakeven points in units* selling price per unit
Breakeven points in dollar (sales) = 24,000* 40 = 960,000
Task 1.3 compute cash disbursement in August
Langano Trading has the following purchases budget for the last half of 2015
July ------------------ birr 100,000 October -----------------------------90,000
August ---------------80,000 November ---------------------------100, 0000
September -----------110,000 December ---------------------------94,000
Solution
July August September October November December
100,000 80,000 110,000 90,000 100,000 94,0000
------- 40,000 55,0000 45,000 50,000 47,000
50,000 50,000 40,000 55,000 45,000 50,000
90,000 95,000 90,000 95,000 97,000 47,000
Task 1.4 if the company pays one half at time of purchase and the remainder in month
following purchase.
Calculate the expected cash disbursement for purchase in August = 90,000
Instruction
Record the journal entry, post to ledger and prepare unadjusted Trial balance
Additional Information
1. Expiration of one months’ rent birr 1,600
2. Consumption of office supplies birr 1,540
3. Depreciation office equipment’s birr 300
4. Accrued of unrecorded wages of birr 720
5. Perform service for which cash was received in advance birr 800
6. Accrued of unrecorded revenue of birr 400
Cash
40,000 3,200 A/R Office Equipment
2,800 2,600 9,600 16,320
5,000
1,400 16,320 16,320
5,000 4,800 4,600
2,800
49,200 29,720
19,480
Office supply
Prepaid rent A/P
5,200
3,200 2,600 5,200
5,200 680
3,200 2,600 5,880
3,200
S/ Revenue
Drawing Wage exp.
2,800 Utilities expenses
9,600 2,800 4,800
12,400 680
2,800 4,800
680
Inventory system
Abdi Boru PLC had the beginning inventory and purchase during the month of December 30,
2015 are given the company uses the periodic inventory system.
Unit unit cost
Dec.1 Inventory 200 Br. 10
Dec.10 purchase 350 Br. 11
Dec.21 purchase 450 Br. 12
Dec.28 purchase 500 Br. 13
At the end of the months physical account of the remaining inventory items shows that 650
units are on hand. The company’s uses periodic FIFO cost assumption.
Task 4.1 compute the cost of merchandise sold and cost of ending inventory on Dec. 2015
Task 4.2 compute the Gross profit of Abdi Boru Company for the month of inventory on Dec.
2015 assuming the sales price is br. 20 for the merchandise sold
Task 4.3 compute the business profit tax if the company has incurred birr. 3,500 general
expenses including 1,000 entertainment expenses during the fiscal year.
Answer
Unit unit cost Total cost
Dec.1 Inventory 200 Br. 10 2,000
Dec.10 purchase 350 Br. 11 3,850
Dec.21 purchase 450 Br. 12 5,400
Dec.28 purchase 500 Br. 13 6,500
Total 1,600 18,750
Cost of merchandise available for sales = 18,750
Periodic FIFO
The most recent, July 28 -----------------------500*13 = 6,500
The next most recent July 20 ------------------150*12 = 1,800
Total 650 8,300
Cost offending inventory = 8,300
Project Five
XYZ agency government enterprises pays the salary of employees as per the Ethiopian
calendar months. The agency has an eight working hours per day and five working days per
week.
S.No Full name BS Month OT hrs Duration
Allow. of OT work
1 Hawi 7,800 1,000 ---- ----
2 Ware 4,000 800 10 Public holiday
3 Sorsa 2,800 600 8 Up to 10 pm
4 Gelane 1,800 200 6 10PM to 5 AM
5 Momina 600 200 10 Weekend
Additional information
1. All employees are permanent
2. Gelane agreed to contribute monthly birr 50 from her salary to credit association
3. The workers are expected to work 40 hours per week or 160 hours per month
4. Allowance is excess 800 are taxable
Required
a. prepared payroll register sheet for the month of Tir 2008
b. record the payment of salary as Tir 2008
c. record the payroll tax expenses as Tir 2008
d. record the payment of payroll withholding to concerned bodies, assuming the
payment was made on yekatit sa15, 2008
Journal Entries
1. To record the salary expenses for the month
Salary Expenses -----------------------20,776.25
Income Tax Payable ----------------------------3,937.75
Pension Contribution payable -----------------1,190
Credit association Payable --------------------- 50
Cash -----------------------------------------------15,601.50
2. Payment of payable
To record the payroll Tax (employer Pension) expenses
Payroll Tax expenses (17,000*0.11) -------------1,870
Pension Contribution payable----------------------------1,870
3. To record the credit association payable
Credit association payable ---------------------50
Cash ---------------------------------------------------50
4. Payroll tax or company pension contributions
To record the payment of payroll tax and withholding tax to the Inland Revenue authority
Income Tax Payable ----------------------------3,937.50
Pension Contribution payable------------------3,060
Cash------------------------------------------------------6,997.50
Additional information
The following data are additionally information for adjustments required on June 30, 2010
a. Supplies on hand June 30, 2010 are birr 380
b. Insurance premium expired during the is birr 315
c. Depreciation of equipment’s during the year is birr 4,950
d. Wage accrued not paid at June 30, 2010 is birr 440
e. Accrued fees earned but not recorded at June 30, 2010 are birr 1,000
f. Unearned fees on June 30, are birr 750
Required
1. Journalize the adjustment
2. Prepare income statement , owner’s equity statement and balance sheet
3. Journalizing closing entries
4. Prepare the post-closing trial balance
Answer
1.
Unit unit cost Total cost
Dec.1 Inventory 300 Br. 8 2,400
Dec.10 purchase 350 Br. 11 3,850
Dec.21 purchase 450 Br. 12 5,400
Dec.28 purchase 550 Br. 13 7,150
Total 1,650 18,800
Cost of merchandise available for sales = 18,800
Periodic FIFO
The most recent, July 28 -----------------------550*13 = 7,150
The next most recent July 20 ------------------80*12 = 960
Total 630 8,110
Cost offending inventory = 8,110
Cost of cost goods sold = CMAFS - Cost offending inventory
Kiya International Company is a private limited company incorporated under the Ethiopian
law. The following information was taken from the payroll register of sene 30, 2006E.C.
Additional information
The corporation employees work 8hrs in days and the during month there are 160 working
hours. Chaltu Tufa is a contract employee, Dawit, Abebe and Meseret contribute 20% of their
monthly basic salary for saving And Credit Association while Selamawit 5%. It is presumed
that an employee who has got fuel allowance up to birr 1,000 enjoys tax exemption and the
current price of a fuel is 20/litre payment is also affected on the pay day.
c. Pension contribution
02 Chala 3,500 350 3000 262.50 7,112.50 1,354.38 210 350 1,914.38 5,198.12
03 Bontu 850 --- ----- 79.6875 929.6875 91.95 ---- -- 91.95 837.74
04 Kena 2,800 150 2000 262.50 5,212.50 806.25 𝟏𝟔𝟖 280 1,254.25 3,958.25
Total 14,150 1,250 10,000 745.32 26,145.32 4,775.71 798 1,255 6,828.71 19,316.61
Journal Entries
1. To record the Payment of salary expenses for the month
Salary Expenses -----------------------26,145.32
Income Tax Payable ----------------------------4,775.71
Pension Contribution payable -----------------798
Credit Association -------------------------------1,255
.Cash -----------------------------------------------19,316.61
2. Payment of payable
To record the payroll Tax (employer Pension) expenses
Payroll Tax expenses (14,150*0.08) -------1,132
Pension Contribution payable----------------------------1,132
3. To the credit association payable
Credit association payable ------------------1,255
Cash ----------------------------------------------------1,255
4. To record the payment of payroll tax and withholding payment
Income tax payable -------------------------4,775.71
Pension payable -----------------------------2,489.69
Cash---------------------------------------------------7,265.40
10. Almaz Birara, owner of the Habesh Bar and restaurant, withdraws Birr 5,000 in
cash for personal use. The effect on the specific items in the basic accounting
equation is:
a. An increase in accounts receivable and a decrease in Almaz Birara, Capital
b. An increases in salary expense and a decrease in cash
c. An increase in Almaz Birara, Capital and a decrease in cash
d. A decrase in Almaz Birara, Capital and a decrease in cash
11. Abyssinia Coffee Plc purchases Birr 60,000 of coffee from Ethiopian Commodity
Exchange market after availing the required cash in its ECX payee out account. The
effect on the components of the basic accounting equation of Abyssinia Coffee Plc
is:
a. An increase in assets and liabilities
b. A decrease in assets and liabilities
c. No change in total assets
d. An increase in assets and a decrease in liabilities
12. The Mohamed and Baubed Company have the following at September 17: Assets
birr 13,000; Liabilities Birr 8,000; and Owner;s Equity Birr 5,000. On September
18, Mohamed and Baubed Company receive Birr 500 of cash revenue and earn Birr
200 of revenue on credit. Michael Tekle, the only worker that day, works 8 hours
and receives a wage rate of Birr 10 per hour. Michael will not get paid unitl
September 21. No other transactions occur during the day. At the end of September
18 the new totals are:
Assets Liabilities Owner’s
Equity
a. 13,500 7,880 5,620
b. 12,500 8,000 4,500
c. 13,500 8,120 5,380
d. 13,700 8,080 5,620
13. As of December 31, 1996, Mohhamed and Baubed Company has liabilities of Birr
5,000 and owner’s equity of Birr 7,000. It received revenues of Birr 23,000 during
the year ended December 31,1996. What are the assets for Mohammed and Baubed
Company as of Decembwer 31, 1996?
a. Birr 2.000 c. Birr 25,000
b. Birr 12,000 d. Birr 35,000
15. Dashen bank buys a Birr 1,200,000 VAN on credit. The transaction will affect the:
a. Income statement only
b. Statement of financial position only
c. Income statement and owner’s equity statement only
d. Income statement , owner’s equity statement, and balance sheet
16. The financial statement that summarizes the financial position of a Dashen bank Plc
is the :
a. Income statement
b. Balance sheet
c. Operating statement
d. Owner’s equity statement
17. Which of the following would not appear on the Mohammed and Baubed Company
balance sheet?
a. Accounts receivable
b. Mohamed and Baubed, capital
c. Utilities expense
d. Wages payable
18. Give two examples of adjustments made at the end of the accounting period
a. Depreciation expense and accounts payable
b. Provision for loan losses and accounts receivable
c. Current asset and non-current asset
d. Depreciation expense and provision for loan losses
19. What are the three elements which change equity:
a. Income, investments by owner(s) and distribution to owners(s)
b. Depreciation expense, accumulated depreciation and provision for loan losses
c. Investments by owner(s), long term liability and interest bearing deposits
d. Distribution to owner(s), interest income, current loans and cash
20. How should an accountant convert a previous sale on account to a note receivable?
a. Debit accounts receivable and credit owner’s equity
b. Debit accounts receivable and credit accounts payable
c. Debit notes receivable and credit accounts receivable
d. Debit notes receivable and credit notes payable
22. One of the following is an element that helps managers make decisions in a legal
context.
a. Identifying compliance requirements
b. Financial auditing
c. Scheduling and planning
d. Technical requirements
23. The pervasive formula of accounting i.e. A=L+C is mainly shown in one of the
following financial statements
a. Cash flow statement
b. Capital statement
c. Income statement
d. Balance sheet
24. Even though a company is under taking a computerized accounting systems, the
possible accounting cycle which still needs the manual intervention of an accountant
is
a. Classifying
b. Summarizing
c. Identifying and recording
d. Analyzing
25. DEK CO, a VAT registered company purchased construction materials and
delivered services for birr 500,000 and 600,000 respectively including VAT in the
month of June 2005. The amount of VAT and month of payment with no penalty is:
a. VAT payable 13,043.50, during July 2005
b. VAT receivable 13,043.50, during July 2005
c. VAT payable 15,000.50, during July 2005
d. VAT receivable 15,000.50, during June 2005
26. Wakjira Hagos has been paying monthly income tax birr 1,234.85 to the tax office.
His monthly pension contribution that has been deducted from his basic salary is
26.34% of his monthly income tax. Using the current pension proclamation (i.e. 6
and 8), what is Wakjira’s monthly Net Pay? (Assume no overtime and other taxable
allowances).
a. 5,421.00 c. 3,860.89
b. 4,215.89 d. 1,897.35
28. Abay Merchandising received in advance cash of birr 700,000.00 from its customer
and recorded it as an income. At the end of the fiscal year, birr 95,000.00 is being
earned. The adjusting entry will be:
a. Debit income and credit unearned revenue by birr 95,000.00
b. Credit income and debit unearned revenue by birr 95,000.00
c. Credit income and debit unearned revenue by birr 605,000.00
d. Debit income and credit unearned revenue by birr 605,000.00
30. Employees at same level pay equal amount of tax. It is principles of tax.
a. Horizontal equity
b. Vertical equity
c. Simplicity
d. Convenience
31. The banker accountant credited the customer account in error and in preparing bank
reconciliation the error could be adjusted by:
a. Adding to depositor balance
b. Deducting to depositor balance
c. Adding to bank balance
d. Deducting to bank balance
32. The process of implementing tasks for small/medium business operation is:
a. Identifying daily work requirements
b. Starting a new designed task
c. Developed effective work habits
d. Evaluate work performance
34. The sales person of a drug store maintains petty cash of birr 14,000.00. Payment
documents of sales person found to be birr 11,000 utilities, birr 2,000 postage, birr
150 taxi, birr 550 loading and unloading and birr 350 in currencies. Which one is
correct to the sales person.
a. Petty cash can be replenished at birr 13,650.00
b. Petty cash can be replenished at birr 13,500.00
c. A cash overage of birr 150.00
d. A cash shortage of birr 50.00
41. Inventory cost method used for estimating ending inventory at fire loss:
a. Weighted average method
b. Gross profit method
c. Retail method
d. FIFO
42. The accounting clerk of Zemen Bank record the withdrawal of birr 30,000.00 to by
a customer from saving account as a collection from the customer for settlement of
Mortgage. The entry to correct the recording should be:
a. Debit mortgage receivable and customer account by 30,000.00
b. Credit mortgage receivable and debit the balance of customer account by
60,000.00
c. Debit customers account and credit cash by 30,000.00
d. Debit customers account and credit cash by 60,000.00
44. The Policies Procedures used by management to protect asset for accurate Business
Information and ensure compliance with laws are called
A. System Design C. System Analysis
B. Internals control D. System Implementation
45. A payment of cash for purchase of services should be recorded on:
A. Purchase journal C. Cash Receipt Journal
B. Revenue journal D. Cash Payments
46. When there are a large number of Individual accounts with a common to please them
in separate ledger called
A. Creditor ledger C. Subsidiary ledger
B. Account Payable ledger D. Account Receivable ledger
47. Is sold on account to a customer for Br 1,000 1/10, n/30 the amount of the discount
for early payment would be
A. Br 0 B. Br 10 C. Br 5 D. Br 100
51. Which one the following would not appear on company’s balance sheet
A. Accumulated depreciation C. Owners’ equity
B. Utilities expense D. A Large payable
52. An inventory system that record as all increases &decreases merchandise inventory
account is known as:
A. A perpetual inventory system C. A periodic inventory system
B. FIFO inventory system D. LIFO inventory system
53. Cost of equipment Br 150,000, use full life 5 years, salvage values 10,000. Compute
the annual depreciation using line method
A. 28,000 B. 14,000 C. 10,000 D. 13,000
57. If the beginning inventory was Br 120,000 cost of merchandise purchase was Br
180,000 & ending inventory was Br 140,000 How much will be the cost of goods
sold?
A. 160,000 B, 150,000 C, 120,000 D, 180,000
60. in a job order cost system manufacturing overhand applied would be record to
A. Finished goods inventory C. Cost of goods sold
B. Work in process inventory D. Manufacturing over head
62. Goods of 1,000 purchased from Mr. A were recorded in sale book. The rectification
of this error will:
a. Increase in the gross profit
b. Reduce the gross profit
c. Have no effect on gross profit
d. None of the given options
63. Which of the following item must be recorded in the unadjusted cash book of the
depositor in order to bring it in line with the adjusted cash balance?
a. Bank charge
b. An error on the bank statement
c. Uncredited deposit
d. Un presented cheque
64. It is supposed that on 31st December, 2007 the sundry debtors are amounted to birr
40,000 on the basis of past experience, it is estimated that 10% of the sundry debtors
are doubtful. Beginning balance of allowance for doubtful accounts was birr 1,600.
What amount of new provision for doubtful debts will be credited in the allowance
account?
a. Birr 4,599
b. Birr 340
c. Birr 2,400
d. Birr 1,500
66. The balance sheet reported a beginning balance of birr 20,000 in accounts
receivable and an ending balance of birr 15,000 credit sales of birr 20,000 were
made during the year. Using this information, compute cash collected from
customers:
a. Birr 205,000
b. Birr 195,000
c. Birr 200,000
d. Birr 15,000
67. What is a business called that sells goods that it purchases for resale?
a. Service business
b. Manufacturing business
c. Partnership business
d. Merchandising business
68. What is the primary purpose of a sales journal?
a. Makes work for the account
b. Shows the company the purchase made last month
c. Shows the individual accounts of all customers
d. Saves time in posting and it
69. Which of the following entry will be recorded if cheque deposited is dishonored by
bank
a. Bank account (Dr) and debtors account (Cr)
b. Debtors account (Dr) and bank account (Cr)
c. Creditors account (Dr) and bank account (Cr)
d. Creditors account (Dr) and bank account (Cr)
70. Which of the following is not a financial statement?
a. Audit report
b. Balance sheet
c. Income statement
d. Cash flow statement
71. Which of the following accounting will be credited in the books of XYZ Company
if the business purchased a vehicle through cheque?
a. Vehicle account
b. Business account
c. Debtors account
d. Bank account
73. Which of the following account balance account will be shown on debit of trial
balance (it is assumed that all account balance are shown on normal balance?
a. Capital account
b. Sundry account
c. Accounts payable account
d. Cash account
75. Which of the following is correct about the flow of recording a transaction?
a. Accuracy of event voucher journal ledger trial balance profit and
loss statement balance sheet.
b. Accuracy of event journal voucher ledger trial balance profit and
loss statement balance sheet.
c. Accuracy of event ledger voucher journal trial balance profit and
loss statement balance sheet.
d. Accuracy of event trial balance voucher journal ledger profit and
loss statement balance sheet.
76. This account does not appear on the income statement
a. Accumulated depreciation
b. Depreciation expense
c. Sales expense
d. Marketing expense
e. Interest expense
79. One of the following loans is an expense of adjusting entry for deferred items?
a. Expense to asset
b. Revenue to liability
c. Asset to expense
d. Liability to expense
80. From income statement sales revenue is Birr 650,000 the gross margin is 20%, what
is the cost of goods sold?
a. Birr 650,000
b. Birr 260,000
c. Birr 130,000
d. Birr 520,000
84. How should an accountant convert a previous sale on account to a note receivable?
a) debit account receivable & credit account payable
b) debit notes receivable & credit notes payable
c) debit notes receivable &credit account receivable
d) debit account receivable & credit owners equity
86. ABC Inc. sold a piece of equipment for birr 50,000. The equipment originally cost
birr 100,000 & the accumulated depreciation on the equipment amounted to
birr 60,000. The company should recognize:
a) Again of birr 50,000
b) Again of birr 10,000
c) Again of birr 60,000
d) No gain or loss
91. Dashen bank buys a birr 1,200,000 Van on credit the transaction will affect the:
a) income statement only
b) statement of financial position only
c) income statement & owner’s equity statement only
d) income statement, owner’s equity statement & balance sheet
93. Almaz Birara owner of the Habesha Bar & Restaurant withdraws birr 5,000 on cash
for personal use. The effect on the specific items in the basic accounting equation
is:
a) An increases in account receivable & a decrease in Almaz Birara
capital
b) An increase in salary expense and a decrease in cash
c) A decrease in Almaz Birara capital and a decrease in cash
d) An increase in Almaz Birara capital & a decrease in cash
94. The Mohamed & Baunbed company has the following at September 17: Assets
birr 13,000; liabilities birr 8,000 and owner equity birr 5,000. On September 18,
Mohamed & Baunbed company receives birr 500 of cash revenue and earns birr 200
of revenue on credit. Michael Tekle, the only workers that day works 8 hours &
receives a wages rate of birr 10 per hour. Micheal will not get paid until
September 21. No other transaction occur during the day. At the end of
September 18, the new totals are:
a) Assets, liabilities, owners’ equity birr 13700 birr 8080 birr 5620
b) Assets, liabilities, owners’ equity birr 13500 birr 8120 birr 5380
c) Assets, liabilities, owners’ equity birr 12500 birr 8000 birr 4500
d) Assets, liabilities, owners’ equity birr 13500 birr 7880 birr 5620
95. The monetary unit assumption:
a) is only used for financial statement of banks
b) is unimportant in applying the cost principle
c) Provides that the unit of measure fluctuates over time
d) Require that only transaction data capable of being expressed in terms
of money be included in the accounting records of the economic entity
96. One of the following provides objective evidence for the occurrence of a
transaction
a. Account
b. Journal
c. Source document
d. Work sheet
97. The process of transferring debit and credit entries to the ledger accounts
a. Adjusting
b. Correcting
c. Journalizing
d. Posting
101. Generally accepted accounting principles call for recognition of expense when
a. Incurred and collected in cash
b. Incurred regardless of time of the related cash payment
c. Goods and services are purchased
d. Paid in cash regardless of the time expenses are incurred
102. Financial statements prepared in between the fiscal period is known as
a. Annual financial statements
b. Fiscal-year financial statements
c. Interim financial statements
d. Year-end financial statements
104. An inventory system that continuously discloses the cost of inventory on hand
and cost of inventory sold is:
a. First-in first-out inventory costing system
b. Periodic inventory system
c. Perpetual inventory system
d. Physical inventory system
106. If original cost salvage value and accumulated depreciation balance of office
equipment after adjustment are birr 20,000 birr 4,000 and birr 12,000 respectively
the book value of the office equipment is :
a. Birr 10,000
b. Birr 8,000
c. Birr 7,000
d. Birr 5,000
The following information is taken from the accounting records of almaz company
immediately before accounts of the company are adjusted
Accounts receivable birr 40,000
Allowance for uncollectible accounts (credit) 200
Percentage of uncollectible 3%
107. Which of the following statement s is correct , if uncollectable is estimated
based on year end accounts receivable balance
A. Account receivable is birr 38,800 after adjustment
B. Allowance for uncollectible accounts is birr 1000 after adjustment
C. Net realizable value of account receivable is birr 38,800 after adjustment
D. Uncollectible accounts expense is birr 1,400
108. The balance of allowance for uncollectible accounts after adjustment is :
a. Br. 200
b. Br. 1,200
c. Br. 1,400
d. Br. 38,800
109. Temporary (or casual ) employees salary are NOT affected by
a. Income tax deductions
b. Overtime earnings
c. Pension contribution deduction
d. Voluntary deduction
110. One of the following is NOT a benefit of applying computer based accounting
system
A. Enhance accuracy in recording transaction
B. Increase the need for source documents
C. Minimizes errors in recording and reporting transactions
D. Saves time for posting entries
116. If beginning inventory was birr 120,000, cost of merchandise was birr
180,000, and ending inventory was birr 140,000, how much will be cost of goods
sold?
a. 160,000 c. 120,000
b. 150,000 d. 180,000
117. Which of the following is not a base fro categorization of tax payers as
category ‘C’?
a. Annual turnover/Sales
b. Legal personality
c. Nature of operations
d. All
119. In a job order cost system, manufacturing overhead applied would be record
to:
a. Finished goods inventory
b. Work in process inventory
c. Cost of goods sold
d. Manufacturing overhead
120. Cost of equipment birr 150,000 uses full life 5 years salvage value 10,000
annual depreciation using straight line method
a. 28,000 B. 14,000 C. 10,000 D. 13,000
121. Peachtree accounting applicable to / computerizing accounting more
a. Company b. Government officer c. micro finance d. banks
122. According to Ethiopian tax proclamation which one is not obligation of an
employee
a. OT earnings b. EIT c. Charity contribution d. pension contribution
123. Not internal users
a. Employee b. financial institution c. budget d. manager
124. The budgeting phases and function includes
a. Planning b. controlling c. evaluating d. all
125. An example of an accelerated depreciation method is
a. Straight line b. sum of the years digit c. unit production d. none
126. According to the Ethiopian tax proclamation which is not obligation of an
employees
a. OT earning b. BIT c. charity contribution d pension contribution
A B
1. Quality I A. Policies and procedures in place
2. Recorded as an asset or as an B. Used to upload data
expense R C. Segregation of duties
3. Conversion costs T D. Budget
4. Internal control A E. For External users and GAAP based
5. Account payables and accounts F. Gap between existing and required skill
receivable S G. Date of actual events for accounting
6. Work schedules L H. More Risks and cost supposed by the supplier
7. Accrued revenue W I. Performance evaluation
8. Spreadsheet B J. Prime costs
9. Training need assessment F K. Increases with units produced
10. Financial accounting E L. Activities assigned to workforce and machines with
11. FOB destination P its completion time
12. Real time transaction G M. Prior claim of creditors
N. FOB shipping
13. Financial plan D O. Decreases with units produced
14. Fixed cost per unit O P. Meeting or exceeding customers’ needs
15. Compliance audit V Q. Retirement payments
R. Prepayments
S. Balance sheet accounts used in accruals
T. Direct labour and overhead costs
U. Residual claim of share holders
V. Disclaimer audit opinion
W. Rent/interest receivables
Matching 2
Column A Column B
1. Excise Tax h a. Appropriations
2. Unqualified audit opinion e b. Bank service charge
3. Government Fund c c. Capital project fund
4. Acquisition of goods and services by a d. Direct labour and overhead costs
governmental fund entity a e. Financial statements presented fairly
5. Organization cost i f. Group A tax payers
6. Submit income statement and balance sheet to g. Group B tax payers
tax authority f h. Indirect tax
7. Cumulative preferred shareholders r i. Intangible asset
8. Home office and branch office p j. Internal control system
9. Bank debit memo b k. Job order costing
10. Production of voluminous similar products m l. NSF Fund
11. Segregation of duty j m. Process costing
12. Source of finance for the state q n. Product pricing decision
13. Management accounting n o. Purchase order report
14. Quantity ordered, received, and remaining k p. Reciprocal accounts
15. Conversion manufacturing costs d q. Tax, loan, and donation
r. The right to take dividend in arrears
Matching 5
Column A Column B
1. Expense paid in advance for futures n a. accrued expense
2. Profit distributed to owners of corporation c b. Retained earnings
3. Summarize the changes in owners ‘equity for c. Dividend
specific period of time b d. Capital
e. Expense
4. Requires that only transaction data capable of being f. Accrued Revenue
expressed interims of money be included in the g. Economic Entity assumption
account records of the economic entities l h. Statement Financial Position
5. Cost of assets consumed or used in the process of i. Journalize
earning revenues e j. Posting
6. The process of recording transaction in the book of k. Patent
original entry i l. Monetary Unit Assumptions
7. Intangible asset k m. Land
8. Direct tax p n. Deferred Expenses
9. Prime cost r o. VAT
10. Revenue earned but not yet collected and recorded f p. Income tax
11. Depreciation t q. Deferred Revenue
12. Interest v r. Direct material & direct labour
13. Asset & liability of the business should be recorded s. Direct labor &MOH costs
costs separately from the personal asset & liability of t. Fixed asset
the owners g u. Merchandise Inventory
14. Entries required after end of the accounting period v. Cost of capital
to update the balance sum accounts w w. Adjusting
15. Items held to be sold to customers u x. Closing
Matching 9
Column A Column B
1. Entries required at the end of the a. Accrued Expenses
account period e b. Retained earning
2. Ledger l c. Dividend
3. WIP inventory h d. Capital statement
e. Expenses
f. Accrued revenue
g. Economic entity assumption
h. Statement of financial position
i. Journalizing
j. Posting
k. Patent
l. Monetary unit assumption
m. Land
n. Deferred expenses
o. VAT
p. Income tax
q. Deferred revenue
Matching 10
Column A Column B
1. Drawing accountV A. Accrued Expenses
2. Internal control system G B. Retained earning
3. Regressive taxation O C. Dividend
4. Progressive taxation P D. Capital statement
5. Checking accounts H E. Expenses
6. Tax impose on luxury goods R
F. Accrued revenue
G. Economic entity assumption
H. Statement of financial position
I. Journalizing
J. Posting
K. Patent
L. Monetary unit assumption
M. Land
N. Deferred expenses
O. VAT
P. Income tax
Q. Deferred revenue
R. Direct material & direct labour
cost
S. direct labour & manufacturing
overhead
T. Fixed assets
U. Merchandise Inventory
V. Cost of capital
W. Adjusting
X. Closing