LULU QUESTION ONE (20 MARKS - 20 Minutes) For each of the following statements, choose whether the su owing statements, choose whether the statement is True (a) or False (b) by drawing a circle on the correct letter: value or not, are recorded in the 1. All transactions, whether measured in monetary value or not, are recorded financial information system. a) True b) False 2. The hiring of a new company accountant is an economic event that requires reco journal entry. a) True b) False 3. The accounting process includes only the function of bookkeeping. a) True b) False 4. Assets are resources owned by the business and are expected to benefit the bushes future periods. a) True b) False 5. The basic accounting equation states that Assets = Liabilities + Expenses. a) True b) False For each of the following statements, choose the correct answer among (a), (b), (c), and (d) by drawing a circle on the correct letter: 6. How does the purchase of buildings on account for AED 3million affect the accounting equation? a) increases assets b) decreases equity c) increases liabilities d) both a and c 7. How does providing services for $8,000 affect the accounting equation? a) decreases cash b) decreases receivables c) decreases revenue d) increases revenue 8. The accounting process includes all the following functions except: a) Identification b) auditing c) recording d) communication 9. Jack's Inc. purchased land for 50,000 in 2007. At December 31, 2018, an appraisal determined the fair value of the land is 65,000. If Jack's follows the historical cost principle, in the 2018 financial statements, the land will be reported at: a) 65,000 on the b) 50,000 on the c) 50,000 on the d) 15,000 on the statement of statement of financial income statement statement of financial financial position. position. position. 10. Liabilities are: a) debts and obligations b) services performed c) future benefits d) none of the answers is correct 11. All the following are examples of liabilities except: a) Accounts receivable b) unearned revenue c) loans d) notes payable Page 2 of 10 12. Which of the following items are sources of increases to equity? a) Purchase of assets b) expenses c) dividends d) capital investment 13. As of December 31, 2017, D&G Inc. had assets of 9,500, share capital of 3.500, and retained earnings of 4,000. Total liabilities as of that date equal: a) 7,500 b) 4,000 c) 2,000 d) 0 14. Freirs Company paid the monthly rent of 6,000. This transaction records: a) a debit to cash and a b) a debit to rent c) a debit to prepaid d) no journal entry credit to rent expense expense and a credit rent and a credit to to cash accounts payable 15. The process of transferring transactions from journal to ledger account is called: y muruplyingb ) preparing income statement e) recording d ) posting 16. The following accounts are examples of assets except: a) cash b) salaries expense c) supplies d) prepaid insurance 17. The process of entering transaction data into the journal is called: a) recording b) listing c) posting d) summarizing 18. At September 1, 2017. Crews Co. reported equity of 272,000. During the month, Crews generated revenues of 40.000, incurred expenses of 24,000, purchased equipment for 10,000 and paid dividends of 4,000. What is the amount of equity at September 30, 2017? a) 272,000 b) 16,000 c) 284,000 d) 274,000 19. Which of the following would not be considered an external user of accounting data for the ABC Company? c) investors b) customers d) tax authority agent a) Managers 20. IFRS stands for: a) International b) Internal Financial c) International d) Internal Financial Financial Reporting Revenue Society Financial Reporting Society Standards Reporting Statements Page 3 of 10
