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Accounting Principles: Exercises and Problems, Exercises of Principles of Accounting

University of Economics and LawPrinciples of Accounting

A series of multiple-choice questions and exercises related to accounting principles. It covers topics such as the balance sheet, income statement, and accounting equation. The exercises provide practical applications of accounting concepts and help students develop their understanding of financial reporting.

Typology: Exercises

2023/2024

Uploaded on 11/24/2024

ngoc-ai-thien-nguyen
ngoc-ai-thien-nguyen 🇻🇳

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PART 1: MULTIPLE CHOICE QUESTIONS
Question 2.1 The balance sheet provides which of the following information
about an accounting unit:
a. Asset, Capital c. Business strategy
b. Revenue, expenses d. All a, b, c are correct
Question 2.2 The income statement provides which of the following information
about the accounting unit?
a. Asset, Capital c. Business strategy
b. Revenue, expenses d. All a, b, c are correct
Question 2.3 Sales transactions have received payment. The product has a cost
of goods sold 100 and a selling price of 90 (not considering the impact of VAT).
How does this transaction affect accounts on the Balance Sheet:
a. 1 asset increases, 1 asset decreases c. 1 asset increased; 1 asset
decreased; 1 capital source decreased
b. 1 asset increased; 1 asset decreased; 1 increased capital source d. 1
asset decreased; 1 increased capital source; 1 capital source decreased
one asset increases (cash), and one asset decreases (inventory). Additionally,
because the selling price (90) is less than the cost (100), there will be a loss of
10, which reduces equity (capital source).
Question 2.4 Sales transaction have received payment. The product has a cost
of goods sold 100 and a selling price of 90 (not considering the impact of VAT).
How does this transaction affect accounts on the Income statement:
a. Revenue increases, costs increase c. Revenue increases, costs increase,
profits decrease
b. Revenue increases, costs decrease d. Revenue increases, costs increase,
profits increase
Revenue increases because the product was sold for 90.
Costs increase due to the Cost of Goods Sold (COGS) being 100.
Since the selling price (90) is less than the COGS (100), there is a loss of 10, meaning profits
decrease.
Question 2.5 Financial statements provide which of the following information?
a. Asset, Capital c. Status of Cash in and out
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PART 1: MULTIPLE CHOICE QUESTIONS

Question 2.1 The balance sheet provides which of the following information about an accounting unit: a. Asset, Capital c. Business strategy b. Revenue, expenses d. All a, b, c are correct Question 2.2 The income statement provides which of the following information about the accounting unit? a. Asset, Capital c. Business strategy b. Revenue, expenses d. All a, b, c are correct Question 2.3 Sales transactions have received payment. The product has a cost of goods sold 100 and a selling price of 90 (not considering the impact of VAT). How does this transaction affect accounts on the Balance Sheet: a. 1 asset increases, 1 asset decreases c. 1 asset increased; 1 asset decreased; 1 capital source decreased b. 1 asset increased; 1 asset decreased; 1 increased capital source d. 1 asset decreased; 1 increased capital source; 1 capital source decreased one asset increases (cash), and one asset decreases (inventory). Additionally, because the selling price (90) is less than the cost (100), there will be a loss of 10, which reduces equity (capital source). Question 2.4 Sales transaction have received payment. The product has a cost of goods sold 100 and a selling price of 90 (not considering the impact of VAT). How does this transaction affect accounts on the Income statement: a. Revenue increases, costs increase c. Revenue increases, costs increase, profits decrease b. Revenue increases, costs decrease d. Revenue increases, costs increase, profits increase  Revenue increases because the product was sold for 90.  Costs increase due to the Cost of Goods Sold (COGS) being 100.  Since the selling price (90) is less than the COGS (100), there is a loss of 10 , meaning profits decrease. Question 2.5 Financial statements provide which of the following information? a. Asset, Capital c. Status of Cash in and out

b. Revenue, expenses d. All a, b, c are correct Question 2.6 Information about profits arising during the period is provided by which of the following financial statements: a. Balance sheet c. Income statement b. Cash flow statement d. a and c Question 2.7 Information about accumulated profits at the end of the period is provided by which of the following financial statements: a. Balance sheet c. Income statement b. Cash flow statement d. a and c Question 2.8 The accounting equation represents the balance of the Income Statement: a. Profit = revenue – costs c. Assets = capital b. Assets = liabilities + owner's equity d. Both a, b, c  Assets = Liabilities + Owner's Equity (option b), which reflects the structure of the Balance Sheet , not the Income Statement. However, Profit = Revenue – Costs (option a) represents a basic formula of the Income Statement. Option c (Assets = capital) simplifies part of the accounting equation but is not a complete representatio Question 2.9 Which measurement is used when preparing the Balance Sheet: a. Value c. Physical items b. Working time d. Both a, b and c Question 2.10 When presenting the item "Depreciation of fixed assets" on the Balance Sheet, which of the following statements is incorrect: a. Presented in the assets section c. Presented in the capital sources section b. Record negative numbers d. Both a and b Question 2.11 The indicator "Profit after tax" on the Income Statement is always equal to the indicator "Undistributed Profit after tax" on the Balance Sheet: a. True c. No conclusion yet

6 Bank deposits

7 Construction in progress

8 Owner's investment capital 9 Finished goods

Account Receivables (date of debt arising: 15/3/N1, payment term: 18 months)

11 Inventory

Account Payables (date of debt arising: 30/5/N1, payment term: 18 months)

Sources of investment capital for basic construction

14 Bonus fund

15 Tools

16 Undistributed profits after tax

17 Taxes and other payable to State Budget

Other payables (paid within 6 months from 31/12/N1)

19 Raw materials

Payable to the seller (date of debt arising: 30/5/N1, payment term: 24 months)

21 Prepaid expenses (36-month allocation period)

3-year term bank borrowings (borrowings date: 1/1/N1, principal payment periodically at the end of each year)

Account Receivables (date of debt arising: 10/11/N1, payment term: 15 months)

Requirement :

  1. Classify these accounts into asset and capital.
  2. Calculate the value of existing owner's equity at the company.
  3. Prepare the balance sheet at the company at the above time. Question 2. On 1/3/N, Mr. Nam plans to establish a commercial enterprise with the following data: (Unit: 1.000 VND).
  4. Buying goods worth 500,000 from supplier X, Nam must pay 50% immediately upon purchase, the remaining balance is owed to the supplier within 12 months.
  5. To ensure a long-term supply of goods, Nam must make a long-term deposit of 200,000 at the request of the supplier.
  6. Buy land use rights and a house for office headquarters from B Real Estate Company with a purchase price of 6,000,000 (of which land use rights are worth 4,000,000). Nam pays 50% immediately, the rest is deferred over 5 years, the payment deadline is the end of each year.
  7. Purchase machinery and office equipment on deferred payment with the purchase price of 240,000, payment-term in 24 months, payment due at the end of each quarter.
  8. The amount of money needed to spend on the remaining initial activities of the business is 900,000. Requirement :
  9. Calculate the initial equity that Nam needs to set up the Company with the above data.
  10. Prepare the Company's Balance Sheet as of 1/3/N. Question 2. An initial business is established with the following data: (Unit: 1, VND).
  11. The parent company provided the subsidiary company (the unit) with cash capital of 5.000.000. There is 4/5 of this amount transferred to the unit's bank account, the remaining amount was put into the cash fund of the unit.
  12. The parent company provides the unit with an amount of inventory worth 800.000 and an amount of fixed assets worth 2.000.000. Requirement:
  13. List down all assets and equity at the enterprise.
  14. Prepare the Balance Sheet at the time the business begins to operate. Question 2.

15 Taxes and other payable to State Budget 23. Requirement:

  1. Calculate X, prepare the Balance Sheet as of 01/12/N.
  2. Prepare the Balance Sheet as of 31/12/N after these economic transactions arise: a. Purchase of goods without payment to the supplier (payment term is 3 months): 20,000. b. The business owner increase equity by adding a tangible fixed asset: 30, c. Cash payment to pay debt for supplier: 20,000. d. Paying taxes to the State by bank deposit: 15.000. e. Use undistributed profits to supplement business capital: 5.000. f. Customers pay for goods in cash: 10.000. g. Pay cash for advances for employees on business trips 2.000. h. Paying short-term loans with bank deposits: 10.000. i. Deposit cash to bank: 15.000. Question 2. At XYZ company, we have the information of revenue and expenses incurred in year 20xx as following (Unit: 1.000 VND):
  3. Total revenue from selling products and providing services: 400.000.
  4. Discount for a number of sold products: 5.000.
  5. Returned products: 4.000.
  6. Price of sold products: 150.000.
  7. Selling expenses: 25.000, General & administration expenses: 22.000.
  8. Financial income: 8.000, other income: 2.000.
  9. Financial expenses: 12.000, other expenses: 3.000.
  10. Corporate income tax must be paid at the tax rate of 20%. Requirement : Prepare the Income statement of XYZ company in year 20xx (follow the below table). INCOME STATEMENT Year …… Account Cod e Amount
  11. Revenue from operations 01 2. Revenue deductions 02
  12. Net sales (10 = 01 – 02 ) 10
  13. Cost of goods sold 11
  1. Gross profit (20 = 10 – 11 ) 20
  2. Financial income 21
  3. Financial expense Include: Interest expense
  1. Selling expenses 24
  2. General & administration expenses 25
  3. Net profit from operations [30 = 20 + (21 - 22) – (24+25) ]
  1. Other income 31
  2. Other expenses 32
  3. Other profit (40 = 31 – 32 ) 40
  4. Total profit before tax (50 = 30 + 40) 50
  5. Current tax expenses 51
  6. Profit after tax (60 = 50 - 51- 52) 60 Question 2.7: On December 1, 20xx, Mr A created a new self-storage business, Mien Nam Company. The following transactions occurred during the company’s first month (Unit: 1.000 VND):
  7. The owner invested 30.000 cash and a cargo truck worth 150.000 in the company.
  8. Rented equipment by paying 2.000 cash for the first month rent.
  9. Purchased 2.400 office supplies for cash.
  10. Paid an employee 10.000 for four week’s salary earned.
  11. Collected 9.800 cash for service fees from customers.
  12. The company billed a customer L 18.000 for fees earned.
  13. Paid 950 cash for minor repairs to a leaking roof.
  14. Paid 400 cash for this month’s telephone bill.
  15. Pay electricity and water bill at the office 1.000 by cash. Identify how each of the following separate transactions affected financial statements. For the balance sheet, identify how each transaction affects assets, liabilities, and equities. For the income statement, identify how each transaction affects net income. For the statement of cash flows, identify how each transactions affects cash flow from operating activities, cash flows from financing activities, and cash flows from investing activities. For increases, place