DySAS Level 1

EASY
1. If a transaction causes total liabilities to decrease but does not affect the owners equity,
what change, if any, will occur in total assets?
(a) assets will be increased (c) no change in total assets
(b) assets will be decreased (d) none
2. A comany has assets of !"#,$$$, no liabilities, and stoc%holders equity of !"#,$$$. It
buys store fi&tures worth !#,$$$ on credit. 'hat effect would this transaction ha(e?
(a) both assets and stoc%holders equity increase by !#,$$$
(b) both assets and stoc%holders equity decrease by !#,$$$
(c) assets remain the same and stoc%holders equity increases by !#,$$$
(d) both assets and liabilities increase by !#,$$$
). In accounting arlance, the sequence of the arrangements of the accounts in a ledger * that
is, assets first, followed by liabilities, owners equity accounts, re(enues and e&enses * is
called+
(a) financial statement order (c) double entry method
(b) account balance (d) accounting cycle
". ,he recording hase of accounting co(ers the following stes, e&cet+
(a) business documents are recei(ed and reared.
(b) transactions are -ournali.ed.
(c) transactions are osted to the ledger.
(d) financial statements are reared.
#. An accrued e&ense is an e&ense+
(a) incurred but not aid (c) aid but not incurred
(b) incurred and aid (d) not reasonably estimable
(c)
/. 0alance sheet accounts that are not eliminated in the closing entries are called+
(a) nominal (c) ositi(e
(b) ri(ate (d) real
1. 2ntries reared, as a ste in the accounting rocess, to bring the boo%s and accounts u3
to3date, is %nown as+
(a) oening entries (c) closing entries
(b) ad-usting entries (d) re(ersing entries
4. If a general artnershi, whose artnershi contract ro(ides for interest on artners5 caital
account balances, incurs a net loss, the interest ro(ision of the contract+
a. 6ust be enforced c. 6ay be either enforced or disregarded
b. 6ust be disregarded d. 6ust be rescinded by the artners
7. A artner by estoel+
a. 8stensible artner c. 9ormant
b. :ecret artner d. ;ominal
1$. ,he theory which (iewed the assets of a business as belonging to the owner or rorietor,
the liabilities as debts of the owner, and the income of the business as an increase in the
owners net worth or caital.
a. !rorietary theory c. 2ntity theory
b. 2quity theory d. <unds theory
AVERAGE
11. ,he income summary account+
(a) generally has a credit balance after all the accounts that should be closed ha(e closed.
(b) summari.es re(enues, e&enses, and net earnings or loss for the accounting eriod.
(c) summari.es changes in assets, liabilities, and net earnings or loss for the accounting
eriod.
(d) is used to close the retained earnings account.
12. =e(ersing entries aly to+
(a) all ad-usting entries. (c) all accruals.
(b) all deferrals. (d) all closing entries.
1). 'hich of the following combinations of trial balance totals does not indicate a transosition?
(a) !/#,"1$ debit and !/",#1$ credit (c) !2#,/1$ debit and !2/,/1$ credit
(b) !)2,#"$ debit and !)#,"2$ credit (d) !1",#11 debit and !1#,"11 credit
1". 'hich of the following errors would cause unequal totals in the trial balance?
(a) ,he comany records a ayment of !2$,$$$ in ad(ance of deli(ery of goods as a debit
of !2,$$$ to urchases and a credit of !2,$$$ to cash.
(b) ,he comany fails to accrue salaries of !#$,$$$ for the month of 9ecember.
(c) 0oth a and b.
(d) ;one of the abo(e.
1#. 'hich of the following errors would cause unequal totals in the trial balance?
(a) ,he firm records !21,$$$ recei(ed from a customer in ad(ance of deli(ery of goods as a
debit of !1,$$$ to cash and a credit of !21,$$$ to sales.
(b) ,he firm fails to enter the cost of electric current used during the month as an e&ense
and fails to recogni.e the !22,$$$ owed to 9>!?.
(c) All these errors will cause unequal trial balance totals.
(d) ;one of these errors will cause unequal trial balance totals.
1/. Ad-usting entries that should be re(ersed include those for reaid or unearned items that+
(a) create an asset or a liability account
(b) were originally entered in a re(enue or e&ense account
(c) were originally entered in an asset or liability account
(d) create an asset or a liability account and were originally entered in a re(enue or e&ense
account
11. ,he rimary resonsibility of an indeendent auditor who is a ?!A is to+
(a) @erify the accuracy of the amounts determined by the client.
(b) Assess whether the management is honest.
(c) 2(aluate the Afair resentationB of the comanys eternal financial statements.
(d) !reare current financial reorts for the client.
14. >o%a and 6o%o formed a artnershi on Culy 1, 2$$1 and contributed the following assets+
>o%a 6o%o
?ash !/#,$$$ !1$$,$$$
=ealty )$$,$$$
,he realty was sub-ect to a mortgage of !2#,$$$, which was assumed by the artnershi.
,he artnershi agreement ro(ides that >o%a and 6o%o will share rofits and losses in the
ratio of one3third and two3thirds resecti(ely. 6o%os lcaital account at Culy 1, 2$$1 should
be+
a. !"$$,$$$ b. !)71,//1 c. !)1#,$$$ d. !)1$,$$$
17. A, 0 and ? are artners in an accounting firm. ,heir caital account balances at year3end
were+ A, !7$,$$$D 0, !11$,$$$D ?, !#$,$$$. ,hey share rofits and losses in a "+"+2 ratio,
after the following secial terms+
a. !artner ? is to recei(e a bonus of 1$E of the net income after the bonus.
b. Interest of 1$E shall be aid on that ortion of a artners caital in e&cess of
!1$$,$$$.
c. :alaries of !1$,$$$ and !12,$$$ shall be aid to artners A and ?, resecti(ely.
Assuming a net income of !"",$$$ for the year, the total rofit share of artner ? would be+
a. !1,4$$ b. !1/,4$$ c. !17,"$$ d. !17,4$$
2$. ,he basic comonents of financial statements include (choose the incorrect one)+
(a) statement of changes in equity (c) statement of retained earnings
(b) statement of recogni.ed gains and losses (d) cash flow statement
DIFFICULT
21. Accrued salaries ayable of !#,$$$ were not recorded at 9ecember )1, 2$$/. :ulies on
hand of !2,$$$ at 9ecember )1, 2$$1 were erroneously treated as e&ense instead of
sulies in(entory. ;either of these errors were disco(ered nor corrected. ,he effect of
these two errors would cause+
(a) 2$$1 net income to be understated by !1,$$$ and 9ecember )1, 2$$1 retained earnings
to be understated by !2,$$$.
(b) 2$$/ net income and 9ecember )1, 2$$/ retained earnings to be understated by !#,$$$
each.
(c) 2$$/ net income to be o(erstated by !#,$$$ and 2$$1 net income to be understated by
!2,$$$.
(d) 2$$1 net income and 9ecember )1, 2$$1 retained earnings to be understated by !2,$$$
each.
22. ;ic% and ?arter are artners who share rofits and losses in the ratio of 1+), resecti(ely.
,heir resecti(e caital accounts are as follows+
;ic% !)#,$$$ ?arter !)$,$$$
,hey agreed to admit 0rian as a artner with a one3third interest in the caital and rofits
and losses, uon an in(estment of !2#,$$$. ,he new artnershi will begin with a total
caital of !7$,$$$. Immediately after 0rians admission, what are the caital balances of
;ic%, ?arter, and 0rian, resecti(ely?
a. !)$,$$$D !)$,$$$D !)$,$$$ c. !)1,//1D !24,)))D !)$,$$$
b. !)1,#$$D !24,#$$D !)$,$$$ d. !)#,$$$D !)$,$$$D !2#,$$$
2). At 9ecember )1, 6iga and 6igo are artners with caital balances of !"$,$$$ and !2$,$$$,
and they share rofits and losses in the ratio of 2+1, resecti(ely. 8n this date Ami in(ests
!11,$$$ in cash for a one3fifth interest in the caital and rofit of the new artnershi.
Assuming that goodwill is not recorded, how much should be credited to Amis caital
account on 9ecember )1?
a. !12,$$$ b. !1#,$$$ c. !1#,"$$ d. !11,$$$
2". If a bonus is traceable to the re(ious artners rather than an incoming artner, it is
allocated among the artners according to the+
a. !rofit3sharing ercentages of the re(ious artnershi.
b. !rofit3sharing ercentages of the new artnershi.
c. ?aital ercentages of the re(ious artners.
d. ?aital ercentages of the new artnershi.
2#. ,he essential characteristics of an asset include (choose the incorrect one)+
(a) ,he asset is the result of ast transaction or e(ent.
(b) ,he asset ro(ides future economic benefits.
(c) ,he cost of the asset can be measured reliably.
(d) ,he asset is tangible.
2/. Immaterial amounts of similar nature and function should be groued or condensed as one
line item in the financial statements.
(a) consistency (c) offsetting
(b) aggregation (d) comarability
21. ,he Aaccounting olicies sectionB of the notes to financial statements should describe+
(a) only the measurement basis used in rearing the financial statements.
(b) only the secific accounting olicies followed by the enterrise.
(c) both the measurement basis and accounting olicies followed.
(d) nature of the enterrises oerations and its rincial acti(ities.
24. Fou are gi(en the data as follows for ?GI; H! ?8=!8=A,I8;+
;et Assets at the beginning of the year !1)$,$$$
;et Assets at the end of the year 11#,$$$
9i(idends declared 4,$$$
?aital :toc% Issued 1$,$$$
,he net income (loss) is+
(a) ;et loss * !1$1,$$$ (c) ;et income * !1$1,$$$
(b) ;et income * !11,$$$ (d) ;et loss * !11,$$$
;et assets at the end of the year ! 11#,$$$
;et assets at the beginning of the year (1)$,$$$)
Increase in net assets ! "#,$$$
9i(idends declared 4,$$$
?aital :toc% issued ( 1$,$$$)
;et loss ! 11,$$$
27. Iern and !ate are artners with caital balance of !/$,$$$ and !2$,$$$, resecti(ely.
!rofits and losses are di(ided in the ratio of /$+"$. Iern and !ate decided to form a new
artnershi with Jrant, who in(ested land (alued at !1#,$$$ for a 2$E caital interest in the
new artnershi. Jrants cost of the land was !12,$$$. ,he artnershi elected to use the
bonus method to record the admission of Jrant into the artnershi. Jrant5s caital account
should be credited for+
a. !12,$$$ b. !1#,$$$ c. !1/,$$$ d. !17,$$$
)$. !artners 9ado, 2toy, <ao, and Jaga share rofits #$E, )$E, 1$E,and 1$E. Accounts
maintained with artners -ust rior to liquidation follow+
Ad(ances (9r) >oans (?r) ?aitals (?r)
9ado ! #,$$$ !"$,$$$
2toy 1$,$$$ )$,$$$
<ao !",#$$ 1#,$$$
Jaga 2,#$$ 2#,$$$
At this oint !14,$$$ is a(ailable for distribution to the artners. Gow much cash is to be
distributed to Jaga?
a. !/,/2# b. !$ c. !11,)1# d. !12,)1#
)1. 'or%ing caital is+
(a) the grou assets which enables the business to oerate rofitably.
(b) caital which has been rein(ested in the business.
(c) unaroriated retained earnings.
(d) current assets less current liabilities.
)2. Cohn and 2ddie form a artnershi on 6arch 1, 2$$2 with the following in(estments+
Cohn 2ddie
?ash !1$,$$$ ! )#,$$$
>and 1$#,$$$
<urniture and fi&tures )#,$$$
Cohn and 2ddie agree to di(ide rofits and losses in the ratio of 1$+)$, resecti(ely, and to
assume the !2$,$$$ mortgage on the land of 2ddie. If Cohn is required to ma%e his share in
equity equal to "$E he must ma%e an additional in(estment of+
a. !"4,$$$ b. !)#,$$$ c. !4$,$$$ d. !"#,$$$
)). It resents an indication in conformity with JAA! of the financial status of the enterrise at a
articular oint in time.
(a) balance sheet (c) statement of retained earnings
(b) statement of earnings (d) cash flow statement