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Assignment 1

This document contains 3 problems related to financial accounting. Problem 1 provides transactions for Creative Advertising and requires journal entries, posting to accounts, and a trial balance. Problem 2 provides transactions for ABC Ltd and requires posting to T-accounts and a trial balance. Problem 3 contains 15 multiple choice questions testing accounting concepts. The problems are part of a financial accounting assignment due on March 26, 2020.

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Eshaal Fatima
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150 views

Assignment 1

This document contains 3 problems related to financial accounting. Problem 1 provides transactions for Creative Advertising and requires journal entries, posting to accounts, and a trial balance. Problem 2 provides transactions for ABC Ltd and requires posting to T-accounts and a trial balance. Problem 3 contains 15 multiple choice questions testing accounting concepts. The problems are part of a financial accounting assignment due on March 26, 2020.

Uploaded by

Eshaal Fatima
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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FINANCIAL ACCOUNTING

Assignment 1:
Dated: 23rd March 2020
Solve the following problems and e-mail back to me at [email protected] by 26th March
2020 by 18:00 Sharp. These problems would be helpful in preparing you for the midterm
examinations.

Problem 1:
Creative Advertising, owned by Miss Abida Masood, provides advertising consulting services.
During January 2019, the following events occurred:
Jan. 2 Owner contributed Rs. 50,000 and a new computer costing Rs. 20,500 to start her
business.
Jan. 4 Office supplies were purchased on account for Rs. 4,000.
Jan. 10 Creative Advertising obtained 12% 5-year loan of Rs. 20,000 from the bank.
Jan. 12 Creative Advertising paid the utility bills for Rs. 2,750.
Jan. 15 Paid the Rs. 3,000 in Accounts Payable from the purchase of office supplies on Jan. 4.
Jan. 24 Advertising services completed in January were billed to clients Annies’ Flowers at Rs.
18,300.
Jan. 27 Creative Advertising received Rs. 5,500 from Annies’ Flowers, a client, as payment on
account.
Jan. 30 Miss Abida Masood withdrew Rs. 6,000 of cash for personal use.
Requirement: Your are required to pass Journal Entry, post to appropriate general ledger
account and make a trial balance?

Problem 2: Post transactions to appropriate T-account & make Trial Balance for ABC Ltd as
on June 30th, 2008:  

1. Owner investment in Cash Rs. 10,000


2. Borrowing Rs. 1,000 from a local bank on a Note due in three months
3. Purchase Equipment of Rs. 500, paid Rs. 100 Cash and promising the rest on a Note
Payable
4. Paid Rs. 150 for Stationery
5. Lent Rs. 200 to an employee who signed a Note promising to repay within 60 days
6. Service Revenue received during the period is Rs. 5,800
7. Paid Insurance for three year at start of this accounting period Rs. 1,800
8. Service Revenue of worth Rs. 1,200 earned but not received
9. Insurances expired recorded as Insurance Expense of Rs. 600
10. Personal withdrawal of owner of Rs. 700

Problem 3: Choose from the best option


1. Which of the following statements is incorrect?

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a. Liabilities + Assets = Capital
b. Assets – Liabilities = Capital
c. Liabilities + Capital = Assets
d. Assets - Capital = Liabilities
2. On January 1st, 2009 an entity's balance sheet showed total assets of Rs. 750 and liabilities of
Rs. 250. Owners' equity at January 1st was?
a. Rs. 750
b. Rs. 1,000
c. Rs. 500
d. Rs. 250
3. If the assets of a business are Rs. 100,000 and equity is Rs. 20,000, the value of liability will
be?
a. Rs. 100,000
b. Rs. 80,000
c. Rs. 120,000
d. 20,000
4. Find out the missing value liabilities in an accounting equation with the help of given data?

Furniture 90,000
Cash 100,000
Accounts receivables 10,000
Other assets 1,000
Owner’s equity 90,000

a. Rs. 201,000 liabilities


b. Rs. 111, 000 liabilities
c. Rs. 290, 000 liabilities
d. Rs. 291, 000 liabilities
5. The accounting equation should remain in balance because every transaction affects how
many accounts?
a. Only one
b. Only two
c. Two or more
d. All of given options
6. Which of the following is not a correct form of the Accounting Equation?
a. Assets = Claims
b. Assets = Liabilities + Owner Equity
c. Assets – Liabilities = Owner’s Equity
d. Assets + Owner’s Equity = Liabilities
7. Find out value of account receivable from following Cash Rs. 48,000 account payable Rs.
33,000 office equipment Rs. 21,000 owner equity Rs. 77,000?
a. Rs. 21,000
b. Rs. 41,000
c. Rs. 15,000
d. Rs. 110,000

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8. During a reporting period, a company’s assets increase by Rs. 80,000,000. Liabilities decrease
by Rs. 20,000,000. Equity must therefore?
a. Decrease by Rs. 100,000,000
b. Increase by Rs. 100,000,000
c. Decrease by Rs. 60,00,000
d. Increase by Rs. 60,000,000
9. Which one of the following equations correctly expresses the relationship between assets (A),
liabilities (L), revenues (R), expenses (E) and capital (C)?
a. A = L + R + E + C
b. A = C + L + (R-E)
c. A = C - (R - E) + L
d. A = (L - C) + (R - E) 
10. The liabilities of a business are Rs. 30,000; the capital of the proprietor is Rs. 70,000. The
total assets are?
a. Rs.70,000
b. Rs. 30,000
c. Rs.40,000
d. None
11. Which of the following account is affected from the drawings of cash in sole-proprietorship
business?
a. Assets account
b. Owner’s equity account
c. Liability account
d. Expense account
12. Mr. “A” borrowed money from bank; this transaction involves which one of the following
accounts?
a. Cash & Bank Loan
b. Bank & Debtors
c. Drawing & Cash
d. Cash & Bank
13. Which of the following accounts will be used in equation, if the goods are sold on credit to
Mr. Mahmood?
a. Cash account and Owner’s equity
b. Account Receivable and Owner’s equity
c. Cash and Account Receivable
d. Account Payable and Owner’s Equity
14. Which of the following is not a satisfactory statement of the balance sheet equation?
a. Assets = liabilities + owner’s equity
b. Assets - liabilities = owner’s equity
c. Assets = liabilities - owner’s equity
d. Assets - owner’s equity = liabilities
15. Which of the following transactions would have no impact on stockholders' equity?
a. Purchase of land on credit
b. Dividends to stockholders
c. Net loss
d. Investment in cash by stockholders

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