Midterm Assignment – Week 9
Due at the end of week 9. There are 70 marks. This assignment is worth 20 % of the total grade.
True or False: (15 Marks)
1. In spite of its weaknesses, the cost principle is most often used because it is the most reliable basis of valuation. TRUE
2. The going concern assumption assumes the company will continue to operate for at least two years. TRUE
3. The economic entity assumption states that economic events can be identified with a particular unit of accountability. FALSE
4. The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records. TRUE
5. The drawings account is a subdivision of …show more content…
b. no accountants on staff. c. few receivables and payables. d. all sales and purchases on account.
13. To close the salaries expense account a. income summary is debited and owner’s capital is credited. b. income summary is debited and the salaries expense is credited. c. income summary is credited and the owner’s capital is debited. d. income summary is credited and the salaries expense is debited.
14. The closing entry process consists of closing a. all asset and liability accounts. b. out the owner's capital account. c. all permanent accounts. d. all temporary accounts.
15. The final closing entry to be journalized is typically the entry that closes the a. revenue accounts. b. owner's drawings account. c. owner's capital account. d. expense accounts.
Question 1: 8 marks
There are ten transactions listed below. Match the transactions that have the identical effect on the accounting equation. You should end up with 5 matches. The first one has been completed for you with an explanation.
a. Receive cash from customers on account.
b. Initial cash contribution by an owner.
c. Pay cash to reduce an accounts payable.
d. Purchase supplies for cash.
e. Pay cash to reduce a notes payable.
f. Purchase supplies on account.
g. Customers pay cash for services rendered.
h. Purchase equipment with a note payable.
i. Pay utilities with cash.
j. Owner withdraws money from the