Accounting Midterm
ACCT112
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 the owner's capital account and appears as an expense on the income statement. FALSE
6. Revenues are a subdivision of owner's capital. TRUE
7. The trial balance has no limitations or weaknesses. FALSE
8. In an automated system, the entering of data and transferring of information is done by following the same steps as in a manual system. TRUE
9. Adjusting entries are often made because some business events are not recorded as they occur. TRUE
10. Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger. FALSE
11. Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal. FALSE
12. An adjusting entry always involves two balance sheet accounts. FALSE
13. The accounting cycle begins at the start of a new accounting period. TRUE
14. A work sheet is a mandatory form that must be prepared along with an income statement and balance sheet. FALSE
15. Both correcting entries and adjusting entries always affect at least one balance sheet account and one income statement account. FALSE
Multiple Choice: Select the most correct answer. (15 marks)
1. As a result of
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 the owner's capital account and appears as an expense on the income statement. FALSE
6. Revenues are a subdivision of owner's capital. TRUE
7. The trial balance has no limitations or weaknesses. FALSE
8. In an automated system, the entering of data and transferring of information is done by following the same steps as in a manual system. TRUE
9. Adjusting entries are often made because some business events are not recorded as they occur. TRUE
10. Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger. FALSE
11. Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal. FALSE
12. An adjusting entry always involves two balance sheet accounts. FALSE
13. The accounting cycle begins at the start of a new accounting period. TRUE
14. A work sheet is a mandatory form that must be prepared along with an income statement and balance sheet. FALSE
15. Both correcting entries and adjusting entries always affect at least one balance sheet account and one income statement account. FALSE
Multiple Choice: Select the most correct answer. (15 marks)
1. As a result of