Reference no: EM133295343 , Length: 4 pages

Part One:

Question 1. Explain the meaning and difference of Accounting, Accountant and Accountancy.
Question 2. State the importance of accounting
Question 3. Distinguish between profitability and liquidity?
Question 4. Distinguish between Accounting and Bookkeeping?
Question 5. What is the role of accounting in business?
Question 6. Briefly describe the four basic financial statements.
Question 7. State the process by which accounting provides information to users.
Question 8. Discuss briefly the generally accepted accounting principle (GAAP) and international financial reporting standards (IFRS). Discuss the difference between GAAP and IFRS.
Question 9. Discuss briefly about decision making, and its process.
Question 10. Discuss the components of master budget in manufacturing and Merchandising business.

Part Two: Accounting cycle for service giving company

On March 1, 2009, Tahir Muktar, a famous business man in Addis Ababa, opened a business named "Universal Garage" which is organized as a sole proprietorship. The business is established to render car repair, maintenance and related services for fees. Below are chart of accounts for and selected transactions completed by Universal Garage in March 2009.
a) Chart of accounts Universal Garage

Chart of Accounts 100 ASSETS
110 CURRENT ASSETS
111 Cash
112 Accounts Receivable
114 Supplies
116 Prepaid Rent
117 Prepaid Insurance
120 PLANT ASSETS
121 Land
123 Machinery
Accumulated Depreciation-Machinery 125 Office Equipment
125.1 Accumulated Depreciation-Office Equipment
200 LIABILITIES
210 CURRENT LIABILITIES
211 Account Payable
213 Salaries Payable
216 Interest Payable
220 NON-CURRENT LIABILITIES
221 Long-term Bank Loan 300 OWNER'S EQUITY
301 Tahir, Capital
302 Tahir, Drawings
303 Incomes Summary
400 REVENUES
401 Fees Earned
410 Other Income
500 EXPENSES
501 Salary Expenses
502 Supplies Expenses
503 Rent Expenses
504 Insurance Expenses
505 Depreciation Expenses
506 Interest Expenses
510 Miscellaneous Expenses

3 Paid Br 1,800 for rent on a building leased for business purposes
3 Purchased welding and other repair machinery for Br 3,600 cash
4 Paid Br 200 for a radio advertisement
8 Sold for Br 200 cash; old office equipment with a recorded cost of Br 200
13 Paid weekly salary Br 1,200
16 Received Br 4,400 from services rendered on cash
20 Paid weekly salary Br 1,200
20 Delivered service on credit, Br 6,000
21 Purchased additional repair machinery on account for Br 2,000 from Sámi-Engineers
23 Received Br 5,000 additional cash investment from its owner
24 Repaid Br 1,000 bank loan and paid Br 100 interest on bank loan
26 Purchased supplies for Br 800 cash
27 Paid Br 100 for customer entertainment and other items
27 Paid weekly salary Br 1,200
31 Paid Br 500 for electricity and other utilities consumed during the month
31 Received Br 4,200 cash from credit customers
31 Paid Tahir Br 1,800 for personal uses

b) Transactions
Mar 1- Received the following assets from its owner, Tahir: Cash. Br, 8,300
Supplies 2,000
Office Equipment. 10,000
2 Borrowed Br 5,000 from Dashen Bank

Required:
a) Journalize the above transactions in a two-column journal
b) Post the journal entries to "T" accounts
c) Prepare and complete a worksheet based on the following additional information
i. Cost of supplies remained unconsumed on Mar 31 is Br 900
ii. The amount paid on Mar 3 is for a three-month rent
iii. The amounts of depreciation for machinery and office equipment are estimated to be Br 560 and Br 1,900 respectively
iv. Universal Garage usually pays Br 1,200 for employee's salary every Saturday for a six- day work week ended on that day
v. Interest on bank loan accrued but not paid on March 31 total Br 100
d) Journalize and post adjusting entries
e) Prepare financial statements for the month
f) Journalize and post-closing entries
g) Prepare post-closing trial balance