ACCOUNTING

1. Model Institute of Science and Technology (MIST)
Department of Business Administration
BBA 1st Year 1st Semester
2nd Mid Term Exam-2019
Course Title & Code: Principles of Accounting (510105)
Time: 3 hours Full Marks: 70
[N.B. - The figures in the right margin indicate full marks. All parts (a, b) of a question must be answered
sequentially]
Part A – Short Question
(Answer any Six questions)
Marks- 65=30
1. (a)Define accounting. 2
(b)Who are the users of accounting Information? 3
2.(a) What are the steps in the accounting process? 2.5
(b) Distinction between Book keeping and Accounting 2.5
3.(a)What is GAAP? 2
(b) Discuss the various Principles of GAAP. 3
4.(a)Write down the three basic differences of event and transaction. 2
(b)Why accounting is called the language of business? 3
5.(a)What is the basic accounting equation? 2
(b)Discuss the elements of accounting Equation. 3
6.(a)What are the golden rules of double entry system? 2
(b)What is accounting cycle? State the steps of accounting cycle. 3
7.(a)What is adjusting entries? 2
(b)What are the different types of Adjusting entries? Explain with Examples. 3
8.(a)Is worksheet a part of accounting cycle? Explain the purpose of worksheet 2.5
(b)What is closing entries? Discuss in brief the closing process of temporary Accounts. 2.5
9.(a)Explain the meaning of the credit terms i) 2/10,n/30,( ii) 1/10, EOM, (iii) n/30. 2.5
(b)What are the Periodic versus perpetual inventory system? 2.5
10.(a) Define special journals. 2
(b)What are the methods of issuing materials? When and Why we will use 3
LIFO or FIFO method?

2. Part B – Broad Question
(Answer any three questions)
Marks- 103=30
11.Michelle Rodriguez started her own consulting firm, Rodriguez Consulting, on May 1,
2010.The following transactions occurred during the month of May. 10
May 1 Michelle invested Tk.7,000 cash in the business.
2 Paid Tk.900 for office rent for the month.
3 Purchased Tk.600 of supplies on account.
5 Paid Tk.125 to advertise in the County News.
9 Received Tk.4,000 cash for services provided.
12 Withdrew Tk.1,000 cash for personal use.
15 Performed Tk.6,400 of services on account.
17 Paid Tk.2,500 for employee salaries.
20 Paid for the supplies purchased on account on May 3.
23 Received a cash payment of Tk.4,000 for services provided on account on May 15.
26 Borrowed Tk.5,000 from the bank on a note payable.
29 Purchased office equipment for Tk.3,100 on account.
30 Paid Tk.175 for utilities.
Instructions
(a) Show the effects of the previous transactions on the accounting equation
(b) Prepare an income statement for the month of May.
(c) Prepare a balance sheet at May 31, 2010.
12.Auhon opened a business on September 2009. During the first month of operation the
following transactions occurred :—September 10
1 Invested Tk. 20,000 cash in the business;
2 Paid Tk.1,000 cash for store rent for the month September;
3 Purchased washer and dryer for 25,000 paying Tk. 10,000 in cash and signing a 15,000 six
month 125 notes payable;
4 Paid Tk. 1200 for one year accident policy;
10 Received bill from the daily news for advertising the opening of the business Tk. 200;
20 Withdrew Tk., 700 cash for personal use;
30 Determine that cash receipts for laundry services for the month were Tk. 6,200.
Instructions:
Journalize the September transactions;
13.Open ledger accounts and post the September transactions; Prepare a trial balance at
September 30, 2009.The unadjusted trial balance of 31st December, 2004 is given below :— 10
Jaba and Company
Unadjusted Trial Balance
As at 31st December, 2004

3. Particulars Debit(Tk.)
90
Credit(Tk.)
Cash 20,000
Accounts Receivable 5,000
Prepaid Insurance 3,000
Supplies 4,000
Equipment 25,000
Accounts Payable 10,000
Unearned Revenue 6,500
Jaba's Capital 19,000
Jaba's Drawings 1,500
Commission Revenue 30,000
Utility Expenses 600
Salaries Expenses 6,400
65,500 65,500
Other Information:—
(a) Supplies on hand at the end of the period Tk. 2800
(b) Prepaid insurance of Tk. 1,500 expired during the year.
(c) Commission revenue earned but not received Tk. 5,000.
(d) Salaries accrued amounting to Tk.1,600.
(e) Depreciation is to be charged on equipment @ 10%.
Required:—
(i) Prepare adjusting entries for December 31, 2004.
(ii)Prepare adjusted Trial Balance.
14.The following information available with a trial balance of Panna Fashion House:
Panna Fashion House
Trial Balance
December 31 2004
Particulars Debit
Taka
Credit Taka
Cash 20,000
Accounts receivable 60,000
Merchandise inventory 2,50,000
Supplies 70,000
Prepaid Insurance 22,000
Buildings 80,000
Equipment 78,000
Accumulated Depreciation – Equipment 8,000
Accounts payable 47,500
Panna’s Capital 5,00,000
Panna’s Drawings 3,000
Sales 2,90,000
Sales return and allowances 15,000
Purchases 1,45,000

4. Purchase discount 14,500
Salaries expense 33,000
Repair expense 9,000
Gas and oil expense 16,000
Miscellaneous expense 20,000
Freight in 12,000
8,60,000 8,60,000
Other information:-
1. By a physical investigation it is found that supplies was Tk. 30000 at the end of the
period
2. Merchandise inventory was Tk. 2 40000 of end of the period.
3. Panna withdrew merchandise of Tk. 15500 for personal use.
4. Expired insurance during the year Tk. 10000.
5. Estimated depreciation on equipment of Tk.7 000.
6. Unpaid salaries were Tk.5 000.
Required: - Prepare a ten column work sheet
15.Students Book Housing distributes books to retail stores and extends credit terms of 3/10,
n/30 to all its customers. At the end of June, Students inventory consisted of 250 books
purchased at Tk. 2,000. During the month of July the following merchandising transactions
occurred:-
1.Purchased 160 books on account for Tk. 7 each from Chowdhury Publishers, FOB destination,
terms 2/10, n/30. The appropriate party also made cash payment of Tk. 200 for the freight on
this data.
3 Sold 120 books from beginning inventory on account to Mallik Brothers for Tk. 1,200.
6 10 books returned to Chowdhury Publishers.
9 Paid Chowdhury Publishers in full.
15 Received payment in full from Mallik Brothers.
17 Sold 120 books from July 1 purchase on account to Mokarrram Book House
for Tk. 9 each.
18 Purchased 110 books on account for Tk. 6 each from Angle Publishers, FOB
shipping point, terms 1/10, n/30. The appropriate party also made cash
payment of Tk 150 for the freight on this date.
20 Granted Mokarram Book House Tk. 90 credit for 10 books returned.
24 Received payment in full from Mokarram Book House.
31 Paid Angle Publishers in full.
You are required to pass the Journal Entries for the month of July for Students Book House
using perpetual inventory system.
16.The following is the trial balance of Hanif Enterprise as on December 31, 2006.
Hanif Enterprise
Trial Balance
December 31, 2006

5. Account titles Debit
Tk.
Credit
Tk.
Accounts receivable and payable 15,000 13,600
Notes receivable and payable 6,000 4,000
Furniture 30,000
Accumulated depreciation- Furniture 6,000
Equipment 60,000
Accumulated depreciation- Equipment 12,000
Hanif’s Capital 73,000
Hanif’s Drawing 10,000
Allowance for doubtful debts 400
10% mortgage loan 15,000
Cash 20,000
Utilities expense 3000
Apprenticeship premium 15,000
Beginning inventory 20,000
Merchandise purchase 75,000
Sales 130,000
Purchases return and allowance 5,000
Sales return and allowance 3,000
Delivery expense 2,000
Rent expense 4,000
General expense 6,000
Salaries expense 7,000
Selling expense 13,000
Total 2,74,000 2,74,000
The following adjustments are to be accounted for:
i. Ending inventory Tk.30, 000.
ii. Accrued salaries expense Tk. 1,500
iii. Depreciation on furniture and equipment is to be provided for @10% per annum
iv. Make an allowance for bad debts at the rate of 6% on accounts receivable.
v. Apprenticeship premium received on first January, 2006 for a period of five years.
vi. Hanif withdraw goods worth Tk. 1,500 from business for personal use.
vii. Rent prepaid is Tk.1,000.
Required:
Prepare a multiple step income statement, owner’s equity statement for the year ended
December 31, 2006 and classified balance sheet as on that date.

6. 17.You are provided with the following information for Keya Inc for the month ended June 30,
2005. Keya uses the periodic method for inventory:-
Date Description Quantity Unit cost or selling
price(Tk.)
June1 Beginning
inventory
50 60
4 Purchase 170 64
10 Sales 140 90
11 Sales Return 20 90
18 Purchase 70 68
18 Purchase Return 10 68
25 Sales 100 95
28 Purchase 40 72
Required:-
Calculate (i) Ending inventory; (ii) Cost of goods sold; (iii) Gross profit; (iv) Gross profit rate
under the following methods: (1)LIFO; (2) FIFO; (3) Average Cost
Compare results for the three cost flow assumptions.