WORKSHEET QUESTIONS FOR ACCOUNTING AND FINANCE FOR

MANAGERS
1. A ledger:
A. Contains only asset and liability accounts.
B. B. Should show accounts in alphabetical order.
C. Is a collection of the entire group of accounts maintained by a company.
D. Is a book of original entry.
2. The principle or assumption dictating that efforts (expenses) be matched with
accomplishments (revenues) is the:
A. Matching principle. B. Cost assumption.
C. Periodicity principle. D. Revenue recognition principle.
3. Each of the following is a major type (or category) of adjusting entries except:
A. Prepaid expenses.
B. Accrued revenues.
C. Accrued expenses.
D. Earned revenues.
4. Adjustments for prepaid expenses:
A. Decrease assets and increase revenues.
B. Decrease expenses and increase assets.
C. Decrease assets and increase expenses.
D. Decrease revenues and increase assets.
5. Accumulated Depreciation is:
A. a contra asset account.
B. an expense account.
C. an owner's equity account.
D. a liability account.
6. In a worksheet, net income is entered in the following columns:
A. Income statement (Dr) and balance sheet (Dr).
B. Income statement (Cr) and balance sheet (Dr).
C. Income statement (Dr) and balance sheet (Cr).
D. Income statement (Cr) and balance sheet (Cr).
7. When a net loss has occurred, Income Summary is:
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 A. Debited and Owner's Capital is credited.
B. Credited and Owner's Capital is debited.
C. Debited and Owner's Drawing is credited.
D. Credited and Owner's Drawing is debited.
8. Which of the following statements about users of accounting information is incorrect?
A. Management is an internal user.
B. Taxing authorities are external users..
C. Present creditors are external users:
D. Regulatory authorities are internal users.
9. Accounts that normally have debit balances are:
A. Assets, expenses, and revenues.
B. Assets, expenses, and owner's capital.
C. Assets, liabilities, and owner's drawings.
D. Assets, owner's drawings, and expenses.
10. Which of the following is not part of the recording process?
A. Analyzing transactions.
B. Preparing a trial balance.
C. Entering transactions in a journal.
D. Posting transactions
11. A trial balance:
A. Is a list of accounts with their balances at a given time.
B. Proves the mathematical accuracy of journalized transactions.
C. Will not balance if a correct journal entry is posted twice.
D. Proves that all transactions have been recorded.
12. All of the following are required steps in the accounting cycle except:
A. Journalizing and posting closing entries.
B. Preparing financial statements
C. Journalizing the transactions.
D. Preparing a work sheet.
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 13. When Alexander Company purchased supplies worth $500, it incorrectly recorded a credit
to Supplies for $5,000 and a debit to Cash for $5,000. Before correcting this error:
A. Cash is overstated and Supplies is overstated.
B. Cash is understated and Supplies is understated.
C. Cash is understated and Supplies is overstated.
D. Cash is overstated and Supplies is understated.
14. The accounting cycle starts with the:
a. preparation of ledger accounts c. analysis of business transaction
b. preparation of trial balance d. preparation of adjusting entries
15. After proper analysis, the business transaction is recorded in journal in a:
a. chronological order c. random order
b. reverse chronological order d. none of the above
16. In accounting/bookkeeping, the term posting refers to:
a. transfer of information from ledger to trial balance
b. transfer of entries from journal to ledger
c. preparation of financial statements from trial balance
d. none of the above
17. The Fast Company purchases land for $12,000. The payment is made by issuing 1,200
shares of common stock of $10 each. The proper journal entry for this transaction would be:
a. Land 12,000 Dr. & Cash 12,000 Cr.
b. Land 12,000 Dr. & Accounts payable 12,000 Cr.
c. Common stock 12,000 Dr. & Land 12,000 Cr.
d. Land 12,000 Dr. & Common stock 12,000 Cr.
18. The collection or group of accounts in an organization is known as:
a. general journal c. trial balance
b. general ledger d. balance sheet
19. The right hand side of a T-account is termed as:
a. debit side c. income side
b. credit side d. expense side
20. How would you post the following journal entry to ledger?
Rent expense $200 Dr.
Cash $200 Cr.
a. Cash account would be debited by $200 and rent expense account would be credited by $200.
b. Rent expense account would be debited by $200 and A/C P.A account would be credited by
$200.
c. Cash account would be debited by $200 and loss account would be credited by $200.
d. Rent expense account would be debited by $200 and cash account would be credited by $200.
21. A credit may signify:
a. an increase in a liability account c. an increase in an asset account
b. a decrease in a liability account d. an increase in an expense account

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 22. A form or statement that lists the titles and balances of ledger accounts at a given date is
known as:
a. balance sheet c. trial balance
b. income statement d. statement of retained earnings
23. The receipt of cash from customers to whom the goods have already been sold on credit
would be recorded by a:
a. debit to cash account & credit to accounts payable account
b. debit to cash account & credit to accounts receivable account
c. debit to accounts payable account & credit to cash account
d. debit to accounts receivable account and credit to cash account
24. The trial balance in which total debits equal total credits provides a proof that:
a. the ledger is in balance
b. the transactions have been correctly analyzed and recorded in proper accounts
c. the correct debit and credit balances have been computed for each account
d. no transaction has been completely omitted during the posting process
25. Which of the following is used to compute the net income for a specific period?
a. Balance sheet c. Income statement
b. Statement of retained earnings d. Cash account
26. Which of the following is helpful in determining the financial position of the business at a
specific date?
a. statement of cash flows c. asset accounts of the business
b. statement of retained earnings d. balancesheet
27. A statement that shows the changes in the amount of retained earnings during a specific
period is known as:
a. statement of financial position c. statement of retained assets
b. statement of retained earnings d. statement of retained liabilities
28. The amount of retained earnings at the end of a period is equal to:
a. Retained earnings at the beginning of the period + Dividends declared – Net income
b. Net income + Dividends declared – Retained earnings at the beginning of the period
c. Retained earnings at the beginning of the period + Net income – Dividends declared
d. Retained earnings at the beginning of the period + Net income – Operating expenses
29. Which one of the following is not a fixed asset?
a. Machinery c. Equipment
b. Plant d. Inventory
30. Which of the following is not an intangible asset?
a. Goodwill c. Prepaid expenses
b. Patent d. Copyright
31. Which of the following financial statements is generally prepared first?
a. Balance sheet
b. Statement of cash flows
c. Income statement
d. Statement of retained earnings

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 a. 32.Accumulated
ABC is a profitable company. Which of the following
depreciation journal entries
c. Depreciation would it make to close
expenses
its income
b. Wages summary account?
expenses d. Advertising expenses
a. Credit income summary account & debit
34. The steps of the operating cycle for a retailer usually capital stock
take account
place in which order?
b. Debit income summary account & credit capital stock account
a. Purchases of merchandise →Sale of merchandise on account →Collection of the receivables
b. Salec.of Debit incomeon
merchandise summary
accountaccount & credit
→Purchases retained earnings
of merchandise account of the receivables
→Collection
d. Credit
c. Collection of theincome summary
receivables accountof&
→Purchases debit retained
merchandise →Saleearnings account on Account
of merchandise
33. Purchases
d. Which if the following accounts
of merchandise is not
→Collection closed
of the to income
receivables →Salesummary accountonatAccount
of merchandise the end of the
accounting period?
Work out questions

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Required
1. based on the above data
a. calculate current ratio
b. calculate quick ratio
c. Account receivable turn over
d. Average collection period
e. Inventory turn over
f. Inventory holding period
g. Fixed asset turn over
h. Profit margin
i. debt to total asset ratio

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 2. Ethiopian Electric power corporation unit sells price per lamps $30. The unit variable cost
per lamp is $18 and fixed costs total $9,600.
Required:
j. Calculate the contribution margin per lamp and contribution margin percentage?
k. Determine the breakeven point unit and sales based on contribution margin
Method?
l. Calculate target unit & sales to earn a profit of birr 5,000?
m. Calculate the margin of safety, assuming 1,500 lamps are sold?
e. Calculate margin of safety percentage?
3. ABC trading sells a single product, the selling price 120 birr per unit and variable cost per
unit 75% of selling price and fixed cost 6,000.00 monthly.
a. Calculate contribution margin per unit and percentage?
b. Calculate BEP sales unit and revenue using both equation and contribution margin
approach?
c. The budgeted unit 270 calculate margin of safety in unit and percentage?
d. To achieve profit of birr 1,000 how many units must be sold?
Discussion part
1. write the four financial statement and discussed each and its elements included
2. objectives of financial statement analysis
3. write the techniques to financial statement analysis
4. write the three manufacturing costs
5. compare and contrast prime cost and conversion costs
6. what are the three techniques of CVPA

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