1.

The balance in unearned rent at the end of period represents:

A. an asset
B. a liability
C. a revenue
D. an expense
2. The salary expense account has a credit balance of 10,000 on Hamle 1, the
beginning of the fiscal year, after reversing entries have been posted but before any
transaction has occurred.
The balance represents
A. an asset
B. a Liability
C. Revenue
D. an expenses
3. What is the maturity value of 90-day, 12% for 100,000?
A. 88,000
B. 100,000
C. 103,000
D. 112,000
4. At the end of the fiscal year before accounts are adjusted, account receivable has
a balance of Br 400,000 and allowance for doubtful accounts has a credit balance
5,000? If the estimated of uncollectable accounts determine by against receivable is
17,000, the current portion to be made for uncollectable accounts expenses will be
A. 5,000
B. 12,000
C. 17,000
D. 400,000
5. Post-closing trial balance may include which of the following account
A. sales
B. salary expense
C. Account receivable
D. interest expense
6. A credit may signify
A. An increase in asset account
B. A decrease in asset account
C. A decrease in a liability account
D. A decrease in a capital account
7. The payment of cash for your client for the settlement of purchase on account
would be
recorded by a:
A. Debit for cash and credit for Account receivable
B. Debit for Account receivable and credit for cash
C Debit for Account payable and credit for cash
C. Debit for cash and credit for Account payable
8. The properties owned by a business enterprise are:
A. Capital
B. owner’s equity
C. Assets
D. Liabilities
9. In a business transaction the first occurrence can be recorded in the book of
account is
A. Journal
B. ledger
C. payment journal
D. Receipt journal
10. Goods and documents are examined in accordance with legislative,
organizational guide line and procedures plus it needs bank permits based on
national bank directives, commercial banks policies. This is refers to:
A. To have principal registration certificate
B. Regarding to import and export activities
C. Regarding to declaration of tax
D. It emphasis the internal control of a company
11. Assume that you have 5,000 euro in your hand. What is the equivalent amount of
it in USD if the exchange for a dollar is Birr 18 and for a EURO is Birr 24?
A. 6,666.67 USD
B. 5,833.33 USD
C. 5,000 .00 USD
D. 120,000 USD
12. Which of the following is not essentially the characteristic of taxation?
A. It is a compulsory levy
B. It provides for non proportionate return or benefit
C. It helps in financing government activities
D. It is an illegal collection
13. Assets in the statement of financial condition for in individuals reported at
A. Cost
B. Lower of cost or market
C. Estimated cost
D. Market value
Taye and Tamire are partners who share income and loss in the ratio of 2:1 who
have a capital
balance of Br 130, 000 and 70,000 respectively. If sisay, with the consent of Y,
acquired one
half of Taye’s interest for Br 80,000 for what amount would sisay capital account be
credited
is:
A. Br 100,000
B. Br 80,000
C. Br 65,000
D. Br 40,000
15. During a period in which general price level is raising which of the following would
create a purchasing power gain?
A. holding cash
B. holding a long term bonds payable
C. holding inventory
D. holding a note receivable
16. A corporation financial statements do not report cents amount. This is an
example of the application of which of following concepts?
A. Business entity
B. going concern
C. consistency
D. Materiality
17. Types of loan granted for a period of an overnight to a maximum of fourteen
days:
A. cash credited
B. Money at call
C. over draft facility
D. Term loan
18. Which of the following is the possible different between a cheque and a bank
draft?
A. a draft cannot be payable to the bearer while cheque can be so drawn
B. a cheque can be drawn in one stated branch while a draft drawn for any branch
C. a draft may be discounted while cheque cannot be discounted
D. a banker is not under a legal obligation to pay the money of draft while for
cheque the bank is liable to pay the value of it
19. A petty cash fund is:
A. used to pay up to 1,000 birr amount
B. used to pay small payment
C. it is apply only in small enterprise
D. used to reimbursed change fund
20. A payment of cash for the purchase of merchandise would be recorded in
A. purchase journal
B. sales journal
C. cash journal
D. purchase discount journal
21. The controlling account in the general ledger that summarizes the debits and
credits to the
individual customers in the subsidiary ledger in entitled:
A. Account payable
B. Account Receivable
C. sales
D. purchase
22. What is the purpose of recording depreciation in accounting?
A. To increase the value of fixed assets
B. To reflect the ongoing usage of fixed assets over time
C. To decrease the value of accumulated depreciation
D. To calculate the original cost of assets
23. Which method calculates depreciation by dividing the original cost of an asset by
its useful life?
A. Units of Production
B. Double Declining Balance
C. Straight-Line
D. Sum-of-Years-Digits
24. In the journal entry for the sale of a fixed asset with a gain, which account is
credited?
A. Cash
B. Accumulated Depreciation
C. Loss on Disposal
D. Gain on Disposal
25. Under IFRS, how is the disposal of fixed assets recorded in the financial
statements?
A. Only in the income statement
B. Only in the balance sheet
C. In both the income statement and balance sheet
D. It is not recorded under IFRS
26. How is the gain or loss on the sale of a fixed asset calculated?
A. Selling price - Book value
B. Accumulated depreciation - Original cost
C. Accumulated depreciation + Original cost
D. Book value - Selling price
27. What is the purpose of an adjusting entry for prepaid expenses?
A. To decrease the prepaid expense account
B. To recognize expenses that have been paid in advance
C. To increase the prepaid expense account
D. To adjust the cash account
28. Under the direct write-off method, when is the bad debt expense recorded?
A. When an account becomes uncollectible
B. At the end of the accounting period
C. When the sale is made
D. When the cash is received
29. Which method estimates bad debt expense based on the percentage of total
receivables?
A. Direct Write-Off Method
B. Allowance Method
C. Aging Method
D. Percentage of Sales Method
30. How is the ending inventory recorded in an adjusting entry when using FIFO?
A. Debit Inventory, Credit Cost of Goods Sold
B. Debit Cost of Goods Sold, Credit Inventory
C. Debit Inventory, Credit Accounts Payable
D. Debit Cost of Goods Sold, Credit Accounts Receivable
31. What is the purpose of balance day adjustments in accounting?
a) To close financial statements
b) To ensure accurate representation of business transactions
c) To prepare tax returns
d) To calculate profits
32. Which of the following is an example of a prepayment adjustment?
a) Accrued salaries
b) Depreciation expense
c) Unearned revenue
d) Bad debt expense
33. What is the purpose of posting in accounting?
a) To create financial statements
b) To transfer entries from the journal to the ledger
c) To calculate depreciation
d) To record opening balances
34. What does a credit balance in an account indicate?
a) The account has more credits than debits
b) The account has a surplus
c) The account has more debits than credits
d) The account has a deficit
35. When is a prepayment adjustment made in accounting?
a) At the end of the accounting period
b) At the beginning of the accounting period
c) Throughout the accounting period
d) Only in case of losses
36. What does "Accumulated Depreciation" represent in the General Ledger?
a) A liability account
b) An expense account
c) An asset account
d) A revenue account
37. What is property, plant, and equipment?
A. Fixed assets with useful lives that extend beyond one year
B. Fixed assets with useful lives of one year or less
C. Tangible current assets
D. Long-term intangible assets
38. A plant asset with a cost of $900,000 and accumulated depreciation of $800,000 is
sold for $80,000. What is the amount of the gain or loss on disposal of the plant
asset?
A. $20,000 loss.
B. $80,000 loss.
C. $80,000 gain.
D. $20,000 gain.
39. Controlling account that summarize the balance of each
customer is
a. Account payable
b. Merchandise inventory
c. Account receivable
d. Income summery
40. Which one of the following does not need journal entry?
a. Not collected and bank service charge
b. Non-sufficient fund
c. Deposit in transit and outstanding check
d. Interest revenue earned
41. .The income statement debit balance was br 65000 credit
balance 90000 and
owner with drawl were br 20000 the amount of net income or net
loss was
a. 20000
b. 15000
c. 5000
d. 10000
42. Operational budget may not including
A. Sales budget
B. Production budget
C. Cash forecast budget
D. Material purchase budget
43. In Ethiopian tax system small business shops Pays
A. Business income and progressive
B. Employee income and progressive
C. Renal income and progressive
D. Value Added Tax and Progressive
44. In preparing payroll the accountant first do
A. Record payroll data
B. Authorization of payroll individual pay advice is obtained
C. Arrangement for payment are made
D. Payroll preparation takes place within designed time lines
45. Which type of audit is focused on assessing the efficiency and effectiveness of
organizational activities?
A. Financial Statement Audit
B. Compliance Audit
C. Operational Audit
D. Investigative Audit
46. What is the primary purpose of a financial statement audit?
A. Evaluate operational efficiency
B. Assess compliance with regulations
C. Confirm the accuracy of financial statements
D. Review environmental impact
47. According to the International Standards on Auditing (ISA), what is the purpose
of audit evidence?
A. Confirming management's assertions
B. Assessing compliance with laws
C. Evaluating operational efficiency
D. Investigating potential fraud
48.What is the primary responsibility of internal auditors?
A. Provide an independent opinion on financial statements
B. Assess compliance with laws and regulations
C. Evaluate the effectiveness of internal controls
D. Conduct investigations into potential fraud
49. What is the main purpose of recalculation during the audit process?
A) Verify existence of assets
B) Check mathematical accuracy of information
C) Examine internal controls
D) Confirm external transactions
50. Which of the following is an example of compliance observation in auditing?
A) Calculating financial ratios
B) Verifying existence of inventory
C) Assessing adherence to internal policies
D) Performing substantive testing on transactions
51. What is the key difference between correction and corrective action in auditing?
A) Correction focuses on non-conformity, while corrective action addresses the cause.
B) Correction involves external parties, while corrective action is internal.
C) Correction is preventive, while corrective action is reactive.
D) Correction is a one-time activity, while corrective action is ongoing.
52. In audit records reviewing, which document type is commonly examined to assess
compliance with tax laws?
A) Inventory records
B) Financial statements
C) Employee records
D) Tax returns
53. What is the primary goal of identifying areas of corrective action during an audit?
A) Confirming compliance with regulations
B) Establishing blame for non-compliance
C) Implementing improvements and ensuring effective operations
D) Enhancing financial reporting accuracy
54. . What type of audit opinion is issued when there are material misstatements but
not pervasive to the financial statements?
a) Unqualified Opinion
b) Qualified Opinion
c) Adverse Opinion
d) Disclaimer of Opinion

55. . Who is typically the intended recipient of an audit report?

a) Regulatory authorities
b) Auditors
c) Shareholders or Board of Directors
d) Management
56. . What is the primary purpose of providing recommendations for improvement in
an audit report?
a) To criticize management's performance
b) To fulfil regulatory requirements
c) To encourage continuous improvement in internal controls and processes
d) To shift responsibility from auditors to management
57. What does an "emphasis of matter" paragraph in an audit report typically address?
a) Positive aspects of the audit
b) Areas for improvement
c) Matters considered significant but not pervasive
d) Material weaknesses in internal control
58. Which cost allocation method allocates service department costs to other parts of a
business by fully loading operating departments with those overhead costs?
A. Direct allocation method
B. Step-down method
C. Reciprocal method
D. Physical unit method
59. What is the primary basis for allocating joint costs in the relative sales value
method?
A. Physical quantities
B. Machine hours
C. Prices at which products will be sold
D. Maintenance hours
60. What is cost assignment?
A. Budgeting process
B. Allocating costs to cost objects
C. Profit calculation
D. Financial forecasting
61. Which of the following is an example of a direct cost?
A. Rent
B. Utilities
C. Raw materials
D. Administrative expenses
62. What does the average cost of production represent?
A. Total fixed costs
B. Total variable costs
C. Per-unit cost of production
D. Marginal cost
63. What is the purpose of cost information in managerial decision-making?
A. Calculating profits
B. Assessing market trends
C. Making informed decisions about pricing and resource allocation
D. Forecasting macroeconomic indicators
64. . What is the main goal of budget variance analysis?
A. Increasing costs
B. Achieving a positive variance
C. Avoiding budgeting altogether
D. Ignoring actual expenses