0411-115 Midterm Solved Questions & Study Guide (Summer 2026)

0411-115 Principles of Accounting Midterm Exam Solved Questions — Summer 2026 (DIU BBA)

Introduction

Principles of Accounting (0411-115) is a foundational course in the Bachelor of Business Administration (BBA) program at Daffodil International University (DIU). This course introduces students to the core concepts of accounting, including the accounting equation, double-entry system, financial statements, and accounting assumptions. For DIU BBA students, mastering these principles is essential for success in advanced accounting courses and future careers in finance, auditing, or entrepreneurship.

Practicing past midterm and final exam questions is one of the most effective ways to prepare for the Principles of Accounting midterm. Solving real exam papers helps students understand the question patterns, mark distribution, and application of accounting principles in practical scenarios. This blog post provides a detailed, step-by-step solution to the Summer 2026 midterm exam for 0411-115, ensuring you grasp every concept and avoid common mistakes.

Exam Overview & Mark Distribution

The Principles of Accounting midterm exam (Summer 2026) assesses students' understanding of basic accounting concepts, journal entries, ledger posting, and trial balance preparation. The exam consists of three questions with the following mark distribution:

• Question 1 (5 marks): Short theoretical questions on accounting users, assumptions, and the accounting equation.
• Question 2 (10 marks): Practical problem involving journal entries, ledger accounts, and trial balance preparation.
• Question 3 (Partial): A continuation problem (only the first transaction is provided in this paper).

Solved Questions

Question 1(a): Explain the internal users of accounting data and interpret how accounting provides relevant data to these users.

Solution Steps:

1. Define Internal Users: Internal users are individuals or groups within an organization who use accounting data to make decisions. Examples include:

- Management (e.g., CEOs, department heads)

- Employees (e.g., for performance evaluation or salary negotiations)

- Owners (e.g., sole proprietors or shareholders)

1. Relevance of Accounting Data:

- Management uses accounting data for budgeting, forecasting, and strategic planning. For example, a manager may analyze cost reports to decide whether to expand a product line.

- Employees rely on accounting data to assess profitability, job security, and bonus eligibility. For instance, a sales team may review revenue reports to track their performance.

- Owners use accounting data to evaluate return on investment (ROI) and business growth. A sole proprietor, for example, may review the income statement to determine if the business is profitable.

1. How Accounting Provides Relevant Data:

- Financial Statements (e.g., balance sheet, income statement) provide quantitative data on assets, liabilities, revenues, and expenses.

- Management Accounting Reports (e.g., budgets, variance analysis) help internal users plan, control, and make decisions.

- Cost Accounting Data assists in pricing, cost control, and profitability analysis.

Final Answer:

Internal users of accounting data include management, employees, and owners. Accounting provides them with financial statements, management reports, and cost data to support decision-making, performance evaluation, and strategic planning.

Question 1(b): Can a business enter into a transaction in which only the left side of the basic accounting equation is affected? If so, illustrate with an example.

Solution Steps:

1. Recall the Basic Accounting Equation:

```

Assets = Liabilities + Owner’s Equity

```

The left side (Assets) and right side (Liabilities + Owner’s Equity) must always remain balanced.

1. Analyze the Question:

- A transaction affecting only the left side would mean one asset increases while another asset decreases (or vice versa).

- This does not affect liabilities or owner’s equity, so the equation remains balanced.

1. Example:

- Transaction: A business purchases office supplies for Tk. 10,000 in cash.

- Effect on Accounting Equation:

- Assets:

- Cash (Asset) decreases by Tk. 10,000

- Office Supplies (Asset) increases by Tk. 10,000

- Liabilities & Owner’s Equity: No change

- Result: The equation remains balanced because one asset increases while another decreases.

Final Answer:

Yes, a business can enter into a transaction affecting only the left side of the accounting equation. For example, purchasing supplies for cash increases one asset (supplies) while decreasing another (cash), keeping the equation balanced.

Question 1(c): Interpret the importance of Going Concern Assumption in preparing financial statements and explain the consequences if this assumption is not valid.

Solution Steps:

1. Define Going Concern Assumption:

- The going concern assumption assumes that a business will continue operating indefinitely (or at least for the foreseeable future).

- This assumption is fundamental in preparing financial statements because it justifies recording assets at historical cost rather than liquidation value.

2