0411-115 Final Solved Questions & Study Guide (Fall 2025)

0411-115 Principles of Accounting Final Exam Solved Questions — Semester Fall 2025 (DIU BBA)

Introduction

The Principles of Accounting (0411-115) course is a foundational subject in the BBA program at Daffodil International University (DIU), designed to equip students with essential accounting concepts, principles, and practices. This course covers key topics such as accounting assumptions, adjusting entries, financial statements, inventory systems, and merchandising transactions. For DIU BBA students, mastering these concepts is crucial not only for academic success but also for real-world applications in business and finance.

Practicing past exam questions is one of the most effective ways to prepare for the Principles of Accounting final exam. Solving these questions helps students understand the exam pattern, identify commonly tested topics, and improve their problem-solving speed. In this blog post, we provide detailed, step-by-step solutions to the Fall 2025 final exam paper for 0411-115 Principles of Accounting, ensuring you grasp every concept thoroughly. Whether you're revising for the exam or reinforcing your understanding, this guide will serve as a valuable resource.

Exam Overview & Mark Distribution

The Principles of Accounting (0411-115) Fall 2025 final exam assesses students' understanding of core accounting principles and their ability to apply them in practical scenarios. The exam consists of four questions, covering theoretical definitions, adjusting entries, financial statements, and journal entries. Below is the mark distribution:

• Question 1 (5 marks): Brief descriptions of accounting terms.
• Question 2 (25 marks): Adjusting entries, worksheet preparation, financial statements (Income Statement, Owner’s Equity Statement, Classified Balance Sheet), and closing entries.
• Question 3 (5 marks): Journal entries for merchandising transactions under the perpetual inventory system.
• Question 4 (15 marks): Journal entries for a service-based business (truncated in OCR).

Solved Questions

Question 1: Describe briefly the following (5×1=5 marks)

(CLO 1 and Level 2)

i) Going Concern Assumption

• Definition: The going concern assumption is a fundamental accounting principle that assumes a business will continue its operations indefinitely, without the intention or necessity of liquidation.
• Purpose: It justifies the use of historical cost accounting and the depreciation of assets over their useful lives rather than valuing them at liquidation prices.
• Example: A company records its machinery at cost and depreciates it over 5 years, assuming it will operate beyond that period.
• Answer: The going concern assumption states that a business will remain in operation for the foreseeable future, allowing assets to be recorded at cost and depreciated over time.

ii) Revenue Recognition Principle

• Definition: The revenue recognition principle dictates that revenue should be recorded when it is earned, not necessarily when cash is received.
• Key Condition: Revenue is recognized when the performance obligation is satisfied (e.g., goods are delivered or services are rendered).
• Example: A company records revenue when it delivers a product to a customer, even if payment is received later.
• Answer: The revenue recognition principle requires revenue to be recorded when earned, typically at the point of sale or service completion.

iii) Periodic Inventory System

• Definition: The periodic inventory system is a method of tracking inventory where the cost of goods sold (COGS) is calculated at the end of the accounting period rather than after each sale.
• Process: Inventory purchases are recorded in the Purchases account, and COGS is determined by adjusting the beginning inventory with purchases and ending inventory.
• Disadvantage: It does not provide real-time inventory tracking, making it less suitable for businesses with high inventory turnover.
• Answer: The periodic inventory system calculates COGS at the end of the period by adjusting beginning inventory with purchases and ending inventory.

iv) Permanent Account

• Definition: Permanent accounts (or real accounts) are balance sheet accounts that carry their balances forward from one accounting period to the next.
• Examples: Assets (Cash, Accounts Receivable), Liabilities (Notes Payable, Accounts Payable), and Owner’s Equity (Capital).
• Purpose: These accounts reflect the financial position of a business over time.
• Answer: Permanent accounts are balance sheet accounts whose balances are carried forward to the next accounting period.

v) Zero Balance

• Definition: A zero balance occurs when the debit and credit totals of an account are equal, resulting in no remaining balance.
• Common Scenario: Temporary accounts (e.g., revenues, expenses, drawings) are closed to Owner’s Capital at the end of the period, resulting in a zero balance.
• Example: After closing entries, the Service Revenue account will have a zero balance.
• Answer: A zero balance means an account has equal debits and credits, leaving no remaining balance after adjustments or closing entries.

Question 2: Arhaan Company Adjusting Entries and Financial Statements (25 marks)

(CLO 3 and Level 4)

i) Preparing the Adjusting Entries (5 marks)

Step 1: Analyze the Additional Data

• Prepaid Insurance: 1-year policy (