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MULTIPLE CHOICE
Instructions: Write the letter before the number that corresponds to the best answer.
1. Adjusting entries normally involve
a. real accounts only b. nominal accounts only c. real and nominal accounts d. neither real nor nominal account
2. The balance in an unearned income account represents an amount
Earned a. Yes b. Yes c. No D. No Collected Yes No No Yes
3. An accrued expense can be best described as an amount
a. paid and matched with earnings for the current period b. paid and not matched with earnings for the current period c. not paid and matched with earnings for the current period d. not paid and not matched with earnings for the current period
4. Which of the following accounts could appear in an adjusting entry, closing entry and reversing entry? a. Accumulated depreciation b. Depreciation Expense c. Interest revenue d. Salaries payable
5. Closing entries ultimately will affect
a. Cash account b. Owner's capital account c. Total assets d. Total liabilities
6. Probably, the last account to be listed on a post-closing trial balance would be
a. Income summary b. Interest expense c. Interest revenue d. Owner's capital
7. Which of the following is not considered in computing net cost of purchases?
a. Purchases b. Purchases returns and allowances c. Transportation paid on goods purchased d. Transportation paid on goods shipped to customers
8. Which of the following accounts would appear on a worksheet for a
merchandising company that uses the periodic inventory system? a. Cost of goods sold b. Income summary c. Purchases returns & allowances d. All of these
9. After all adjusting entries are posted, the balances of all asset, liability, income and expense accounts correspond exactly to the amounts in the a. Financial Statement b. Post closing trial balance c. Unadjusted Trial Balance d. Worksheet Trial Balance
10. Insurance Expense account has a balance of P108,000 before adjustment.
This amount represents insurance premium for three months beginning November 1, 2014. Based on these data, the prepaid insurance that should be reported in the December 31, 2014 statement of financial position is a. P-0- b. P36,000 c. P72,000 d. P108,000
11. A P50,000 purchases on account was paid after the expiration of the 2% discount period. The entry to record the payment would include a. debit to accounts payable for P50,000 b. credit to accounts payable for P49,000 c. debit to purchases discount for P1,000 d. credit to cash for P49,000
12. Prior to adjustments, Supplies Expense account has a balance of P13,500.
Adjustment data gathered shows that supplies inventory on hand at year-end amounted to P5,500. The amount of supplies to be shown in the income statement is a. P-0- b. P5,500 c. P8,000 d. P13,500 13. Rent Income account has a credit balance of P240,000 composed of the following: a. Rental for three months ending March 31, 2014, P45,000 b. A credit of P195,000 representing advance rental payment for one year beginning April 1, 2014
The December 31 adjusting entry will require a debit to Rent Income and a credit to Unearned Rent of: a. P45,000 b. 48,750 c. P191,250 d. P195,000
14. The Giveaway Enterprises reported an allowance for uncollectible accounts of
P16,000 (credit) at December 31, 2014, before any adjustment. At the end of the year, the company reports accounts receivable of P800,000, 3% of which is estimated to be uncollectible. The adjusting entry required at December 31, 2014 would be: a. Uncollectible Accounts Expense 8,000, Allowance for Uncollectible Accounts 8,000 b. Uncollectible Accounts Expense 16,000, Allowance for Uncollectible Accounts 16,000 Uncollectible Accounts Expense 24,000, Allowance for Uncollectible Accounts 24,000 d. Uncollectible Accounts Expense 40,000, Allowance for Uncollectible Accounts 40,000
15. Assuming that ending merchandise inventory was P10,000 less than the beginning merchandise inventory of P125,000 and that the net purchases was P450,000, how much was the cost of goods sold? a. P-0- b. P335,000 c. P460,000 d. P565,000 MATCHING TYPE Instructions. Write the letter that corresponds to the best answer. Choices: A. Accounting period B. Accrued expenses C. Adjunct account D. Book value E. Business documents F. Business enterprises G. Closing entries H. Contra asset account I. Cost of goods available for sale J. Cost of goods sold K. Credit L. Debit M. Deferral N. Depreciation O. Financial statements P. General ledger Q. Income summary R. Nominal accounts S. Post-closing trial balance T. Posting U. Prepaid expenses V. Real accounts W. Reversing entries X. Special journals Y. Subsidiary ledger Z. Worksheet 1. The end product of the accounting process 2. Expenses already incurred but not yet paid and recorded at the end of the accounting period. 3. An account with credit balance which is deducted from an asset account. 4. Systematic allocation of cost of an item of property, plant and equipment over periods benefited by the use of the asset 5. An entry on the right side of an account. 6. Economic entities organized for profit. 7. The original source materials evidencing business transactions. 8. Span of time covered by the statement of comprehensive income. 9. Merchandise inventory beginning plus purchases. 10. Journals designed in a tabular fashion to accommodate the recording of specific types of similar transactions. 11. A book of accounts that include all asset, liability, equity, income, and expense accounts. 12. The process of classifying and grouping similar transactions in common accounts by transferring amounts from the journals to the ledger. 13. A postponement of the recognition of an expense already paid, or of revenues already received in advance. 14. Entries that reduce all nominal accounts to a zero balance at the end of each accounting period. 15. A working paper often used by accountants to summarize adjusting entries. 16. The temporary account used in closing nominal accounts whose. credit balance represents net profit. 17. Accounts whose balances are carried forward to the next accounting period 18. Entries prepared at the beginning of a new accounting period to facilitate the recording of expense payments and revenue receipts in the usual manner. 19. A listing of all real account balances after the closing process has been completed. 20. The difference between the accumulated depreciation account and the related property and equipment account.
