Statement 1 - The transactions that are recorded in the accounting records and the
information accumulated in these accounting are used for the preparation of
balance sheet at periodic intervals. Statement 2 - The record keeping procedures
used by business should at least provide a chronological record of all business
transactions. *
A. Only the first statement is true
B. Only the second statement is true
C. Both statements are true
D. Both statements are false
Statement 1 - Transactions during the period may have been recorded in the real
or nominal account that an adjustment of either of these two accounts is necessary
to reflect the correct balance of the account. Statement 2 - Transactions during the
period may have been recorded in the real or nominal account that an adjustment
of either of these two accounts is necessary to reflect the correct balance of either
the nominal or the real account. *
A. Only the first statement is true
B. Only the second statement is true
C. Both statements are true
D. Both statements are false
Statement 1 - The account on the left side is designated as debit and the account
on the right side is designated as credit. Statement 2 - The nature of the account
determines the side to be used for recording the increase and decrease in the
account. *
A. Only the first statement is true
B. Only the second statement is true
C. Both statements are true
D. Both statements are false
Statement 1 - The financial statement should reflect as correctly as possible only
the revenues earned and the expenses incurred during the period. Statement 2 The financial statement should reflect as correctly as possible only the assets,
liabilities, and owner’s equity accounts as of the end of the given period. *
A. Only the first statement is true
B. Only the second statement is true
C. Both statements are true
D. Both statements are false
The normal balance of an account is on the *
a. Debit side of the account
b. Credit side of the account
c. Side represented by increase in the account balance
d. Side represented by decrease in the account balance
The debit credit of the analysis of a transaction normally takes place *
a. Before an entry is recorded in a journal.
b. When the entry is posted to the ledger
c. When the trial balance is prepared
d. At some other point in the accounting cycle.
Which of the following is not a possible combination of a journal entry? *
a. Increase in asset and decrease in liability.
b. Decrease in equity and increase in liability.
c. Decrease in liability and decrease in asset.
d. Increase in asset and decrease in equity.
What function does general ledger serve in the accounting process? *
a. Recording
b. Summarizing
c. Classifying
d. Interpreting
Why are adjusting entries necessary? *
a. Transaction takes place over more than one accounting period.
b. To make debits equal credits
c. To close nominal accounts at year-end
d. To correct erroneous balance accounts
Adjusting entries effects *
a. One nominal account and one real account
b. Two nominal accounts
c. Two real accounts
d. No particular combination of nominal and real accounts
Which of the following statements is false regarding adjusting entries? *
a. Cash is neither debited nor credited as a result of adjusting entries.
b. Each adjusting entry affects one statement of financial position account and one income
statement account.
c. Each adjusting entry affects one revenue account and one expense account.
d. Adjusting entries involve accruals or deferrals.
An adjusting entry should never include? *
a. A debit to revenue and a credit to liability
b. A debit to expense and a credit to liability
c. A debit to liability and a credit to revenue
d. A debit to expense and a credit to revenue
Which of the following properly describes a deferral? *
a. Cash is received after revenue is earned.
b. Cash is received before revenue is earned.
c. Cash is paid after expense is incurred.
d. Cash is paid at the same time period that an expense is incurred.
Which of the following best defines as accrual? *
a. Adjusting entries where cash flow precedes revenue or expense recognition
b. Adjusting entries where revenue or expense recognition precedes cash flow
c. Adjusting entries where cash flow and revenue or expense recognition are simultaneous
d. Adjusting entries where revenue and expenses are recognized in the absence of cash flow
If an expense has been incurred but not yet recorded, the adjusting entry would
involve *
a. A liability and an asset
b. A liability and an expense
c. An expense and an asset
d. An asset and a revenue
An accrued expense can best be described as an amount *
a. Paid and currently matched with earnings
b. Paid and not currently matched with earnings
c. Not paid and currently matched with earnings
d. Not paid and not currently matched with earnings
A prepaid expense can best be described as an amount *
a. Paid and currently matched with earnings
b. Paid and not currently matched with earnings
c. Not paid and currently matched with earnings
d. Not paid and not currently matched with earnings
An accrued income can best be described as an amount *
a. Collected and currently matched with expenses
b. Collected and not currently matched with expenses
c. Not collected and currently matched with expenses
d. Not collected and not currently matched with expenses
An unearned income can best be described as an amount
a. Collected and currently matched with expenses
b. Collected and not currently matched with expenses
c. Not collected and currently matched with expenses
d. Not collected and not currently matched with expenses
Match column A with Column B: *
A. Accrued expenses
B. Deferred expenses
C. Accrued revenues
D. Deferred revenues
E. Depreciation
-Revenue not yet earned; collected in advance accrued rev B. DEFERRED REVENUES
-Office supplies on hand; used next accounting period B. DEFERRED EXPENSES
-Rent revenue collected; not yet earned. D. DEF REV
-Rent not yet earned; already collected. D. DEF REV
-An expenses incurred; not yet paid ACCRUED EXPENSE
-An expenses paid; not yet incurred DEF EXP
-At the end of the year, salaries payable of P3,600 had not been recorded or paid. ACCRUED
EXPENSES
-Supplies for office use were purchased during the year for P500, and P100 of the office
supplies remained on hand at year-end. DEF EXP
-Interest of P250 on a note receivable was earned at year end ACCRUED REV
-At the end of the year, service revenues of P2,500 was collected in cash but was not yet
earned. DEF REV
-Florenda Quino Forwarders borrowed P600,000 from the bank on September 1, 2016. The
note carried an 8% annual rate of interest and was set to mature on February 28, 2017.
Interest and principal were paid in cash on the maturity date ACCRUED EXP
-Paid P24,000 for a 1-year fire insurance policy to commence on September 1. The amount of
premium was debited Premium Insurance. DEF EXP
The Car Cleaning Services paid the business P36,000 representing the two-year
rent for the space they are occupying. This was credited to an income account on
September 1. The adjusting entry is *
a. Debit rent income account; credit unearned income, 36,000
b. Debit Unearned liability account; credit rent income account, 6,000
c. Debit Rent Income, credit Unearned Income for P30,000
d. Debit Unearned Income, credit Rent Income for P6,000
The business received from Service cleaning Company P12,000 representing 6month rent on December 1 of the current year. The amount was credited to a
liability account upon receipt. The adjusting entry is *
a. Debit rent income account; credit unearned income, 2,000
b. Debit unearned income account; credit rent income account, 2,000
c. Debit rent income, credit unearned income for P10,000
d. Debit unearned income, credit rent income for P10,000
The business paid three years premium to FGU Insurance amounting to P36,000.
The insurance was debited to an asset account on August 1. *
a. Debit prepaid insurance; credit insurance expense, 31,000
b. Debit prepaid insurance; credit insurance expense, 5,000
Option 3
d. Debit insurance expense; credit prepaid insurance, 5,000
On October 1, of the current year ending December 31, the business paid rentals
for office space amounting to P48,000. This amount, debited to an expense
account, was for 2 years. *
a. Debit rent expense,; credit prepaid rent, 6,000
b. Debit rent expense; credit prepaid rent, 42,000
c. Debit prepaid rent; credit rent expense, 6,000
d. Debit prepaid rent; credit rent expense, 42,000
The note from Gale Medical Clinic received on October 1 of this accounting period
ending November 30, amounted to P65,000. This note was a 6 percent note for
120 days *
a. Debit accrued interest receivable; credit interest income 650
b. Debit accrued interest income; credit interest receivable, 650
c. Debit accrued interest payable; credit interest income, 650
d. Debit accrued interest expense; credit interest expense, 650
The examination of accounting records on April 30, end of the accounting period
revealed that a commission payable to sales representatives amounting to P25,000
remain unpaid. *
a. Debit expense; credit accrued commission payable, 25,000
b. Debit commission payable; credit accrued expense, 25,000
c. Debit payable; credit accrued commission expense, 25,000
d. Debit accrued expense; credit accrued expense payable, 25,000
The business paid P24,000 for a monthly rent of P6,000 October 1. The expense
account was overstated as of December 31. *
a. Debit rent expense; credit accrued rent payable, 24,000
b. Debit rent expense; credit accrued rent payable, 6,000
c. Debit prepaid rent; credit rent expense, 6,000
d. Debit rent expense; credit prepaid rent, 24,000
Insurance expense of P36,000 on the trial balance represents three years payment
for the premium on October 1 of this year. There was no recognition of appropriate
expense on December 31. *
a. Debit insurance expense; credit prepaid insurance, 3,000
b. Debit prepaid insurance; credit insurance expense, 33,000
c. Debit insurance expense; credit prepaid insurance, 33,000
d. Debit insurance expense; credit prepaid insurance, 3,000
The equipment cost P36,000, purchased on July 1 of the current year, has no
salvage value. It was estimated that the life of the equipment was 10 years from
the date of acquisition. *
a. Debit depreciation; credit accumulated depreciation, 1,800
b. Debit depreciation; credit accumulated depreciation, 3,600
c. Debit equipment; credit accumulated depreciation, 1,800
d. Debit equipment; credit accumulated depreciation, 3,600
It was estimated that 5 percent of the accounts receivable of December 31 may
prove to be uncollectible. The accounts receivable in the trial balance amounted to
P45,000. *
a. Debit bad debts expense; credit allowance for bad debts, 2,250
b. Debit bad debts expense; credit allowance for bad debts, 45,000
c. Debit bad debts expense; credit accounts receivable, 2,250
d. Debit accounts receivable; credit allowance for bad debts, 2,250
The furniture and fixtures costs P25,000, all acquired on January of this year had a
salvage value equal to 10 percent of cost with estimated that the life of 5 years. *
a. Debit depreciation; credit accumulated depreciation 4,500
b. Debit depreciation; credit accumulated depreciation 2,500
c. Debit depreciation; credit furniture and fixtures, 4,500
d. Debit furniture and fixtures; credit depreciation, 4,500
By means of physical count, it was estimated that supplies on hand amounted to
P3,500. The supplies expense per trial balance amounted to P35,000 *
a. Debit supplies; credit supplies expense, 3,500
b. Debit supplies; credit supplies expense, 31,500
c. Debit supplies expense; credit supplies, 3,500
d. Debit supplies expense; credit supplies, 31,500
The business acquires a truck for P240,000 on June 30,2019. It was estimated that
the truck will serve the business for 20 years. At the end of the service life of the
truck it had a scrap value of P20,000. The balance sheet date of the business was
December 31, 2019. The adjusting journal entry as at end of December 2019 was *
a. Debit to accumulated depreciation of P11,000
b. Debit to an expense account amounting to P5,500
c. Debit to an expense account amounting to 11,000
d. Debit to depreciation expense account amounting to P6,000
The business acquires a truck for P240,000 on June 30,2019. It was estimated that
the truck will serve the business for 20 years. At the end of the service life of the
truck it had a scrap value of P20,000. The balance sheet date of the business was
December 31, 2019. The adjusting journal entry as at end of December 2020 was *
a. Debit to accumulated depreciation of P11,000
b. Debit to an expense account amounting to P11,000
c. Debit to an expense account amounting to 12,000
d. Debit to depreciation expense account amounting to P12,000
The business paid insurance premium of P4,500 covering 6 months starting
October 1, 2018. The balance sheet date of the business was December 31, 2019.
The journal entry on October 1 assuming that payment was initially recorded as
asset was *
a. Debit insurance premium for P750
b. Debit and asset account for P4,500
c. Debit insurance expense account for P4,500
d. Debit prepaid insurance for P750
The business paid insurance premium of P4,500 covering 6 months starting
October 1, 2018. The balance sheet date of the business was December 31, 2019.
The adjusting entry if the payment was initially recorded as expense was *
a. Debit to an expense account for 4,500
b. Debit to an expense account for P2,250
c. Debit to an asset account for P2,250
d. Debit to an asset account for P4,500
Problem 1 - Cachero Company *
If on December 31, 2014, supplies on hand were P2,000, the adjusting entry would contain a
a. debit to Supplies for P2,000
b. credit to Supplies for P2,000
c. debit to Supplies Expense for 13,000
d. credit to Supplies Expense for 13,000
Refer to Problem 1: If on Dec. 31, 2014, the insurance still unexpired amounted to
P2,000, the adjusting entry would contain *
a. debit to Prepaid Insurance for P3,000
b. credit to Prepaid Insurance for P3,000
c. debit to Insurance Expense for P2,000
d. credit to Insurance Expense for P2,000
Refer to Problem 1: If the estimated depreciation for office equipment were
P20,000, the adjusting entry would contain a *
a. credit to Accumulated Depreciation – Office Equipment for P20,000
b. credit to Depreciation Expense for P20,000
c. debit to Accumulated Depreciation – Office Equipment for P20,000
d. credit to Office Equipment for P20,000
Refer to Problem 1: If as Dec. 31, 2014 the rent of P10,000 for December had not
been recorded or paid, the adjusting entry, the adjusting entry would include a *
a. credit to Accumulated Rent for P10,000
b. debit to Rent Payable for P10,000
c. debit to Rent Expense for P10,000
d. credit to Cash for P10,000
Problem 2 - Sam Makulet Ads *
If the balance of the Makulet, Withdrawals account were P120,000 and the balance of the Salaries
expense account were P50,000, what would be the amount of B?
460,000
500,000
580,000
625,000
Refer to Problem 2: If the trial balance showed a balance of P70,000 in the Makulet,
Withdrawals account and a balance of P50,000 in the Salaries expense account,
what would be the amount of Advertising Revenues for the period? *
170,000
330,000
370,000
400,000
Refer to Problem 2: If the trial balance, total assets equals *
170,000
330,000
370,000
400,000
Refer to Problem 2: If the trial balance showed a balance of P80,000 in the
Salaries Expense account and a balance of P350,000 in the Advertising Revenues
account, what would be the amount of A? *
30,000
60,000
90,000
120,000
Refer to Problem 2: If the trial balance showed a balance of P40,000 in the
Salaries Expense account and a balance of P300,000 in the Advertising Revenues
account, what would be the amount of Makulet, Withdrawals account? *
50,000
120,000
150,000
180,000