Prelim Accounting1-1st Semester Sy 2018-2019
.
- 1.The Accounting Equation is: ASSETS = LIABILITIES + OWNER'S EQUITY OR ASSETS - LIABILITIES = OWNER'S EQUITY
- A.
True
- B.
False
- 2.Which of the following is/are a purpose of adjusting entries?
- A.
To update the accounts in the books
- B.
To apply the matching principle
- C.
To properly reflect the the correct net income
- D.
To make the equation A=L+C more accurate
- E.
All of the above
- 3.If adjusting entries are recorded in the worksheet, there is no need for them to be journalized or posted
- A.
True
- B.
False
- 4.Accrual accounting involves all of the following except
- A.
Recording all revenues when cash was received
- B.
Applying the matching rule
- C.
Recognizing expense when incurred
- D.
Adjusting the accounts
- E.
All of the above
- 5.Which one of the following categories of account is "credited" when it is increased?
- A.
Revenue
- B.
Purchases
- C.
Asset
- D.
Expenses
- 6.Which one of the following categories of account is "debited" when it is increased?
- A.
Revenue
- B.
Assets
- C.
Sources of fund
- D.
Liability
- 7.Is it true that the trial balance totals should agree?
- A.
No, there are sometimes good reasons why they differ
- B.
Yes, except where the trial balance is extracted at the year end
- C.
Yes, always
- D.
No, because it is not a balance sheet
- 8.The current portion of a long term debt should
- A.
Be classsified as a long term liability
- B.
Not be separated from the long term portion of debt
- C.
Be paid immediately
- D.
Be reclassified as a current liability
- 9.Which of the following accounts is what is known as a temporary or nominal account ?
- A.
Asset
- B.
Owner's Equity (Capital)
- C.
Liability
- D.
Revenue & Expenses
- 10.A Debit:
- A.
Increase an Asset Account
- B.
Decrease an Asset Account
- C.
Increase a Liability Account
- D.
Increase Owner's Equity
- 11.A Credit:
- A.
Increase an Asset Account
- B.
Decrease a Liablility Account
- C.
Increase a Liability Account
- D.
Decrease an Owner's Equity
- 12.Under accrual accounting, revenue is recorded
- A.
When the cash is collected, regardless of when the services are performed
- B.
When the services are performed, regardless of when the cash is received
- C.
Either when the cash is received or the sale is made
- 13.A company using the accrual basis of accounting pays P15,000 for a television advertising campaign. Commercials will run evenly in December, January, and February. How much expense will be reported on an income statement prepared for the month of December?
- A.
P0
- B.
P5,000
- C.
P10,000
- D.
P15,000
- 14.Adjusting entries are:
- A.
Prepared by the Manager
- B.
Closing entries
- C.
Prepared at the beginning of the accounting period to update all accounts.
- D.
Prepared at the end of the accounting period to update certain accounts.
- 15.Prepaid insurance is reported on the balance sheet as a(n):
- A.
Expense
- B.
Liability
- C.
Asset
- D.
Contra asset
- 16.A liability that arises from an expense that has not yet been paid is a(n):
- A.
Unearned expense
- B.
Prepaid expense
- C.
Accrued expense
- D.
Accrued revenue
- 17.The book value of an asset that cost P20,000 and has accumulated depreciation of P6,000 is
- A.
P20,000
- B.
P 6,000
- C.
P26,000
- D.
P14,000
- 18.A company has P800 beginning balance of Supplies (asset). At the end of the month, the Supplies on hand is P150. The adjusting entry for this company is:
- A.
Debit supplies of P150 and a credit of P150 to Supplies Expense
- B.
Debit supplies Expense of P150 and a credit of P150 to Supplies
- C.
Debit supplies Expense of P650 and a credit of P650 to Supplies
- D.
There is not enough information given to prepare the entry
- 19.The financial statements are prepared from the
- A.
Adjustments
- B.
Unadjusted trial balance
- C.
Ledger
- D.
Adjusted trial balance
- 20.According to the revenue principle, revenue should be recorded
- A.
Before it has been earned
- B.
When the cash is received
- C.
When it has been earned
- D.
Whenever the company needs to record the revenue
- 21.An expense that is paid in advance is a(n):
- A.
Unearned expense
- B.
Prepaid expense
- C.
Liability
- D.
Unearned asset
- 22.Current assets include
- A.
Cash and receivables
- B.
Cash and payables
- C.
Land and Building
- D.
Retained earnings
- 23.Which account is debited in the adjusting entry to record depreciation expense during the current period?
- A.
Accumulated Depreciation
- B.
Equipment
- C.
Depreciation Expense
- D.
Depreciation Payable
- 24.Which of the following accurately describes the account type of the Accumulated Depreciation account?
- A.
Contra-expense account
- B.
Liability account
- C.
Contra-asset account
- D.
Expense account
- 25.On November 1, Phillips Company paid six months’ insurance in advance totalling P9,000. An adjusted trial balance prepared on December 31 would include a balance in the Prepaid Insurance account of:
- A.
P9000
- B.
P6000
- C.
P3000
- D.
P0
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