REVISION-24/1/24

Multiple Choice

The primary objective of financial accounting is:

• To serve the decision-making needs of internal users.

• To provide financial statements to help external users analyze an organization's activities.

• To monitor and control company activities.

• To provide information on both the costs and benefits of looking after products and services.

Multiple Choice

An accountant has debited an asset account for RM1,500 and credited a liability account for RM500. What can be done to complete the recording of the transaction?

• Nothing further must be done.

• Debit an owner's equity account for RM1,000.

• Debit another asset account for RM1,000.

• Credit a different asset account for RM1,000.

Multiple Choice

On 1 June 2010 Dewani Inc. reported a cash balance of RM12,000. During June, Dewani made deposits of RM3,000 and made disbursements totaling RM14,000. What is the cash balance at the end of June?

• RM1,000 debit balance

• RM15,000 debit balance

• RM1,000 credit balance

• RM4,000 credit balance

Multiple Choice

At 1 January 2010, Bibah Industries reported owner’s equity of RM130,000. During 2010, Bibah had a net loss of RM30,000 and owner drawings of RM20,000. At 31 December 2010, the amount of owner’s equity is

• RM130,000

• RM140,000

• RM100,000

• RM80,000

Multiple Choice

Abadi Company pays its employees twice a month, on the 7th and the 21st. On 21 June, Abadi Company paid employee salaries of RM4,000. This transaction would

• increases owner’s equity by RM4,000.

• decreases the balance in Salaries Expense by RM4,000

• decreases net income for the month by RM4,000.

• be recorded by a RM4,000 debit to Salaries Payable and a RM4,000 credit to Salaries Expense.

Multiple Choice

At January 31, 2010, the balance in Prieto Inc.’s supplies account was RM250. During February, Prieto purchased supplies of RM300 and used supplies of RM400. At the end of February, the balance in the supplies account should be

• RM250 debit.

• RM350 credit.

• RM950 debit.

• RM150 debit

Multiple Choice

The first step in the recording process is to

• prepare financial statements.

• analyze each transaction for its effect on the accounts.

• post to a journal.

• prepare a trial balance.

Multiple Choice

Fatimah Company provided consulting services and billed the client RM2,500. As a result of this event,

• assets remained unchanged.

• assets increased by RM2,500.

• owner’s equity increased by RM2,500.

• Both b and c.

Multiple Choice

Adjusting entries are required

• because some costs expire with the passage of time and have not yet been journalized.

• when the company's profits are below the budget.

• when expenses are recorded in the period in which they are incurred.

• when revenues are recorded in the period in which they are earned.

Multiple Choice

Unearned revenues are

• received and recorded as liabilities before they are earned.

• earned and recorded as liabilities before they are received.

• earned but not yet received or recorded.

• earned and already received and recorded.

Multiple Choice

If a resource has been consumed but a bill has not been received at the end of the accounting period, then

• an expense should be recorded when the bill is received.

• an expense should be recorded when the cash is paid out.

• an adjusting entry should be made recognizing the expense.

• it is optional whether to record the expense before the bill is received.

Multiple Choice

Jasa Enterprise purchased office supplies costing RM8,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed RM4,400 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

• Debit Office Supplies Expense RM4,400, Credit Office Supplies RM4,400

• Debit Office Supplies RM3,600, Credit Office Supplies Expense RM3,600

• Debit Office Supplies Expense RM3,600, Credit Office Supplies RM3,600

• Debit Office Supplies RM4,400, Credit Office Supplies Expense RM4,400

Multiple Choice

Realty Services received a payment for RM18,000 on 1 July 2010 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent was credited for the full RM18,000. Financial statements were prepared on 31 July every year. Realty Services should make the following adjusting entry on 31 July 2010:

• Debit Unearned Rent RM3,000, Credit Rental Revenue RM3,000

• Debit Rental Revenue RM3,000, Credit Unearned Rent RM3,000

• Debit Unearned Rent RM15,000, Credit Rental Revenue RM15,000

• Debit Rental Revenue RM15,000, Credit Rental Revenue RM15,000

Multiple Choice

On 1 January 2011, Daniel Repair Services purchased an insurance policy for RM2,400 for coverage of one year. The entire RM2,400 was charged to Insurance Expense on the same day. If the firm prepares monthly financial statements, the proper adjusting entry on 31 January 2011 will be

• Debit Insurance Expense RM2,200, Credit Prepaid Insurance RM2,200

• Debit Prepaid Insurance RM2,200, Credit Insurance Expense RM2,200

• Debit Insurance Expense RM200, Credit Prepaid Insurance RM200

• Debit Prepaid Insurance RM200, Credit Insurance Expense RM200

Multiple Choice

Which of the following statements related to the adjusted trial balance is INCORRECT?

• It shows the balances of all accounts at the end of the accounting period

• It is prepared before adjusting entries have been made

• It proves the equality of the total debit balances and the total credit balances in the ledger

• Financial statements can be prepared directly from the adjusted trial balance

Multiple Choice

Closing entries are made

• in order to terminate the business as an operating entity.

• so that all assets, liabilities, and owner's capital accounts will have zero balances when the next accounting period starts.

• in order to transfer net income (or loss) and owner's drawing to the owner's capital account.

• so that financial statements can be prepared.

Multiple Choice

When cash is paid in advance for insurance, ____. 

• 2. the Prepaid Insurance account is decreased.

• 2. the Prepaid Insurance account is credited.

• 3. the Prepaid Insurance account is increased.

• 4. none of the above 

Multiple Choice

37. Major types of adjusting entries are: 

 

1. I. Accrued revenues 

2. II. Accrued expenses 

3. III. Earned revenues 

4. IV. Prepaid expenses 

• 2. I and II 

• 2. I, II and III 

• 3. I, II, and IV 

• 4. All of the above

Multiple Choice

A trial balance will NOT be balanced under which of the following condition? 

• 2. A journal entry is posted twice. 

• 2. A journal entry is partially posted. 

• 3. Incorrect account titles are used in journalizing. 

• 4. A wrong amount is used in journalizing both side of debit and credit. 

Multiple Choice

The double-entry system requires that each transaction must be recorded

• in at least two different accounts.

• in two sets of books.

• in a journal and in a ledger.

• first as a revenue and then as an expense.