Basic Accounting Cup Elimination

What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, P15,500, and unexpired amounts per analysis of policies, P4,500?

• Debit Insurance Expense, P4,500; Credit Prepaid Insurance, P4,500

• Debit Insurance Expense, P15,500; Credit Prepaid Insurance, P15,500

• Debit Prepaid Insurance, P11,000; Credit Insurance Expense, P11,000

• Debit Insurance Expense 11,000; Credit Prepaid Insurance 11,000

The adjusting entry to adjust supplies was omitted at the end of the year. This would affect the income statements by having

• Expenses understated and therefore net income overstated

• Revenues understated and therefore net income understated

• Expenses understated and therefore net income understated

• Expenses overstates and therefore net income understated

The financial statements that are prepared for the business are separate and distinct from the owners according to the

• Going-concern assumption

• Matching principle

• Economic Entity assumption

• Full disclosure principle

Beginning and ending Accounts Receivable balances were P28,000 and P24,000, respectively. If collections from clients during the period were P80,000, then total services rendered on account were apparently

• 76,000

• 84,000

• 104,000

• 108,000

Which of the following is not among the first five steps in the accounting cycle?

• Record transactions in journals

• Record closing entries

• Adjust the general ledger accounts

• Post entries to general ledger accounts

Unearned fees appear on the

• Balance sheet in the current assets section

• Balance sheet as current liability

• Balance sheet in the stockholders equity section

• Income statement as revenue

The supplies account has a balance of P1,000 at the beginning of the year and was debited during the year for P2,800, representing the total of supplies purchased during the year. If P750 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year is

• 750

• 3,550

• 3,800

• 3,050

The worksheet

• Is an integral part of the accounting cycle

• Eliminates the need to rewrite the financial statements

• Is a working paper that is required

• Is used to summarize account balances and adjustments for the financial statements

Which of the following qualitative characteristics of financial information requires that information not be biased in favor of one group of users to the detriment of others?

• Relevance

• Reliability

• Verifiability

• Neutrality

The unearned rent account has a balance of P40,000. If P3,000 of the P40,000 is unearned at the end of the accounting period, the amount of the adjusting entry is

• 3,000

• 40,000

• 37,000

• 43,000