3 Financial Accounting and Reporting

Arrange the following items in the order of the accounting cycle:

1. record transactions into the book of original entry

2. prepare financial statements

3. make period-end adjustments

4. post transactions to ledger

• 1432

• 4132

• 1423

• 4123

The receipt of cash from customers in payment of their accounts would be recorded by a:

• debit to Cash and a credit to Accounts Payable

• debit to Cash and a credit to Accounts Receivable

• debit to Accounts Receivable and a credit to Retained Earnings

• debit to Accounts Payable and a credit to Cash

Carson offered for sale at ₱75,000 land that had been purchased for ₱45,000. If Zimmer paid Carson ₱70,000 for the land, the amount that Zimmer would record for the purchase of the land in the accounting records is

• ₱75,000

• ₱45,000

• ₱70,000

• ₱0

An economic transaction or event that affects an entity’s assets, liability, equity, income or expense is

• recorded in the books of accounts.

• posted in the ledger.

• an accountable event.

• all of these

In the first month of operations, the total of the debit entries to the Cash account amounted to ₱3,000 and the total of the credit entries to the Cash account amounted to ₱1,800. The Cash account has a

• ₱1,800 credit balance.

• ₱3,000 debit balance.

• ₱1,200 debit balance.

• ₱1,800 credit balance.

At November 1, 20xx, Johnson Inc. had an Accounts Receivable balance of ₱200,000. During the month, the company made sales on account of ₱300,000. In addition, Johnson Inc. collected ₱400,000 from customers that owed them money. At November 30, 2018, the Accounts Receivable balance is

• ₱100,000 debit

• ₱100,000 credit

• ₱500,000 debit

• ₱300,000 credit

Which of the following statements is correct?

• The process of recording a transaction in a journal is called posting.

• A group of accounts for a business entity is called a Journal.

• A listing of all the accounts in a ledger is called a chart of accounts.

• All the statements above are correct.

Of the following errors, the one that will cause an inequality in the trial balance totals is:

• incorrectly computing an account balance

• failure to record a transaction

• recording the same transaction more than once

• posting a transaction to the wrong account with same normal balance as the correct account

On July 7, 20xx, XYZ Enterprises received cash ₱1,400 for services rendered. The entry to record this transaction will include

• a debit to Service Revenue of ₱1,400.

• a credit to Accounts Receivable of ₱1,400.

• a debit to Cash of ₱1,400.

• a credit to Accounts Payable of ₱1,400.

When payment is made to a supplier for goods previously purchased on account, the debit is to:

• an asset account

• a liability account

• an owner’s equity account

• an expense account