FIRST YEAR - ELIMINATION

Jaspher Balbanida Inc. received 70,000 cash from customer indicating advance for the service to be performed. Jaspher uses Unearned revenue as to account such advance. At the end of the year, Jaspher successfully rendered 50,000 worth of service. what is included in adjusting entries.

• debit to Unearned revenue amounting to 20,000
• Provide necessary disclosure in notes to FS indicating 20,000 still payable to customers
• Credit to service revenue amounting to 50,000
• credit to service revenue amounted to 20,000

Mang kepweng trading company bought supplies for 8,000 using expense method. At the end of the year 6,735 of supplies have been used. Necessary entries for adjustments includes

• Debit expense amounting to 6,735
• Debit prepaid supplies 1,265
• Credit Cash for 8,000
• Credit prepaid supplies for 6,735

Indicating to others, through your past action, that you will accept and discharge certain responsibilities, thereby creating an expectation on them that you will do so, creates an obligation called

• legal obligation.
• construction obligation.
• indicative obligation.
• constructive obligation.

A business incurs total expenses of ₱630,000 and reports loss of ₱270,000. How much is the total income?

• 900,000
• 320,000
• 380,000
• 360,000

The following errors were made in preparing a trial balance: the P1,350 balance of Inventory was omitted; the P450 balance of Prepaid Insurance was listed as a credit; and the P300 balance of Salaries Expense was listed as Utilities Expense. The debit and credit totals of the trial balance would differ by

• P1,350
• P2,100
• P1,800
• P2,250

Prepaid Insurance: Balance beginning of year P5,600 Balance end of year 6,400 During the year, an additional business insurance policy was purchased. A 2-year premium of P2,500 was paid and charged to Prepaid Insurance.

• Debit Insurance Expense and credit Prepaid Insurance, P1,700.
• Debit Prepaid Insurance and credit Insurance Expense, P1,700.
• Debit Prepaid Insurance and credit Insurance Expense, P800.
• Debit Prepaid Insurance and credit Insurance Expense, P6,400.

At year-end, Entity A’s total assets and total liabilities are ₱190M and ₱70M, respectively. If Entity A had a beginning equity of ₱145M and there were no contributions from, or distributions to, the owner during the period, how much profit (loss) did Entity A earn (incur) during the year?

• ₱35M
• ₱25M
• (₱35M)
• (₱25M)

Which of the following is incorrect regarding adjusting entries?

• Adjusting entries involve at least one balance sheet account and one income statement account.
• Adjusting entries affect profit or loss.
• In layman’s terms, “to accrue” means to accumulate, while “to defer” means to postpone.
• The process of splitting mixed accounts into their expired and unexpired portions or earned and unearned portions refers to accrual.
• Adjusting entries are typically prepared only when financial statements are prepared.

These accounts are closed at the end of the accounting period.

• Real accounts
• Mixed accounts
• Nominal accounts
• Door accounts

The term “deferral” as used in accounting means

• to split the earned and unearned portions of an advanced collection.
• to split the expired and unexpired portions of a prepayment.
• to record the collection of income or the payment of expense.
• split both the earned and unearned ; expired and unexpired portions.