DIAGNOSTIC TEST

Sarah runs a small bakery and at the end of the month, she needs to record all her sales and expenses in the books. What is the first step she should take in the accounting cycle?

• A. Preparing the trial balance

• B. Analyzing transactions

• C. Closing the books

• D. Posting to the ledger

A business received cash of P30,000 in advance for revenue that will be earned later. The cash receipt entry debited cash and credited unearned revenues for P30,000. At the end of the period, P11,000 is still unearned. The adjusting entry for this situation will

• Debit revenues and credit unearned revenues for P19,000.

• Debit revenues and credit unearned revenues for P11,000.

• Debit unearned revenues and credit revenues for P19,000.

• Debit unearned revenues and credit revenues for P11,000.

John operates a car repair shop. Each time he completes a repair, he records the transaction in chronological order. Which document is John using?

• A. General ledger

• B. Trial balance

• C. Journal

• D. Balance sheet

Which type of business organization has a board of directors to make major decisions and is owned by shareholders?

• A. Cooperative

• B. Corporation

• C. Sole Proprietorship

• D. Partnership

Which type of business organization typically faces the most regulatory requirements and formalities?

• A. Sole Proprietorship

• B. Partnership

• C. Corporation

• D. Cooperative

Josh and Paul want to start a business together where they will share the responsibilities and profits equally. What type of business organization should they form?

• A. Corporation

• B. Partnership

• C. Sole Proprietorship

• D. Cooperative

Maria owns a clothing boutique. After recording transactions in the journal, she needs to summarize all the transactions for each account. What process is she undertaking?

• A. Posting to the ledger

• B. Preparing financial statements

• C. Ensuring that debits equal credits

• D. Recording transactions in chronological order

At the end of the quarter, Bob prepares a document to ensure all the debits and credits from his small IT consulting firm are equal. Which step in the accounting cycle is this?

• A. Preparing financial statements

• B. Posting transactions to the ledger

• C. Preparing the trial balance

• D. Analyzing transactions

Andrea wants to form a business that can raise capital by selling shares to the public. What type of business organization is she considering?

• A. Sole Proprietorship

• B. Partnership

• C. Corporation

• D. Cooperative

Geov and his neighbors want to create a business that is owned and operated by all members, who also benefit from its services. What type of business organization fits this description?

• A. Sole Proprietorship

• B. Partnership

• C. Corporation

• D. Cooperative