NEW
Font size
Worksheets2024The Accounting Process
Total questions: 62
Worksheet time: 31mins
Which of the following represents the expanded basic accounting equation?
Assets = Liabilities + Common Shares + Dividends – Income – Expenses
Assets + Dividends + Expenses = Liabilities + Equity + Income
Assets – Liabilities – Dividends = Equity + Income – Expenses
Assets = Income + Expenses – Liabilities
The basic sequence in the accounting process can best be described as:
Transaction, journal entry, source document, ledger account, trial balance.
Source document, transaction, ledger account, journal entry, trial balance.
Transaction, source document, journal entry, trial balance, ledger account.
Transaction, source document, journal entry, ledger account, trial balance.
Which of the following statements is/are true? I. The listing of all of the accounts available for use in a company's accounting system is known as the General Ledger. II. The term associated with "left" or "left-side" is Credit. III. The basic accounting equation is Assets + Liabilities = Capital. IV. The accounting equation should remain in balance because every transaction affects only two accounts. V. The Accounting Cycle represents the steps or accounting procedures normally used by entities to record transactions and prepare financial statement. It implements the accounting process. VI. A corporation's net income and distributions to stakeholders are eventually recorded in the income summary.
II, IV, V, VI
V
I, V, VI
I, V
The following comments all relate to the recording process. Which of these statements is correct?
The general ledger is a chronological record of transactions
The general ledger is posted from transactions recorded in the general journal.
The trial balance provides the primary source document for recording transactions into the general journal.
Transposition is the transfer of information from the general journal to the general ledger.
Choose the incorrect statement
An accounting information system is designed to collect data about each transaction and event that should be recorded by an entity during a reporting year
Posting is a transfer process which reclassifies chronological information into account classification format in the ledger
In recording transactions, an external transaction is more likely to be overlooked and not recorded than is an internal transaction.
A trial balance is prepared after adjusting entries are recorded but before closing entries.
Which of the following is not optional?
use of an Income Summary account
preparation of the Worksheet
making adjusting entries
preparation of Post-Closing Trial Balance
Given the dual effects of accountable events, an increase in a liability cannot possibly be accompanied by a (an):
increase in asset
decrease in equity
decrease in asset
no effect on assets
Which of the following statements is true? I. The two basic concepts or theories underlying double-entry bookkeeping are Duality and Equilibrium II. The reason why expense is recorded as a debit entry to an expense account is that expenses decrease owner’s equity. III. The effects of revenue and expenses upon owners’ equity explains the debit and credit rules relating to the recording of revenue and expenses IV. All activities of a business are recorded in its accounting system V. The accounting process of determining how events affect assets, liabilities, owners’ equity, revenue and expenses of the enterprise is called “Measuring the effects.”
I, II, IV
I, II, III
III, IV, V
I, II, III, V
Which of the following statements correctly relate to single-entry system?
I. Accrual basis financial statements cannot be prepared under a singleentry bookkeeping system II. Under single-entry bookkeeping system financial statements are not likely to be fairly presented in accordance with GAAP III. Cash Receipts and Cash Disbursement Journals are utilized in both a single-entry bookkeeping system and a double-entry bookkeeping system IV. Internal control is inadequate under a single-entry bookkeeping system V. Subsidiary ledger is utilized only in a double-entry bookkeeping system but not in a single-entry bookkeeping system
II, IV
II, III, IV, V
I, III, IV
I, II, III, IV, V
The following statements relates to the double-entry system and the single-entry system. Choose the correct statements.
I. Merchandise inventory account is not recognized under single-entry bookkeeping II. Net income or loss under single entry bookkeeping is computed using an approach that directly matches cost with revenue. III. Under a Double-entry system, both general and special journals are used while under a single-entry system, only special journals are used. IV. Double-entry system is sometimes known as transaction approach of accounting for assets, liabilities, equity, revenue and expenses. V. Double-entry system is the generally acceptable method of bookkeeping because it offers a more accurate and more complete income measurement than single-entry.
I, III, V
I, V
III, IV, V
I, III, IV, V
Which of the following statements is incorrect?
Accrual basis financial statements may be prepared from single-entry records
Single-entry accounting is synonymous with cash basis accounting
No adjusting entries are necessary when accounting records are kept on a pure cash basis
Over the entire life of a business enterprise, there would be no difference between income on a cash basis and income on an accrual basis
Consider the following statements. I. The theory of debit and credit is a fundamental concept of double entry bookkeeping II. From the accounting viewpoint, the life of the business is a series of income statements III. From the accounting viewpoint, the life of the business is a series of balance sheets
true, true, true
true, true, false
false, false, true
true, false, true
The best interpretation of the word credit is the
offset side of an account.
right side of an account.
increase side of an account
decrease side of an account
The account may take many possible forms and accounting practice commonly uses several. Perhaps the most useful form of the account for textbooks, problems, and examinations but not really used in actual practice, except perhaps for memoranda or preliminary analyses is the
One-sided account
T-account
Three-sided account
moving balance account
Which one of the following best expresses the primary purpose of the general journal?
The general journal provides an organized summary of transactions classified by type of account
The general journal directly provides the data for a trial balance
The general journal eliminates the need for control accounts in the ledger
The general journal provides a chronological listing of transactions in debit-credit form
Choose the incorrect statement concerning special journals
All special journals are designed to handle only one type of transaction
Special journals are designed specifically to simplify the data processing tasks involved in journalizing and posting of particular types of transactions
The design of special journals is dependent upon the frequency of specific types of transactions
Special journals vary in number depending upon the types of frequent transactions recorded by the entity
Which one of the following best expresses the primary purpose of the general ledger?
The general ledger provides a record of transactions classified by account
The general ledger provides a record from which the journal entries are later posted
The general ledger provides a listing of the dates of transactions affecting each account, in what amounts, and the ending balances of each account
The general ledger eliminates the need for control account
Which of the following best defines a control account?
A summary account in the general ledger that is supported by detailed accounts in a subsidiary ledger
A listing of the balances in all accounts
An account which increases due to sale of goods or services during the normal operations of a business
A chronological listing of all transactions for a specific time period
These are entries made at the end of the accounting period after adjustments used as means of closing nominal accounts to a summary account and transferring the balances to equity
Closing entries
Adjusting entries
Reclassification entries
Reversing entries
These are entries usually made in the next period to reverse certain adjusting entries made in the immediately preceding accounting period.
Closing entries
Adjusting entries
Reclassification entries
Reversing entries
These are entries used to correct accounting errors.
Correcting entries
Adjusting entries
Reclassification entries
Reversing entries
These are entries that transfer an item from one account to another that more clearly describe the nature of the item transferred.
Correcting entries
Adjusting entries
Reclassification entries
Reversing entries
It is the difference between the debit and the credit side of a T account.
normal balance
account balance
discount
normal and account balance
The normal balance of any account is the
left side
right side
side which increases that account
side which decreases that account
A journal is not useful for
closing in one place the complete effect of a transaction
preparing financial statements.
providing a record of transactions.
locating and preventing errors.
T account is
a way of depicting the basic form of an account.
a special account used instead of a journal.
a special account used instead of a trial balance.
used for accounts that have both a debit and credit balance.
A systematic compilation of a group of accounts; also called a “book of secondary entry”
trial balance
ledger
worksheet
journal
A notation in a journal or ledger not intended to be incorporated in the accounts which describes a situation/event
memo entry
correcting entry
reversing entry
adjusting entry
The mechanical process of recording transactions and events on the books of accounts in a chronological sequence in accordance with established accounting rules and procedures
summarizing
reporting
journalization
classification
The appropriate book of account in which the receipt of a cash dividend is recorded
purchases journal
sales journal
cash receipts journal
general journal
Which of the following statements are correctly stated? I. A general journal entry having two debits and a credit is a simple entry. II. Account numbers are entered in the posting reference column of the two-column general journal at the time the transactions are recorded in the journal. III. One of the purposes of the ledger is to record the complete effect of the transaction in one place. IV. A list of all the accounts of a specific business enterprise is referred to as a ledger. V. When special journals are designed and adopted correctly, there is no need for the general journal.
I, III, IV
II, V
II, IV
none
This is prepared in order to prove the equality of the debits and credits in the ledger after the closing process.
Trial balance
Worksheet
chart of accounts
post-closing trial balance
The post-closing trial balance contains
nominal, real, and mixed accounts c
real and nominal accounts
real and mixed accounts
real accounts only
Which of the following statements is true?
Bad debts recovered account, if having an income tax benefit, is transferred to profit or loss summary account
Bill of exchange is drawn by the purchaser
Trial balance establishes the arithmetical accuracy of the accounting records
A well maintained asset need not be depreciated
The trial balance:
Is a formal financial statement.
Is used to prove that there are no errors in the journal or ledger.
Provides a listing of every account in the chart of accounts.
Provides a listing of the balance of each account in active use.
Which of the following errors will be disclosed in the preparation of a trial balance?
Recording transactions in the wrong account.
Duplication of a transaction in the accounting records
Posting only the debit portion of a particular journal entry.
Recording the wrong amount for a transaction to both the account debited and the account credited
An error which is disclosed by trial balance
account omitted from trial balance
journal entry not posted
omission of journal entry
error of transposition in posting one side of a journal entry
Which of these errors would be disclosed by the trial balance?
check of P95 from Pedro Cruz entered in Pedro’s account as P59.
selling expenses debited to the sales account.
credit sales of P300 entered in both the double entry account as P30.
a purchase of P250 was omitted entirely from the books.
Which of the following errors would cause unequal totals in the trial balance?
the firm records P2,100 received from a customer in advance of delivery of goods as a debit of P100 to Cash and a credit of P2,100 to Sales
the firm fails to enter the cost of the electric current used during the month as an expense and fails to recognize the P2,200 owed to Meralco
all these errors will cause unequal trial balance totals
none of these errors will cause unequal trial balance totals
Which of the following statements about adjusting entries is/are correct? I. Every adjusting entry impacts both a balance sheet and a statement of profit or loss and other comprehensive income account. II. Every adjusting entry impacts comprehensive income. III. If only year-end financial reports are prepared for both external and internal users then adjusting entries need only to be prepared once a year. IV. Adjusting entries are necessitated by the accrual basis accounting. If an entity uses the pure cash basis of accounting, there is no need for adjusting entries.
I, II, III, IV
I, II, III
I, II, IV
II, III, IV
These are entries made at the end of the accounting period to update certain amounts so that they reflect correct balances at the designated time.
Correcting entries
Adjusting entries
Reclassification entries
Reversing entries
Theoretically, adjusting entries fall into these broad classes
deferred items and accrued items
deferred items, accrued items and reclassification items
deferred items, accrued items and client adjustments
deferred items, accrued items, reclassification items, current period correcting items and prior period correcting items
Deferred items consist of these types of adjusting entries
asset/ expense adjustments, liability/revenue adjustments, asset/revenue adjustments, and liability/expense adjustments
asset/ expense adjustments and liability/revenue adjustments
asset/revenue adjustments and liability/expense adjustments
asset/liability adjustments, liability/equity adjustments, asset/ equity adjustments, asset/ expense adjustments, and liability/revenue adjustments
Accrued items consist of these types of adjusting entries
asset/ expense adjustments, liability/income adjustments, asset/income adjustments, and liability/expense adjustments
asset/ expense adjustments and liability/income adjustments
asset/income adjustments and liability/expense adjustments
asset/liability adjustments, liability/equity adjustments, asset/ equity adjustments, asset/ expense adjustments, and liability/income adjustments
In accounting, it means to postpone or delay
defer
accrue
procrastinate
defer and procrastinate
In accounting, it means to grow or accumulate
defer
accrue
germinate
defer and germinate
Consist of adjusting entries involving data previously recorded in accounts
deferred items
accrued items
procrastinated items
none of the above
Consist of adjusting entries relating to activity on which no data have been previously recorded in the accounts
deferred items
accrued items
procrastinated items
none of the above
Deferred items:
involve the initial, or first, recording of assets and liabilities and the related revenues and expenses or the transfer of data already recorded in asset and liability accounts to expense and revenue accounts, respectively
involve the reconciling of records to conform to Mr. Auditor’s materiality threshold
involve the initial, or first, recording of assets and liabilities and the related revenues and expenses
involve the transfer of data already recorded in asset and liability accounts to expense and revenue accounts, respectively
Accrued items:
involve the initial, or first, recording of assets and liabilities and the related revenues and expenses or the transfer of data already recorded in asset and liability accounts to expense and revenue accounts, respectively
involve the reconciling of records to conform to Mr. Auditor’s materiality threshold
involve the initial, or first, recording of assets and liabilities and the related revenues and expenses
involve the transfer of data already recorded in asset and liability accounts to expense and revenue accounts, respectively
Periodic reporting and the matching principle necessitate the preparation of
journal entries
dramatic entries
adjusting entries
no id, no entry
Receiving assets before they are earned creates a liability called
unearned assets
deferred assets
unearned revenue
accrued revenue
Accrued expense accounts are presented as
assets
liabilities
equity
contra-equity
Accrued income accounts are presented as
assets
liabilities
equity
contra equity
Employees’ taxes not yet paid to the BIR as of reporting date should be credited to which account
income tax payable
output tax
withholding tax payable
deferred tax liability
Adjusting entries reversed
depletion adjustments
bad debt adjustments
accrued expenses
inventory adjustments
A prepaid expense
paid and not currently matched with earnings
not paid and currently matched with earnings
paid and currently matched with earnings
not paid and not matched with earnings
The premium on a three-year insurance policy expiring on December 31, year 3, was paid in total on January 1, year 1. Assuming that the original payment was recorded as a prepaid asset, how would each of the following be affected in year 3? (Item #1) Prepaid Asset; (Item #2) Expenses
decrease, increase
decrease, no change
no change, increase
no change, no change
The accrued balance in a revenue account represents an amount which is:
earned and collected
earned and not collected
not earned or collected
not earned but collected
Which one of the following assets is similar to certain current assets, but is not one?
Accounts receivable
Prepaid insurance
long term payment of expenses
short-term investment in equity security
The premium on a three (3) year insurance policy was paid in total on January 1, 1989. Upon payment, Prepaid Asset Account was debited. The appropriate journal entry has been recorded on December 31, therefore the balance of Prepaid Asset Account should be:
higher, if the original payment had been debited initially to an expense account
the same as the original payment
the same even if the original payment had been debited initially to an expense account
no balance
An adjusting entry for revenue collected in advance, which was initially credited to a revenue account will:
decrease liabilities
increase assets
decrease the balance in the revenue account
increase equity
