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WorksheetsAccounting Fundamentals Midterm Examination
Total questions: 40
Worksheet time: 42mins
The accounting equation must be in balance
only when journal entries are recorded.
only when the trial balance is prepared.
only when the financial statements are prepared
throughout the accounting process.
The debit and credit analysis of a transaction normally takes place at what point in the accounting process?
Prior to recording the transaction in journal
When the journal entry is posted to the ledger.
When the trial balanced is prepared.
At some other point in the accounting cycle.
A business has total assets of P780,000 and total liabilities of P220,000. How much is the equity?
P1,000,000
P560,000
P650,000
P530,000
If an owner invests her laptop computer and printer in the business, what are the effects on the fundamental accounting equation?
option A
option B
option C
option D
Which of the following is not a true statement about the accounting equation and its elements?
The accounting equation is Assets = Liabilities - Stockholders’ Equity.
Assets are the economic resources controlled by a business entity.
Liabilities represent obligations of a business.
Equity represents the owner’s claim against the total economic resources of the business
When a business entity receives payment for services rendered, the cash account is
credited
debited
debited or credited
not affected
The general ledger is known as
Books of original entry
Books of accounts
Books of final entry
business document
Revenues should be recorded when
work has begun on a job.
a contract is signed.
earned.
cash is received from the customer
A debit entry decreases the balance of
Assets
Expenses
Liabilities
Owner’s Withdrawal
Modern bookkeeping can be traced from the book Summa de Arithmetica written by this author.
Amatino Manucci
Luca Pacioli
Jacques Savary
Eugen Schmalenbach
A chart of accounts is
the same as balance sheet
usually listing of accounts in alphabetical order
usually listing of accounts in financial statement order
used in place of ledger
Which of the following would typically be considered a source document?
Invoice issued to a customer
General journal
Chart of accounts
general ledger
Which of the following accounts is presented on the credit column of the unadjusted trial balance?
Service Fees
Owner’s Drawings
Accounts receivable
Cash
Which of the following gives the correct sequence of accounting procedures?
Ledger, trial balance, journal, financial statements
Journal, Ledger, trial balance, financial statements
Financial statements, trial balance, Ledger, Journal
Financial statements, Journal, ledger, trial balance
The posting reference column in the general journal is used to show that an account has been posted to the ledger when which of the following is placed in it?
Journal page number
an "X"
Account number
Journal number
In this phase of the accounting process, accounting information is disseminated to interested parties.
Recording
Identifying
Disseminating
Communicating
The accounts and their balances shown in the trial balance are derived directly from the
Journal
General Ledger
Subsidiary ledger
Accountant’s mind
Which of the following statements is false concerning the rules of debits and credits?
The left side of an account is always the debit and the right side is always the credit side.
Increases in assets and expenses are debit entries, and increases in liabilities, equity and income are credit entries.
The term “debit” means to increase and the term “credit” means to decrease.
The normal balance of any account appears on the side for recording increases.
A business received P8,000 cash from charge customers. What account should be credited?
Cash
Accounts receivable
Accounts payable
Note receivable
When transactions are recorded
Assets are credited for increases
Liabilities, revenues and equity are credited for increases
Revenues are credited for decreases
Expenses are debited for decreases
The posting process will include the transfer of the following information from the journal to the account.
date, amount (debit or credit)
date, amount (debit or credit), journal page number
amount (debit or credit), account number
date, amount (debit or credit), account number
Which of the following statements regarding a trial balance is INCORRECT?
A trial balance is a list of all open accounts in the ledger with their balances as of a given date.
A trial balance is a test of equality of the debit and credit balances in the ledger.
A trial balance helps to localize errors within an identifiable time period.
A trial balance proves no errors of any kind have been made in the accounts during the accounting period
Preparing financial statements at least annually is an application of which of the following accounting concepts?
Accrual basis
Historical cost
Time period/Periodicity
Stable monetary unit
The normal balance of an account is
Debit side of the account
Credit side of the account
Side represented by increases in the account balance
Side represented by decreases in the account balance
Which of the following equation is correct?
Assets + Capital = Liabilities
Assets = Liabilities – Owner’s Equity
Capital = Assets + Liabilities
Capital = Assets – Liabilities
The balance of the account is determined by
adding all of the debits to all of the credits.
always subtracting the debits from the credits.
always subtracting all of the credits from the debit.
adding all of the debits, adding all of the credits, and then subtracting the smaller sum from the larger sum.
Mr. K owns a café. When Mr. K drinks coffee from his café, he pays for it even though he is the owner. Mr. K is most likely to be applying which of the following accounting concepts?
Separate entity
Accrual basis
Periodicity
Going concern
When the proprietor withdrew cash or other assets from the business, the Withdrawal account is
Credited
Debited
Debited and credited
not affected
Which is not a service entity?
Recruitment agency
insurance brokerage
Law firm
Truck dealer
Which of the following is not correct regarding the journal?
The journal is the accounting record where a transaction is initially recorded.
A journal is a company’s record of its daily transactions in chronological order.
The journal is known as the book of final entry.
Journalizing is the process of recording transactions from source document to the general journal.
Which of the following group of accounts are all assets?
Cash, Accounts Payable, Buildings
Accounts Receivable, Revenue, Cash
Cash, Prepaid Expenses, Buildings, Copyright
Unearned Revenues, Prepaid Expenses, Cash
An Accounts Payable has a normal beginning balance of P45,000, a debit posting of P85,000, and a credit posting of P70,000, which of the following was its ending balance?
P30,000 debit
P30,000 credit
P75,000 credit
P60,000 credit
Which of the following best describes the nature of accounting?
It is the process of counting money.
It is something that only accountants can understand.
It is a system responsible for generating the resources needed to fund the business operations.
It is the process of providing information that is useful in making a wide variety of economic decisions.
The assumption that a business entity will not be sold or liquidated in the near future is known as the
Economic entity assumption
conservatism assumption
Going concern
Monetary unit assumption
Which of the following applications of the rules of debit and credit is true?
increase Supplies Expense with a debit and the normal balance is a debit
decrease Prepaid Insurance with a credit and the normal balance is a credit
increase Accounts Payable with a credit and the normal balance is a debit
decrease Cash with a debit and the normal balance is a credit
Which of the following is correct?
option A
option B
option C
option D
XYZ Medical Center purchased X-ray equipment for P3,000, paid P750 down, with the remainder to be paid later. The correct entry would be
option A
option B
option C
option D
The above journal entry will
Increase Able, Capital and decrease Cash
Increase Cash and increase Able, Capital
Decrease Cash and decrease Able, Capital
Increase Cash and decrease Able, Capital
What is the best explanation for this journal entry?
purchased supplies on cash basis
investment of supplies by the owner
purchased supplies on credit
paid suppliers for supplies
Prepare a trial balance. The total of the debits is
P4,100
P4,700
P6,300
P8100
