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WorksheetsPrelim Intermediate Accounting 2
Total questions: 40
Worksheet time: 30mins
Accrued expenses are the opposite of prepaid expenses.
TRUE
FALSE
A company pays rent in advance for six months. At the end of the first month, what adjusting entry should be recorded?
Debit Prepaid Rent, Credit Rent Expense
Debit Rent Expense, Credit Prepaid Rent
Debit Cash, Credit Rent Payable
Debit Rent Payable, Credit Cash
A company received ₱10,000 from a customer in advance for services to be performed next month. What is the correct adjusting entry?
Debit Unearned Revenue ₱10,000, Credit Service Revenue ₱10,000
Debit Cash ₱10,000, Credit Unearned Revenue ₱10,000
Debit Service Revenue ₱10,000, Credit Unearned Revenue ₱10,000
No entry is needed until the service is performed
A company performed services worth ₱25,000 in December but will receive payment in January. What adjusting entry should be recorded in December?
Debit Accounts Receivable ₱25,000, Credit Service Revenue ₱25,000
Debit Service Revenue ₱25,000, Credit Accounts Receivable ₱25,000
Debit Unearned Revenue ₱25,000, Credit Cash ₱25,000
No adjusting entry is needed
Adjusting Entries are journaling entries usually made at the beginning of an accounting period to allocate income and expenditure to the period in which they occurred.
TRUE
FALSE
A machine worth ₱500,000 depreciates by ₱50,000 per year. What adjusting entry should be recorded?
Debit Depreciation Expense ₱50,000, Credit Accumulated Depreciation ₱50,000
Debit Accumulated Depreciation ₱50,000, Credit Depreciation Expense ₱50,000
Debit Equipment ₱50,000, Credit Depreciation Expense ₱50,000
Debit Cash ₱50,000, Credit Accumulated Depreciation ₱50,000
At the beginning of September, 2020 Judith Company reported Merchandise Inventory of P4,000. During the month, the company made purchases of P7,800. At September 30, 2020, a physical count of inventory reported P3,200 on hand. Cost of goods sold for the month is
600
7,800
8,600
11,800
Beginning and ending Accounts Receivable balances were P28,000 and P24,000, respectively. If collections from clients during the period were P80,000, then total services rendered on account were apparently
104,000
P76,000
P84,000
108,000
Company A rents a warehouse for $600,000 to be paid for 2 years. The debit on the journal entey is:
$250,000
$25,000
$60,000
$600,000
Explain the measurement and recognition of long term liabilities.
Measurement of fair value and recognition criteria
Measurement of historical cost and recognition criteria
Measurement of book value and recognition criteria
Measurement of present value and recognition criteria
How are liabilities broadly categorized?
Current, non-current, contingent
Short-term, medium-term, long-term
Immediate, future, uncertain
Payable, receivable, accrued
How should a note payable designated at fair value through profit or loss be measured?
Face amount
Fair value plus transaction cost
Fair value
Fair value minus transaction cost
If during the accounting period the assets increased by P 14,000 and equity increased by P 4,000, then how did liabilities change?
Decreased by P18,000
Decreased by P4,000
Increased by P4,000
Increased by P10,000
It is also known as accrued liabilities.
Accrued Expenses
Accrued Revenues
Prepaid Expenses
Depreciation
It is also known as “Book of Original Entry”
Chart of Accounts
General Ledger
Journal
Book of Accounts
It is the art of analyzing financial transactions and economic events, recording them, classifying them into accounts, summarizing them, reporting, and interpreting the results.
Bookkeeping
Journalizing
Accounting
Auditing
It is the buying of goods and selling the same without change in form.
Service Business
Merchandising
Manufacturing
It is the process of converting raw materials into finished products
Service Business
Merchandising
Manufacturing
It is the simplest form of business organization
Partnership
Sole Proprietorship
Cooperatives
Corporation
It refers to an association of two or more persons to carry on as co-owners of a business for profit
Partnership
Sole Proprietorship
Cooperatives
Corporation
Langrio Company received P9,600 on April 1, 2018 for one year's rent in advance and recorded the transaction with a credit to a nominal account. The December 31, 2018 adjusting entry is
debit Rent Income and credit Unearned Rent,
P2,400
debit Rent Income and credit Unearned Rent, P7,200
debit Unearned Rent and credit Rent Income, P2,400
debit Unearned Rent and credit Rent Income, P7,200
Layla Company issued a 3-year, P 150,000 face value non interest-bearing note payable in exchange for a new machinery on January 1 (Year 1). The note is payable in 3 equal annual installments every January 1, starting year 1. No cash price of the machinery is available. The prevailing rate for similar note is 12%. PV of 1 at 12% for 3 periods is 0.7118. PV of an ordinary annuity of 1 at 12% periods us 2.4018. PV of an annuity due at 12% for 3 period us 2.6900. How much is the interest expense for Year 1?
8,410
10,140
16,140
14410
Mary Joe’s Market recorded the following events involving a recent purchase of merchandise: Received goods for P50,000, terms 2/10, n/30. Returned P1,000 of the shipment for credit. Paid P250 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company’s merchandise inventory
Increased by P48,020
Increased by P49,250
Increased by P48,265
Increased by P48,270
Miya Company issued a 3-year, P 150,000 face value non interest-bearing note payable in exchange for a new machinery on January 1 (Year 1). The note is payable in 3 equal annual installments every January 1, starting year 1. No cash price of the machinery is available. The prevailing rate for similar note is 12%. PV of 1 at 12% for 3 periods is 0.7118. PV of an ordinary annuity of 1 at 12% periods us 2.4018. PV of an annuity due at 12% for 3 period us 2.6900. How much is PV of the note payable at the end of Year 2
44,640
28,500
84,500
41,590
On March 1 (Year 1), ABC Company issued a P90,000, 8% interest-bearing note payable from a financial institution. Interest and principal are payable after 1 year. How much is the interest expense for Year 1?
7,200
5,400
6,000
7,000
Other term for Merchandising?
Trading
Dealings
Marketing
Commerce
Resuello Company shows the following balances: Sales P1,000,000; Sales Returns and Allowances 180,000; Sales Discounts 20,000; Cost of Goods Sold 560,000. What is the gross profit percentage?
56%
70%
44%
30%
Revenue that has been earned by providing a good or service, but for which no cash has been received.
Service Revenue
Recurring Revenue
Accrued Revenue
Unearned Revenue
The purpose of adjusting entries is to convert cash transactions into the accrual accounting method.
TRUE
FALSE
The total assets of Abawag Enterprises are P700,000 and its owner’s equity is P420,000. What is the amount of its liabilities?
P1,120,000
P280,000
P300,000
P400,000
Tribuntante Company shows the following balances: Sales P125,000; Sales Allowances P9,000; Sales returns P6,000; and Sales Discounts P3,300. What is the amount of net sales?
P106,700
P110,000
P113,300
P125,000
True or False: Market risk is the risk that the issuer of the liability would cause a financial loss to the other party by failing to discharge the obligations.
(a)
What are the types of long term liabilities?
Long-term loans, bonds payable, and deferred tax liabilities
Accrued expenses, accounts payable, and short-term loans
Common stock, retained earnings, and treasury stock
Accounts receivable, inventory, and prepaid expenses
What is the accounting equation that includes liabilities?
Assets = Liabilities + Equity
Assets = Liabilities / Equity
Assets = Liabilities * Equity
Assets = Liabilities - Equity
What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, P15,500, and unexpired amounts per analysis of policies, P4,500?
Debit Insurance Expense, P4,500; Credit Prepaid Insurance, P4,500
Debit Prepaid Insurance, P11,000; Credit Insurance Expense, P11,000
Debit Insurance Expense, P15,500; Credit Prepaid Insurance, P15,500
Debit Insurance Expense 11,000; Credit Prepaid Insurance 11,000
What type of adjusting entry is needed when a business records revenue before receiving cash?
Prepaid Expense
Accrued Revenue
Depreciation
Unearned Revenue
Which of the following best describes an adjusting journal entry?
A journal entry made to record daily transactions
A journal entry made to correct errors in financial statements
A journal entry made at the end of an accounting period to update accounts
A journal entry made only when cash is received
Which of the following is NOT a type of adjusting journal entry?
Prepaid Expense
Unearned Revenue
Accrued Expense
Cash Sales
Who is the Father of Accounting?
Fra Luca Pacioli
Leonardo Da Vinci
Michealangelo David
René Descartes
Why are adjusting journal entries necessary?
To ensure expenses and revenues are recorded in the correct period
To record transactions that involve cash payments only
To increase a company's net income at year-end
To avoid recording transactions twice
