Merchandising companies earn income by buying and selling products or merchandise.

When this merchandise is sold, the revenue is reported as fees earned, and its cost is recognized as an expense called the cost of merchandise/goods sold.

The operating cycle begins with receiving cash from customers, and it ends with spending for the business.

A merchandising business must first purchase the merchandise for sale.

Which of the following accounts is used in merchandising but not in service?

Which of the following is equal to gross profit plus the cost of sale?

Which of the following is equal to fees earned plus operating expenses?

Statement 1: The operations of a service business involve the purchase of merchandise for sale (purchasing activity), the sale and distribution of the products to customers (sales activity).

Statement 2: Operating cycles differ, depending upon the nature of the business and its operations.

Statement 1: The revenue activities of a merchandising business involve providing services to customers.

Statement 2: When merchandise is sold, the revenue is reported as fees earned, and its cost is recognized as an expense called the cost of merchandise sold.

A trial balance is a necessary checkpoint for uncovering certain types of errors.

A trial balance is a list of accounts and their balances at a given time.

A trial balance guarantees freedom from recording errors.

A trial balance:

The trial balance of Clooney Co. had accounts with the following normal balances:

Cash P5,000,

Service Revenue P85,000,

Salaries, and Wages Payable P4,000,

Salaries, and Wages Expense P40,000,

Rent Expense P10,000,

Clooney Capital P42,000,

Notes Payable P15,000,

and Equipment P61,000.

In preparing a trial balance, the total in the debit column is:

Posting from the purchases journal to the subsidiary ledger is generally made weekly.

The accounts in the general ledger are classified into two general groups, the statement of changes in equity accounts and income statement accounts.

Each account has no own record in the ledger.

Debits in the journal are posted on the debit side of a ledger, and credits in the journal as credits in the ledger.

The process of transferring the amounts from the journal to the appropriate accounts in the ledger is sliding.

Generally, a currency sign is shown only for the first item in the column and for the total of that column.

The first step in locating errors is to determine the amount of the difference between the two columns of the trial balance.

Adjusting entry consists of one permanent account and a temporary account.

Preparing of adjusting entries at the end of the accounting period is supported by the matching principles as well as the accrual basis of accounting.

Recording the expired portion of a prepaid expense results in an increase to the expense account and a decrease in the related prepaid expense account.

Under the expense method of recording prepayment, the initial entry is a debit to a prepaid expense account.

If no adjusting entries are prepared, then the accounting process would generate corrected financial statements.

If the total sales of the company are Php84,200 while its expenses totaled Php35,700, and its gross profit if 65% of the total sales how much is the net income or loss of the company?

The following are general and administrative expenses except for

Statement 1: The proper sequence for preparing the financial statements are as follows: statement of the balance sheet, income statement, and statement of changes in equity

Statement 2: Financial statements are not important in making business decisions.

A debit column greater than the credit-column total under the Income Statement portion of the worksheet would mean:

Income Statement debit columns of the worksheet contain

The usefulness of the worksheet is in

In what columns of the worksheet does net income appear?

Which of the following steps comes first in worksheet preparation?

The statement of owner’s equity is often viewed as the connecting link between the income statement and the balance sheet.

Financial statements are vital in business because contribute to the decision making of a business.

In the accounting cycle, which of the following is considered the output document?

Statement 1: Temporary accounts are also called real accounts.

Statement 2: Closing entries bring the income and expense accounts to zero at the end of the period.

Statement 1: During the closing process, expenses are transferred to the credit side of the Income Summary account.

Statement 2: During the closing process, revenues are transferred to the credit side of the Income Summary account.

An important purpose of closing entries is to

Which of the following accounts is not found in closing entries?

The statement of owner’s equity is often viewed as the connecting link between the income statement and the balance sheet.

Financial statements are vital in business because contribute to the decision making of a business.

The purpose of the post-closing trial balance is to

Post-closing trial balance differ is for the adjusted trial balance in that it does not