Financial Accounting and Reporting Reviewer

Source One: extended to the credit column of the

balance sheet.
1. Rendered services for 25, 000, receiving
50% cash and the balance on account. The 9. Depreciation is the process of: Allocation
journal entry made to record the transaction of costs.
includes: Debit to Cash of 12, 500, debit
10. A worksheet can be a substitute for a
Accounts Receivable of 12, 500 and credit
complete set of financial statements: False.
Service Revenue of 25, 000.
11. The annual depreciation under the
2. A sole proprietor rendered services to a
straight line method is computed by dividing
customer for 25, 000, receiving 10, 000
the assets’ costs over its useful life: False.
cash and the balance to be paid in 30 days.
This transaction results to: Increase in 12. This is not a possible combination of a
assets for 25, 000; Increase in capital for journal entry: Increase in Asset and
25, 000 for the total revenue earned. decrease in Equity.
3. This is true regarding the trial balance: 13. Made an adjusting entry to recognize 5,
Preparation of trial balance determines the 000 accrued salaries payable. On January 5,
total debits equal total credits. 2021, total salaries paid were 8, 500. This
will lead to an entry of Credit to Cash of
4. Payment of customer was recorded as
8,500 and: Debit to Salaries Expense of 8,
debit to Cash and credit to Accounts
500.
Payable. It should be debited to Cash and
credit to Accounts Receivable. The 14. A journal consists of: A chronological
erroneous entry resulted to: record of individual business transactions.
Understatement of AR, overstatement of
AP/None of the Statement. 15. In terms of Debits and Credits, these
accounts have the same normal balances:
5. On the worksheet, the Income Statement Accounts Payable, Rental Revenue,
debit column equals 800, 000 and the credit Unearned Rental Revenue.
column equals 700, 000, stating that: The
result of operation is a loss of 100, 000 16. Using a worksheet, this situation
which is added to the credit column of indicates a loss on the Statement of Profit
Income Statement and extended to the or Loss columns: Total debits exceeds total
debit column of the Statement of Financial credits.
Position. 17. This is done first in the accounting
6. Numerous errors may exist even though cycle: Adjusting entries are recorded.
the trial balance columns agree. This is not 18. The drawing account is extended to the:
one of those: Transposition error. Statement of Financial Position, Debit
7. Adjusting entries involves: One real and column.
one nominal account. 19. This is the source for the preparation of
8. On the worksheet, in order for the Financial Statements: Adjusted Trial
balance sheet’s total debit column and total Balance.
credit column to balance: The net income s 20. Borrowed 500, 000 from BPI with an
interest rate of 1% per month and is due
 Financial Accounting and Reporting Reviewer

every June 1. This will appear in the need for adjusting entries at the end of the
Statement of Financial Position dated Dec period: True.
31, 2020: Interest Payable of 5, 000.

21. A 15, 000 debit entry was posted with

Computations Example:
just 1, 500. This will cause: Debit total is
understated by 13, 500. 1. The unadjusted trial balance includes the
following:
22. A ledger contains a separate “account”
for each: Asset, Liability, and Elements of Account Titles Balances
Owner’s Equity.
Prepaid Rent 12, 000
23. Failed to make an adjustment for 4, 500
Salaries Expense 25, 000
accrued service revenue earned and
unexpired portion of 7, 500 of insurance Utilities Expense 6, 000
premium that has been debited to insurance
Office Supplies 5, 000
expense, resulting to: Revenues
understated by 4, 500 and expenses Adjustments Balances
overstated by 7, 500.
Expired Rent 5, 000
23. A transaction caused a 25, 000 decrease
Accrued Salaries 2, 500
in both total assets and total liabilities. This
transaction could be: Payment of Accounts Accrued Utilities 1, 500
Payable worth 25, 000. Unused Office Supplies 2, 000
24. Paying previously recorded accrued
expense payable will cause total assets,
liabilities, and owner’s equity to: Decrease,
Total Expenses: 43, 000
decrease, remain unchanged, respectively.
2. Suppose the given values are the
25. The allowance for doubtful accounts has
following:
a credit of 15, 000 on Jan 1. At Dec 31, the
accounts receivable had a balance of 150, A = 1, 975, 000
000. It is estimated that 30% of the AR are
uncollectible. This is incorrect statement: L = 734, 651
Allowance for doubtful accounts will be C = 1, 240, 349
credited by 45, 000.
If:
26. This is incorrect regarding adjusting
entries: Each adjusting entry affects one A = - 535, 000
revenue account and one expense account. L = + 298, 641
27. If one omitted an adjustment, this will C = 406, 708
yield to an Understatement of Net Income:
Overstatement of Unearned Revenues. How much is the increase/(decrease) of
Equity during the year? (833, 641)
28. If all transactions were recorded in
conformity with current generally accepted
accounting principles, there would be no
 Financial Accounting and Reporting Reviewer

d. The equipment with a useful life of 10

years and with an estimated salvage value
of 65, 000 was purchased on March 31 of
the current year.

Books of Gomez Consultancy Firm showed e. Prepaid Insurance represents the amount
the unadjusted accounts’ balances as of of a one-year premium expiring March 1,
December 31, 2019 2020.

Cash 93, 500 f. The note was received from a customer

on November 16, 2019 for 60 days at 20%
Notes Receivable 13, 000
interest.
Accounts Receivable 30, 000
g. The payroll for the 5-day work week
Allowance for Bad Debts 1, 500 covering Dec 29, 2020 to January 2, 2020 is
Prepaid Insurance 3, 750 11, 250.

Equipment 365, 000 Answers to the Following:

Accounts Payable 47, 500 Adjusted Assets: 476,300
Notes Payable 15, 000 Adjusted Liabilities: 94,250
Gomez, Capital 354, 050
Profit of Angel Service Center for the period
Gomez, Personal 35, 000 ended Dec 31, 2020: 66,530
Consultancy Income 380, 000 Liabilities that will appear in the Dec 31,
Interest Income 2, 500 2020 SFP of Angel Service Center: 73,050

Supplies Expense 2, 500 Assets that will appear in the Dec 31, 2020
Interest Expense 1, 800 SFP of Angel Service Center: 262,880

Rent Expense 76, 500

Salaries Expense 168, 000
Miscellaneous Expense 11, 500

a. Unused Supplies at the end of the year is

850.

b. Uncollectible accounts are estimated to

be equivalent to 15% of outstanding
Accounts Receivable.

c. Consultancy income received in advance

in the amount of 25, 000 was included in
the consultancy income amount.
 Financial Accounting and Reporting Reviewer

8. The entries to record the receipt of

electric bill, scheduling it for payment on
the first week of the following month: Debit
Utilities Expense and Credit Utilities Payable

Source Two: 9. The bookkeeper of ABC Consultancy firm

failed to recognize the following at the end
1. A prepaid expense is not an: Expired Cost of the period: Earned consultancy fee but
2. The trial balance is out balance. This may not yet collected, P3, 000; Unused supplies
be due to: Sales posted as 400 should be of P1, 500; Accrued expense of P3, 800.
400. The total effect of the above errors in the
3. Year-end net assets would be profit of ABC Consultancy Firm is: Profit is
understated and current expenses would be understated by P700.
overstated as a result of failure to record 10 A tool used to summarize all information
this entry: Unexpired Portion of Insurance needed to make adjusting entries and
Premiums Paid. facilitate the preparation of the financial
4. At the beginning of the year, the balance statements, as well as the closing entries, is
of L. Ocampo Capital is P150, 000. During called: Worksheet.
the year, L. Ocampo invested additional 11. A service vehicle, costing P1, 000, 000
P50, 000 and withdrew P30, 000. After of the Union Company is being depreciated
closing the nominal accounts, Income over 10-year life with salvage value to 10%
Summary Account showed a credit balance of its costs. After recording the depreciation
of P36, 000. The net increase/(decrease) in on December 31, 2019, the balance of the
the capital account is: Increase of P56, 000. accumulated depreciation account is P315,
5. Velvet Corporation paid P24, 900 in 000. What is the age of the service vehicle
insurance premiums during 2019. Velvet as of December 31, 2019? 3.5 years.
showed P3, 600 in Prepaid Insurance on its 12. A business received cash of P30, 000 for
December 31, 2018 statement of financial services that will be provided in the future.
position and P4, 500 on December 31, The cash received was recorded as a debit
2019. The insurance Expense on the to cash account and a credit to unearned
statement of comprehensive income for service income account. At the end of the
2019 was: 24,000. year, P11, 000 is still unearned. The
6. The entries to record the purchase of an adjusting entry for this is: Debit Unearned
asset issuing a 60-day note: Debit Asset Service Income and Credit Service Income
and Credit Notes Payable. for 19,000.

7. The company failed to record accrued 13. In which financial statement does the
interest income at the end of the accounting account Income Summary appear? It does
period. Which of the following is not not appear in any financial statement.
understated? Interest Payable 14. Which of the following accounts is not
Understated: Total Assets, Interest closed during the closing process? Unearned
Receivable, and Net Income/Profit Income.
 Financial Accounting and Reporting Reviewer

15. On December 1. 2019, the Accounts 23. The function of general ledgers in the
Receivable has a balance of 54, 000. During accounting process is: Classifying.
the month, collection amounting to 150,
24. Reymond Company has 9, 000, 10%
000 was recorded. If the Accounts
90-day note receivable outstanding on
Receivable is P42, 000 at December 31,
December 31. The note is dated December
2019, how much was debited to the
1. An adjusting entry is made on the note at
account during December? 138, 000.
year end. The correct reversing entry
16. What will be the result if the company should be: Debit Interest Revenue and
failed to prepare adjusting entry to record credit Interest Receivable, 75.
an accrued expense? Profit will be
25. Which of the following statements
Overstated.
regarding a trial balance is incorrect? The
17. Using the allowance method of trial balance is an assurance that all
recording doubtful accounts, the entry to accountable events have been correctly
collect an account receivable which was recorded.
previously written-of: Will increase cash.
26. On April 1, Venus Company received
18. The statement of comprehensive and paid a 700 bill for advertising done in
income contains the following except: March. In addition to this bill, the company
Accumulated Depreciation. It includes: paid 6, 100 during April for expenses
Interest Income, Interest Expense, and incurred in that month. On May 2, Venus
Professional Fees. Company paid a 4, 600 payroll to
employees for work done in April. Based on
19. The Corona Corporation prepares
the above data, total expenses for the
reversing entries at the beginning of the
month of April: 10, 700.
accounting period. Which of the following
adjusting entries prepared by the entity will 27. A deferred revenue account balance
be reversed? The entry to take up the represents an amount that is: Collected but
unused supplies at the end of the period. Not Yet Earned.

20. The post-closing trial balance: Does not 28. A journal consists of: Chronological
include nominal accounts. record of individual business transactions.

21. The accountant of Converge Company 29. The remaining steps in the accounting
failed to make the adjustments on the cycle performed at the end of the year are:
following items: Depreciation of Office Adjusting Entries, Financial Statements,
Equipment, 12, 000, Accrued Utilities, 5, Closing Entries, Post-closing Trial Balance,
000 and Accrued Revenues, 2, 000. The Reversing Entries.
overall effect of the above omissions to net
30. Corona Company recorded accrued
income is: 15, 000 overstated.
salaries of 25, 000 at December 31. 2018.
22. After posting the closing entries: The During 2019, Corona Company paid salaries
Income Accounts, Expense Accounts and of 872 000. Unpaid salaries at December
Income Summary Accounts have zero 31, 2019 amounted to 34, 000. Corona
balance. prepares adjustments only at December 31,
and also reversing entries on January 1.
The balance of the Salaries Expense
 Financial Accounting and Reporting Reviewer

account that would appear in the post- 31, 2019, laundry supplies on hand is 18,
closing trial balance at December 31, 2019 500. The adjusting entry on December 31,
is: 0. 2019 will result to supplies expense of: 61,
500.
31. A reversing entry is: Not required.
36. A debit entry of 6, 750 was posted as 7,
32. After closing the revenue and expense
650. This error is called: Transposition.
accounts. Income Summary showed a credit
balance of 60, 000. Which of the following
statement is true: The company had a profit
Computation Examples:
of 60, 000.
Unadjusted Trial Balance of ERM Clinic at
33. The following transactions took place for
December 31, 2019
Dizon Consultancy Firm for the month of
December 2019: Cash 55, 000
- The owner invested cash of 50, 000 in the Medical Supplies 20, 000
business
Prepaid Insurance 10, 000
- Purchased 6, 800 worth of various Medical Equipment 198, 000
equipment on account but paid 3, 600 ten
Accumulated Depreciation 43, 600
days after
Accounts Payable 25, 000
- Rendered services receiving 12, 000 cash
and 8, 500 note issued by the client Professional Fees 225, 000
promising to pay within 20 days Salaries Expense 60, 000
- Billed another client for 5, 000 Utilities Expense 25, 400
representing services rendered

- Received 48, 500 from a bank as proceeds

a. Accrued Professional Fees is 15, 000
of 90-day loan. This amount is net of 1, 500
while Unearned Professional Fees is 20,
services charges
000.
- Paid salaries of staff, 5, 000
b. Medicals supplied unused at the end of
The above transaction resulted to: Increase the period is 11, 500.
in Assets and Liabilities of 122, 200 and 53,
c. Accrued Salaries for the period is 12, 000.
200 respectively.
d. Expired Insurance is 5, 000.
34. A debit of 1, 000 to accounts receivable
was posted to the debit side of the general e. Depreciation Expense for period is 9, 000.
ledger as 100, this will: Understate the
How much is the profit for the period?
Accounts Receivable by 900.
- 100, 100
35. A laundry shop began operation in
November with laundry supplies of 16, 000. Unadjusted Trial Balance of Consultancy
During the month, the shop purchased Firm at December 31, 2019
laundry supplies ofP29, 000 and purchased
another 35, 000 in December. On December Consultancy Fees 500, 000
 Financial Accounting and Reporting Reviewer

Office Supplies Expense 15, 000

Representation Expense 25, 000
Salaries Expense 175, 000
Utilities Expense 46, 000
Miscellaneous Expense 28, 000
Accounts Receivable 80, 000
Adjusted Trial Balance of Pauper Company
Office Equipment 120, 000 at December 31, 2019
Accumulated Depreciation 40, 000
Debit Credit

Cash 530, 000

a. Inventory of office supplies unused, 750. Accounts Receivable 100, 000
b. Accrued consultancy fees, 12, 000. Furniture & Fixtures 150, 000
c. Accrued salaries, 15, 000. Accumulated Dep 40, 000

d. Depreciation for the period, 8, 000. Accounts Payable 50, 000

e. Accrued utilities, 6, 000. Pauper, Capital 280, 000

Pauper, Drawings 50, 000

f. Unearned consultancy fees, 30, 000.
Revenues 630, 000
The debit and credit columns of the Income
Statement in the worksheet show total of: Salaries Expense 60, 000
482, 000. Depreciation Expense 40, 000

Miscellaneous Exp 70, 000

How much is the balance of Pauper Capital

on the December 31, 2019 post-closing trial
balance?

- 690, 000

What is the total of the debit and credit

columns of the post-closing trial balance?

- 780, 000
 Financial Accounting and Reporting Reviewer

000. The adjusting entry will include a to

Allowance for Doubtful Accounts: Credit of
23, 000

10. A company estimates that 20, 000 of its

500, 000 of accounts receivable will be
uncollectible. Its Allowance for Doubtful
Accounts presently has a credit balance of
Source Three 18, 000.

1. Failure to prepare an adjusting entry to The adjusting entry will include a to Bad
record earned revenue will cause: An Debts Expense: Debit of 2, 000
understatement of revenues and assets 11. A company estimates that 20, 000 of its
2. Accrued income: Increase assets 500, 000 of accounts receivable will be
uncollectible. Its Allowance for Doubtful
3. An adjustment that represents services Accounts presently has a credit balance of
provided by a company for which it will 8, 000. The adjusting entry will included a
receive payment in the future: An accrued to the Allowance for Doubtful Accounts:
income Credit of 12, 000
4. A prepaid expense is not an: Expired cost 12. Entries required at the end of an
5. Depreciation is the process of: Allocation accounting period to bring the accounts up
of Cost to date and to ensure the proper matching
of income and expenses are called:
6. This is the systematic allocation of a fixed Adjusting Entries
asset's depreciable cost over its estimated
useful life: Depreciation 13. This is the account that would probably
need adjusting at the end of the accounting
7. A rental company reported these two period: Supplies
different balances in their Unearned Rent
account at the beginning and end of year 14-16 Before year-end adjustments are
2012: Jan. 1, 2015 = 26, 000; Dec. 31, made, the December 31, 2015 Trial Balance
2015 = 32, 000. If rent revenue for Year of Alba Co. contains revenues of P146, 000
2012 was 263, 000 how much cash was and expenses of P85,700, adjustments are
received by the company as advance necessary for the following items:
payments for rent due in Year 2015: 269, Fees earned in year 2015, not yet billed to
000 customer, P32, 000
8. After several years of operations, a Depreciation for Year 2015, P28, 000
company's Bad Debts Expense for a given
year is likely to be the same as its balance Portion of prepaid insurance applicable to
in Allowance for Bad Debts: Not Possible Year 2015, P18, 400

9. A company estimates that 20, 000 of its Portion of fees collected in advance earned
500, 000 of accounts receivable will be in Year 2015, P12, 500
uncollectible. Its Allowance for Doubtful Compute for the correct revenue: 190, 500
Accounts presently has a debit balance of 3,
 Financial Accounting and Reporting Reviewer

Compute for the correct expenses: 133, 900 24. Accumulated depreciation is: A contra
asset account
Compute for the correct profit: 56, 600
25. Alvarez purchased a delivery truck on
17. ABC receives a 90-day, 6 percent note
May 1, 2015. The truck cost P600, 000 and
receivable from a client for the repair of a
with a 4-year service life. The adjusting
computer for P20, 000. The repair was done
entry that would be necessary on December
on Sept. 16. ABC's accounting period ends
31, 2015 would include: A debit to
on September 30. How much is the accrued
depreciation expense for P100, 000
interest? 47

18. An adjustment that represents services

received by the company for which it will be 26. The ABC repairs company reported the
pay in the future is called: An accrued following data:
expense
Salaries payable, 1/1/2015 worth 100, 000
19. Chris’ company acquired a delivery truck
Salaries paid during 2015 worth 800, 000
on August 1, 2015. The truck costs P590,
000 and incidental costs of P100, 000 were Salaries expense for 2015 worth 840, 000
paid related to its purchase. Estimates
reveal that the useful life of this truck is five The balance in the ABC repairs company's
years. On December 31, 2015, the entry to salaries payable account on December 31,
record depreciation on this truck would be: 2015 must have been: 140, 000
A credit to accumulated depreciation of P50, 27. How does the accumulated depreciation
000 account appear in the financial statements:
20. An adjustment that represents services As a contra asset on the statement of
that have been rendered by a company, but financial position
which have not yet been receive by the 28. Which of the following is true under the
company is called: An accrued income direct write-off method of accounting for
21. The amount of accrued but unpaid bad debts: The accounts receivables are
salaries at the end of the period is both an stated in the statement of financial position
expense and: A liability at their net amortized cost

22. Accrued expenses are expenses: That 29-30

have been incurred but not yet paid Miguel Co. prepared an aging of its
Relate to future accounting periods. accounts receivable at December 31, 2015
and determined that the net realizable value
23. The store supplies account had a P12, of the receivable at that date is P1, 000,
500 balance at the beginning of the year, 000 additional information is available:
P56, 000 of store supplies were purchased
during the year, and an inventory of unused Accounts receivable 12/31/14 of 960, 000
store supplies at the end of the year totaled Accounts receivable 12/31/15 of 1, 080, 000
P15, 000. How much is the Store Supplies
Expense for the year? 53, 500 Allowance for doubtful accounts 12/31/14
credit worth 120, 000
 Financial Accounting and Reporting Reviewer

Accounts written off as uncollectible during covering the period from October 1, 2015 to
2015 worth 100, 000 September 30, 2016. The payment was
originally recorded as an expense account.
29. How much is the allowance for doubtful
How much rent expense is reported in the
account balance? 80, 000
statement of comprehensive income of
30. Compute the doubtful account expense Orange Company for the year ended Dec
for 2015? 60, 000 31, 2015: 45, 000

31-32 36-37

Clark co. allowance for doubtful accounts Tin-Tin Company acquired an equipment
had a credit balance of P12, 000 at January costing P480, 000 on January 2, 2015. The
1, 2015. Clark accrues doubtful account equipment is being depreciated using
expense at 4% of outstanding accounts straight line method. It is estimated to have
receivable of P1, 500, 000. Uncollectible a useful life of five years and a residual
accounts amounting to P48, 000 were value of P30, 000
written off. The aging of accounts
36. Assuming the equipment will be sold on
receivable indicated that P50, 000 allowance
April 1, 2017. At P250, 000, how much is
for doubtful accounts was required at
the gain or loss on sale of equipment? 27,
December 31, 2015
500 loss
31. Compute Clark's Doubtful account
37. What is the accumulated depreciation
expense for Year 2015: 86, 000
balance that would be shown on December
32. How much is the balance of the 31, 2016? 180, 000
allowance account on December 31, 2015:
38. Cordova company received cash of
50, 000
P6,000 advance for revenue that will be
33. Round table advertisers company began earned subsequently. The cash receipt entry
operations on December 1, 2015 with office debited cash and credited unearned
supplies of P32, 000. During the month, the revenues for P6, 000. At the end of the
firm purchased supplies of P58, 000. On period, it was determined that P2, 200 is
December 31, a count of office supplies on still unearned. The adjusting entry will:
hand totaled P42, 000. Supplies expense to Debit Unearned Revenues and Credit
be reflected on the statement of Revenues for 3, 800
comprehensive income for the period would
39. On December 1, 2015, Morning Dancer
be: P48, 000
borrowed P500, 000 from PNB. Interest on
34. Which of the following accounts would this loan is 1% per month, and is due every
be found in an adjusting entry: Both Income June 1. Which of the following items would
Statement Accounts and Balance Sheet appear on Morning Dancer's December 31,
Accounts 2015 statement of financial position:
Interest Payable of P5, 000
35. On September 30, 2015, orange
company paid P180, 000 for one year rental
 Financial Accounting and Reporting Reviewer

40. Adjusting entries: Help to properly fee income. The adjusting entry related to
measure the period's profit or net loss this transaction would include a: Debit to
Service Fee Income of 50, 000 and a Credit
41. On August 1, 2015, IRH Co. collected 8
of Cash 50, 000
months' rent revenue of P142, 000 in
advance. The Co. debited cash and credited 48. The company's two office employees
deferred rent. Adjusting entry have to be earn P350 per day and P400 per day
prepared on December 31, 2015. What is respectively, they were paid every Friday for
the liability account on December 31, 2015: 5 day work that begins on Monday. This
53, 250 year, December 31 fell on a Tuesday, and
the employees both worked on Monday and
Tuesday. How much salaries should be
42. On October 1, 2015 an investment bank accrued on December 31? 1, 500
loaned P300,000 to a small business
payable within 9 months at 12 percent. The
bank's accounting period ends on December 49. The unadjusted trial balance of RapRap
31, 2015What amount would be reported in Co. had a P2, 000 balance in the
the bank's 2015 statement of commission income, of which ¾ was earned
comprehensive income as interest revenue: during the year. What would be the effect
9, 000 on profit and liabilities respectively if an
adjusting entry was not prepared:
43.. Under the revenue recognition
Overstated, understated
principle, revenue is recorded: After it has
been earned, but not before 50. Which of the following accounts would
not be found in an adjusting entry: Cash
44. At the end of the current accounting
period, Highlight Barbershop omitted the 51. The company has unrecorded and
recording of the prepaid expense. As a unpaid salaries to its two employees. The
result, current period assets, liabilities, journal entry to adjust the books results in
equity, and profit, respectively, are: which of the following types of accounts
Understated, Correct, Understated, being debited and credited: Expense and
Understated liability

45. If a P20, 000 adjustment for 52. Which of the following errors would
depreciation is made twice, which of the cause unequal tools in the trial balance: The
following financial statement error will company recorded P42, 000 received from a
occur: Equity will be understated and/or customer in advance for the rendering of
Expenses will be overstated services as a debit of P2, 000 to cash and a
credit of P42, 000 to service fee income
46. The carrying value of a delivery van
used in a business is equal to vehicles: Cost 53. A machinery purchased for P585, 000
minus accumulated depreciation on April 1, 2011 was sold on September 30,
2012 for P355, 000. If the machinery has an
47. On December 1, 2015, a company
estimated useful life of 8 years and has a
receive cash of P100, 000 for services to be
residual value of P25, 000. How much is the
rendered on January 31, 2016. The
gain (loss) on the sale of machinery? 125,
company debited cash and credited service
000 loss
 Financial Accounting and Reporting Reviewer

54. Accrued expenses: Increases liabilities on December 31, 2015: Interest Payable of
P250
55. Benny’s company records the payment
of insurance policies in the prepaid 60. The company has already rendered
insurance account. Information pertaining services to a client, but as of period-end this
to 2015 follows: client has not paid, and the transaction was
not yet recorded in the company's books.
Prepaid Insurance 1/1/2015 P30, 000
The journal entry to adjust the books would
Insurance Expense P22, 000 include: A debit to an asset and a credit to
income
Prepaid insurance 12/31/2015 P36, 000

The cost of insurance acquired during 2015

was: P28, 000

56. A small business reported these

balances on their wages payable account at
61. Adjust for wages accrued at the end of
the beginning of 2015 and end of 2015:
the period: Debit Wages Expense and Credit
January 1, 2015 P11, 000 Wages Payable

December 31, 2015 P14, 000 62. Adjust for depreciation of equipment for
the period: Debit Depreciation Expense and
If wages of P18, 000 were paid in cash Credit Accumulated Depreciation
during the year, what amount would be
reported for wages expense in 2015? 21, 63. Adjust for prepaid insurance expired
500 during the period: Debit Insurance Expense
and Credit Prepaid Insurance
57. Failure to prepare an adjusting entry to
record an accrued expense will cause: Profit 64. Adjust for supplies used during the
to be overstated period: Debit Supplies Expense and Credit
Supplies
58. The following data were taken from the
books of Aimee Co. Rent paid during the 65. Adjust for rent accrued at the end of the
period P187, 000; Accrued rent expense, period on properly rented to others: Debit
January 1, 2015 P28, 000; Accrued rent Accounts Receivable and Credit Rent
expense, December 31, 2015 P15, 000. Revenue

Using the above data, how much would be 66. Adjust for professional fees accrued at
the amount of rent expense that must be the end of the period: Debit Accounts
reported in year 2015? 174, 000 Receivable and Credit Professional Fees

59. On December 1, 2015 Yaman borrowed 67. Close the salaries expense account:
P25, 000. Interest on the loan is 1% per Debit Income Summary and Credit Salaries
month and is due on January 1, 2016. Expense
Which of the following items would appear
on Yaman's statement of financial position
 Financial Accounting and Reporting Reviewer

68. Close the appropriate depreciation 79. Auditing is: the examination of financial
account: Debit Income Summary and Credit statements by a CPA for opinion
Depreciation Expense
80. The private accountant might be
69. Close the drawing account: Debit involved in: Internal auditing, tax
Owner’s, Capital and Credit Owner’s, accounting, and designing accounting and
Drawing total information systems

70. Close the income summary account. Net 81. A care in measurement so as not to
loss is the result of operation: Debit overstate assets or not to understate
Owner’s, Capital and Credit Income liabilities: Prudence
Summary
82. The monetary unit assumption:
Requires transaction with constant unit of
measurement

83. A proprietorship is a business: Owned

by one person

84. An example of an internal transaction is

the: Use of paper, pens, and other office
supplies
71. This relates to both relevance and
faithful representation: Cost-benefit 85. Economic events of the enterprise
constraint recorded by accountants: Transactions

72. The statement in relation to income is 86. Resources owned by the business:
true: Income encompasses both revenue Assets
and gain
87. Cost of assets consumed or services
73. The process of determining the used in the process of earning revenue:
monetary amounts at which the elements of Expenses
the FS are recognized: Measurement
88. Process of identifying, recording, and
74. Normally, revenue from sale of goods is communicating the economic information of
recognized: Goods are delivered to the event to users: Accounting
customer
89. States that economic events can be
75. The term recognized is synonymous identified with a particular unit of
with the term: Recorded accountability: Economic entity assumption

76. The matching principle is best 90. Gross increase in equity resulting from
demonstrated by: Associating efforts with business entered for the purpose of earning
accomplishment income: Revenues

77. This is not part of the accounting 91. Reports assets, liabilities, and owner's
process: Financial decision making equity of business at a specific date:
Balance sheet
78. Internal users of accounting data
include: Company officers
 Financial Accounting and Reporting Reviewer

92. Presents the revenues & expenses and 106. This is related to GAAP: Constantly
resulting net income for a period of time: reviewed for specific users in preparation of
Income statement FS

93. The excess of the carrying value of item 107. This is not one of the financial
sold over its selling price is: Loss statements: Statement of Account

94. Creditorship claims on total assets: 108. Shows the financial stability and
Liabilities condition of the business: SFP

95. Ownership claim on total assets: 109. Comprising of significant accounting

Owners' equity policies and other explanatory on financial
statements: Notes to Financial Statement
96. Summarizes the changes in owner's
equity for a specific period of time: Owners' 110. Financial statements are, except:
equity statement Doesn't disclose supplement information

97. States those assets should be recorded Because financial statements are intended
at their cost: Cost principle to meet the needs of users, communicates
the financial information about business,
98. Common set of rules, procedures, &
and shows the stewardship of management
guidelines used by accountants in reporting
towards business
transaction: GAAP
111. Which of the following is not an
99. The length of time which the life of a
element of Financial Statements: Accounts
business is divided for the preparation of
periodic FS: Accounting Period

100. Notion that the life of a business is 112. This is not recognized as an account
divisible into equal time periods of equal used for element of FS of a business entity:
length: Time-period principle Kamote’s Personal Computer

101. Formulates the IFS that adopted by 113. States that Income must be recognized
large interested users for financial when earned & expense must be recognized
reporting: IASB-SIC when incurred: Accrual Basis of Accounting

102. Created by PRC upon recommendation

from board of Accountancy: FRSC

103. SIC stands for: Standing Interpretation

Committee

104. SIC is replaced by: International

Financial Reporting Interpretations
Committee

105. One of the following is not a member

of FRSC: PUBG
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