QUIZZER (DO-IT-YOURSELF DRILL)

THEORIES
1. The first step in the accounting cycle is to
A. Record transactions in a journal
B. Adjust the general ledger accounts
C. Analyze transactions from source documents
D. Post journal entries to general ledger accounts

2. It is a systematic compilation of a group of accounts.

A. Chart of accounts C. Ledger
B. Trial balance D. Journal

3. Which of the following would result to a net income for the period?
A. Debit balance in the income summary account after closing income and expense
account
B. Credit balance exceeded debit balance in the balance sheet column of worksheet
C. The difference between the debit and credit in the income statement column is
extended to debit balance of balance sheet column of worksheet
D. The difference between the debit and credit in the income statement column is
extended to credit balance of balance sheet column of worksheet

4. Which of the following statements about the accounting process is incorrect?

A. All of the accounts of a specific business enterprise are referred to as a ledger
B. Closing the books is not part of the accounting process
C. Like a balance sheet, the post-closing trial balance contains only real accounts.
D. The fact that an expense is recognized on the income statement indicates that
equivalent outlay of cash has been made in the same period.

5. Which of the following statements is not a reason for preparing end of period adjusting
entries?
A. Some transactions extend beyond one accounting period.
B. They help to properly measure the period’s net income or net loss
C. Mixed accounts should be split into their real and nominal elements
D. Errors discovered at the end of the period should be corrected in order to generate
more reliable financial reports.

6. Which of the following adjusting entries will not affect both the balance sheet and income
statements?
A. Accrued income
B. Prepayments using the expense method
C. Unearned income using the liability method
D. None of the choices

7. Reversing entries apply to all of the following, except

A. Unearned revenue C. Prepaid insurance
B. Accrued wages D. Depreciation

8. The following statements refer to the use of special journals:

Statement I: Transactions that cannot be appropriately recorded in a special journal are
recorded in the general journal.
Statement II: Sales of merchandise on account are recorded in the sales journal while
cash sales are recorded in the cash receipts journal.
 Statement III: Purchases of any items on account are recorded in the purchase journal
while acquisition of any items for cash is recorded in the cash disbursements journal.
A. Only statement I is true C. Only statement III is false
B. Only statement II is false D. All of the statements are true

9. When an entity sold some of its office machineries on account, the entity enters the
transaction in the
A. Sales journal C. Cash receipts journal
B. General journal D. Cash payments journal

10. The accounting equation must remain in balance

A. Throughout each step of the accounting cycle
B. Only when journal entries are recorded
C. Only at the time the trial balance is prepared
D. Only when formal financial statement'; are prepared

11. The financial information qualities of faithful representation, verifiability, and freedom
from error are typically applied in which of the following step of the accounting cycle?
A. Journalizing C. Trial Balance preparation
B. Posting D. Adjusting entries

12. Reversing entries are

1. normally prepared for prepaid, accrued, and estimated items.
2. necessary to achieve a proper matching of revenue and expense.
3. desirable to exercise consistency and establish standardized procedures.
A. 1 C. 3

B. 2 D. 1 and 2
13. An unearned revenue can best be described as an amount
A. collected and currently matched with expenses.
B. collected but not currently matched with expenses.
C. not collected but currently matched with expenses.
D. not collected and not currently matched with expenses.

14. Which of the following is a real (permanent) account?

A. Inventory C. Accounts Receivable
B. Sales D. Both Inventory and Accounts
Receivable

15. An accounting record into which the essential facts and figures in connection with all
transactions are initially recorded is called the
A. ledger. C. trial balance.
B. account. D. none of these.

16. Which of the following statements is true?

A. Journals are used under both the double-entry system and single-entry system
B. The accrual basis of accounting cannot be applied when using the single-entry
system ,
C. The cash basis and accrual basis of accounting can both be used under double-
entry systems but not under single-entry systems.
D. Subsidiary ledgers are used under both double and single-entry systems.
17. If an entity uses the expense method of initial recording of expenses, the year-end
adjusting entry involves
A. debiting a prepaid asset account for the expired portion of the advance payment
made
B. debiting an expense account for the expired portion of the advance payment made
C. crediting an expense account for the unexpired portion of the advance payment
made
D. crediting a prepaid asset account for the unexpired portion of the advance
payment made

18. If an entity uses the asset method of initial recording of prepaid expenses, the year-end
adjusting entry involves
A. debiting a prepaid asset account for the expired portion of the advance payment
made
B. debiting an expense account for the expired portion of the advance payment made
C. crediting an expense account for the unexpired portion of the advance payment
made
D. crediting a prepaid asset account for the unexpired portion of the advance
payment made

19. Errors revealed by a trial balance exclude:

(1) Transplacement and transposition error
(2) Journalizing an entry twice
A. 1 only C. Both 1 and 2
B. 2 only D. Neither 1 nor 2

20. Which of the following is a temporary or nominal account?

(1) Allowance for bad debts (3) Owner’s drawing
(2) Doubtful accounts expense (4) Unearned income
A. 1 and 2 C. 2 and 3
B. 3 and 4 D. 1 and 4

21. If, during an accounting period, an expense item has been incurred and consumed but
not yet paid for or recorded, then the end-of-period adjusting entry would involve
A. a liability account and an asset account.
B. an asset or contra asset account and an expense account.
C. a liability account and an expense account.
D. a receivable account and a revenue account.

22. S1: The accrual for depreciation expense can be reversed in the next financial
reporting period.
S2: There is profit if the income summary account is debited when closing to an equity
account.
A. True, false C. False, false
B. False, true D. True, true

23. A subsidiary ledger is

A. A listing of accounts of a subsidiary
B. A listing of the components of account balances
C. A backup system to protect against record destruction
D. A listing of account balances just before closing entries are prepared

24. Which of the following statements is incorrect?

 A. Accounts in the ledger follow the T-account format, wherein the left side is known
as the debit side while the right side is known as the credit side.
B. Not all accounts both have a general and subsidiary ledger.
C. The year-end adjusting entry made for prepaid expenses under asset method can
be reversed at the beginning date of the subsequent accounting period.
D. The preparation of worksheet is optional in the accounting process.

25. Which of the below statements is correct?

S1: The trial balance can only reveal errors that will caused the total debits and total
credits to be unequal.
S2: The preparation of the unadjusted and post-closing trial balance and preparation
of financial statements are optional steps in the accounting cycle.
A. S1 only C. Both statements
B. S2 only D. Neither from the statements

26. Which of the following statements is true regarding debits and credits?
A. Before adjustments, debits will not equal credits in the trial balance.
B. The rules for debit and credit and the normal balance of share capital are the same
as for liabilities.
C. In the income statement, revenue is increased by a debit whereas in the statement
of financial position, retained earnings account is increased by a credit.
D. On the income statement, debits are used to increase account balances, whereas
on the statement of financial position, credits are used to increase account
balances.

27. Which of the following is an example of an accrued expense?

A. Depreciation expense
B. Property tax incurred during the year to be paid next year
C. Rent earned during the current year to be received at the end of next year
D. Equipment purchased at the beginning of the year and debited to an expense
account

28. The recording phase of financial accounting covers the following steps, except
A. Transactions are journalized
B. Financial statements are prepared
C. Transactions are posted to the ledger
D. Business documents are received and prepared

29. Which of the following is not a principal purpose of a trial balance?

A. It supplies a listing of open accounts and their balances
B. It is the basis for any adjustments to the account balances
C. It provides that debits and credits of equal amounts are in the ledger
D. It proves that debits and credits were properly entered in the ledger accounts

30. Which one of the following is a purpose of adjusting entries?

I. To apportion the proper amounts of revenue and expense to the current accounting
period.
II. To establish the proper amounts of assets and liabilities in the balance sheet.
III. To accomplish the objective of offsetting the revenue of the period with all the
expenses incurred in generating that revenue.
IV. To prepare the revenue and expense accounts for recording transactions of the
following period.
A. I and II only C. I, II and III only
 B. II and III only D. All of these

31. It is the basic storage of information in accounting.

A. Journal entry C. Debit or Credit
B. T-account D. Account

32. Adjusting entries that should be reversed include those for prepaid or unearned items
that
A. create an asset or a liability account.
B. were originally entered in a revenue or expense account.
C. were originally entered in an asset or liability account.
D. create an asset or a liability account and were originally entered in a revenue or
expense account.

33. KGA CORP. initially records payments in balance sheet accounts and make reversing
entries when appropriate. Which of the following year-end adjusting entries should be
reversed?
A. The entry to record supplies used during the period
B. The entry to record the bad debts expense for the period
C. The entry to record service fees earned by year-end but not billed
D. The entry to record the portion of service fees received in advance that is earned
by year-end

34. Adjustments are often prepared

A. After the statement of financial position date and dated after that date.
B. After the statement of financial position date and dated as of that date.
C. Before the statement of financial position date and dated after that date.
D. Before the statement of financial position date and dated as of that date.

35. Which of the following statements best describes the purpose of closing entries?
A. To facilitate posting and taking a trial balance.
B. To determine the amount of net income or net loss for the period.
C. To complete the record of various transactions that were started in a prior period.
D. To reduce the balances of temporary accounts to zero so that they may be used
to accumulate the revenue, expenses and dividends of the next period.

36. It is a list of accounts and their balances.

A. Chart of accounts C. Ledger
B. Trial balance D. Journal

37. This concept views each transaction as having a two-fold effect on values - a value
received and a value parted with, and each transaction is recorded using at least two
accounts.
A. Equilibrium C. Double-entry.
B. Duality D. Twins concept

38. The postclosing trial balance

A. Consists of statement of financial position accounts only.
B. Shows that the accounting equation is in balance at the end of the accounting
period.
C. Will balance if a transaction is not journalized and posted, or if a transaction is
journalized and posted twice.
D. All of the choices are correct regarding the post-closing trial balance.
39. Which of the following is a real account?
A. Freight-in C. Accumulated depreciation
B. Freight-out D. Interest expense

40. Under the cash basis of accounting, revenues are recorded

A. when they are earned and realized.
B. when they are earned and realizable.
C. when they are earned.
D. when they are realized.

PROBLEMS
1. A P 4,650 debit to utilities expense was incorrectly posted as a P465 debit. What is the
effect of this error on the trial balance and the utilities expense account?
A. The debit column of the trial balance would be P 4,185 too low and utilities expense
would be understated by P 4,185.
B. The debit column of the trial balance would be P 4,185 too high and utilities
expense would be understated by P 4,185.
C. The debit column of the trial balance would be P 4,185 too low and utilities expense
would be overstated by P 4,185.
D. The debit column of the trial balance would be P 4,185 too high and utilities
expense would be overstated by P 4,185.

2. The trial balance totals of LEO CORP. at 30 September 2020 are:

Debit P 992,640
Credit. P1,026,480
Which TWO of the following possible errors could, when corrected, cause the trial
balance to agree?
1) An item in the cash book P6,160 for payment of rent has not been entered in the
rent payable account.
2) The balance on the motor expenses account P27,680 has incorrectly been listed in
the trial balance as a credit.
3) P6,160 proceeds of sale of a motor vehicle has been posted to the debit of motor
vehicles asset account.
4) The balance of P21.520 on the rent receivable account has been omitted from the
trial balance.
A. 1 and 2 C. 2 and 4
B. 2 and 3 D. 3 and 4

3. The debit side of a trial balance totals P800 more than the credit side. Which one of the
following errors would fully account for the difference?
A. P400 paid for plant maintenance has been correctly entered in the cash book and
credited to the plant asset account.
B. Discount received P400 has been debited to discount allowed account.
C. A receipt of P800 for commission receivable has been omitted from the records.
D. The petty cash balance of P800 has been omitted from the trial balance.

4. A business pays weekly salaries of P20,000 on Friday for a five-day week ending on that
day. The adjusting entry necessary at the end of the fiscal period ending on Thursday is
A. debit Salaries Payable, P16,000; credit Cash, P16,000
B. debit Salary Expense, P16,000; credit Dividends, P16,000
C. debit Salary Expense, P16,000; credit Salaries Payable, P16,000
D. debit Drawing, P16,000; credit Cash, P16,000
5. The following adjusting journal entry was found on page 4 of the journal. Select the best
explanation for the entry.
Unearned Revenue 4,500
Fees earned 4,500
????????????????
A. Record payment of fees earned
B. Record fees earned at the end of the month
C. Record fees that have not been earned at the end of the month
D. Record the payment of fees to be earned.

6. At the end of the current year, the prepaid insurance account showed a debit the balance
of P5,000; the balance at the beginning of the year was P6,000, and during the year
the insurance premiums paid amounted to P8,000. Assuming insurance premium
payments are initially entered in the prepaid insurance account ,the adjusting entry at
the end of the year would include:
A. debit prepaid insurance P9,000 C. debit insurance expense P7,000
B. credit prepaid insurance P1,000 D. debit insurance expense P9,000

7. The September 30 trial balance of PIESCES CORP. shows the following information:
Accounts receivable 8,060 Equipment 42,120
Accounts payable 6,370 Other expense 4,940
Accumulated depreciation 21,060 Owner's drawings 5,460
Advertising expense 390 Owner's equity 28,600
Cash 7,540 Sales 12,480
Depreciation expense of P702 is not yet recorded. In an after-closing trial balance
prepared on September 30, the total of the credit column will be
A. 57,270 C. 57,720
B. 62,660 D. 57,018
Use the following information in answering the next item(s):
AQUARIUS CORP.
Worksheet
For the Year Ended December 31, 2020

Adjusted Trial Balance Income Statement Balance Sheet

Account Title Debit Credit Debit Credit Debit Credit
Cash 16,000 16,000
Accounts Receivable 6,000 6,000
Supplies 2,000 2,000
Equipment 19,000 19,000
Accumulated Depr-Equip 6,000 6,000

Accounts Payable 10,000 10,000

Wages Payable 2,000 2,000
Capital Stock 11,000 11,000
Dividends 1,000 1,000
Fees Earned 47,000 47,000
Wages Expense 21,000 21,000
Rent Expense 6,000 6,000
Depreciation Expense 5,000 5,000
Totals 76,000 76,000 32,000 47,000 44,000 29,000
Net Income (Loss) 15,000 15,000
47,000 47,000 44,000 44,000

8. The journal entry to close revenues would be:

A. debit Income Summary P47,000, credit Fees Earned P47,000
B. debit Retained Earnings P47,000, credit Fees Earned P47,000
C. debit Fees Earned P47,000; credit Income Summary P47,000
D. credit Fees Earned P47,000; credit Capital Stock P47,000

9. Based on the preceding trial balance, the entry to close income summary would be:
A. debit Income Summary P15,000; credit Retained Earnings P4,000
B. debit Income Summary P47,000; credit Retained Earnings P47,000
C. debit Income Summary P15,000, credit Retained Earnings P15,000
D. debit Retained Earnings P4,000; credit Income Summary P4,000

10. The work sheet at the end of September has P4,000 in the Balance Sheet credit column
for Accumulated Depreciation. The work sheet at the end of October has P4,750 in the
Balance Sheet credit column for Accumulated Depreciation. What was the amount of the
depreciation expense adjustment for the month of October?
A. amount cannot be determined C. P4,000
B. P4,750 D. P750