PAR COR ACCOUNTING CUP_AVERAGE QUESTIONS

Multiple Choice
Identify the choice that best completes the statement or answers the question.

1. Which of the following is not a characteristic of a corporation?

a. Corporations are organized as a separate legal taxable entity
b. Ownership is divided into shares of stock.
c. Corporations experience an ease in obtaining large amounts of resources
by issuing stock.
d. A corporation’s resources are limited to their individual owners’ resources.
e. Corporations make up 20% of all businesses.
2. The assets and liabilities of the company are P155,000 and P60,000 respectfully.
Stockholders’ equity should equal
a. P215,000
b. P155,000
c. P60,000
d. P95,000
3. Stockholders' Equity is increased by which of the following accounts?
a. cash
b. revenue
c. accounts receivable
d. all are correct
4. Rivers Computer Makeover Company has received P3,500 in cash for services rendered. What
affect does this transaction have on the accounting equation?
a. Increase Assets (Cash) and decrease Stockholders’ Equity (Expenses)
b. Increase Assets (Cash) and decrease Assets (Accounts Receivable)
c. Increase Assets (Accounts Receivable) and increase Stockholders’ Equity
(Fees Earned)
d. Increase Assets (Cash) and increase Stockholders’ Equity (Fees Earned)
5. Revenue should be recognized when
a. cash is received
b. the service is performed
c. the customer places an order
d. the customer charges an order
6. A chart of accounts is
a. the same as a balance sheet
b. usually a listing of accounts in alphabetical order
c. usually a listing of accounts in financial statement order
d. used in place of a ledger
7. Which statement(s) concerning cash is (are) true?
a. cash will always have more debits than credits
b. cash will never have a credit balance
 c. cash is increased by debiting
d. all of the above
8. A debit may signify a(n)
a. decrease in asset accounts
b. decrease in liability accounts
c. increase in the capital stock account
d. decrease in the dividend account
9. In which of the following types of accounts are increases recorded by credits?
a. revenues, liabilities
b. dividends, assets
c. liabilities, dividends
d. expenses, liabilities
10. Which of the following entries records the billing of patients for services performed?
a. Accounts Receivable, debit; Fees Earned, credit
b. Accounts Payable, debit; Cash, credit
c. Fees Earned, debit; Accounts Receivable, credit
d. Fees Earned, debit; Cash, credit
11. Which of the following situations increase stockholders’ equity?
a. Supplies are purchased on account.
b. Services are provided on account.
c. Cash is received from customers.
d. Utility bill will be paid next month.
12. An overpayment error was discovered in computing and paying the wages of a Bartson Repair
Shop employee. When Bartson receives cash from the employee for the amount of the
overpayment, which of the following entries will Bartson make?
a. Cash, debit; Wages Expense, credit
b. Wages Payable, debit; Wages Expense, credit
c. Wages Expense, debit, Cash, credit
d. Cash, debit; Wages Payable, credit
13. The trial balance is out of balance and the accountant suspects that a transposition or slide
error has occurred. What will the accountant do to find the error?
a. Determine the amount of the error and look for that amount on the trial
balance.
b. Determine the amount of the error and divide by two, then look for that
amount on the trial balance.
c. Determine the amount of the error and refer to the journal entries for that
amount
d. Determine the amount of the error and divide by nine. If the result is
evenly divided, then this type of error is likely.
14. If the effect of the credit portion of an adjusting entry is to increase the balance of a liability
account, which of the following describes the effect of the debit portion of the entry?
a. increases the balance of a contra asset account
b. increases the balance of an asset account
 c. decreases the balance of an stockholders’ equity account
d. increases the balance of an expense account
15. The cash basis of accounting records revenues and expenses when the cash is exchanged
while the accrual basis of accounting
a. records revenues when they are earned and expenses when they are paid
b. records revenues and expenses when they are incurred.
c. records revenues when cash is received and expenses when they are
incurred.
d. records revenues and expenses when the company needs to apply for a
loan.
16. Which of the following is considered to be unearned revenue?
a. Concert tickets sold for tonight’s performance.
b. Concert tickets sold yesterday on credit.
c. Concert tickets that were not sold for the current performance.
d. Concert tickets sold for next month’s performance.
17. Prepaid advertising, representing payment for the next quarter, would be reported on the
balance sheet as a(n)
a. asset
b. liability
c. contra asset
d. expense
18. The adjusting entry for rent earned that is currently recorded in the unearned rent account is
a. Unearned Rent, debit; Rent Revenue, credit
b. Rent Revenue, debit; Unearned Rent, credit
c. Unearned Rent, debit; Prepaid Rent, credit
d. Rent Expense, debit; Unearned Rent, credit
19. Which of the following accounts will be closed to the retained earnings account at the end of
the fiscal year?
a. Rent Expense
b. Fees Earned
c. Income Summary
d. Depreciation Expense
20. The difference between the totals of the debit and credit columns of the Adjusted Trial
Balance columns on a work sheet
a. is the amount of net income or loss
b. indicates there is an error on the work sheet
c. is not unusual when preparing the work sheet
d. is the net difference between revenue, expenses, and dividends
21. A net loss appears on the work sheet in the
a. debit column of the Balance Sheet columns
b. credit column of the Balance Sheet columns
c. debit column of the Income Statement columns
d. credit column of the Adjustments columns
22. The inventory system employing accounting records that continuously disclose the amount of
inventory is called
a. retail
b. periodic
c. physical
d. perpetual
23. Apple Co sells merchandise on credit to Zea Co in the amount of P8,000. The invoice is dated
on September 15 with terms of 1/15, net 45. If Zea Co. chooses not to take the discount, by
when should the payment be made?
a. September 30
b. October 30
c. October 15
d. September 25
24. One of the main disadvantages of the corporate form is the
a. professional management
b. double taxation of dividends
c. charter
d. corporation must issue stock
25. The SEC allows a corporation to issue only a certain number of shares of each class of stock.
This amount of stock is called
a. treasury stock
b. issued stock
c. outstanding stock
d. authorized stock
26. The charter of a corporation provides for the issuance of 100,000 shares of common stock.
Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired.
What is the number of shares outstanding?
a. 5,000
b. 35,000
c. 45,000
d. 55,000
27. The par value per share of common stock represents
a. the minimum selling price of the stock established by the articles of
incorporation.
b. the minimum amount the stockholder will receive when the corporation is
liquidated
c. an arbitrary amount established in the articles of incorporation
d. the amount of dividends per share to be received each year
28. The Rand Corporation began the current year with a retained earnings balance of P25,000.
During the year, the company corrected an error made in the prior year, which was a failure
to record depreciation expense of P3,000 on equipment. Also, during the current year, the
company earned net income of P12,000 and declared cash dividends of P5,000. Compute the
year end retained earnings balance.
 a. P29,000
b. P35,000
c. P39,000
d. P45,000
29. To organize a corporation require at least _____, but not more than ____ incorporators.
a. 2, 5 c. 5, 15,
b. 5, 10 d. 7, 20
30. To form a partnership, one of the requirements is that
a. all partners must be CPAs c. objective is charitable pursuits
b. all partners must invest funds d. purpose must be lawful
PAR COR ACCOUNTING CUP_AVERAGE QUESTIONS
Answer Section

MULTIPLE CHOICE

1. D
2. A
3. B
4. D
5. B
6. C
7. C
8. B
9. A
10. A
11. B
12. A
13. D
14. D
15. B
16. D
17. A
18. A
19. C
20. B
21. A
22. D
23. B
24. B
25. D
26. B
27. C
28. A
29. C
30. D