Adjusting entries are often made because some business events are not recorded as they occur.

True
False
Companies prepare classified and comparative financial statements because
They are required by international accounting principles
They show changes in a company's management policies
They provide financial statement readers with useful information about trends in financial position
and operating performance
They are required by the IRS
Distributions by a corporation to its stockholders are called
Dividends
Income
Withdrawals
Retained earnings
The idea that the activities of the entity are to be separated from those of the individual owner is the
Arm's-length transaction assumption
Separate entity concept
Money measurement concept
Going concern assumptio
The idea that an increase or decrease on one side of the accounting equation must be offset exactly by
an increase or decrease on the other side of the accounting equation is called -
Going concern assumption
Monetary measurement concept
Double-entry accounting
Additive concept
When a prepaid expense is initially debited to an expense account, expenses and assets are both
overstated prior to adjustment.
True
False
The comparative balance sheet for Earthwork Company is presented below.
               
Earthwork Company
Comparative Balance Sheet
December 31, 2020 and 2019
     
Assets 12/31/2020 12/31/2019
Cash P39,000 P32,500
Supplies ? 9,100
Land 52,000 52,000
Equipment 32,500 26,000
     
Liabilities and Stockholders' Equity    
Accounts payable P23,400 P19,500
Notes payable 26,000 28,600
Capital stock 52,000 52,000
Retained earnings 35,100 ?
 
Additional information for Earthwork's 2020 operations revealed that the company had
revenues of P65,000 for the year and no dividends were paid.

Compute the total current assets at 12/31/2020 -

52,00
Answer:
0
Which of the following is an example of a disclosure of information NOT recognized that would be
explained in the notes to the financial statements?
The description of all the individual items that comprise notes payable
The disclosure of quarterly financial information

The method used to estimate depreciation on a piece of equipment

The disclosure of the uncertain, potential outcome of a lawsuit

Accrued expenses result in an adjustment to both the income statement and the statement of financial
position.
True
False
Many business transactions affect more than one time period.
True
False
The Financial statement that reports resources owned, the obligations to transfer resources to other
organizations, and the claims by the entity's owners is known as the -
Statement of retained earnings
Income statement
Balance sheet
Statement of cash flows
Revenue received before it is earned and expenses paid before being used or consumed are both
initially recorded as liabilities.
True
False
The comparative balance sheet for Earthwork Company is presented below.
               
Earthwork Company
Comparative Balance Sheet
December 31, 2020 and 2019
     
Assets 12/31/2020 12/31/2019
Cash P39,000 P32,500
Supplies ? 9,100
Land 52,000 52,000
Equipment 32,500 26,000
     
Liabilities and Stockholders' Equity    
Accounts payable P23,400 P19,500
Notes payable 26,000 28,600
Capital stock 52,000 52,000
Retained earnings 35,100 ?
 
Additional information for Earthwork's 2020 operations revealed that the company had
revenues of P65,000 for the year and no dividends were paid.

Compute the total expenses incurred at 12/31/2020 -

49,40
Answer:
0
Manhattan Park adjusts its books each month and closes its books on December 31 each year.  
The trial balance at January 31, 2020, before adjustments, follows:
                                                                                                                  Debit    
          Credit 
                  Cash..............................................................................   P    6,600
                  Supplies........................................................................          5,400
                  Unexpired Insurance.....................................................        12,600
                  Equipment.....................................................................        72,000
                  Accumulated Depreciation: Equipment.........................                               P
18,000
                  Unearned Admission Revenue......................................                                  
12,000
                  Share Capital.................................................................                                  
20,000
                  Retained Earnings, January 1, 2020..............................                                  
38,200
                  Admissions Revenue.....................................................                                  
27,600
                  Salaries Expense...........................................................          8,100
                  Utilities Expense...........................................................          5,700
                  Rent Expense................................................................          5,400        
_________
                                                                                                            P115,800           
P115,800
.

Refer to the above data.  According to attendance records, P8,200 of the Unearned
Admission Revenue has been earned in January.  Compute the amount of admissions
revenue to be shown in the January income statement:

35,80
Answer:
0
Net assets are equal to -
Total assets minus dividends paid
Total assets minus owners' equity
Total assets minus total liabilities
Total assets minus net income
Manhattan Park adjusts its books each month and closes its books on December 31 each year.  
The trial balance at January 31, 2020, before adjustments, follows:
                                                                                                                  Debit    
          Credit 
                  Cash..............................................................................   P    6,600
                  Supplies........................................................................          5,400
                  Unexpired Insurance.....................................................        12,600
                  Equipment.....................................................................        72,000
                  Accumulated Depreciation: Equipment.........................                               P 
18,000
                  Unearned Admission Revenue......................................                                  
12,000
                  Share Capital.................................................................                                  
20,000
                  Retained Earnings, January 1, 2020..............................                                  
38,200
                  Admissions Revenue.....................................................                                  
27,600
                  Salaries Expense...........................................................          8,100
                  Utilities Expense...........................................................          5,700
                  Rent Expense................................................................          5,400        
_________
                                                                                                            P115,800           
P115,800
 
Refer to the above data.   At January 31, the amount of supplies on hand is P2,300.   What
amount is shown on the January income statement for supplies expense?
3,10
Answer:
0
Which of the following would not result in unearned revenue?
Sale of season tickets to football games
Sale of two-year magazine subscriptions
Services performed on account
Rent collected in advance from tenants
The time period assumption states that the economic life of a business entity can be divided into
artificial time periods.
True
False
Which of the following reflect the balances of prepayment accounts prior to adjustment?
Statement of financial position accounts are overstated and income statement accounts are
overstated.
Statement of financial position accounts are understated and income statement accounts are
overstated.
Statement of financial position accounts are overstated and income statement accounts are
understated.
Statement of financial position accounts are understated and income statement accounts are
understated.
Unearned revenue is a prepayment that requires an adjusting entry when services are performed.
True
False
In general, the shorter the time period, the difficulty of making the proper adjustments to accounts
is unaffected.
is increased.
is decreased.
depends on if there is a profit or loss.
Accrued revenues are revenues which have been received but not yet earned.
True
False
An adjusted trial balance should be prepared before the adjusting entries are made.
True
False
 Unearned revenue on the books of Chocolate Company, the landlord, can be a prepaid asset on the
statement of financial position of its tenant, Cupcake, Inc.
True
False
Financial statements can be prepared from the information provided by an adjusted trial balance.
True
False
Which of the following is the reason that the accounting equation is true by definition?

Assets are the source that funds the purchase of liabilities and owner’s equity

Liabilities are the source that funds the purchase of assets

Liabilities and owner’s equity are the sources that fund the purchase of assets

None of these are true, the accounting equation is merely a coincidence

A transaction that causes an increase in an asset may also cause
An increase in a liability
A decrease in owners' equity
An increase in another asset
A decrease in a liability

The comparative balance sheet for Earthwork Company is presented below.

               
Earthwork Company
Comparative Balance Sheet
December 31, 2020 and 2019
     
Assets 12/31/2020 12/31/2019
Cash P39,000 P32,500
Supplies ? 9,100
Land 52,000 52,000
Equipment 32,500 26,000
     
Liabilities and Stockholders' Equity    
Accounts payable P23,400 P19,500
Notes payable 26,000 28,600
Capital stock 52,000 52,000
Retained earnings 35,100 ?
 
 Additional information for Earthwork's 2020 operations revealed that the company had
revenues of P65,000 for the year and no dividends were paid.

Compute the Supplies balance at 12/31/2020 -

13,00
Answer:
0
Expenses sometimes make their contribution to revenue in a different period than when they are paid.
When wages are incurred in one period and paid in the next period, this often leads to which account
appearing on the statement of financial position at the end of the time period?
Salaries and Wages Payable.
Due from Employees.
Due to Employer.
Salaries and Wages Expense.
The adjusting entry at the end of the period to record an expired cost may be different depending on
whether the cost was initially recorded as an asset or an expense.
True
False
Philippine Financial Reporting Standards (PFRS) include a revenue recognition principle that states that
“let the revenues follow the expenses.”
True
False
Which of the following is an example of additional information about summary totals that would be
explained in the notes to the financial statements?
The disclosure of the uncertain, potential outcome of a lawsuit

The description of all the individual items that comprise notes payable

The method used to estimate depreciation on a piece of equipment

The disclosure of quarterly financial information

The following information was taken from the records of McDyce Corporation for the year ended
December 31, 2020:
 
Dividends paid P 12,800
Service revenue 90,500
Accounts payable 139,750
Capital stock 378,750
Total expenses 67,000
Retained earnings (1/1/20) 43,400
 

The net income at December 31, 2020 was

 43,400

72,750

54,100

23,500

A flower shop makes a large sale and provides flowers to a customer for P1,000 on November 30. The
customer is sent a statement on December 5 and a check is received on December 10. The flower shop
follows PFRS and applies the revenue recognition principle. When is the P1,000 considered to be
earned?
December 1.
December 10.
November 30.
December 5.
The following information was taken from the records of Tellers Corporation for the month
ended December 31, 2020:
 
Advertising expense P20,625
Income tax expense 13,095
Accounts payable 13,450
Dividends paid 14,125
Retained earnings (12/1/20) 57,860
Consulting fees revenue 93,550
Rent expense 11,728
Supplies expense 16,917
 
Given the above information, net income is
45,110
35,310
31,185
11,385
Types of adjusting entries include deferral of unearned revenue, which requires the company to record a
liability on the statement of financial position.
True
False
Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.
True
False
 If a company has P528,000 of sales revenue, pays P26,400 in dividends, and has net income of P158,400,
how much were the expenses for the year?
343,200
396,000
369,600
422,400
The comparative balance sheet for Earthwork Company is presented below.
               
Earthwork Company
Comparative Balance Sheet
December 31, 2020 and 2019
     
Assets 12/31/2020 12/31/2019
Cash P39,000 P32,500
Supplies ? 9,100
Land 52,000 52,000
Equipment 32,500 26,000
     
Liabilities and Stockholders' Equity    
Accounts payable P23,400 P19,500
Notes payable 26,000 28,600
Capital stock 52,000 52,000
Retained earnings 35,100 ?
 
Additional information for Earthwork's 2020 operations revealed that the company had
revenues of P65,000 for the year and no dividends were paid.

Compute the Retained Earnings balance at 12/31/2019 -

29,90
Answer: (19,500)
0
Accrued revenues are revenues that have been earned and received before financial statements have
been prepared
True
False
The revenue recognition principle dictates that revenue be recognized in the accounting period in which
cash is received.
True
False
If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future.
True
False
The accuracy of the information contained in the financial statements is the responsibility of the
Management
Securities and Exchange Commission
Certified Public Accountant
Stockholders
When a company receives cash for future service, it debits unearned revenue on the income statement
and credits cash on the statement of financial position.
True
False
Because accounting often requires estimates to be made to assess the effect of a transaction, the
shorter the time period, the easier it becomes to determine the proper adjustments.
True
False
 Candy factory's employees work overtime to finish an order that is sold and shipped on February 28.
The office sends a statement to the customer in early March and payment is received by mid-March. The
overtime wages should be expensed in
Either in February or March depending on when the pay period ends.
The period when the workers receive their checks.
February.
March.