This includes money or its equivalent
The
that is readily available for unrestricted
use. * CASH
For a sole proprietorship, this represents
the residual amount after deducting total
liabilities from total assets. * OWNER’S
EQUITY
Revenues earned from sales of goods
are recorded in this account. * SALES
This represents the value of inventories
that have been sold during the
accounting period. * COST OF SALES
It is the aggregate of estimated losses
from uncollectible accounts receivable. *
ALLOWANCE FOR BAD DEBTS
This represents the costs incurred when
travelling on business trips. * TRAVEL
EXPENSE
This represents the rentals that have
been used up during the accounting
period. * RENT EXPENSE
This represents the cost of business and
local taxes required by the government
for the conduct of business. * TAXES
AND LICENCES
This account is used to record the
temporary withdrawals of the owner
during the period. * OWNER’S
DRAWING
Revenues earned from rendering
services are recorded in this account. *
SERVICE FEES
The business sells goods to a customer
who orally promises to pay for the
purchase price after 30 days. *
ACCOUNTS RECEIVABLE
The customer in Question above (The
business sells goods to a customer who
orally promises to pay for the purchase
price after 30 days) is subsequently
found to be in financial distress.
business estimates that only half of the
purchase price will be collected from the
customer. * ALLOWANCE FOR BAD
DEBTS
The business purchases goods to be
held for resale in the ordinary course of
business activities. * INVENTORY
The business acquires equipment for a
total cost of ₱1M. Instead of expensing
right away the ₱1M cost, the business
allocates it over the 5-year useful life of
the equipment. Meaning, the business
will recognize the ₱1M cost as expense
on a piecemeal basis or ₱200K per year
(1M ÷ 5 years). The portion of the cost
that is expensed during the period is
recorded as * DEPRECIATION
EXPENSE
The business purchases inventory on
account (on credit). * ACCOUNTS
PAYABLE
The business borrowed ₱1M from the
bank. At maturity date, the business
pays the bank ₱1.4M to settle the loan.
The ₱.4M difference between the
settlement amount and the principal
(i.e., 1.4M – 1M = .4M difference) is
recorded as * INTEREST EXPENSE
The business pays its employees
compensation for the services they have
rendered during the period. * SALARIES
EXPENSE
The business owner invested cash to
the business. * OWNER’S EQUITY
The business renders services to
clients. * SERVICE FEES
The business receives billing for
electricity used during the period. Before
the bill is paid, it is initially recorded in
this account. * UTILITIES PAYABLE
Which of the following statements is
incorrect regarding the use of the books
of accounts? * ALL THE ACCOUNTS IN
THE GENERAL LEDGER HAVE
SUPPORTING ACCOUNTS IN THE
SUBSIDIARY LEDGER
Journals are used in a recording
process called * JOURNALIZING
Which of the following is not a special
journal? * SUBSIDIARY LEDGER
An increase to an account is recorded *
IN THE SIDE OF THAT ACCOUNT
THAT REPRESENTS ITS NORMAL
BALANCE
When two debits get together, the result
is * ADDITION
Cash is increased through * A DEBIT
The minimum balance of an account is
zero. In accounting, a negative balance
in an account is referred to as *
ABNORMAL BALANCE
At the beginning of the period, a
business has a cash balance of
₱20,000. During the period, total cash
collections and total cash payments
amounted to ₱100,000 and ₱70,000,
respectively. How much is the ending
balance of cash? * 50,000
You opened up a business and invested
₱5M cash as the business’ initial capital.
Which of the following accounts is
increased and therefore debited? *
CASH
In conjunction with the transaction in #9
above (At the beginning of the period, a
business has a cash balance of
₱20,000. During the period, total cash
collections and total cash payments
amounted to ₱100,000 and ₱70,000,
respectively. How much is the ending
balance of cash?), which of the following
accounts is also increased and therefore
credited? * OWNER’S EQUITY
-Which among the following is the last
step in the accounting cycle? *
PREPARATION OF POST-CLOSING
TRIAL BALANCE
Arrange the following steps in their
correct order: I. Financial statements are
prepared. II. Adjusting entries are
recorded. III. Nominal accounts are
closed. * II, I and III
Adjusting entries are needed because
an entity * USES THE ACCRUAL
BASIS OF ACCOUNTING
Adjusting entries involve * AT LEST
ONE REAL AND ONE NOMINAL
ACCOUNT
Accruals are * ADJUSTING ENTRIES
WHERE REVENUE OR EXPENSE
RECOGNITION PRECEDES CASH
FLOW
Which of the following is an example of
an adjusting entry? * RECORDING
DEPRECIATION OF A TRUCK
An unearned revenue can be best be
described as an amount * COLLECTED
AND NOT CURRENTLY MATCHED
WITH EXPENSE
Total net income over the life of an
entity is * THE SAME UNDER THE
CASH BASIS AS UNDER THE
ACCRUAL BASIS
Closing entries * REMOVE THE
BALANCES FROM THE ENTITY’S
TEMPORARY ACCOUNTS
After the accounts have been closed *
THE REVENUE, EXPENSES, AND
INCOME SUMMARY ACCOUNTS
HAVE ZERO BALANCES
Income summary is a * NOMINAL
ACCOUNT
Adjusting entries that are reversed
include those for prepaid or unearned
items that * CREATE AN ASSET OR A
LIABILITY ACCOUNT AND WERE
ORIGINALLY ENTERED IN A
REVENUE OR EXPENSE ACCOUNT
An entity initially records prepayment in
real accounts and makes reversing
entries when appropriate. Which of the
following year-end adjusting entries
should be reversed? * THE ENTRY TO
RECORD SERVICE FEES EARNED
BY YEAR-END BUT NOT BILLED
An entity initially records prepayment in
nominal accounts. Which of the
following year-end adjusting entries
may be reversed? * THE ENTRY TO
RECORD THE PORTION OF RENTAL
RECEIVED IN ADVANCE THAT IS
UNEARNED AT YEAR-END
Which statement about the trial balance
is incorrect? * A TRIAL BALANCE
LISTS ALL OPEN ACCOUNTS IN THE
GENERAL LEDGER AS OF A TIME
PERIOD.
It measure economic flow over a period
of time * NOMINAL ACCOUNT
Which is not correct on the use of
special journals? * MERCHANDISE
AND OTHER PURCHASES ARE
RECORDED IN THE PURCHASES
JOURNAL. ALL CASH OUTLAYS ARE
RECORDED IN THE CASH
DISBURSEMENTS JOURNAL

Which of the following is a “source

document” and which source document
requires an entity in the books? *
SALES INVOICE

Debits * INCREASE ASSETS AND

EXPENSES AND DECREASE
LIABILITIES, REVENUE AND EQUITY

Which of the choices that follow is not a

“book of original entry”? * GENERAL
LEDGER

Journalizing is performed in what phase

of the accounting process? *
RECORDING

General ledger serves what phase of

the accounting process? *
CLASSIFYING

An accounting record into which the

essential facts and figures in connection
with all transactions are initially recorded
and in chronological order is called *
JOURNAL

Which of the following accounting tool

exemplifies the ledger? * T – ACCOUNT

It helps localize accounting errors within

a period of time. * TRIAL BALANCE