1.

Adjusting entries:
A. Never include a cash account.
B. Are made when there have been prepayments during the year.
C. May be necessary when revenue has been earned in one period but received in another
D. All of the above
2. On November 1, 20X1, you record a P20,000 note payable, debiting Cash and crediting Notes
Payable. The note matures on May 1,20X2 when the principal and accrued interest of 6% a year
is due. On December 31, 20X4, your adjusting entry for accrued interest will include:
A. A debit to Interest Payable for P400
B. A debit to Interest Expense for P200
C. A credit to Interest Payable for P400
D. None of the above
3. On April 1, a company takes on an 18-month job and receives a P10,000 advance that is
recorded in Revenue. If no adjusting entry is made at year end. How will the financial
statements be affected?

Net Income Assets Liabilities

A. Overstated Not affected Understated
B Overstated Overstated Not affected
C Understated Not affected Overstated
D Understated Understated Not affected
4. These accounts are not closed at the end of the accounting period, but rather carried over to
the next period.
A. Real accounts C. Mixed accounts
B. Nominal accounts D. Carryover accounts
5. The following errors were made in preparing a trial balance: the $1,350 balance of Supplies was
omitted, the $450 balance of Prepaid Insurance was listed as a credit, and the $300 balance of
Advertising Expense was listed as Travel Expense. The debit and credit totals of the trial
balance would differ by what amount? __________________
6. Beginning and ending Accounts Receivable balances were P28,000 and P24,000 respectively. If
collections from clients during the period were P80,000, then the total services rendered on
account were apparently. ___________
7. The Supplies on hand account balance at the beginning of the period was P6,600. Supplies
totaling P12,825 were purchased during the period and debited to Supplies on Hand. A physical
count shows P3,825 of Supplies on Hand at the end of the period. The proper journal entry at
the end of the period is Credit Supplies on Hand for:___________
8. Engene Co. sells major household services contracts for cash. The service contracts are for a
one-year, two-year, or three-year period. Cash receipts from contracts are credited to
Unearned Service revenues. This account had a balance of P700,000 at December 31, 2021
before year-end adjustment. Service contract costs are charged as incurred to the Service
contract expense account, which had a balance of P230,000 at December 31,2021.

Service contracts still outstanding at December 31, 2021 expire as follows:

During 2022 190,000
During 2023 285,000
 During 2024 175,000
What amount should be reported as Unearned Service revenues in Engene’s December 31, 2021
Balance sheet?
9. Jake company’s account balances at December 31, 20X2 for Accounts Receivable and the
Allowance for Doubtful Accounts are P640,000 debit and P1,200 credit. Sales during 20X1 were
P1,800,000. It is estimated that 2% of sales will be uncollectible. How much is the doubtful
accounts during 20X1? ______________
10. Baragi corp. reported revenue of P900,000 in its accrual basis income statement for the year
ended June 30,2020. Additional information were as follows:

Accounts Receivable June 30, 2019 P250,000

Accounts Receivable June 30,2020 530,000

Uncollectible Accounts written off during the fiscal year 13,000

Under the Cash basis, Baragi should report revenue of? _________

11. On July 30, a company paid P3,600 for insurance premiums for the current year and debited
the amount to Prepaid Insurance. At December 31, the bookkeeper forgot to record the
amount expired. The omission has the following effect on the financial statements prepared
December 31.
A. Overstate Owner’s equity C. Understate net income
B. Overstate assets D. both A & B
12. Dark Moon company purchased equipment on October 1, 2018 by giving its supplier a 12-
month, nine percent note with a face value of P48,000. The December 31, 2018, adjusting entry
is? ______________
13. TXT corporation’s interest revenue for 2021 was P13,100. Accrued interest receivable on
December 31,2021 was P2,275 and P1,875 on December 31, 2020. The cash received for
interest during 2021 was? ____________
14. Star Seekers’ salaries expense for 2019 was P136,000. Accrued salaries payable on December
31, 2019 was P17,800 and P8,400 on December 31, 2018. The cash paid for salaries during
2004 was?__________
15. Mr. Bang pays weekly salaries of P15,000 on Friday for a five-day week ending on that day. The
adjusting entry necessary at the end of the fiscal period ending on Wednesday is?
_____________