Professional Documents
Culture Documents
ACCOUNTING PROCESS
6. Debits
a. Increase assets and decrease expenses, liabilities, revenue and equity.
b. Increase assets and expense and decrease liabilities, revenue and equity.
c. Increase liabilities, revenue and equity and decrease assets and expenses
d. Increase assets and equity and decrease liabilities and revenue
14. A trial balance may prove that debits and credits are equal, except
a. An amount could be entered in the wrong account.
b. A transaction could have been entered twice.
c. A transaction could have been omitted.
d. All of these may prove that debits and credits are equal.
15. Which of the following is not correct about an unadjusted trial balance?
a. It proves that debits and credits of equal amounts are in the ledger.
b. It is the basis for any adjustments to the account balances.
c. It supplies a listing of open accounts and their balances.
d. It proves that debits and credits were properly entered in the ledger accounts.
21. What is the adjusting entry for prepaid expenses assuming the expense method is used?
a. Debit prepaid expenses and credit expenses.
b. Debit expenses and credit prepaid expenses
c. Debit prepaid expenses and credit accrued expense
d. It is not necessary to adjust prepaid expenses.
22. What is the adjusting entry for prepaid expenses assuming the asset method issued?
a. Debit prepaid expenses and credit accrued expenses
b. Debit expenses and credit accrued expenses
c. Debit expenses and credit prepaid expenses
d. No adjusting entry
24. What is the adjusting entry for unearned income if the income method is used?
a. Debit unearned income and credit income
b. Debit income and credit unearned income
c. Debit accrued income and credit unearned income
d. No adjusting entry
25. What is the adjusting entry for unearned income if the liability method is used?
a. Debit income and credit unearned income
b. Debit accrued income and credit unearned income
c. Debit unearned income and credit income
d. No adjusting entry
31. A reversing entry should never be made for an adjusting entry that
a. Accrues unrecorded revenue
b. Accrues unrecorded expenses
c. Adjusts expired costs from an asset account to an expense account
d. Adjusts unexpired costs from expense account to an asset account
32. Which of the following should be reversed assuming prepayments are initially recorded in
nominal accounts?
a. Adjusting entry to record ending inventory
b. Adjusting entry to record doubtful accounts
c. Adjusting entry to record depreciation
d. Adjusting entry to record portion of rental received in advance that is unearned at year-end
33. An entity is a resort located in Boracay. The entity collects cash when guests make a
reservation. During December 2022, the entity collected P5,000,000 of cash and recorded the
receipt by recognizing revenue. The entity had earned P4,000,000 of this amount and the
balance will be earned during January 2023. What is the impact of the adjusting entry on
December 31, 2022?
a. 4,000,000 increase in revenue
b. 1,000,000 decrease in liability
c. 5,000,000 increase in asset
d. 1,000,000 increase in liability
34. An entity recorded all purchases of supplies as expense. Prepaid supplies totaled P500,000 on
January 1, 2022. Supplies in the amount of P5,000,000 were purchased during the current year.
Actual year-end supplies unused amounted to P1,500,000. No reversing entry was made on
January 1, 2022. What is the adjusting entry on December 31, 2022?
a. Debit prepaid supplies and credit supplies expense P1,000,000
b. Debit supplies expense and credit prepaid supplies P1,000,000
c. Debit prepaid supplies and credit supplies expense P1,500,000
d. Debit supplies expense and credit prepaid supplies P1,500,000
35. An entity reported wages expense of P6,000,000 for 2022. The wages payable at the beginning
of year amounted to P1,500,000. Wage payments during the year totaled P5,000,000. The
previous year’s adjusting entry for unpaid wages was reversed on January 1, 2022. What is the
adjusting entry for accrued wages payable on December 31, 2022?
a. Debit wages expense and credit wages payable P1,000,000
b. Debit wages expense and credit wages payable P1,500,000
c. Debit wages expense and credit wages payable P2,500,000
d. Debit wages payable and credit wages expense P2,500,000
END