1.

It is the simplest form of business organization

a. Sole proprietorship
b. Service entity
c. Merchandising entity
d. Partnership
2. Accounting is
a. The recording of financial transactions
b. The person who keeps and maintains the books of accounts of the business organization.
The bookkeeper is responsible for recording the transactions of the business.
c. The art of recording, classifying and summarizing in a significant manner and in terms of
money, transactions and events which are in part at least of financial character and
interpreting the results thereof.
d. The process of recording, classifying and summarizing business transactions for the proper
determination of correct tax declarations and payments.
3. The following are examples of service businesses except
a. Cagayan River Hotel and Resorts
b. Philippine Airlines
c. Spendmore Supermarket
d. Azina Water Refilling Station
4. Bookkeeping is
a. The process of recording, classifying and summarizing business transactions for the proper
determination of correct tax declarations and payments.
b. The recording of financial transactions and is part of the process of accounting in business.
c. The person who keeps and maintains the books of accounts of the business organization.
The bookkeeper is responsible for recording the transactions of the business.
d. The art of recording, classifying and summarizing in a significant manner and in terms of
money, transactions and events which are in part at least of financial character and
interpreting the results thereof.
5. Which is not a form of business organization?
a. Corporation
b. Partnership
c. Business association
d. Sole proprietorship
6. A business of two or more persons who bind themselves to contribute money, property or
industry to a common fund, with the intention of dividing the profits among themselves
a. Corporation
b. Partnership
c. Cooperative
d. Sole proprietorship
7. Which is not a type of business?
a. Manufacturing
b. Servicing
 c. Merchandising or trading
d. Philanthropy
8. Which of the following gives the best definition of bookkeeping?
a. To calculate the amount of profit to be paid to investors.
b. To calculate the amount of tax to be paid to BIR
c. To record, classify and summarize financial transactions and events
d. To provide financial information to users
9. The following are examples of manufacturing business except
a. Toyota Motors, Inc.
b. Sony Philippines
c. Rolex Watch Repair Shop
d. Red Ribbon Bakeshop
10. Businesses must register in the following except
a. Department of Trade and Industry
b. Cooperative Development Authority
c. Securities and Exchange Commission
d. Department of Business and Management
11. In the accounting process, which step follows journalizing?
a. Posting to the ledger
b. Preparation of trial balance
c. Preparation of financial statements
d. Documentation of the transaction
12. Which is not one of the legal requirements of a business?
a. Maintain accounting records
b. Issue receipts and invoices
c. Conduct profitable activities
d. Secure business registration certificates and permits
13. Which is not a basic characteristic of a business?
a. A regular activity
b. Social marketing
c. Involves commercial activities
d. Conducted for profit
14. The form of business organization owned by stockholders
a. Sole proprietorship
b. Corporation
c. Partnership
d. Non-profit organization
15. It is a type of business buys goods and commodities then sells the same for profit without
changing its form
a. Service Business
b. Merchandising business
c. Manufacturing business
 d. All of the above
16. Which is not one of the legal requirements of a business?
a. Maintain profitability
b. File and pay taxes
c. Withhold taxes on certain payments
d. Pay business permits and licenses
17. Which may not be a function of a bookkeeper?
a. Record employee attendances
b. Record purchase invoices
c. Record cash receipts and payments
d. Record sales invoices
18. Which may not be a function of a bookkeeper?
a. Approve transactions
b. Record sales and collections
c. Record purchases and payments
d. Record inventory movement
19. The bookkeeper is
a. The person who keeps and maintains the books of accounts of the business organization
and is responsible for recording the transactions of the business.
b. The artist of recording, classifying and summarizing in a significant manner and in terms of
money, transactions and events which are in part at least of financial character and
interpreting the results thereof.
c. The process of recording, classifying and summarizing business transactions for the proper
determination of correct tax declarations and payments.
d. The recording of financial transactions and is part of the process of accounting in business.
20. Which may not be a function of a bookkeeper?
a. Post adjusting entries
b. Prepare unadjusted trial balance
c. Record transactions
d. Finalize financial statements
21. The recording phase of financial accounting cover the following except.
a. Transactions are recorded in the journal
b. Source documents are gathered and analyzed
c. Posting to the ledger
d. Financial Statements are prepared
22. Which of the following is true about trial balance?
a. The trial balance will not balance if a transaction is recorded twice
b. It is a list of all accounts with open balances
c. If total debits is equal to total credits, it is a prof that no mathematical error has been
committed
d. The trial balance is a proof that all transactions are recorded correctly if it is balanced.
23. Which of the following cannot be recorded into the company’s books of accounts?
 a. Repair services have been rendered to a customer but not yet collected.
b. The proprietor withdrew a certain amount of cash from the business.
c. Invoices for supplies purchased have been received but not ye paid.
d. One month telephone services have been utilized but the bill has not yet arrived.
24. Journalizing involves
a. Transferring the amounts from the source documents of the general journal in the form of
journal entry
b. Transferring the amounts from the general ledger to the trial balance
c. Transferring the amount form the general journal to the general ledger
d. Preparation of various source documents before recording the transactions in the general.
Journal
25. An event that affects the financial position of an organization and requires recording is called
a. Operating activities
b. Account
c. Business documents
d. Transaction
26. What are the elements of a journal entry?
I. The date of the transaction
II. The accounts debited and credited
III. The monetary values of the accounts debited and credited
IV. The posting reference code of the destination ledger account
V. A brief and clear explanation of the transaction
a. I, II and III only
b. I, II, III and IV only
c. I, II and IV only
d. I, II, III, IV and V
27. A transaction or event is accountable when it meets the following criteria except:
a. If affects the assets, liabilities or equity of the business
b. It affects the business entity
c. It can be measured in terms of money
d. It is supported by a document
e. It is a personal transaction of the owner
28. It contains the specific titles and codes to be used in recording transactions
a. General ledger
b. General journal
c. Trial balance
d. Chart of accounts
29. A trial balance will not disclose that an error has been made in
a. Entering an amount on the wrong side of an account
b. Transferring an account balance from the ledger to the trial balance
c. Posting amount to the wrong ledger account
d. Computing the balance of an account
30. Which of the following is not an accountable transaction?
a. Purchase of the equipment on account
b. Cash investment into the business by the proprietor
c. Spending of cash of the proprietor for his wedding
d. Purchase of merchandise inventory in cash
31. An asset has been acquired for P100,000. It is estimated to have a useful life of 10 years and
salvage value of P20,000. How much is the annual depreciation?
a. P8,000
b. P6,000
c. P12,000
d. P10,000
32. Transactions are recorded chronologically in the
a. Trial Balance
b. General Ledger
c. General Journal
d. Chart of Accounts
33. Accrued income
a. Decreases liabilities
b. Increases revenues
c. Increases expenses
d. Decreases asset
34. It is called the books of original entry
a. General journal
b. Chart of accounts
c. Trial Balance
d. General Ledger
35. Under the accrual basis of account transactions and effects are recorded when
a. Expenses are incurred and revenues are collected in cash
b. Expenses are incurred but not paid and revenues are earned but not yet collected
c. Expenses are paid and revenue are earned
d. Expenses are incurred and revenues are earned
36. A prepaid expense is a/an
a. Equity
b. Revenue
c. Expense
d. Asset
37. Prepaid expenses are amounts that are
a. Paid and not yet matched with current revenues
b. Matched with current revenues and are already paid
c. Matched with currents revenues but not yet paid
d. Paid and matched with current revenues
38. The Accumulated Depreciation- Delivery Equipment is reported in the
 a. Trial Balance only
b. Income Statement as part of the Operating Expenses
c. Balance Sheet as Addition to the Deliver Equipment account
d. Balance Sheet as Deduction from the Delivery Equipment account
39. An asset has been acquired for P250,000. It is estimated to have useful life of 8 years and is
being depreciated at P29,375 per year. How much is its estimated scrap value?
a. P28,750
b. P0
c. P15,000
d. P43,750
40. The allowance for uncollectible accounts has a normal credit balance and is present in the
a. Income Statement as part of the Operating Expenses
b. Balance Sheet as deduction from Accounts Payable
c. Balance Sheet as deduction from Accounts Receivable
d. Balance Sheet as addition to Accounts Receivable
41. The term footing refers to
a. The process of obtaining the bottom number in an account
b. The process of taking the total of a set of number arranged in a column
c. The process of posting
d. The process of obtaining the top number in an account
42. Adjust Dolt Company reported the following unadjusted balances at year-end:
Account Receivable P3,000,000
Allowance for doubtful accounts 12,000
Net credit sales 7,000,000

The company estimates that 2% of the gross accounts receivable would become uncollectible

What amount should be reported as doubtful accounts expense for the current year?

a. P120,000
b. P48,000
c. P140,000
d. P40,000
43. Failure to record the adjusting entry for the expired portion of prepaid expenses will
a. Understate assets and net income
b. Overstate equity and understate liability
c. Understate equity and overstate liability
d. Overstate assets and net income
44. Which of the following should appear in an income statement?
a. Revenues that are not yet collected
b. Revenues that are collected
c. Cash receipts from revenues
d. Revenue whether collected or not
45. A statement that shows the listings of assets, liabilities and equity of an entity
a. Statement of cash flows
b. Balance sheet
c. Notes to the financial statements
d. Income Statement
46. Which transaction decreased both the total assets and total liabilities by P10,000?
a. Payment of salaries, P10,000
b. Payment of accounts payable of P10,000
c. Purchase of equipment for cash, P10,000
d. Collection of AR receivable, P10,000
47. A claim from a customer for services rendered is an account reported as
a. Account receivable in the balance sheet
b. Service revenue in the statement of cash flows
c. Accounts payable in the balance sheet
d. Service revenue in the income statement
48. The obligations of an enterprise to non-owners
a. Expenses
b. Revenues
c. Liabilities
d. Assets
49. Gross profit is calculated as
a. Net sales less merchandise inventory purchased
b. Net sales less cost of goods sold
c. Net sales less goods available for sale
d. Gross sales less sales returns and discounts less merchandise inventory at the end of the
period
50. Which of the following statements is correct?
a. Revenues and Expenses increase capital
b. The bottom line of an Income Statement shows that the business always have profit
c. The accounting equation can also be expressed as Assets- liabilities = Owner’s Equity
d. Source documents are prepared after analyzing the business transaction
51. Which of the following correctly describes revenues?
a. Increase in owner’s equity due to rendering service to a client
b. Properties or resources owned by the business
c. Amount charged to the capital as cost of rendering services to a client
d. Economic claims of the owners to a business
52. Accrued income
a. Increases revenues
b. Increases expenses
c. Decreases liabilities
d. Decreases assets
53. All of the following are cash flows in the financing activities of a business except
a. Cash payment to suppliers
b. Cash proceeds and payments to bank borrowings
c. Cash withdrawals by owners
d. Cash investment by owners
54. All of the following are uses of cash in investing activities except
a. Cash payment to acquire furniture and fixture
b. Cash payment for construction of building
c. Cash payment to acquire equipment
d. Cash withdrawals by the business owner
55. Which of the following would appear in a balance sheet?
a. Cash payments during the period
b. Cash balance at the beginning of a period
c. Cash receipts during the period
d. Cash balance at the end of the period
56. Which of the following steps may be omitted in the completion of the accounting cycle
a. Entries are posted to the general ledger
b. Adjusting entries are journalized and then posted to the general ledger
c. Reversal of some adjustments are made
d. Financial statements are prepared
57. Which situation indicates a net loss in the income statement accounts?
 a. Total debits and total credits have zero balances
b. Total debits exceed total credits
c. Total debits equal total credits
d. Total credits exceed total debits
58. The allowance for uncollectible accounts has a normal credit balance and is presented in the
a. Balance Sheet as addition from Accounts Receivable
b. Balance Sheet as deduction from Accounts Receivable
c. Income Statement as part of the Operating Expenses
d. Balance Sheet as deduction from Accounts Payable
59. Which account is used to close the revenue, purchases and expense accounts?
a. Drawing account
b. Capital account
c. Revenue account
d. Income and expense summary account
60. After posting all the closing entries
a. The revenues, expenses and income summary accounts have zero balances.
b. The capital and drawing accounts have zero balances
c. All the accounts have zero balances.
d. The assets, liabilities and equity accounts have zero balances
61. Which of the following is an operating cash flow?
a. Payments to banks for loans borrowings
b. Payments to supplier
c. Payment for purchased equipment
d. Withdrawals of cash by owners
62. It is called the books of original entry
a. General Leger
b. Chart of Accounts
c. General Journal
d. Trial Balance
63. Which accounts are closed at the end of the accounting period?
a. Nominal or temporary accounts
b. Balance sheet accounts
c. Permanent or real accounts
d. Equity accounts
64. Which of the following are real or permanent accounts?
a. Prepaid rent, accumulated depreciation and sales
b. Notes payable, notes receivable and cash
c. Rent expense, capital and prepaid insurance
d. Accounts receivable, commission income and salaries
65. What is the normal order of accounts in the trial balance?
a. Assets, liabilities, revenues and expenses
b. Assets, capital, revenues, expenses and liabilities
 c. Assets, liabilities, capital, revenues and expenses
d. Assets, liabilities, capital
66. Which are temporary accounts?
a. Accounts Payable, Prepaid expenses, Rental expenses
b. Insurance expenses, Professional fees, Drawing
c. Cash, Prepaid expenses, Drawing
d. Insurance expenses, Professional fees, Capital
67. Which of the following accounts would not appear in the post-closing trial balance?
a. Unearned Service Revenue
b. Doubtful Accounts Expense
c. Accumulated Depreciation
d. Accrued Interest Payable
68. Which of the following accounts would not appear in the post-closing trial balance?
a. Interest Expense
b. Unearned Interest Income
c. Prepaid Insurance Expense
d. Accumulated Depreciation
69. Which of the following accounts are closed at the end of the accounting period?
a. Liability accounts
b. Revenue accounts
c. Asset accounts
d. Equity accounts
70. To which account is the Drawing account closed to?
a. Liability account
b. Income and expense summary account
c. Expense account
d. Capital account
71. A journal entry records the effects of a transaction or event expressed in terms of debit and
credit. Which of the following is not a correct journal entry?
a. An entry with two or more debits and one credit
b. An entry with one or more debits only
c. An entry with one debit and two or more credits
d. An entry with one debit and one credit
72. Which of the following is correct?
a. Assets and revenues normally have credit balances
b. Assets and liabilities normally have credit balances
c. Assets and expense normally have debit balances
d. Liabilities and revenues normally have debit balances
73. Which document is issued by a vendor or supplier for items or goods rendered the company? It
is called Sales invoice from the point of view of the supplier.
a. Disbursement Voucher
b. Order slip
 c. Official Receipt
d. Purchase invoice
74. In terms of debits and credits, which accounts have the same normal balances?
a. AR, AP, Capital
b. AP, Rental Revenue, Unearned rental revenue
c. Prepaid expenses, Insurance expense, Capital
d. Rental expense, professional fees, drawing
75. Which of the following is a simple journal entry?
a. An entry with two or more debits and one credit
b. An entry with one debit only
c. An entry with one debit and two or more credits
d. An entry with one debit and one credit
76. Which of the following entries record the receipt of an electric bill which will paid next month
a. Debit utilities payable and credit cash
b. Debit utilities expense and credit utilities payable
c. Debit utilities expense and credit cash
d. Debit utilities expense and credit notes payable
77. Which documents is issued for specific items or goods purchased by customers?
a. Order Slip
b. Sales invoice
c. Purchase invoice
d. Deposit slip
78. Which of the following is true about debits and credit?
a. Decreases in assets and increases in liabilities are always credited.
b. Decreases in owner’s equity and drawing are always debited.
c. Increases in assets and liabilities are always debited.
d. Increases in owner’s equity and decreases in liabilities are always credited.
79. The adjusted trial balance shows
a. Accounts and amounts for the preparation of FS
b. Revenues and expenses accounts only
c. Assets, liabilities and equity accounts only
d. Accounts and amounts which have been adjusted only
80. If the totals of a trial balance are not equal, it may indicate that
a. Transaction is not recorded
b. The balance of one account is incorrectly computed
c. A transaction has been recorded twice
d. A transaction has been recorded with an erroneous amount on both debit and credit
81. A claim from a customer for service rendered is an account reported as
a. Service revenue in the statement of cash flow
b. AP in the balance sheet
c. AR in the balance sheet
d. Service revenue in the income statement
82. The obligations of an enterprise to non-owners
a. Revenues
b. Liabilities
c. Expenses
d. Assets
83. The balance sheet reports
a. The financial position of the business entity as of a given date
b. The cost of sold merchandise inventory
c. The profits earned by the business entity
d. The sources and uses of cash
84. Which of the ff would appear in an income statement
a. Expenses whether paid or not
b. Expenses that are paid
c. Expenses not yet paid
d. Cash payments for expenses
85. An asset has been acquired for P250,000. It is estimated to have a useful life of 8 years and is
being depreciated at P29,375 per year. How much is its estimated scrap value?
a. P0
b. P28,750
c. P43,750
d. P15,000
86. Which of the ff accounts are not closed at the end of the accounting period?
a. Purchases accounts
b. Revenue accounts
c. Capital accounts
d. Expense accounts
87. Which of the ff FS discloses the economic resources of the organization and the claims against
those resources?
a. SO Cash Flows
b. SO Changes in Equity
c. Balance Sheet
d. Income Statement
88. Unearned revenue is a/an
a. Asset
b. Revenue
c. Equity
d. Liability
89. An adjusting entry is erroneously recorded twice. Which of the ff statements will occur?
a. Assets will be overstated
b. Expenses will be understated
c. Net income will be understated
d. Equity will be overstated
Periodic Trial Balance
Easy Practice Test | Accounting Test Prep

Revenues - Accounting Capital