TERMINOLOGIES:

OBJECTIVITY: accounting concepts states that an accounting transaction should be supported by

sufficient evidence to allow two or more qualified individuals to arrive at essentially similar conclusion?

FINANCIAL STATEMENTS: Consider the steps in the accounting cycle. Which part of the accounting
cycle provides information to help a business decide whether to expand its operations?

GENERAL LEDGER: collection of accounts in an entity

ENTITY EITHER GENERATED A PROFIT OR INCURRED A LOSS: If the income statement

debit and credit columns are not equal after adding the respective columns

Assets = over, Capital = over, Expense = over: the effect of failure to record the uncollectible accounts?

PERIODICITY CONCEPT: It means that an organization’s life can be meaningfully subdivided into
equal time periods for reporting purposes.

DEPRICIABLE COST: Asset cost less its related accumulated depreciation equals

OSTENSIBLE PARTNER: One who takes an active part in the business and is known to the
public as partner.

SITUATIONAL

1. How would the proceeds received from the advance sale of non-refundable tickets for a theatrical
performance be reported in the seller’s financial statements before the performance?

a. Unearned Revenue for the Entire Proceeds

2. In the statement of cash flows, borrowings from the bank is shown in

a. Financing Activities

3. If an adjusting entry were not made at the end of a period to remove the earned revenue from the
Unearned Revenues account,

i. Liabilities would be overstated

4. Return of goods from a customer is recorded in which journal?

i. General journal
 TRUE STATEMENTS

1. The matching principle is one of the basic underlying concepts in accounting

2. The matching principle is related to accrual basis of accounting.

3. Analysis of the transaction is essential for a journal entry to be made.

4. To close net income account to owner’s capital, Income Summary account is debited and
Owner’s capital is credited

5. Scrap value is known as residual value

6. Unearned revenue is revenue already received but not yet earned.

7.

FALSE STATEMENTS

1. Chart of accounts are listing of account titles in the ledger.

2. If trial balance debit and credit balances is equal, it means that transactions are posted correctly.
3. A general journal is optional for a company to maintain.

4. To close expenses account to Income Summary, the Income Summary account is credit and
expense account is debited.

5.