COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119
Name __________________________________________Course/Year ______________Score _______
Test 1- True or False
1. Accounting is a service activity whose function is to provide quantitative information about economic
entities
2. The records used for the initial recording of business transactions are journals
3. The rules for debit and credit and the normal balance of liabilities are the same as for capital
4. Special journals are used to record usual and frequent transactions
5. The preparation of work sheet eliminates the need to journalize and post adjusting entries
6. The accounting process consists of the recording phase and the reporting phase
7. The purpose of a trial balance is to reconcile subsidiary ledger balances with general ledger balances
8. Accumulated depreciation is an example of an adjunct account
9. The general ledger includes all accounts appearing in the financial statements, while subsidiary ledgers
provide details in support of certain general ledger balances
10. Entering a debit balance in an account as a credit will cause the trial balance to be out of balance by an
amount that is divisible by two (2)
11. Adjusting entries are made to correct errors made in the recording phase
12. The entry to record depreciation expense is an example of an adjustment that would be reversed if
reversing entries are made
13. It is sometimes correct for a compound entry’s debit totals and credit totals to be unequal
14. The trial balance is used to prepare the statement of comprehensive income while the general ledger is
used to prepare the statement of financial position
15. The recording of an accrued expense will always result to an increase in an expense account and a
liability account
16. The balances of all the accounts in the general ledger must be closed at the end of the accounting
period
17. The asset and liability accounts are known as real accounts
18. The adjusted trial balance is prepared after the financial statements are prepared
19. Owner’s equity is the excess of an entity’s asset over its liabilities
20. The general ledger account that summarizes the detailed information in a subsidiary ledger is known as
control account
21. The balance sheet shows the financial position of a company at a given date
22. The difference between the debit total and the credit total in the statement of financial position section
of the work sheet represents the profit or loss during the period
23. Recording the expiration of a prepaid asset results in the reduction of the asset account and an
increase in a related expense account
24. Reversing entries are prepared at the end of the accounting period
25. Since new and revenue accounts will be opened in the subsequent accounting period, it is no longer
necessary for an entity to post the closing entries to the accounts in the ledger.
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COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119
Test 2- Identification
Required: Write the word on the space provided that corresponds to the best answer
Accounting period Credit Prepaid expenses
Accrued expenses Debit Real accounts
Adjunct account Deferral Reversing entries
Book value Depreciation Special journals
Business documents Financial statements Subsidiary ledger
Business enterprises General ledger Worksheet
Closing entries Income summary
Contra asset account Nominal accounts
Cost of goods available for sale Post-closing trial balance
Cost of goods sold Posting
1. ________________ the end product of the accounting process
2. ________________ expenses already incurred but not yet paid and recorded at the end of the
accounting period
3. ________________ an account with credit balance which is deducted from an asset account
4. ________________ systematic allocation of cost of an item of property, plant and equipment over
periods benefited by the use of the asset
5. ________________ an entry on the right side of an account
6. ________________ economic entities organized for profit
7. ________________ the original source materials evidencing business transactions
8. ________________ span of time covered by the statement of comprehensive income
9. ________________ merchandise inventory beginning plus purchases
10. ________________ journals designed in a tabular fashion to accommodate the recording of specific
types of similar transactions
11. ________________ a book of accounts that include all asset, liability, equity, income and expense
account
12. ________________ the process of classifying and grouping similar transactions in common accounts
by transferring amounts from the journals to the ledger
13. ________________ a postponement of the recognition of an expense already paid, or of revenues
already received in advance
14. ________________ entries that reduce all nominal accounts to a zero balance at the end of each
accounting period
15. ________________a working paper often used by accountants to summarize adjusting entries
16. ________________the temporary account used in closing nominal accounts whose credit balance
represents net profit
17. ________________accounts whose balances are carried forward to the next accounting period
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COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119
18. ________________entries prepared at the beginning of a new accounting period to facilitate the
recording of expense payments and revenue receipts in the usual manner
19. ________________ a listing of all real account balances after closing process has been completed
20. ________________ the difference between the accumulated depreciation account and the related
property and equipment account
Test 3-Multiple Choice
1. If the debit and credit totals of a trial balance were 240,000 and an additional entry was recorded and
posted for the purchase of 10,000 of office supplies for cash, what would be the new debit and credit
totals for the trial balance after this entry is made
a. 230,000
b. 240,000
c. 245,000
d. 250,000
2. A trial balance has debit and credit totals of 240,000. The purchase of 10,000 of office supplies on
account was omitted from the original journal entries. After the recording and posting of this
transaction, the new debit and credit totals for the trial balance would be
a. 230,000
b. 240,000
c. 245,000
d. 250,000
3. Aquino Service Company billed 1,200,000 for services to clients on account and had expenses of
500,000 on account. Accounts receivable had a beginning balance of 120,000 and an ending balance
of 80,000. How much cash did Aquino collect on accounts receivable and what type of entry to
accounts receivable was made?
a. 740,000; debit
b. 740,000; credit
c. 1,240,000; debit
d. 1,240,000; credit
4. Prepaid Insurance account had a beginning balance of 45,000. At the end of the accounting period, it
had a balance of 9,000. Accumulated depreciation had a beginning balance of 30,000 and an end-of-
period balance of 45,000. The change in the account balances of these two accounts resulted in total
expenses changing by a (an)
a. decrease of 36,000
b. increase of 39,000
c. decrease of 45,000
d. increase of 51,000
5. In the worksheet, the Income Statement debit column equals 700,000 and the credit column equals
800,000. Which of the following statements is correct?
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COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119
a. the company realized a profit of 100,000 and it must be added to the Income statement debit column
and the Statement of financial position credit column to complete the worksheet
b. the company incurred a loss of 100,000 and it must be subtracted from the Income statement debit
column and the Statement of financial position credit column to complete the worksheet
c. the company incurred a loss of 100,000 and it must be added to the Income Statement credit column
and the Statement of financial position debit column to complete the worksheet
d. the company realized a profit of 100,000 and it must be subtracted from the Income statement debit
column and added to the Statement of financial position debit column
6. An entry requiring a debit to an expense account and a credit to a liability account is an example of an
adjusting entry classified as
a. accrued expense
b. depreciation
c. prepaid expense
d. uncollectible accounts
7. Closing entries are journalized and posted before
a. financial statements are prepared
b. adjusting entries are journalized and posted
c. post-closing trial balance is prepared
d. work sheet is completed
8. The summarizing phase include all of the following steps, except
a. journalizing and posting adjusting entries
b. journalizing and posting closing entries
c. preparing the trial balance
d. transferring the recorded transactions in the journal to the accounts in the ledger
9. Which of the following is a distinguishing characteristic of a contra account?
a. it always has a credit balance
b. its normal balance matches that of its companion account
c. it always decreases the balance of its companion account
d. it always increases the balance of its companion account
10. An adjusting entry for unearned revenue is required because cash is received
a. before the revenue is earned
b. after the revenue is earned
c. as revenue is earned
d. after the balance sheet date
11. An accrued expense can be best described as an amount
a. paid and matched with earnings for the current period
b. paid and not matched with earnings for the current period
c. not paid and matched with earnings for the current period
d. not paid and not matched with earnings for the current period
12. Which of the following accounts could appear in adjusting entry, closing entry and reversing entry?
a. accumulated depreciation
b. depreciation expense
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COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119
c. interest revenue
d. salaries payable
13. Closing entries ultimately will affect
a. cash account
b. owner’s capital account
c. total assets
d. total liabilities
14. Probably, the last account to be listed on a post-closing trial balance would be
a. income summary
b. interest expense
c. interest revenue
d. owner’s capital
15. Which of the following is not considered in computing net cost of purchases?
a. purchases
b. purchases returns and allowances
c. transportation paid on goods purchased
d. transportation paid on goods shipped to customers
Test 4-Problem Solving
DEF Merchandising follows the policy of recording prepayments in revenue and expense accounts and
reverses appropriate adjusting entries at the beginning of the new accounting period. The records of the
business show the following:
a. On September 1, 2014, DEF borrowed 2,000,000 cash from the Bank of the Philippines by issuing
a 6% note payable in one year. The interest is payable upon maturity of the note
b. On February 1, 2014, DEF paid insurance premium of 72,000 covering a period of three years
beginning on this date
c. On December 1, 2014, DEF paid 360,000 representing rental for one year starting on this date
d. DEF pays all employees every Friday. The total payroll for the five-day workweek ending January
3, 2015 is 450,000
e. DEF purchased office equipment on August 1, 2014 amounting to 120,000. On January 1, 2014,
the office equipment account has a balance of 480,000. All equipment has estimated useful life of 5
years with no residual value.
f. Office supplies on hand on January 1, 2014 amounted to 5,000. During the year, office supplies of
12,500 were purchased. On December 31, 2014. There are unused supplies of 4,500.
g. DEF subleases part of its office space for 30,000 per month. On November 1, 2014, it received
rental payments for six months starting on this date.
h. Merchandise inventory on January 1 and December 31 amounted to 180,000 and 220,000,
respectively
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COLEGIO DE STA. ANA DE VICTORIAS, INC.
Osmeña Avenue, Victorias City, Negros Occidental, 6119
Required:
a. Prepare the necessary adjusting entries on December 31 2014
b. Prepare appropriate reversing entries as of January 1, 2015
Test 5- Essay
Briefly discuss/explain the following (in 3-5 sentences) based on what you have learned
1. What is accounting and what is its purpose? What is its role in decision-making?
2. Why do accountants prepare work sheet even if its preparation is optional?
3. Does the trial balance prove the accuracy of accounting work done? Explain your answer
-End of Test-