1. Which type of accounts measure economic flows over a D.

All of the choices are correct regarding the post-

period of time? closing trial balance.
A. Real Accounts
B. Nominal Accounts 7. Which of the following is not among the first five
C. Mixed Accounts steps in the accounting cycle?
D. Contra Accounts A. Record transactions in journals
B. Record closing entries
2. Why are adjusting entries necessary? C. Adjust the general ledger accounts
A. Transactions take place over more than one accounting D. Post entries to general ledger accounts
period.
B. They help properly measure net income or net loss. 8. Adjusting entries affect
C. To bring assets and liabilities to correct balances. A. One nominal account and one real account
D. All of these. B. Two nominal accounts
C. Two real accounts
3. The system of bookkeeping that recognizes the two-fold D. No particular combination of nominal and real
effect of an accountable event is known as? accounts
A. Double-Entry
B. Single-Entry 9. Which of the following criteria must be met
C. Cash Basis before an event should be recorded for accounting
D. Accrual purposes?
A. The event must be an arm’s length transaction
4. Which of the following best defines a prepayment and a B. The event must be repeatable in the future period
deferral? C. The event must be measurable in financial terms
A. Adjusting entries where cash flow precedes revenue or D. The event must be disclosed in the reported
expense recognition. footnotes
B. Adjusting entries where revenue or expense recognition
precedes cash flow. 10. Reversing entries
C. Adjusting entries where cash flow and revenue or expense A. Are normally prepared for accrued, prepaid and
recognition are simultaneous. estimated items.
D. Adjusting entries where revenues or expenses are B. Are necessary to achieve a proper matching of
recognized in the absence of cash flow. revenue and expense.
C. Are desirable to exercise consistency and
5. Which of the following statements best describes the establish standardized procedures.
purpose of closing entries? D. Must be made at year-end.
A. To facilitate posting and taking a trial balance.
B. To determine the amount of net income or net loss for the 11. What function do general ledgers serve in the
period. accounting process?
C. To reduce the balances of temporary accounts to zero so A. Reporting
that they may be used to accumulate the revenue, expenses B. Summarizing
and dividends of the next period. C. Classifying
D. To complete the record of various transactions that were D. Recording
started in a prior period.
12. Given the dual effects of accountable events, an
6. The post-closing trial balance increase in a liability cannot possibly be
A. Consists of statement of financial position accounts only. accompanied by a (an)
B. Will balance if a transaction is not journalized and posted, A. Decrease in another liability
or if a transaction is journalized and posted twice. B. Increase in an asset
C. Shows that the accounting equation is in balance at the C. Increase in owner’s equity
end of the accounting period. D. Decrease in Revenue
13. Which of the following is not a possible combination of a 20. Sky Corporation’s salaries expense for 2022 was
journal entry? P136,000. Accrued salaries payable on December
A. Increase in asset and increase in liability. 31, 2022, was P17,800 and P8,400 on December 31,
B. Decrease in equity and increase in liability. 2021. The cash paid for salaries during 2022 as:
C. Decrease in liability and decrease in asset. A. P126,600
D. Increase in asset and decrease in equity. B. P127,600
C. P145,400
14. A debit balance in the income summary account D. P153,800
represents
A. Net Income 21. A simple journal entry
B. A drawing Account A. Consists of one debit and one credit
C. Net Loss B. Consists of one debit and two credits
D. None of the above C. Consists of two debits and one credit
D. Is only a memorandum entry
15. The accounting equation must remain in balance
A. Throughout each step in the accounting cycle 22. Crescent Corporation’s interest revenue for 2022
B. Only when journal entries are recorded. was P13,100. Accrued interest receivable on
C. Only at the time the trial balance is prepared. December 31, 2022, was P2,275 and P1,875 on
D. Only when formal financial statements are prepared. December 31, 2021. The cash received for interest
during 2022 was:
16. It is the accounting device that is used to store the A. P13,500
recorded monetary information from the entity’s transaction B. P10,825
and events. C. P12,700
A. Account D. P13,100
B. Journal
C. Ledger 23. Which is false concerning the use of special
D. Source Document journals?
A. Only sales of merchandise on account are
17. Accumulated depreciation is an example of recorded in the sales journal and cash sales are
A. Nominal and adjunct account recorded in the cash receipts journal.
B. Real and adjunct account B. Purchases of any items on account are recorded in
C. Nominal and contra account the purchases journal.
D. Real and contra account C. Transactions that cannot be appropriately
recorded in a special journal are recorded in the
18. In preparing a worksheet, the company is profitable in general journal.
the current period, the total of the balance sheet credit D. Only cash purchases are recorded in the cash
column will be. disbursements journal.
A. Larger than the balance sheet debit column
B. Larger than the income statement debit column 24. A chart of accounts is
C. Smaller than the balance sheet debit column A. A subsidiary ledger
D. Smaller than the income statement credit column B. A listing of all account titles
C. A general ledger
19. A general journal D. A general journal
A. Chronologically lists transactions and other events
expressed in terms of debits and credits.
B. Contains one record for each of the asset, liability, equity,
revenue and expense accounts.
C. Lists all the increases and decreases in each account in
one place.
D. Contains only adjusting entries.
25. A trial balance (choose the incorrect one) 31. Which is an example of a nominal and contra
A. Is a test of the equality of the debits and credits in the account?
general ledger. A. Freight In
B. Is a list of all open accounts in the ledger with their B. Sales Discount
balances as of a given date. C. Purchases
C. Provides information that is helpful when making D. Allowance for doubtful Accounts
adjusting entries.
D. Proves that no errors of any kind have been made in the 32. On May 1, 2023, an entity borrowed P3,000,000
accounts during the accounting period. cash and signed a 13% note payable due April 30,
2024. Interest is paid every April 30. The accounting
26. Which of the following steps in the accounting cycle are period ends December 31. The adjusting entry on
listed in logical order? December 31, 2023 would include
A. Post the reversing entries, prepare the financial statements A. Debit to note payable for P390,000.
and then take a trial balance. B. Debit to interest expense for P390,000.
B. Prepare the closing entries, prepare the adjusting entries C. Credit to interest payable for P130,000.
and then prepare the financial statements. D. Credit to interest payable for P260,000.
C. Prepare an unadjusted trial balance, prepare the adjusting
entries and then prepare the financial statements. 33. On August 1, 2023, an entity received cash of
D. Post the closing entries, take a post-closing trial balance P1,200,000 for on year’s rent in advance and
and then prepare financial statements. recorded the transaction as a credit to rent revenue.
The December 31, 2023 adjusting entry is
27. Which of the following would not be a correct form for A. Debit rent revenue and credit unearned rent
an adjusting entry? revenue for P500,000.
A. A debit to revenue and a credit to liability B. Debit rent revenue and credit unearned rent
B. A debit to an expense and a credit to a liability revenue for P700,000.
C. A debit to a liability and a credit to a revenue C. Debit unearned rent revenue and credit rent
D. A debit to an asset and a credit to a liability revenue for P500,000.
D. Debit unearned rent revenue and credit rent
28. The last step in the accounting cycle is to revenue for P700,000.
A. Prepare a post-closing trial balance
B. Journalize and post closing entries 34. In recording transactions
C. Prepare financial statements A. The word “debit” means increase and the word
D. Journalize and post adjusting entries “credit” means decrease.
B. Assets, expenses and drawing accounts are
29. A post closing trial balance credited for increases.
A. Is a listing of general ledger accounts and their balances C. Liabilities, revenue, and capital accounts are
after closing entries have been made. credited for increases.
B. Consist entirely of real accounts. D. Assets, expenses and drawing accounts are
C. Helps to ensure that the closing process has been debited for decreases.
performed correctly.
D. All of the above 35. What is the normal order of accounts in the
unadjusted trial balance?
30. After the accounts have been closed A. Asset, equity, income, expense, and liability
A. All the accounts have zero balances. B. All accounts with debit balances and then all
B. The asset, liability and equity accounts have zero accounts with credit balances
balances. C. Asset, liability, and equity
C. The revenue, expense, income summary and retained D. Asset, liability, equity, income, and expense
earnings accounts have zero balances.
D. The revenue, expense and income summary accounts
have zero balances.