1.

If the cash account has a debit balance of P72, 000 as of December 31, 2019 with a debit posting
of P148, 000 and credit posting of P172, 400, what is its beginning balance?

Beginning Balance x
148,000 172,400
Ending Balance 72,000

X = Ending Cr Bal. + (Posted Cr – Posted Dr)

X = 72,000 + (172,400 – 148,000)
X = 72,000 + 24,400
X = 96,400

2. The Accounts Receivable had a total debits for the month of P30, 000 and total credits for the
month of P14, 000. If the beginning balance of Accounts Receivable was P24, 000, what was the
change in Accounts Receivable?

Beginning Balance 24,000 14,000

30,000
Ending Balance 40,000

Increased by 16, 000 = Ending Bal. (Dr) – Beginning Bal. (Dr)

3. Accrued expenses
a. Decrease assets b. Increase assets c. Increase liabilities d. Decrease liabilities
ACCRUED EXPENSE is an expense already incurred but not yet paid (LIABILITY) and
OPPOSITE of PREPAID EXPENSE
4. A credit to revenue account will…
a. Decrease expense account b. Increase liability account c. Increase asset account
b. Decrease drawing account
5. From the point of view of the company receiving the cash, an item that represents services that
have been paid for by the customer, but have not been provided to the customer by the firm which
received the cash, is called…
a. Accrued expense b. Prepaid expense c. Accrued revenue d. Unearned revenue
UNEARNED REVENUE is revenue received in advance but not yet earned (LIABILITY)
6. The basic elements directly related to the performance or results of operations.
a. Assets, liabilities, revenues and expenses
b. Assets, liabilities, and equity
c. Revenues and expenses
d. Assets and revenues
7. The following are the possible effects of business transactions on the accounting equation,
except:
a. Increase in liabilities; decrease in owner’s equity
b. Increase in liabilities; decrease in another liability
c. Increase in assets; decrease in liabilities
8. Which of the following transactions does not affect the balance sheet totals?
a. Purchasing supplies on account
b. Additional investment by the owner
c. Paying a Notes Payable
d. Collection from customers on account
9. In recording transactions:
a. The word “debit” means increase and the word “credit” means decrease
b. Asset, expense, and drawing accounts are debited for increases
c. Liabilities, revenues, and drawing accounts are debited for increases
d. Assets, expenses, and capital accounts are debited for increases
10. A chart of accounts is
a. Subsidiary ledger b. General ledger c. General journal d. Listing of all accounts
11. A ledger
a. Contains only assets and liability accounts
b. Should show accounts in alphabetical order
c. Collection of the entire group of account maintained by a company
d. Book of final entry
12. The recording phase of financial accounting covers the following steps, except:
a. Business documents are received
b. Transactions are journalized
c. Financial statements are prepared
d. Debit and credit entries are recorded
13. Posting refers to the process of transferring information from
a. Journal to general ledger accounts
b. Journals to source documents
c. General ledger accounts to journal
d. Source documents to journal
14. Which of the following is an essential characteristic of an asset?
a. The claims to be an asset’s benefits are legally enforceable
b. An asset is tangible
c. An asset is recorded at invoice price
d. An asset provides future benefit
15. The term “footing” refers to the:
a. Process of posting
b. Addition of column figures
c. Process of obtaining the bottom number in an account
d. Process of obtaining the top number in an account
16. This is called the book of final entry
a. General journal b. General ledger c. T-Account d. General voucher
17. A journal entry that consists one debit and one credit is called…
a. Compound entry b. Multiple entry c. Simple entry d. Memorandum entry
18. Which of the following is not considered as a business transaction?
a. Purchase of supplies on account
b. Withdrawal of cash by the owner
c. Provision of services for which fees are not yet received
d. All of these are business transactions thus none of the above
19. This refers to optional journal entries that are intended to make recording transactions easier in
the next accounting period.
a. Simple entries b. Compound entries c. Reversing entries d. Multiple entries
20. Which of the following statements is false?
a. Communicating is the process of preparing and distributing accounting reports to potential
users of accounting information
b. An event is accountable or quantifiable when it has an effect on assets, liabilities, and equity
c. Only economic activities are emphasized and recognized in financial accounting
d. Historical cost is identified as the current selling price
21. The accounting cycle starts with the analysis of business transactions and ends with the recording
of adjusting entries. False
22. All transactions should be recorded by the firm. False
23. Journalizing comes before posting. True
24. After all entries have been journalized in the journal, the next step is footing – that is transferring
the entries from the journal to the ledger. False
25. The ledger is sometimes called the book of final entry. True
26. Once a chart of accounts is used, it must never be changed or modified. False
27. A trial balance that is balance is a guarantee that the accounting record is correct. False
28. Some errors may remain even if a trial balance is in balance. True
29. The financial accounting process is guided by broad operating principles of accounting. True
30. The term footing means you add the numbers horizontally. False
31. A trial balance is a list of accounts with open balances at a given time. True
32. A journal entry erroneously debited advertising expense to cash will still make the trial balance in
balance. True
33. When a customer is billed for services performed, the cash should be debited. False
34. A credit entry to assets will decrease its balance. True
35. The normal balance of liabilities, revenues, and equity is credit. True
36. Net income will result during a time period when revenues exceed expenses. True
37. In every entry, the difference between total debits and total credits should be zero. True
38. Payment of liability will not affect total assets but will make total liabilities decrease. False
39. A decrease in asset may decrease a liability. True
40. A compound entry happens when there are two or more accounts debited or credited even if one
account has been correspondingly debited or credited. True