When recording the closing entries, the bookkeeper performs the following, except a. Credit the owner's drawing account b. Credit the balances of the expense accounts c. Credit the owner's capital account for the net income d. Debit the balances of the revenue accounts
1. When recording the closing entries, the bookkeeper performs the following, except
a. Credit the owner's drawing account
b. Credit the balances of the expense accounts
c. Credit the owner's capital account for the net income
d. Debit the balances of the revenue accounts
2. The physical counting of inventory is needed in order to determine the inventory on hand and cost of
goods sold in this inventory system
I. Periodic inventory system
II. Perpetual inventory system
a. I only
b. II only
c. Both I and II
d. Neither I nor II
3. A sole proprietor rendered services to a client for 50,000, receiving $20,000 cash and the balance
To be paid in 30 days. This transaction results to:
a. Increase in assets for 20,000; Increase in capital for $20,000
b. Increase in Asset for 50,000; increase in capital for 50,000 for the revenue earned.
c. Total assets increased by 50,000; Total liabilities increase by 50,000
d. Increase in Asset for $20,000; decrease in liabilities for $30,000; Increase in capital for $50,000 for the revenue earned.
4. BestLife Trading Company had the following information on its cash transactions:
Collection from customers P 400,000
Payment to suppliers 180,000
Payment for operating expenses 80,000
Capital investment 1,000,000
Payment for loans 22,000
Proceeds from loan borrowing 200,000
Purchase of office equipment 220,000
How much should be reported as
a. P1,200,000
b. P1,098,000
c. P1,178,000
d. P1,318,000
5. The telephone bill for a period is recorded by the bookkeeper as expense but no payment is made yet. The effect of this transaction in the
a. Decrease in asset and decrease in owner’s equity.
b. Decrease in asset and decrease in liability
c. Increase in liability and decrease in owner’s equity (expense)
d. Increase in asset and increase in liability.
6. What account is used to record the transportation costs of purchased merchandise inventory in the Perpetual inventory system?
a. Freight Out
b. Merchandise Inventory
c. Freight In
d. Purchases
7. On December 1, 2020, ABC Company issued a P200,000 promissory note to its supplier, DEF Trading. The note bears an annual interest rate of 12%. The note is due in eight months and no interest or principal has been made until the due date. ABC Company prepares its monthly financial statements.
The adjusting
a. An accrued interest income of P24,000
b. An accrued interest income of P2,000
c. An accrued interest expense of P24,000
d. An accrued interest expense of P2,000
8. In the perpetual inventory system, merchandise inventory returned by customers are recorded by Debiting
a.
b. Accounts Receivable and Sales Returns
c. Sales Returns
d. Accounts Receivable only
9. Company X makes the following adjusting journal entry at year-end:
Prepaid Insurance P50,000
Insurance Expense P50,000
What method did the bookkeeper adopt in the initial recording of the prepayment?
a. Income method
b. Liability method
c. Asset method
d. Expense method
10. Which of the following statements is not correct about the perpetual inventory system?
a. Sales are recorded including an entry to debit Cost of Sales and credit Merchandise Inventory
b. Purchases are recorded as debits to Merchandise Inventory
c. Purchase returns are recorded by debiting Accounts Payable and crediting Purchase Returns and Allowances
d. After a physical count, inventory is credited for any missing inventory.
11. On December 1, 2020, DEF Trading received a P200,000 promissory note from one of its customers, ABC Company. The note bears an annual interest rate of 12%. The note is due in eight months and no interest or principal payment has been received until the due date. DEF Trading prepares its monthly financial statements.
The
a. An accrued interest expense of P24,000
b. An accrued interest income of P2,000
c. An accrued interest income of P24,000
d. An accrued interest expense of P2,000
12. Which of the following would appear in an income statement?
a. Expenses that are paid
b. Cash payments for expenses
c. Expenses not yet paid
d. Expenses whether paid or not
13. What account is used to record the transportation costs of purchased merchandise inventory in the Periodic inventory system?
a. Freight In
b. Freight Out
c. Purchases
d. Merchandise Inventory
14. A company using periodic inventory system was not able to record a purchase of merchandise on Account. This merchandise was not included in the year-end physical count of inventory. How would This error affect the cost of sales?
a. The cost of sales is overstated
b. The cost of sales is understated
C. No effect
d. Cannot be determined based on the above information
15. Which of the following accounts is not closed to the “Income and Expense Summary” account?
a. Uncollectible Accounts Expense
b. Interest Expense
c. Service Revenues
d. Owner’s Drawing
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
