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BASIC CONCEPTS
Definition of Accounting
It is the process of identifying, measuring, and communicating economic
information to permit informed judgments and decisions by the users of information
...
- American Institute of Certified Public
Accountants (AICPA)
Accounting is a service activity
...
- Accounting Standard Council (ASC)
Nature of Accounting
 Accounting is a process
...

 Accounting is an art
...
It is a combination of techniques and its application
requires applied skills and expertise
...
- It deals
only with quantifiable financial transactions
...

 Accounting is a means and not an end
...

 Accounting is an information system
...
It also collects processes and communicates financial
information
...
- The records should
be systematic enough to enable easy understanding of users
...
- Accounting records serve as evidence
that properties of a business do exist or how much of a particular resource does a
company have
...

 Communicating results to various parties in or connected with the
business
...

 Meeting legal requirements
...





Objective - To provide users with useful information for economic and decisionmaking study and judgments
...


Accounting History
 Early civilizations - Accounting history began around 3000BC and it is evidenced
by the record-keeping wealth thru "clay tablets" of Mesopotamia


Florentine Approach is the introduction of double-entry bookkeeping system
by Amanito Manucci, a partner of merchant partnership



Venetian Approach of reporting is where the debits are recorded on the left side
of the page across the credits and introduced by Andrea Bargarigo
...




Napoleonic Commercial Code gives in notes and example of inventory where
it described that the assets must be carried at their market value on the day
inventory and not on the basis of historical cost by Napoleon Bonaparte
...




The arrival of income taxation and the conflict with financial
accounting - Tax Accounting was born as a specialized field of accounting with
this development where CPAs are infused with taxation works
...





The rise of the group of companies and the need for consolidated
accounts - The evolution of Business Combination accounting practices thru
merger or consolidation
...


THE ACCOUNTING PROFESSION
The Classical Notion of Stewardship
It applies to the valuation and the stewardship role
...

When the markets are perfect and complete, the assets and the changes in the book
value of owner's equity can be measured at their market value
...

 Stewardship - Stewardship of the firm affects the value of the firm
...

Specialized Fields and Branches of Accounting
1
...

a
...
Tax Services - For tax compliance, accountants prepare various tax
returns for income taxes, business taxes and transfer taxes
...

c
...


2
...
Financial Accounting
Definition - bookkeeping of financial transactions and events of a business and
preparation of basic financial
statements
Report - Financial statements:
(1) General Purpose Financial Statements are prepared to accommodate the
information needs of persons who have no capability to request or acquire information
directly from the company
(2) Special Purpose Financial Statements - utilized by internal parties to guide
them in the decision making process for the company
Purpose - guide internal and external users in economic decisions
Frequency - periodic
Intended Users - external and internal users
Standards - Philippine Financial Reporting Standards (PFRS) and Philippine
Accounting Standards (PAS)
b
...
Tax Accounting - involved in tax compliance and tax planning
d
...

e
...

f
...
Government Accounting
Definition - accounting for the receipt and disposition of government fund and
property and interpreting the result thereof ; used by all government agencies
Report - periodic financial reports and financial statements
Purpose - show stewardship of public funds by the government
Frequency - periodic
Intended Users - external and internal users
Standards - National Government Accounting System (NGAS) - enhances
responsibility accounting in all agencies and discourages misappropriation and
misuse of public fund
...
Accounting Education - focuses in education students and professionals alike
about accounting, auditing, taxation, and advanced accounting and business
subjects
...

 Objectivity – to not allow bias, conflict of interest or undue influence of others to
override professional or business judgments
...

 Confidentiality – to respect the confidentiality of information acquired as a
result of professional and business relationships and, therefore, not disclose any
such information to third parties without proper and specific authority, unless
there is a legal or professional right or duty to disclose, nor use the information for
the personal advantage of the professional accountant or third parties
...


Philippine Accountancy Act of 2004
The Republic Act 9298 (RA9298) otherwise known as the "Philippine Accountancy
Act of 2004" serves as the regulating law for the certified public accountants (CPAs) in
the Philippines
...
Topics and its accompanying details are included in the CPA Board
Examinations as part of the Auditing Theory subject
...

 Philippine Institute of Certified Public Accountants (PICPA) - national
organization of CPAs and the accredited professional organization (APO)
...

 Securities and Exchange Commission (SEC) - keeps an eye in the operations
of partnerships and corporations
 Bangko Sentral ng Pilipinas (BSP) - regulates the operations of financial
institutions, banks and business import and export activities
 Local Government Units (LGU) - ensure payment of local taxes
Financial Reporting Standards Council (FRSC)
The Financial Reporting Standards Council (FRSC) was established by the Board
of Accountancy (BOA or the Board) in 2006 under the Implementing Rules and
Regulations of the Philippine Accountancy of Act of 2004 to assist the Board in carrying
out its power and function to promulgate accounting standards in the Philippines
...

Professional Organizations of CPAs
Philippine Institute of Certified Accountants (PICPA)
 the accredited professional organization (APO) of CPAs by the Professional
Regulation Commission (PRC) and has been awarded twice as PRC most
outstanding APO from among other professional organizations
...
W
...
Larkin, holder of CPA
Certificate No
...








The group set forth the following objectives:
To promote and maintain high professional and ethical standards among
accountants;
To advance the science of accounting;
To develop and improve accountancy education;
To encourage cordial relations among accountants, and
To protect the Certificate of Certified Public Accountant granted by the Republic
of the Philippines
...
Sole or Single Proprietorship - Business is owned by only one person
Advantage
1
...
owner has full control of the
business - can single-handedly
decide on matters pertaining to the
business
3
...
owners have all profits for
themselves
5
...
unlimited liability - can go after
personal properties even after
extinguishing all business assets to
satisfy claims of creditors
2
...

owner's bias - owner has the
final word

b
...
easier to create than corporation
2
...
larger pool of human capital
than sole proprietorship

1
...

mutual agency
3
...
Corporation - artificial being created by the operation of law, having the right
of succession and the powers, attributes and properties expressly authorized by
law or incident to its existence
Advantage
1
...
transferable owner's rights ownership rights are represented by
stocks and can be transferred
through sale, donation or other
modes of transfer
3
...
virtually unlimited life - 50 years
and can be extended (no limit in
extension)
5
...
heavily regulated by the government
- closely monitored by the
government
2
...

not easy to form
4
...
Service
Definition - generally use their employees to provide services to customers
Input - labor
Output - intangible ; service
Advantages - absence of inventory ; no production facilities
Disadvantages - inability to standardize services; maintaining human capital
Service revenue - primary source of revenue through performance of services
2
...
Manufacturing (Manufacturers)
Definition - create their own products
Input - raw materials, labor, overhead
Output - tangible ; manufactured products
Advantages - visible products; quality control
Disadvantages - generally need production facilities; high conversion costs; cost
of quality control; managing inventory
Users of Accounting Information

Activities in Business Organizations
•

Financing Activities- Organizations require financial resources to obtain other
resources in financial markets
Are the methods an organization uses to obtain financial
resources from financial markets and how it manages these
resources
...
g
...
(e
...
Buying land, equipment, buildings and
other resources that are needed in the operation of the business and selling
theses resources when they are no longer needed
...
(e
...
research and development, design and
engineering, purchasing, human resources, production, distribution,
marketing and selling and servicing
...

Accounting Principles – (Generally Accepted Accounting Principles or GAAP) These
GAAPs are the doctrines, creeds, dogmas we apply and follow in the accounting practice
...

The Basic Financial Statements and their definition
1
...

2
...

3
...

4
...

5
...

Objective of Financial Statements


to provide information about the financial position, performance and changes in
financial position of an entity that is useful to a wide range of users in making
economic decisions
...

1
...

2
...
Meaning, expenses recognition is driven
by a matching process
...

1
...

2
...

Liabilities are carried at an undiscounted amount of cash or cash equivalents that
would be required to settle the obligation currently
...
Realizable (settlement) Value - Assets are carried at the amount of cash or
cash equivalents that could currently be obtained by selling the asset in an orderly
disposal
...

4
...
Liabilities are carried at their present discounted value of the future net
cash outflows that are expected to be required to settle the liabilities in the normal
course of business
...
Relevance- to the extent that it results in information that is meaningful and useful
to those who need to know something about a certain organization
...
Objectivity- to the extent that the resulting information is not influenced by the
personal bias or judgments of those who furnish it
...
Feasibility- to the extent that it can be implemented without undue complexity or
cost
...
Objectivity Principle- Accounting records and statements are based on the most
reliable data available so that they will be accurate and as useful as possible
...
Historical Cost- states that acquired assets should be recorded at their actual cost
and not at what management thinks as at the reporting date
...
Revenue recognition principle
4
...
Full disclosure principle – Information communicated to users reflect a balance
between detail and conciseness, keeping in mind the cost-benefit principle
...
Materiality Principle
7
...

Basic Accounting Assumptions
A
...


B
...




Periodicity or Time Period Assumption refers to the equal length of time or
relatively short periods of the economic life of the organization
...


Qualitative Characteristics
Understandability - Users are assumed to have a reasonable knowledge of
business and economic activities and accounting and willingness to study the
information with reasonable diligence
...
Relevance - Information has the quality of relevance when it influences the
economic decisions of users by helping them evaluate past, present and future
events confirming, or correcting, their past evaluations
...
Materiality depends on the size of the item or error judged in the
particular circumstances of its omission or misstatements
...
Predictive Value - Accounting information should be helpful to external
decision makers by increasing their ability to make predictions about the
outcome of future events
...
Feedback Value - Accounting information should be helpful to external
decision makers who are confirming past predictions or making updates,
adjustments, or corrections to predictions
...
Timeliness - Accounting information must be available on time when
needed if it is to influence decisions
...

Information is useless if not available when needed
...
Reliability - Information has the quality of reliability when it is free from
material error and bias and can be depended upon by users to represent faithfully
that which is either purports to represent or could reasonably be expected to
represent
...
Faithful representation - A statement of financial position should
represent faithfully the transactions and other events that result in assets,
liabilities and equity of the entity at the reporting date which meet the
recognition criteria
...
Substance over form - If information is to represent faithfully the
transactions and other events that it purports to represent, it is necessary
that they are accounted for and presented in accordance with their
substance and economic reality and not merely their legal form
...
Prudence is the inclusion of a degree of caution in the exercise of the
judgments needed in making estimates required under conditions of
uncertainty, such that assets or income are not overstated and liabilities or
expenses are not understated
...
Completeness - To be reliable, the information in financial statements
must be complete within the bounds of materiality and cost
...

e
...

1
...


Comparability - Users must be able to compare the financial statements of an
entity through time in order to identify trends in its financial position and
performance
...

a
...
Comparisons over time are difficult unless there is consistency in
the way accounting principles are applied across fiscal years
...
Timeliness - Management may need to balance the relative merits of timely reporting
and the provision of reliable information
2
...

3
...

4
...
Controlled by the enterprise- Control is the ability to obtain the economic benefits and
to restrict the access of others
...
Past events- The event must be past before an asset can arise
...
Future economic benefits- these are evidenced by the prospective receipt of cash
...

Examples of assets:
Cash, Cash equivalents, notes receivable, accounts receivable, inventories, prepaid
expenses, property, plant and equipment, investments, intangible assets and other
assets
...
Current Assets- assets that are expected to be realized, sold or consumed within the
enterprise’s normal operating cycle
...
Non-Current Assets - All other assets which are not current and are expected to be
realized in more than 12 months
Examples of Current assets
1
...
Accounts Receivable- Oral promises to the entity to receive cash at a later date and
usually arise from the normal course of business
o Trade Receivables - arise from the normal course of business
o Non-Trade Receivables – do not arise from the normal course of business (other
receivables)
3
...
Most often, these are entered to make the
most income out of its idle cash
4
...
Sometimes called promissory notes
5
...
Prepayments




Paid in advance for goods or services anticipated to be received by the entity in the
future
Would only cease to be as such when they are finally used up

Examples of Non-Current assets
1
...
Fixed Assets
 Most tangible, longest-serving assets
 Expected to not be converted into cash immediately and regularly placed as a
means of production
 Not usually consumable and are only used through utilization
Depreciation – deterioration with the passage of time, through usage, normal wear-andtear, and obsolescence (except land)
3
...
Other Assets
 All remaining assets which do not fall into any of the accounts mentioned
 Catch-all for assets which are usually very much unique or hard to classify
Liabilities- are obligations of the entity to outside parties who have furnished
resources
Characteristics of a Liability:
1
...

2
...

3
...
Complementary nature of assets and liabilities- as should be evident from the
above, assets and liabilities are seen as mirror images of each other
...


Classification of Liabilities
1
...
Noncurrent Liabilities- Form the residual portion of liabilities
Liabilities that are expected to be settled after more than a year, or have a legal or
contractual capacity to defer payment accordingly
Examples of Current Liabilities
1
...
Notes Payable
o
o
o
o

Written promises of the entity to pay sum certain in a future determinable time
Can also arise from the regular borrowings
Opposite of notes receivable
Pay interest regularly and may be paid in lump sum or instalments

3
...

Current Portion of Long-Term Debts
o Portion of the remaining debt that is due many years from now
5
...


Bonds Payable
o Degree more formal than notes payable
o Have stated interest rates
o Usually issued by the government, banks and huge corporations seeking huge
financing sources
o Bond Indenture – agreement of a long-term debt, often in huge sums
o Term Bonds – Have principal maturing in a single date
o Serial Bonds – Have principal maturing in multiple dates

Equity- Residual interest of the owners in the assets of the business after considering
all liabilities
Owner’s Capital – equity of sole proprietorships and partnerships
Stockholder’s Equity – equity of corporations
Capital- this account is used to record the original and additional investments of the
owner of the business entity
...

Income Summary- It is a temporary account used at the end of the accounting period
to close income and expenses
...
Common Share- Security which represents ownership in a corporation
Common Shareholders – those who own common stocks
Rights of a Common Shareholder:




Right to vote in the stockholder’s meetings
Right to receive dividends
Pre-emptive right which is the right to be offered first to buy additional shares in the
event of future issuance
Par Value– legal nominal value assigned to stocks
2
...
Additional Paid-in Capital (share premium)



Excess over par value contributed by the company’s shareholders in a stock issue
Arises from the selling of the stock at higher price than the par value

4
...
Revenues – amounts received by a business earned as a result of selling something
or rendering a service
2
...
Sales Revenue – main source of revenue for businesses that sells products
4
...
Non-Operating Revenue – result of some side activities
6
...
Dividend Revenue – earned as a result of dividend declaration of a company where
in a business has invested stocks
8
...
Gains – result of non-recurring activities or the increase in value of investments
10
...
Cost of Goods Sold – incurred by the company to make the inventory sell or buy
them
2
...
Depreciation Expense – use of building and equipment
4
...
Insurance Expense – insurance paid for, expiring over time
6
...
Bad Debts Expense – estimate of how much accounts receivable the company will
not be able to collect
8
...
Losses – direct opposite of gains
10
...
Liquidating Dividends – originate from some other equity account

The Expanded Accounting Equation
Assets = Liabilities + Equity + Income - Expenses
The difference between income and expenses represents profit or loss
...

EXPENSES – are decreases in economic benefits during the period in the form of
decreases in assets, or increases in liabilities, that result in decreases in equity,
excluding those relating to distributions to the business owner
...
Events may be internal actions, such as the use of
equipment for the production of goods and services
...
A transaction is a particular kind
of event that involves the transfer of something of value between two entities
...

TYPES AND EFFECTS OF TRANSACTIONS
It will be beneficial in the long-term to be able to understand a classification approach
that emphasizes the effects of accounting events rather than the recording procedures
involved
...
Although business entities engage in
numerous transactions, all transactions can be classified into one of the four types,
namely:
1
...

Examples:
a
...


Sold goods on cash on delivery basis

2
...

Example: Acquired equipment for cash

3
...
An asset account decreases and a corresponding claims
(liabilities or owner’s equity) account decreases
...


Settled accounts payable

b
...

Exchange of Claims (EC) One claims (liabilities or owner’s equity) account
increases and another claims (liabilities or owner’s equity) account decreases
...

Every accountable event has a dual but self-balancing effect on the accounting equation
...
The four types of transactions above may further expanded into nine
types pf effects as follows:
1
...


Increase in assets = Increase in Owner’s Equity (SA)

3
...


Decrease in Assets = Decrease in Liabilities (UA)

5
...


Increase in Liabilities = Decrease in Owner’s Equity(EC)

7
...


Increase in one liability = Decrease in another liability (EC)

9
...
Preparing a worksheet involves
Response: d
...

Correct answer: d
...

Score: 1 out of 1 Yes

Question 2
2
...
not journalized until after the financial statements are prepared
...
not journalized until after the financial statements are prepared
...
The information for preparing a trial balance on a worksheet is obtained from
Response: b
...

Correct answer: b
...

Score: 1 out of 1 Yes

Question 4
4
...
adjustments columns of the worksheet
...
post-closing trial balance
...
If the total income statement debit column exceeds the total income statement credit
column on a worksheet, then the company has
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 6
6
...
preparation of financial statements
...
preparation of financial statements
...
Which of the following companies would be least likely to use a worksheet to
facilitate the adjustment process?
Response: a
...
Small company with few accounts
Score: 0 out of 1 No

Question 8
8
...
optional device used by accountants
...
optional device used by accountants
...
The account, Supplies, will appear in the following debit columns of the worksheet
...
All of these answer choices are correct
Correct answer: d
...
When constructing a worksheet, accounts are often needed that are not listed in the
trial balance already entered on the worksheet from the ledger
...
They should be inserted in chart of account order into the trial balance
already given
...
They should be inserted on the lines immediately below the trial
balance totals
...
When using a worksheet, adjusting entries are journalized
Response: a
...

Correct answer: c
...

Score: 0 out of 1 No

Question 12
12
...
Income statement columns
Correct answer: a
...
Adjusting entries are prepared from
Response: b
...

Correct answer: b
...

Score: 1 out of 1 Yes

Question 14
14
...
is found by computing the difference between the income statement
columns of the worksheet
...
is found by computing the difference between the income statement
columns of the worksheet
...
The worksheet does not show
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 16
16
...
will decrease because a net loss has occurred
...
will increase because net income has occurred
...
The income statement and statement of financial position columns of Pint of Ale
Company’s worksheet reflect the following totals:
The net income (or loss) for the period is
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 18

18
...
income statement credit column and the statement of financial position
debit column
...
income statement credit column and the statement of financial
position debit column
...
Closing entries are necessary for
Response: b
...

Correct answer: b
...

Score: 1 out of 1 Yes

Question 20
20
...
All of these are closed to Income Summary
...
Owner’s Drawings
...
Closing entries are made
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 22
22
...
posted to the ledger accounts from the worksheet
...
journalized in the general journal
...
The income summary account
Response: d
...

Correct answer: d
...

Score: 1 out of 1 Yes

Question 24
24
...
debit to the owner’s capital account
...
credit to the owner’s capital account
...
Closing entries are journalized and posted
Response: b
...

Correct answer: b
...

Score: 1 out of 1 Yes

Question 26
26
...
cause the revenue and expense accounts to have zero balances
...
cause the revenue and expense accounts to have zero balances
...
Which of the following is a true statement about closing the books of a
proprietorship?
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 28
28
...
statement of financial position
Correct answer: c
...
In order to close the owner’s drawings account, the
Response: d
...

Correct answer: d
...

Score: 1 out of 1 Yes

Question 30
30
...
each expense account will be credited
...
each expense account will be credited
...
The most efficient way to accomplish closing entries is to
Response: d
...

Correct answer: d
...

Score: 1 out of 1 Yes

Question 32
32
...
all temporary accounts
...
all temporary accounts
...
The final closing entry to be journalized is typically the entry that closes the
Response: b
...

Correct answer: b
...

Score: 1 out of 1 Yes

Question 34
34
...
the statement of financial position accounts have zero balances
...
the statement of financial position accounts have zero balances
...
The Income Summary account is an important account that is used
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 36
36
...
zero
...
the net income or loss on the income statement
...
After closing entries are posted, the balance in the owner’s capital account in the
ledger will be equal to
Response: b
...

Correct answer: b
...

Score: 1 out of 1 Yes

Question 38
38
...
contains the
following information:
The entry to close the revenue account includes a
Response: c
...

Correct answer: d
...

Score: 0 out of 1 No

Question 39
39
...
contains the
following information:
The entry to close the expense accounts includes a

Response: c
...

Correct answer: b
...

Score: 0 out of 1 No

Question 40
40
...
contains the
following information:
After the revenue and expense accounts have been closed, the balance in Income
Summary will be
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 41
41
...
contains the
following information:
The entry to close Income Summary to Owner’s Capital includes
Response: d
...

Correct answer: d
...

Score: 1 out of 1 Yes

Question 42
42
...
contains the
following information:
At June 1, 2020, Snap Shot reported owner’s equity of $36,000
...
At June 30, 2020, the company will report owner’s equity
of
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 43
43
...
debit to Revenues for 73,000
...
debit to Revenues for 73,000
...
The income statement for the year 2020 of Bugati Holding contains the following
information:
The entry to close the expense accounts includes a
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 45
45
...
a debit balance of 6,500
...
a debit balance of 6,500
...
The income statement for the year 2020 of Bugati Holding contains the following
information:
The entry to close Income Summary to Owner’s Capital includes
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 47
47
...
Owner drawings for the
year totalled 13,000
...
30,500
...
30,500
...
The income statement for the year 2020 of Bugati Holding contains the following
information:
After all closing entries have been posted, the Income Summary account will have a
balance of
Response: a
...

Correct answer: a
...

Score: 1 out of 1 Yes

Question 49
49
...
0
...
0
...
A post-closing trial balance is prepared
Response: a
...

Correct answer: a
...

Score: 1 out of 1 Yes

Question 51
51
...
proves that all transactions have been recorded
...
proves that all transactions have been recorded
...
A post-closing trial balance will show
Response: a
...


Correct answer: a
...

Score: 1 out of 1 Yes

Question 53
53
...
after closing entries are posted to the ledger accounts
...
after closing entries are posted to the ledger accounts
...
A post-closing trial balance will show
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 55
55
...
prove the equality of the statement of financial position account balances
that are carried forward into the next accounting period
...
prove the equality of the statement of financial position account
balances that are carried forward into the next accounting period
...
The balances that appear on the post-closing trial balance will match the
Response: b
...

Correct answer: b
...

Score: 1 out of 1 Yes

Question 57
57
...
Owner’s Capital
Correct answer: c
...
A double rule applied to accounts in the ledger during the closing process implies
that
Response: c
...

Correct answer: a
...

Score: 0 out of 1 No

Question 59
59
...
a statement of financial position
...
a statement of financial position
...
Which one of the following is usually prepared only at the end of a company’s
annual accounting period?
Response: a
...
Journalizing and posting closing entries
Score: 0 out of 1 No

Question 61
61
...
e
...
posting to ledger accounts
...
journalizing and posting adjusting entries
...
Which one of the following is an optional step in the accounting cycle of a business
enterprise?
Response: b
...
Prepare a worksheet
Score: 1 out of 1 Yes

Question 63
63
...
a post-closing trial balance
...
a post-closing trial balance
...
Which of the following steps in the accounting cycle would not generally be
performed daily?
Response: c
...
Prepare adjusting entries
Score: 1 out of 1 Yes

Question 65
65
...
Prepare a trial balance
Correct answer: d
...
Which of the following depicts the proper sequence of steps in the accounting
cycle?
Response: c
...
Prepare a trial balance, prepare adjusting entries, prepare financial
statements
Score: 1 out of 1 Yes

Question 67
67
...
reversing entries and a worksheet
...
reversing entries and a worksheet
...
The first required step in the accounting cycle is
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 69
69
...
always affect at least one statement of financial position account and one
income statement account
...
may involve any combination of accounts in need of correction
Score: 0 out of 1 No

Question 70
70
...
The transaction was erroneously recorded as a debit to Cash €560 and a credit to
Service Revenue €560
...
debit Cash, €650; credit Accounts Receivable, €650
...
debit Cash, €90 and Service Revenue, €560; credit Accounts
Receivable, €650
...
If errors occur in the recording process, they
Response: b
...

Correct answer: b
...

Score: 1 out of 1 Yes

Question 72
72
...
may involve any combination of accounts
...
may involve any combination of accounts
...
An unacceptable way to make a correcting entry is to
Response: b
...

Correct answer: b
...

Score: 1 out of 1 Yes

Question 74
74
...
TheaccountantpreparingthepayrollentryoverlookedthefactthatSalari
esandWagesExpenseofNT2,300,000 had been accrued at year end on December 31
...
Cash 2,200,000 ; Salaries and Wages Expense 2,200,000
Correct answer: c
...
Truffles Company
paid 860onaccounttoacreditor
...
The correcting entry is
Response: d
...
Accounts Receivable 680 ; Accounts Payable 860 ; Cash 1,540
Score: 1 out of 1 Yes

Question 76
76
...
He erroneously debited
Cash for INR25,000 and credited Accounts Receivable for INR25,000
...
Cash 27,000 ; Accounts Receivable 25,000 ; Unearned Service Revenue
52,000
Correct answer: c
...
On May 25, Mt
...
Thebookkeeper
forMt
...
The amounts have been posted to the ledger
...
debit Accounts
Receivable 370andcreditUnearnedServiceRevenue370
...
debit Accounts
Receivable 370andcreditUnearnedServiceRevenue370
...
On March 8, Saltwater Taffy bought supplies on account from the Sweet Honey for
NT44,000
...
The entries have been posted to the ledger
...
Supplies 44,000 ; Equipment 40,000 ; Accounts Payable 4,000
Correct answer: d
...
The following information is for Central Avenue Real Estate:
The total amount of assets to be classified as current assets is
Response: b
...

Correct answer: b
...

Score: 1 out of 1 Yes

Question 80
0
...
$285,000
...
$210,000
...
The following information is for Central Avenue Real Estate:
The total amount of assets to be classified as investments is
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 82
82
...
$85,000
...
$85,000
...
The following information is for Qwik Auto Supplies:
The total dollar of assets to be classified as current assets is
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 84
84
...
€585,000
...
400,000
Score: 0 out of 1 No

Question 85
85
...
€185,000
...
€185,000
...
The following information is for Qwik Auto Supplies:
The total dollar amount of liabilities to be classified as current liabilities is
Response: c
...

Correct answer: c
...

Score: 1 out of 1 Yes

Question 87
87
...
supplies
...
supplies
...
The first item listed under current liabilities is usually
Response: a
...

Correct answer: b
...

Score: 0 out of 1 No

Question 89
89
...
property, plant, and equipment
...
property, plant, and equipment
...
A current asset is
Response: d
...

Correct answer: d
...

Score: 1 out of 1 Yes

Question 91
91
...
does not have physical substance, yet often is very valuable
...
does not have physical substance, yet often is very valuable
...
Liabilities are generally classified on a statement of financial position as
Response: d
...

Correct answer: d
...

Score: 1 out of 1 Yes

Question 93
93
...
Current maturities of non-current debt

Correct answer: a
...
Revenue recognition fraud is
Response: c
...
S
...

Correct answer: c
...
S
...

Score: 1 out of 1 Yes

Question 95
95
...
neither IFRS nor GAAP
...
neither IFRS nor GAAP
...
Depreciation based on revaluation of land and buildings is permitted under
Response: a
...

Correct answer: c
...

Score: 0 out of 1 No

Question 97
97 Under GAAP, income is defined as
Response: b
...

Correct answer: a
...

Score: 0 out of 1 No

Question 98
98
...
It is prepared before adjusting entries have been made
...
It is prepared before adjusting entries have been made
...
Financial statements are prepared directly from the
Response: d
...


Correct answer: d
...

Score: 1 out of 1 Yes

Question 100
100
...
The note is signed on November 1 in the
amount of €80,000 with annual interest of 6%
...
Interest Expense 800 Interest Payable 800
Correct answer: a

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