ACCCOB1 (quiz 1)

Question 1

It is mandatory for a profit or non-profit entity to have an accounting system, whether manual or computerized

Answer 1

TRUE

Question 2

Designing an accounting system begins with the chart of accounts.

Answer 2

TRUE

Question 3

Entities are required to submit the Statement of Profit or Loss, Statement of Financial Position, Statement of Cash Flows, and the Trial Balance attached to their income tax return.

Answer 3

FALSE
The trial balance is not a requirement.

Question 4

The Statement of Profit or Loss shows the financial performance of a business entity

Answer 4

TRUE

Question 5

The Statement of Cash Flows shows the inflows and outflows of cash and other assets

Answer 5

FALSE
The other assets are not included in the Statement of Cash Flows

Question 6

Accounting information is used only by external users with a financial interest in a business enterprise

Answer 6

FALSE
Users without financial interests use accounting information as well

Question 7

Net income is computed by deducting costs and expenses from revenues, and it should equal the cash balance.

Answer 7

FALSE
Net income does not have to equal the cash balance

Question 8

The accounting cycle is a series of sequential steps or procedures performed to accomplish the accounting process.

Answer 8

TRUE

Question 9

Generally accepted accounting principles are standards that indicate how to report economic events.

Answer 9

TRUE

Question 10

The Matching principle dictates that expenses incurred to generate revenue must be recorded during the period when the corresponding revenue is generated.

Answer 10

TRUE

Question 11

The first step in the accounting cycle is the analysis of business transactions and the recording of these transactions in the general ledger.

Answer 11

FALSE
Transactions are recorded in the general journal

Question 12

The general journal is called the book of original entries, where balances of various accounts
can be found.

Answer 12

FALSE
Balances of various accounts are found in the general ledger.

Question 13

A single journal entry consists of one debit and one credit entry

Answer 13

FALSE
Simple, not single

Question 14

The worksheet preparation helps facilitate the preparation of financial statements.

Answer 14

TRUE

Question 15

The financial statements are prepared in this order: Statement of Profit or Loss, Statement of Changes in Owner’s Equity, Statement of Financial Position, Worksheet, and Statement of Cash Flows

Answer 15

FALSE
The worksheet is not a financial statement.

Question 16

The business entity’s inflow and outflow of cash is found in:
A. The Statement of Profit or Loss
B. Statement of Financial Position
C. Statement of Changes in Owner’s Equity
D. Statement of Cash Flows

Answer 16

D. Statement of Cash Flows

Question 17

What are the next steps in the accounting cycle after the preparation of the trial balance are?
A. Worksheet preparation, journalizing adjusting entries, and preparation of the financial statements.
B. Journalizing adjusting entries, preparation of the financial statements, and worksheet preparation (optional).
C. Preparation of the financial statements, worksheet preparation, journalizing adjusting entries.
D. Worksheet preparation, journalizing closing entries, and preparation of the financial statements.

Answer 17

A. Worksheet preparation, journalizing adjusting entries, and preparation of the financial
statements.

Question 18

Which of the following is a financial statement?
A. Worksheet
B. General Journal
C. Trial Balance
D. Statement of Profit or Loss

Answer 18

D. Statement of Profit or Loss

Question 19

When revenue is earned:
A. Assets increase
B. Owner’s equity decreases
C. Liabilities decrease
D. Drawing account increases

Answer 19

A. Assets increase

Question 20

Which part of the accounting process is considered necessary but optional?
A. Journalizing
B. Posting
C. Worksheet preparation
D. Financial statements preparation

Answer 20

C. Worksheet preparation

Question 21

Which principle requires important facts that would have an effect on an investor’s decisions be
included in the financial statements?
A. Full disclosure principle
B. Historical cost basis principle
C. Matching principle
D. Revenue recognition principle

Answer 21

A. Full disclosure principle

Question 22

Which section in the Statement of Profit or Loss is unusual to a service business?
A. Revenue
B. Cost of goods sold
C. Distribution expenses
D. General and administrative expenses

Answer 22

B. Cost of goods sold

Question 23

Purchases add freight in minus purchase returns and allowances minus purchase discount
equals
A. Cost of goods sold
B. Net delivered cost of purchases
C. Total operating expenses
D. Net income

Answer 23

B. Net delivered cost of purchases

Question 24

Acquisition of office supplies as payment from a credit customer would
A. Increase in one asset and decrease in another asset
B. Increase in one asset and increase in liabilities
C. Decrease in one asset and increase in owner’s equity
D. Decrease in one asset and decrease in liabilities

Answer 24

A. Increase in one asset and decrease in another asset

Question 25

A business entity received a note one month ago, and today, interest has accrued for P600. What is the accrual entry for the interest? A. Note receivable 600 Sales 600 B. Interest receivable 600 Interest income 600 C. Interest expense 600 Accrued interest expense 600 D. Accrued interest expense 600 Accrued interest income 600

Answer 25

B. Interest receivable 600 Interest income 600

Question 26

Purchase discount A. Is a contra cost account B. Appears in the Statement of Financial Position C. Has a normal debit balance D. Is included in the operating expenses

Answer 26

A. Is a contra cost account

Question 27

When the company uses the periodic inventory method of accounting for inventories, the A. Merchandise inventory account does not change until before the adjusting entry is prepared at the end of the year. B. Merchandise inventory account is debited when inventory is purchased and cost of goods sold is debited when inventory is sold. C. Sale of inventory requires a credit to Cost of Goods Sold. D. Withdrawal of merchandise by the owner requires a credit to Merchandise Inventory

Answer 27

A. Merchandise inventory account does not change until before the adjusting entry is prepared at the end of the year.

Question 28

Shipping terms FOB shipping means that A. The purchaser is responsible for the shipping charges. B. The seller is responsible for the shipping charges. C. Items should be in the purchaser’s inventory account at year end if the items are in transit D. Merchandise inventory is debited by the purchaser if the items are in transit.

Answer 28

A. The purchaser is responsible for the shipping charges.

Question 29

When a purchaser of merchandise is allowed by the seller a reduction of the original price fordefective goods, the purchaser will be issued a A. Debit memorandum B. Sales invoice C. Credit memorandum D. Official receipt

Answer 29

A. Debit memorandum

Question 30

Which of the following is not considered an operating expense A. Freight in B. Freight out C. Depreciation expense D. Office salaries expense

Answer 30

A. Freight in

Question 31

A special-purpose cash fund used to handle payments involving small amounts of money is called a ______ cash fund

Answer 31

petty

Question 32

If the company is a corporation, the third section of a corporation's balance sheet is____ whereas, If the company is a sole proprietorship, it is referred to as ____

Answer 32

stockholder's equity ; owner's equity

Question 33

also the "book value" of the corporation.

Answer 33

Stockholder's equity

Question 34

How do you get the Net realizable value?

Answer 34

Accounts receivable - Allowance for doubtful accounts