fabm (quiz 2)

Question 1

a listing of all accounts used by the business and is usually tailored to its operations

Answer 1

Chart of accounts

Question 2

The basic storage of information in accounting

Answer 2

An account

Question 3

The basic summary device of accounting.

Shows a detailed record of the changes in a specific asset, liability, equity, income, or expense

Answer 3

An account

Question 4

Five major accounts

Answer 4

Assets
Liabilities
Equity
Revenue
Expenses

Question 5

Resources controlled by the business

The first element of the Statemeny of Financial Position

Answer 5

Assets

Question 6

Reasonably expected to be realized within one year or the normal operating cycle

Answer 6

Current assets/liabilities

Question 7

Reasonably expected to be realized beyond one year or the normal operating cycle

Answer 7

Non-current assets/liabilities

Question 8

Current Assets (for familiarization lang)

Answer 8

Cash
Receivables
Inventory
Prepaid expenses
Prepaid supplies
Trading securities

Question 9

Non-current Assets (for familiarization lang)

Answer 9

Fixed Assets or Property, Plant, and Equipment
Investments
Intangible Assets

Question 10

Allowance for Doubtful Accounts

Accumulated Depreciation

Answer 10

Contra-asset Accounts

Question 11

The present obligations of an entity arising from past transactions or events

Answer 11

Liabilities

Question 12

Current Liabilities (for familiarization lang)

Answer 12

Accounts Payable
Notes Payable
Accrued Expenses
Unearned Revenue
Bank Loan Payable
Mortgage Payable
Bonds Payable

Question 13

The residual interest of the owner after liabilities are deducted from assets

Answer 13

Equity

Question 14

Equity (for familiarization lang)

Answer 14

Owner’s Capital
Owner’s Drawings
Net Income or Net Loss

Question 15

The earnings of the business arising from its main line of operations

Element of the Statement of Profit or Loss

Answer 15

Revenue

Question 16

Costs incurred by the business generating revenues

Answer 16

Expenses

Question 17

Used for incidental costs incurred

Answer 17

Losses

Question 18

Money the business earns from activities outside its main operations

Answer 18

Incidental income

Question 19

The Accounting Equation

Answer 19

Assets = Liabilities + Equity

Question 20

For every transaction, at least two accounts are affected

Answer 20

Double-entry Accounting

Question 21

Concepts of debit and credit

Answer 21

Debit (assets) = left
Credit (liabilities and equity) = right

Question 22

Accounts that are increased by debits

Answer 22

Assets
Drawings
Expenses

(ADE)

Question 23

Accounts that are increased by credits

Answer 23

Liabilities
Equity/Capital
Revenues

(LER)

Question 24

Where business transactions are initially recorded

Recorded in a chronological order

Answer 24

The general journal

Question 25

Called as the “book of original entry”

Answer 25

The general journal

Question 26

An entry composed of only one debit account and one credit account

Answer 26

A simple journal entry

Question 27

An entry that is made up of more than one debit account and/or more than one credit account

Answer 27

A compounded journal entry

Question 28

Basic components of a journal entry

Answer 28

1. Date of the transaction 2. Particulars 3. Posting Reference 4. Debit Account and Amount 5. Credit Account and Amount

Question 29

[True or False] The first step in the accounting cycle is recording transactions in the general journal

Answer 29

False (first step: analyzing transactions to see what accounts are affected.)

Question 30

Contains a record of all the accounts the business uses and their related transactions Transactions are classified per account

Answer 30

The general ledger

Question 31

Called as the “book of final entry”

Answer 31

The general ledger

Question 32

The summarized version of the ledger Determines the equality of the debit and credit entries

Answer 32

Trial balance

Question 33

Common errors that cannot be detected by the trial balance

Answer 33

- A complete omission of a transaction - Failure to post a journal entry - Posting a journal entry twice - Posting to the wrong account and amount

Question 34

[True or False] The total debits and total credits of each ledger account must be equal.

Answer 34

False (They only need to be equal in the trial balance, where the total of all debit balances equals the total of all credit balances.)

Question 35

[True or False] A balanced trial balance implies that no error was committed by the business in preparing and posting the journal entries.

Answer 35

False (Mistakes like posting to the wrong account, recording the wrong amount on both sides, or missing entries entirely can still exist even if the trial balance is balanced.)

Question 36

[True or false] Liabilities must be equal to the sum of assets and owner's equity.

Answer 36

False (Liabilities must be equal to the difference of the assets and owner's equity.)

Question 37

[True or False] When an equipment is bought on credit by the owner under the business' name to be used for its operations total assets will increase and total liabilities will decrease.

Answer 37

False (When an equipment is bought on credit by the owner under the business' name to be used for its operations total assets and total liabilities will increase.)

Question 38

[True or false] A liability is a present obligation that has resulted from past events and has the potential to cause a transfer of an economic resource in settlement.

Answer 38

True

Question 39

[True or false] The accounting cycle begins with the recording recording of the transactions and ends with the preparation of financial statements.

Answer 39

False (The accounting cycle begins with the analyzing transactions and ends with preparing a post-closing trial balance or preparing and posting reversing entries.)

Question 40

[True or false] The Unearned Service Revenue account is used to record services that are already earned.

Answer 40

False (The Unearned Service Revenue account is used to record services that are not yet earned but for which payment is already received.)

Question 41

[True or false] The Unearned Service Revenue account is used to record services that are already earned.

Answer 41

False (The Unearned Service Revenue account is used to record services that are not yet earned but for which payment is already received.)

Question 42

[True or false] When payment is received for service that is not yet rendered, no journal entry is made until the service is earned.

Answer 42

False (When payment is received for service that is not yet rendered, a journal entry is made to record cash received and recognize a liability.)

Question 43

[True or False] Investments by the owner in the business are recorded in the owner's capital account, not in a revenue account.

Answer 43

True

Question 44

[True or False] The normal balance of any account refers to the side of the account where increases are recorded

Answer 44

True

Question 45

[True or False] Entering transactions in the general journal is called posting.

Answer 45

False (Entering transactions in the general journal is called journalizing.)

Question 46

[True or False] Withdrawals made by the owner are considered expenses.

Answer 46

False (Withdrawals made by the owner are not considered expenses. If not re-invested by the owner at the end of the accounting period, these are charged to the owner's capital.)

Question 47

A P200,000 machine is purchased by paying P50,000 cash and the remainder is on account. The journal entry for this should include a credit to Accounts Payable for P150,000.

Answer 47

True

Question 48

[True or False] A credit always means an entry to the left side of an account.

Answer 48

False (A credit always means an entry to the right side of an account.)

Question 49

[True or false] In preparing the trial balance, all debits are listed first before all the credits.

Answer 49

False (In preparing the trial balance, the accounting equation is followed in listing down the accounts. Assets first, then liabilities, followed by the equity accounts - capital and drawings, then revenue, and finally expense accounts.)

Question 50

[True or false] A trial balance with equal total debit and credit means that all transactions were recorded correctly in the journal and posted accurately to the ledger.

Answer 50

False (A trial balance with equal total debit and credit does not guarantee that all transactions were recorded correctly in the journal and posted accurately to the ledger.)

Question 51

[True or false] Double posting of a credit journal entry will cause the total debits and total credits not to balance.

Answer 51

True

Question 52

An account that has a normal credit balance

Answer 52

Rent income

Question 53

When a credit is made to Accounts Receivable, its balance will

Answer 53

Decreasw

Question 54

The balance of an account with multiple entries is written

Answer 54

on the side with the greater total.

Question 55

The primary purpose of posting is to

Answer 55

to obtain updated account balances.

Question 56

the correct sequence of accounting procedures

Answer 56

Journal, Ledger, Trial Balance, Financial Statements

Question 57

Will not require an entry in the company's books

Answer 57

Agreement to perform a service at a future date.

Question 58

When owner's equity increases, which of the following most likely occur?

Answer 58

An asset increases

Question 59

An example where transactions decreases both assets and owner's equity?

Answer 59

Owner withdrew cash from the business

Question 60

Books of accounts include:

Answer 60

Journals and ledgers

Question 61

The accounts entered as debit when it increases

Answer 61

Rent expense