[MAY 2022 SOURCE] Theories Flashcards
(18 cards)
Which of the following statements is correct?
a. When the debit total and the credit total of an account are equal, the account is said to be an open account.
b. When the debit total and the credit total of an account are not equal, the account is said to be a closed account.
c. The difference between the debit and credit of an account is said to be the account balance.
d. If the debit total of an account is greater than its credit total, the account is said to be a deficit.
c. The difference between the debit and credit of an account is said to be the account balance.
Arrange the following functions of accounting in a sequential manner.
Classifying
Recording
Interpreting
Summarizing
a. 2,1,3,4
b. 2,1,4,3
c. 1,2,4,3
d. 1,2,3,4
b. 2,1,4,3
SOURCE Philippine Accountancy Act of 2004
Selected accounts of Paubaya Company after adjusting entries appearing in the trial balance are shown below:
What kind of trial balance is above?
a. Trial Balance of Balances
b. Post-closing Trial Balance
c. Trial Balance of Totals
d. Preliminary Trial Balance
a. Trial Balance of Balances
SOURCE Bookkeeping Fundamentals
When all the accounts are closed, the income summary account is
a. Debited and the owner’s capital is credited.
b. Credited and the owner’s capital is debited.
c. Debited and the owner’s capital is debited.
d. Credited and the owner’s capital is credited.
a. Debited and the owner’s capital is credited.
SOURCE Closing Entries in Bookkeeping
How does failure to record accrued income distort the financial reports?
a. Overstates assets and owner’s equity
b. Understates revenues and owner’s equity
c. Overstates revenues and owner’s equity
d. Understates current assets and overstates stockholders’ equity
b. Understates revenues and owner’s equity
SOURCE Accrual Accounting IFRS
The type of transaction that would appear in the sales journal would be
a. Sale of merchandise for cash
b. Purchase of merchandise for cash
c. Sale of merchandise in exchange for an office equipment
d. Sale of merchandise on account
d. Sale of merchandise on account
SOURCE Bookkeeping Cycle
To record the sale of goods for cash in a perpetual inventory system:
a. Only one journal entry is necessary to record cost of goods sold and reduction of inventory.
b. Only one journal entry is necessary to record the receipt of cash and sales revenue.
c. Two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.
d. Two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the cost of goods sold and sales revenue.
c. Two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.
SOURCE Perpetual Inventory System
The steps in the accounting cycle for a merchandising company are the same as those in a service company except:
a. An additional adjusting journal entry for inventory may be needed in a merchandising company.
b. Closing journal entries are not required for a merchandising company.
c. A post-closing trial balance is not required for a merchandising company.
d. A multiple-step income statement is required for a merchandising company.
a. An additional adjusting journal entry for inventory may be needed in a merchandising company.
SOURCE Bookkeeping Cycle
Which of the following questions would not be answered by the statement of cash flows?
a. Where did the cash come from during the period?
b. What was the cash used for during the period?
c. Were all the cash expenditures beneficial to the company during the period?
d. What was the change in the balance during the period?
c. Were all the cash expenditures beneficial to the company during the period?
SOURCE IAS 7 Statement of Cash Flows
In a statement of cash flows (using indirect approach for operating activities) an increase in inventories should be presented as a(n):
a. Outflow of cash
b. Inflow and outflow of cash
c. Deduction from net income
d. Addition to net income
c. Deduction from net income
SOURCE IAS 7 Statement of Cash Flows
In determining cost of goods sold in a periodic system:
a. Purchase discounts are deducted from net purchases.
b. Freight-out is added to net purchases.
c. Purchase returns and allowances are deducted from net purchases.
d. Freight-in is added to net purchases.
d. Freight-in is added to net purchases.
SOURCE Periodic Inventory System
Which of the following is an appropriate reconciling item to the balance per bank in a bank reconciliation?
a. Bank service charge
b. Bank interest
c. Deposit in transit
d. Chargeback for NSF check
c. Deposit in transit
SOURCE Bank Reconciliation Statement
Internal users of accounting information would not include
a. Managers
b. Creditors
c. Employees
d. Officers
b. Creditors
SOURCE Users of Accounting Information
This deals with the determination of the fairness of the accounting reports and whether they are in accordance with generally accepted accounting principles.
a. Cost Accounting
b. Management Accounting
c. Auditing
d. Financial Accounting
c. Auditing
SOURCE Philippine Standards on Auditing
Assume that the term of shipment is FOB Shipping Point, Freight Collect. Who should shoulder the freight and who will pay?
a. Should shoulder: Seller & Will pay: Seller
b. Should shoulder: Buyer & Will pay: Buyer
c. Should shoulder: Seller & Will pay: Buyer
d. Should shoulder: Buyer & Will pay: Seller
b. Should shoulder: Buyer & Will pay: Buyer
SOURCE Incoterms 2020 FOB Shipping Point
How many of the following statements is/are FALSE?
1. An increase in revenue is on the credit side hence a decrease in expense is also on the credit side.
2. A balanced trial balance means that the recording is free from errors.
3. A simple entry has only one debit and credit while a compound entry has two or more debits and credits.
4. Tangible assets have values, but intangible assets have no values.
a. 4
b. 3
c. 2
d. 1
c. 2
SOURCE Basic Accounting Principles
Which of the following statements is incorrect concerning the adjusted trial balance?
a. An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made.
b. The adjusted trial balance provides the primary basis for the preparation of financial statements.
c. The adjusted trial balance lists the account balances segregated by assets and liabilities.
d. The adjusted trial balance is prepared after the adjusting entries have been journalized and posted.
c. The adjusted trial balance lists the account balances segregated by assets and liabilities.
SOURCE Bookkeeping Cycle
If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has:
a. Earned net income for the period.
b. An error because debits do not equal credits.
c. Suffered a net loss for the period.
d. To make an adjusting entry.
c. Suffered a net loss for the period.
SOURCE Worksheet Preparation
