Adjusting & Closing Entries

CSS –Accounting & Auditing, Paper 1, 2001
01 For preparing balance sheets prepaid expenses are showed as part of

(a) Liability (b) Equities
(c) Assets (d) None of these
02 Unpaid and unrecorded expenses are called:
(a) Prepaid expenses (b) Accrued expenses
(c) Additional expenses (d) None of these
CSS – Accounting & Auditing, Paper 1, 2004
03 Commission received in advance is to be considered as:
(a) Outstanding expenses
(b) Accrued income
(c) Prepaid expenses
(d) Unearned income
04 The provision for discount on creditors is often not provided in keeping with the principle of:
(a) Materiality
(b) Consistency
(c) Conservatism
(d) Realization
05 On April 1, Hassan & Company received and paid a Rs. 700 bill for the advertising done in March. In addition to this bill
the company paid Rs. 6,100 during April for expenses incurred in that month. Hassan & Company paid Rs. 3,600 as
salary to employees for work done in April. Based on these facts, total expenses for the month of April were:
(a) Rs. 6,100 (b) Rs. 6,800
(c) Rs. 10,700 (d) None of these
06 Which of the following categories of accounts are closed at the end of an accounting period?
(a) Temporary accounts (b) Permanent accounts
(c) Personal accounts (d) None of these
07 While passing adjusting entries for what type of transactions expenses are debited and assets are credited:
(a) Accrued revenue (b) Accrued expenses
(c) Declining balance (d) Depletion
08 Which of the following accounts are not closed at the end of an accounting period?
(a) Revenue accounts
(b) Expense accounts
(c) Drawing accounts
(d) Asset accounts
Q Use the following information in questions (iv) and (v).
9 Accounts appearing in the trial balance of Eastside Plumbing at May 31 are listed below in alphabetical order:
& Accounts payable...................................... Rs. 2.450
Accounts receivable ................................. 3,100
10
Accumulated Depreciation: Equipment.... 8,100
Advertising expense.................................. 150
Cash.......................................................... 2,900
Equipment................................................. 16,200
J.T. Golden, capital ................................. 11,000
J.T. Golden, drawing................................ 2,100
Other expenses.......................................... 900
Service revenue......................................... 4,800
Supplies expense....................................... 1,000
No adjusting entry has yet been made to record depreciation expense of Rs. 270 for the month of May.
09 The balance of XYZ Company capital account appearing in the May 31 balance sheet should be:
(a) Rs. 11,650 (b) Rs. 8,630
10 In an after-closing trial balance prepared at May 31, the total of credit column will be:
(a) Rs. 26,620 (b) Rs. 22,200
11 Before month-end adjustments are made, the January 31 trial balance of Hanan Excursions contains revenue of Rs. 9,300
and expenses of Rs. 5,780. Adjustments are necessary for following items:
 Portion of prepaid rent applicable to January, Rs. 900
 Depreciation for January, Rs. 480
 Portion of fees collected in advance earned in January, Rs. 1,100
 Fees earned in January not yet billed to customers, Rs. 650
Net Income for Hanan Excursions’ January income statement is:
(a) Rs. 3,520 (b) Rs. 5,690
12 On December 31, Elite Property Management made an adjustment entry to record Rs. 300 management fees earned but not
yet billed to Hayat’s, a client. This entry was reversed on January 1. On January 15, Hayat’s paid Elite Rs. 1,200, of
which Rs. 900 was applicable to the period January 1 through January 15. The Journal Entry made by Elite to record
receipt of the Rs. 1,200 on January 15 includes:
(a) A credit to Management Fees Earned of Rs. 1,200
(b) A credit to Accounts Receivable of Rs. 300
(c) A debit to Management Fees Earned of Rs. 300
(d) A credit to Management Fees Earned of Rs. 900
(e) None of these
13 Trading loss occurs when:
(a) Revenues exceed the matching relevant costs
(b) Revenues and matching costs are equal to each other
(c) When relevant matching costs exceed revenues
(d) None of these
14 Deferred tax is shown in the balance sheet as:
(a) Liability (b) Assete
(c) An expenditure in income statement
(d) None of these
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CSS –Accounting & Auditing, Paper 1, 2001

01 For preparing balance sheets prepaid expenses are showed as part of

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