ACT6146

The double entry accounting system means - The dual effect of each transaction is

recorded with a debit and a credit.

Adjusting entries are needed because an entity - Uses the accrual basis of

accounting

Arrange the following steps in their correct order: - II, I and III

A simple journal entry - Consists of one debit and one credit

Which of the following is not correct about an unadjusted trial balance? - It

proves that debits and credits were properly entered in the ledger accounts.

The normal balance of an account is on the - Side represented by the increase in

the account balance

A trial balance may prove that debits that debits and credits are equal, except -

All of these may prove that debits and credits are equal.

Total net income over the life of an entity is - The same under the cash basis as

under the accrual basis

Adjusting entries involve - At least one real and one nominal account

An unearned revenue can be best be described as an amount - Collected and not

currently matched with expense

Which of the following is an example of an adjusting entry? - Recording

depreciation of a truck
Closing entries - Remove the balances from the entity’s temporary accounts

Which among the following is the last step in the accounting cycle? - Preparation

of the post-closing trial balance

Which is a logical order in the accounting cycle? - Financial statements, closing

entries and reversing entries

Accruals are - Adjusting entries where revenue or expense recognition precedes cash

flow

Adjusting entries affect - One nominal account and one real account

Which is not a possible combination of a journal entry? - Increase in asset and

decrease in equity

Which of the following least resembles a typical adjusting entry? - Debit asset,

credit liability

Posting - Transfers journal entries to the ledger accounts.

In recording transactions - Liabilities, revenue and share capital are credited for

increases.

Tranvia Company had the following balances on December 31, 2018: Cash in checking

account 350,000 Cash in money market account 750,000Treasury bill, purchased

November 1, 2018, maturing January 31, 20193,500,000Time deposit purchased December

1, 2018, maturing March 31, 2019 4,000,000What amount should be reported as cash
and cash equivalents on December 31, 2018? 4600000

When a petty cash fund is used, which of the following is true? - The reimbursement

of the petty cash fund should be credited to the cash account.

The overall objective of financial reporting is to provide information - That is

useful for decision making

Which of the following is most likely not considered as cash for financial

reporting purposes? - Post-dated checks from customers

Which statement is not a specific objective of financial reporting? - To provide

information on the liquidation value of an entity.

Bank overdraft - Which cannot be offset is classified as current liability

Which of the following statements is incorrect? - The responsibility for receiving

merchandising and paying for it should usually be given to one person

Cash equivalents are - Short-term and highly liquid investments that are readily

convertible into cash and acquired three months before maturity

Cash set aside for a particular purpose (i.e. restricted) - May be classified as

current or non-current depending on the purpose for its establishment

The objective of financial reporting in the Conceptual Framework - Is the

foundation for the Conceptual Framework.

Cash equivalents are short-term and highly liquid investments that are - Readily

convertible into cash and acquired 3 months before maturity

preparing a bank reconciliation which ends with adjusted balance? - Note receivable

collected by the bank in favor of the depositor and credited to the account of the

depositor.

Thor Company provided the following data on December 31, 2018: Checkbook

balance4,000,000Bank statement balance 5,000,000 Cash in sinking fund 2,000,000

Check drawn on Thor’s account, payable to supplier, dated and recorded on

December 31, 2018 but not mailed until January 15, 2019 amounted to P500,000. On

December 31, 2018, what amount should be reported as “cash” under current

assets? 450000

A bank reconciliation is - A schedule that accounts for the difference between an

entity’s cash balance as shown in the bank statement and the cash balance shown

in the general ledger.

Which of the following provides “the why” or the goal and purpose of accounting?

- Objective of financial reporting

A proof of cash - is a four-column bank reconciliation showing reconciliation of

cash balances per book and per bank at the beginning and end of the current month
and reconciliation of cash receipts and cash disbursement of the bank and the

depositor during the current month.

Which of the following shall not be considered “cash” for financial reporting

purposes? - Postdated checks and IOUs

All of the following can be classified as cash and cash equivalents, except? -

Equity investments

Which statement is true about the Conceptual Framework for Financial Reporting? -

All of these statements are true about the Conceptual Framework

Under existing accounting rules, cash is considered as a - Financial asset

Mr. Golf Champ maintains the accounts receivable records, authorizes the write-off

of uncollectible accounts, issues credit memoranda to customers, and handles cash

receipts from customers. When customers are late in paying their accounts, Mr. Golf

Champ often writes off the account as uncollectible and abstracts the cash received

from the customer. This fraud should come to light if an employee other than Mr.

Golf Champ. - none of the above

Short-term non-interest-bearing notes receivable are usually recorded at their -

maturity value

The category "trade receivables" includes - none of these

Roth Company received from a customer a one-year, P500,000 note bearing annual
interest of 8%. After holding the note for six months, the entity discounted the

note without recourse at 10%. - 513,000

A non-interest-bearing note receivable - includes an unspecified principal amount

and an unspecified interest amount

Eureka Co. sells goods to Ancing, a customer who uses Swipe Credit Card. Eureka

should record this sale as: - an account receivable from Swipe

At year-end, Barr Company reported net sales of P7,100,000 and allowance for

doubtful accounts with debit balance of P16,000 before adjustment. The entity

estimated the uncollectible accounts receivable at 2% of net sales. - P126,000

When accounts receivable are factored without recourse, what account does the

transferor credit? - accounts receivable

Which of the following is not a characteristic of receivables? - The holder has a

demonstrated positive intention and ability to hold them to maturity

Theoretically, the amount of estimated future returns and allowances on credit

sales should be recorded during the period of the sale so as not to overstate sales

and ending accounts receivable. In practice, these estimates are rarely recorded

because: - the amount of such returns and allowances is usually not material

When the percentage of credit sales method is used in determining doubtful

accounts, the amount computed represents the - bad debt expense

they include an unspecified principal and an unspecified interest

Which of the following methods is not appropriate for estimating bad debt expense?

- percentage of income

Accounts receivable usually appear in the balance sheet - as current assets,

immediately after cash and cash equivalents

When individual customers' accounts have credit balances of material amounts, these

amounts - must be reported separately in the liability section of the balance sheet

A cash refund to a customer for sales returns should be entered in - cash

disbursements journal

Ismael Co. recorded a bad debt recovery using the allowance method of accounting

for bad debts. Compare (X) the working capital before the recovery with (Y), the

working capital after the recovery. - X equals Y

If a 12%, 3-month note receivable is acquired from a customer in settlement of an

existing account receivable of ?10,000, the entry on initial recognition of the

note receivable includes a - debit to note receivable for ?10,000 and no entry for

interest
Jay Company provided the following data relating to accounts receivable for the

current year: - 925000