Bfar Comprehensive Exam Reviewer 1
Bfar Comprehensive Exam Reviewer 1
Bfar Comprehensive Exam Reviewer 1
MULTIPLE CHOICE
4. Which of the following accounts could appear in an adjusting entry, closing entry and
reversing entry?
a. Accumulated depreciation
b. Depreciation expense
c. Interest revenue
d. Salaries payable
5. Closing entries ultimately will affect
a. Cash account
b. Owner’s Capital account
c. Total assets
d. Total liabilities
9. After all adjusting entries are posted, the balances of all asset, liability, income and
expense accounts correspond exactly to the amounts in the
a. financial statements
b. post-closing trial balance
c. unadjusted trial balance
d. worksheet trial balance
10. Insurance Expense account has a balance of P108,000 before adjustment. This amount
represents insurance premium for three months beginning November 1, 2021. Based on
these data, the prepaid insurance that should be reported in December 31, 2021
statement of financial position is
a. P-0-
b. P36,000
c. P72,000
d. P108,000
11. A P50,000 purchases on account was paid after the expiration of the 2% discount
period. The entry to record the payment would include.
a. debit to accounts payable for P50,000
b. credit to accounts payable for P49,000
c. debit to purchases discount for P1,000
d. credit to cash for P49,000
12. Prior to adjustments, Supplies Expense account has a balance of P13,500. Adjustment
data gathered shows that supplies inventory on hand a year-end amounted to P5,500.
The amount of supplies to be shown in the income statement is
a. P-0-
b. P5,500
c. P8,000
d. P13,500
13. Rent Income account has a credit balance of P240,000 composed of the following:
a. Rental for three months ending March 31, 2021, P45,000
b. A credit of P195,000 representing advance rental payment for one year beginning
April 1, 2021
The December 31 adjusting entry will require a debit to Rent Income and a credit to
Unearned Rent of
a. P45,000
b. P48,750
c. P191,250
d. P195,000
14. The Giveaway Enterprises reported an allowance for uncollectible accounts of P16,000
(credit) at December 31, 2021, before any adjustment. At the end of the year, the
company reports accounts receivable of P800,000, 3% of which is estimated to be
uncollectible. The adjusting entry required at December 31, 2021 would be
a. Dr Uncollectible Accounts Expense, P8,000; Cr Allowance for Uncollectible Accounts;
P8,000
b. Dr Uncollectible Accounts Expense, P16,000; Cr Allowance for Uncollectible
Accounts, P16,000
c. Dr Uncollectible Accounts Expense, P24,000; Cr Allowance for Uncollectible
Accounts, P24,000
d. Dr Uncollectible Accounts Expense, P40,000; Cr Allowance for Uncollectible
Accounts, P40,000
15. Assuming that ending merchandise inventory was P10,000 less than beginning
merchandise inventory of P125,000 and that the net purchases was p450,000, how
much was the cost of goods sold?
a. P-0-
b. P335,000
c. P460,000
d. P565,000
Answer Key:
1. C 6. D 11. A
2. D 7. D 12. C
3. C 8. C 13. B
4. C 9. A 14. A
5. B 10. B 15. C
3. The carrying amount (book value) of an item of property, plant and equipment is
determined by
a. deducting depreciation expense during the period from the original balance of the
asset account
b. adding the contra account balance to the original balance of the asset account
c. deducting the contra account balance from the original balance of the asset account
d. an independent appraiser
4. Recording the expiration of a prepaid expense that was originally recorded in an asset
account would require a
a. debit to the appropriate prepaid asset account
b. debit to the appropriate expense account
c. credit to cash
d. credit to accounts payable
5. An adjusting entry for unearned revenue is required because cash is received
a. before the revenue is earned
b. after the revenue is earned
c. as revenue is earned
d. after the balance sheet date
10. Which of the following accounts would not be used in an adjusting entry?
a. Accumulated depreciation
b. Equipment
c. Interest Expense
d. Salaries Payable
11. In the accounting cycle, which step follows the preparation of the financial statements?
a. Journalize and post transactions as they occur
b. Journalize and post adjusting and closing entries
c. Prepare the work sheet
d. Prepare a post-closing trial balance
12. An entry requiring a debit to an expense account and a credit to a liability account is an
example of an adjusting entry classified as
a. accrued expense
b. Depreciation
c. prepaid expense
d. uncollectible accounts
14. A debit column total is greater than the credit column total in the income statement
section of the work sheet. This means that
a. mistakes were made in the preparation of the adjusted trial balance
b. the company had a profit
c. the company had a loss
d. the Income Summary account will have a credit balance after the nominal accounts
are closed
16. Before the adjusting entries are entered on the work sheet
a. the trial balance debit and credit column totals are not equal
b. the trial balance account balances do not reflect updated balances
c. the post-closing trial balance must be completed
d. the financial statements are prepared
17. Nominal accounts are also called
a. mixed accounts
b. permanent accounts
c. real accounts
d. temporary accounts
18. Which of the following items is not found in the work sheet?
a. Adjustments
b. General journal
c. Income statement
d. Statement of Financial Position
20. The summarizing phase includes all of the following steps except
a. Journalizing and posting adjusting entries
b. Journalizing and posting closing entries
c. Preparing the trial balance
d. Transferring the recorded transactions in the journal to the accounts in the ledger
25. A journal entry that contains more than two accounts is called
a. A posted journal entry
b. An adjusting journal entry
c. An erroneous journal entry
d. A compound journal entry
30. Beysic Co. pays all salaried employees on a biweekly basis. Overtime pay, however, is
paid in the next biweekly period. The company accrues salaries expense only at its
December 31 year end. Data relating to salaries earned in December 2021 are as
follows:
Last payroll was paid on 12/26/21, for the 2-week period ended 12/26/21.
Overtime pay earned in the 2-week period ended 12/26/21 was P10,000.
Remaining work days in 2021 were December 29, 30, 31, on which days there was no
overtime. The recurring biweekly salaries total P180,000.
Assuming a five-day work week, Beysic should record a liability at December 31, 2021
for accrued salaries of
a. P54,000
b. P64,000
c. P108,000
d. P118,000
Answer Key:
1. D 11. B 21. A
2. C 12. A 22. D
3. C 13. D 23. A
4. B 14. C 24. A
5. A 15. C 25. D
6. B 16. B 26. B
7. C 17. D 27. B
8. C 18. B 28. A
9. B 19. B 29. A
10. B 20. D 30. B
Multiple Choice – Problems
1. If a debit and credit totals of a trial balance were P240,000 and an additional entry was
recorded and posted for the purchase of P10,000 of office supplies for cash, what would
be the new debit and credit totals for the trial balance after this entry is made
a. P230,000
b. P240,000
c. P245,000
d. P250,000
2. A trial balance has debit and credit totals of P240,000. The purchase of P10,000 of office
supplies on account was omitted from the original journal entries. After the recording
and posting of this transaction, the new debit and credit totals for the trial balance
would be
a. P230,000
b. P240,000
c. P245,000
d. P250,000
3. Bleachers Service Company billed P1,200,000 for services to clients on account and had
expenses of P500,000 on account. Accounts receivable had a beginning balance of
P120,000 and an ending balance of P80,000. How much cash did the company collected
on accounts receivable and what type of entry to accounts receivable as made?
a. P740,000; debit
b. P740,000; credit
c. P1,240,000; debit
d. P1,240,000; credit
4. Bonifacio Co. pays cash for three months of rent in advance, at a rate of P50,000 per
month. The balance of the Prepaid Rent account two months later would be
a. P25,000
b. P50,000
c. P100,000
d. P150,000
5. Prepaid Insurance account had a beginning balance of P45,000. At the end of the
accounting period, it had a balance of P9,000. Accumulated Depreciation had a
beginning balance of P30,000 and an end-of-period balance of P45,000. The change in
the account balances of these two accounts resulted in total expenses changing by a
(an)
a. decrease of P36,000
b. increase of P39,000
c. decrease of P45,000
d. increase of P51,000
6. Carlos Company paid four month rent on August 1 and debited Rent Expense for
P80,000. On August 31, Carlos should
a. debit Prepaid Rent for P20,000
b. credit Prepaid Rent for P20,000
c. credit Rent Expense for P20,000
d. credit Rent Expense for P60,000
10. In the worksheet, the Income Statement debit column equals P700,000 and the credit
column equals P800,000. Which of the following statements is correct?
a. The company realized a profit of P100,000 and it must be added to the Income
Statement debit column and the Statement of Financial Position credit column to
complete the worksheet.
b. The company incurred a loss of P100,000 and it must be subtracted from the Income
Statement debit column and the Statement of Financial Position credit column to
complete the worksheet.
c. The company incurred a loss of P100,000 and it must be added to the Income
Statement credit column and the Statement of Financial Position debit column to
complete the worksheet
d. The company realized a profit of P100,000 and it must be subtracted from the
Income Statement debit column and added to the Statement of Financial Position
debit column.
11. The balance of the following accounts were closed to the Income Summary account:
Salary Expense, P50,000 debit; Cost of Goods Sold, P80,000 debit; Utility Expense,
P25,000 debit; Sales, P200,000 credit. The amount and the entry to close Income
Summary to the Capital account would be
a. P45,000 credit to the Income Summary account
b. P45,000 debit to Income Summary account
c. P155,000 debit to the Income Summary account
d. P200,000 credit to the Income Summary account
12. If the Income Summary account has a credit balance of P150,000 before its balance is
closed to the Capital account, you know that
a. revenues exceeded expense by P50,000
b. the company had a loss of P100,000
c. the company had a profit of P150,000
d. the owner invested an additional P150,000 in the business
13. The cost of goods available for sale is P1,300,000. The gross profit is P300,000, net sales
amounted to P1,000,000, net purchases are P1,100,000, and operating expenses are
P220,000. How much is the profit or loss of the company?
a. P80,000 profit
b. P80,000 loss
c. P300,000 profit
d. P300,000 loss
14. On August 1, 2021, the Gabriel Company paid P36,000 in advance for a one-year
insurance policy starting on this date. Gabriel debited Insurance Expense and credited
Cash for P36,000.
If adjusting entries are recorded annually, the appropriate adjusting entry at December
31, 2021 is a debit to
a. Prepaid Insurance and a credit to Insurance Expense for P15,000
b. Insurance Expense and a credit to Prepaid Insurance for P15,000
c. Prepaid Insurance and a credit to Insurance Expense for P21,000
d. Insurance Expense and a credit to Prepaid Insurance for P21,000
15. Using the information in the problem above and assuming Gabriel Company prepares
reversing entries, what is the correct reversing entry on January 1, 2022?
a. A debit to Insurance Expense and a credit to Prepaid Insurance for P15,000
b. A debit to Prepaid Insurance and a credit to Insurance Expense for P21,000
c. A debit to Insurance Expense and a credit to Prepaid Insurance for P21,000
d. No reversing entry should be recorded
16. Jacinto Company has beginning inventory of P600,000 and ending inventory of
P700,000. Under the periodic inventory system, the Inventory account at the end of the
period would have the following balances, respectively, before and after adjusting and
closing entries
a. P600,000 and P700,000
b. P600,000 and P600,000
c. P700,000 and P600,000
d. P700,000 and P700,000
17. Prepaid Insurance has an ending balance of P46,000. During the period, insurance
premium in the amount of P24,000 expired. The adjusting entry would include a debit to
a. Prepaid Insurance for P22,000
b. Insurance Expense for P22,000
c. Prepaid Insurance for P24,000
d. Insurance Expense for P24,000
18. A business received cash of P300,000 in advance for service that will be provided later.
The cash receipt was recorded by a debit to Cash and a credit to Unearned Revenue for
P300,000. At the end of the period, P110,000 is still unearned. The appropriate adjusting
entry is
a. debit Unearned Income and credit Income for P190,000
b. debit Unearned Income and credit Income for P110,000
c. debit Income and credit Unearned Income for P190,000
d. debit Income and credit Unearned Income for P110,000
19. The adjusted trial balance of LONESTAR Company shows the following balances:
Debit Credit
Cash P 500,000
Accounts Receivable 100,000
Furniture and Fixtures 150,000
Accumulated Depreciation P 40,000
Accounts Payable 50,000
Palejo, Capital 250,000
Palejo, Drawing 50,000
Service Fee 630,000
Salaries Expense 100,000
Depreciation Expense 40,000
Miscellaneous Expense 30,000
P970,000 P970,000
20. The Supplies on Hand account balance at the beginning of the period was P30,000.
Supplies totaling P120,000 was purchased during the period and debited to Supplies on
Hand. A physical count shows P40,000 of unused supplies at the end of the period. The
appropriate adjusting journal entry at the end of the period is
a. debit Supplies on Hand and credit Supplies Expense for P80,000
b. debit Supplies Expense and credit Supplies on Hand for P80,000
c. debit Supplies on Hand and credit Supplies Expense for P110,000
d. debit Supplies Expense and credit Supplies on Hand for P110,00
21. Silang Company purchased equipment on November 1, 2021 by giving the supplier a
one-year, 12 % note with a face value of P200,000. The December 31 adjusting entry
related to the note is
a. debit Interest Expense and credit Cash for P4,000
b. debit Interest Expense and credit Interest Payable for P4,000
c. debit Interest Expense and credit Interest Payable for P6,000
d. debit Interest Expense and credit Interest Payable for P24,000
22. Before any year-end adjustments were made, the profit of Valiente Co. was P2,000,000.
However, the following adjustments were necessary: office supplies used, P30,000;
services performed for clients but not yet collected, P65,000; interest accrued on note
payable, P15,000. After recording these adjustments, the profit would be
a. P1,890,000
b. P1,920,000
c. P2,020,000
d. P2,050,000
23. The following adjusted account balances are taken from the ledger of Roque
Merchandising Company as of December 31, 2021:
Freight-In P 70,000
Inventory, beginning 560,000
Purchases Discounts 30,000
Purchases Returns and Allowances 25,000
Purchases 1,020,000
Sales Discounts 43,000
Sales Returns and Allowance 37,000
Sales Revenue 1,915,000
a. 1 only
b. 2 only
c. 3 only
d. both 2 and 3
24. Using the information the in the problem above, the adjusting entry required to record
ending inventory will include a
1. debit to Income Summary, P578,000
2. credit to Income Summary, P578,000
3. debit to Inventory, P578,000
a. 1 only
b. 2 only
c. 3 only
d. both 2 and 3
25. Using the information in No. 23, assuming that the adjusting entry method was used for
the inventory, the correct entry to close the accounts with debit balances to Income
Summary account is
a. credit Income Summary, P1,732,000
b. debit Income Summary, P1,170,000
c. debit Income Summary, P1,732,000
d. credit Income Summary, P1,170,000
Answer Key:
1. B 14. C
2. D 15. C
3. D 16. A
4. B 17. D
5. D 18. A
6. D 19. C
7. C 20. D
8. C 21. B
9. A 22. C
10. A 23. A
11. B 24. D
12. C 25. D
13. A
Modified True or False
Read the statements carefully and indicate whether:
A. only the first statement is true
B. only the first statement is false
C. both statements are true
D. both statements are false
Answer Key:
1. O
2. B
3. H
4. N
5. K
6. F
7. E
8. A
9. I
10. X
11. P
12. T
13. M
14. G
15. Z
16. Q
17. V
18. W
19. S
20. D