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Practice Exam

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5 views4 pages

Practice Exam

Practice

Uploaded by

ririgrant9
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TEST I.

True or False (20 points)


1. A balance sheet reflects the financial position of a business at a particular date.
2. The accounting equation is Assets + Liabilities = Owner's Equity.
3. Revenue is recognized when cash is received, regardless of when it is earned.
4. The accrual basis of accounting recognizes revenues when earned and expenses when
incurred.
5. Depreciation expense represents a cash outflow during the accounting period.
6. Liabilities are claims of creditors against the assets of the business.
7. Owner's Equity decreases when the owner withdraws cash or assets from the business.
8. Financial statements include a Statement of Financial Position, Statement of
Comprehensive Income, Statement of Cash Flows, and Statement of Changes in Equity.
9. Accounts Receivable is classified as a liability on the balance sheet.
10. The trial balance is used to detect errors in journal entries and posting to the ledger.
11. Expenses increase owner's equity in the business.
12. A journal entry that records a debit to cash and a credit to sales represents a cash sale
transaction.
13. A liability account typically has a debit balance.
14. Accrued expenses are recognized when paid, not when incurred.
15. A company's net income appears on both the Statement of Comprehensive Income and
the Statement of Financial Position.
16. Adjusting entries are made at the end of the accounting period to update account
balances.
17. Goodwill is considered an intangible asset.
18. Inventory is classified as a non-current asset.
19. The matching principle states that expenses should be matched with the revenues they
help generate.
20. A credit entry decreases the balance of an asset account.
TEST II.
Identification (20 ponits)
1. The system that ensures that every transaction has at least one debit and one credit.
2. The financial statement that summarizes the revenues and expenses of a business for a
period of time.
3. An asset's original cost minus accumulated depreciation.
4. A ledger that contains all of the accounts used by a business.
5. A financial statement showing the company's cash inflows and outflows.
6. The adjusting entry used to recognize earned but unrecorded revenue.
7. The principle requiring revenue to be recognized when earned, not when cash is received.
8. An obligation of a company to pay a debt in the future.
9. The decrease in the usefulness of a fixed asset over time.
10. The account used to track owner contributions to the business.
11. The systematic process of identifying, recording, and reporting financial information.
12. The process of transferring journal entry information to the ledger accounts.
13. The allocation of the cost of a tangible asset over its useful life.
14. A cost that has been incurred but not yet paid or recorded.
15. A financial statement that provides a snapshot of the company’s assets, liabilities, and
owner’s equity at a specific point in time.
16. The entry made to correct an error in the accounting records.
17. An asset that is expected to be converted into cash within one year.
18. The process of determining the cost of goods sold by adding purchases to the beginning
inventory and subtracting the ending inventory.
19. The type of account that normally has a credit balance.
20. The principle that requires expenses to be recorded when they contribute to generating
revenues.
TEST III.
Dr. Nick Marasigan, upon completing a residency program at Harvard Medical Center,
established a medical practice in San Pablo, Laguna. During October 2024, the first month of
operations, the following transactions occurred:
Oct. 1 Dr. Marasigan transferred P250,000 from his personal checking account to a
bank account, Dr. Nick Marasigan, M.D.
1 A medical clinic, P1,000,000 and land, P250,000 were acquired by paying
P50,000 in cash and issuing a 5-year, 20% note payable (interest is payable every
6 months) for the P1,200,000 balance.
1 Acquired medical equipment costing P420,000 and medical supplies amounting to
P39,000 by paying P59,000 cash and issuing a 24% note payable, maturing in 6
months, for the P400,000 balance.
2 Acquired "all-in-one" insurance for a year, P20,000.
4 Received cash from patients amounting to P117,000.
7 Bought medical supplies on account from San Pablo Supply, P17,000.
10 Paid salaries of nurses and office staff, P73,000.
12 Received P90,000 from the Laguna Experimental Drug Center for research to be
conducted by Dr. Marasigan over the next 3 months.
18 Billed patients P317,000 for services rendered.
21 Paid P23,000 for repairs to the medical equipment.
23 Paid the telephone bill, P3,000.
24 Bought medical equipment on account from Dr. De Leon, P45,000.
25 Collected P113,000 from patients billed on the 18th.
27 Paid P13,000 on account to San Pablo Supply.
30 Withdrew P200,000 in cash from the medical practice.
30 Paid P15,000 dues to the Laguna Medical Association.

Required:
1. Prepare all journal transactions for the month of October and post it into the Ledger
(40 points)
2. Prepare a trial balance to check the equality of the transactions (20 points)
Presented below is the unadjusted trial balance of the Leah May Santiago Information
Systems for the year ended Dec. 31, 2024: (20 points)
Leah May Santiago Information Systems
Unadjusted Trial Balance
Account Titles Debit Credit
Cash 45,000
Notes Receivable 360,000
Accounts Receivable 156,000
Office supplies 63,000
Land 300,000
Building 1,590,00
Accumulated Depreciation-Building 254,000
Equipment 2,150,000
Accumulated Depreciation-Equipment 612,000
Accounts Payable 213,000
Unearned Consulting Revenue 450,000
Santiago, Capital 1/1/2024 2,655,000
Santiago, Withdrawals 600,000
Consulting Revenues 2,108,000
Salaries Expense 875,000
Repairs Expense 116,000
Miscellaneous Expense 37,000

Totals 6,292,000 6,292,000

Adjustments:
a. Office supplies on hand as at Dec. 31, 2024 is P21,000.
b. One-third of the unearned revenues has been earned as at Dec. 31, 2024.
c. Depreciation for the year amounted to P38,000 for the building and P123,000 for the
equipment.
d. Salaries in the amount of P14,000 have accrued at year-end.
e. The notes receivable were accepted from several customers. The notes were issued on Sept. 1,
2024 and will be settled together with a 20% interest on May 31, 2025.
Required:
1. Establish a ledger account for each of the account in the unadjusted trial balance. 2. Journalize
and post the adjusting entries.
3. Prepare an adjusted trial balance.

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