1.

The______ shows the details of a controlling account, which allows for tracking
transactions within the controlling account in more detail.
a. Subsidiary ledger
b. Accounts receivable ledger
c. Accounts payable ledger
d. Special ledger

2. The end of Luca Pacioli's accounting cycle

a. Memorandum
b. Notes
c. Trial Balance
d. Financial Statements

3. A columnar working paper used to prepare a company’s unadjusted trial balance. adjusting entries, adjusted trial
balance, and financial statements, and which is an optional tool in the accounting process is a(n):
a. Adjusted trial balance.
b. Work sheet.
c. Post-closing trial balance.
d. General ledger.

4. If the company is using the expense method in initially recording cash disbursements for expenses, the year-end
adjusting entry will include a credit to the specific expense account at what amount?
a. Earned portion
b. Unearned portion
c. Used portion
d. Unused portion

5. Which is false concerning the rules of debit and credit?

a. The left side of an account is always the debit side and the right side is always the credit side
b. Increases in assets and expenses are debit entries, and increases in liabilities, equity and revenue are credit
entries.
c. The normal balance of any account appears on the side for recording increases.
d. The word "debit" means to increase and the word "credit" means to decrease.

6. The business deposited to the bank its cash collection from outstanding accounts receivable from customer. Which
of the following could best describe the effect of the transaction?
a. Increase in asset, decrease in payable
b. Increase in asset, increase in labilities
c. Increase in asset, decrease in liabilities
d. Increase in asset, decrease in other asset

7. Recognition of depreciation expense is based on what expense recognition principle?

a. Accrual basis
b. Immediate recognition
c. Matching principle
d. Systematic and rational allocation

8. When closing entries are made:

a. All ledger accounts are closed to start the new accounting period.
b. All temporary accounts are closed but not the permanent accounts.
c. Al real accounts are closed but not the nominal accounts.
d. Al balance sheet accounts are closed.

9. Statement 1: Individual transactions are posted both to the controlling account and the corresponding subsidiary
ledger.
Statement 2: An accounts receivable subsidiary ledger can have a credit balance.
a. Both statements are true
b. Both statements are false
c. Only Statement 1 a true
d. Only Statement 2 is true
10. Accounting is the process of identifying, measuring and communicating economic information to permit informed
judgments and decisions by users of the information according to
a. Accounting Standard's Council
b. American Accounting Association
c. American institute of Certified Public Accountants
d. Philippine Institute of Certified Public Accountants

11. The system of preparing financial statements based on recognizing revenues when the cash is received and
reporting expenses when the cash is paid is called:
a. Accrual bass accounting.
b. Operating cycle accounting.
c. Cash basis accounting.
d. Revenue recognition accounting.

12. Which of the following methods of estimating bad debts wil directly result in the balance of bad debts expense?
a. aging of receivables
b. percentage of accounts receivable
c. percentage of credit sales
d. specific identification

13. Statement 1: The controlling account, ideally, should have a greater balance than its corresponding subsidiary
ledger accounts.
Statement 2: The controlling account pertains to an account in the general ledger for which a corresponding
subsidiary ledger has been created.
a. Both statements are true
b. Both statements are false
c. Only Statement 1 is true
d. Only Statement 2 is true

14. A CPA should be straightforward and honest in performing professional services.

a. Reputation
1. Integrity
2. Competence
3. Objectivity

15. The broad principle that requires expenses to be reported in the same period as the revenues that were eamed
as a result of the expenses a the:
a. Recognition principle.
b. Cash basis of accounting.
c. Matching principle.
d. Time period principle.

16. Decrease in asset may

a. Decrease another asset
1. Decrease liabilities
2. Increase capital
3. Increase liabilities

17. Paying the rent for the current month will

a. Increase assets
b. Not change assets
c. Decrease Assets
d. Eliminate Assets

18. In the income statement, the difference between the net sales and the cost of goods sold is called
a. Gross sales
b. Net profit
c. Net income
d. Gross profit
19. A broad principle that requires identifying the activities of a business with specific time periods such as months,
quarters, or years is the:
a. Operating cycle of a business.
b. Time period assumption.
c. Matching principle.
d. Accrual basis of accounting.

20. A simple journal entry

a. Consists of one debit and one credit
b. Consists of two debits and one credit
c. Consists of one debit and two credits
d. Is a memorandum entry

21. A general journal would have the following columns, except:

a. Date
b. b. Debit Column
c. Credit Column
c. d. Place of Transaction

22. When the owner of the business takes cash from the business for his personal
use,
a. Assets will increase
b. Capital will decrease
c. liabilities will increase
d. Expenses will increase

23. The entry to close the beginning inventory would require a

a. Debit to the income summary account
b. Debit to the inventory account
c. Debit to the purchases account
d. Credit to the accounts payable account

24. Which of the following is the usual final step in the accounting cycie?
a. A. Preparing an adjusted trial balance.
b. B. Preparing a post-closing trial balance.
c. C. Preparing the financial statements.
d. D. Preparing a work sheet.

25. Payment of P100,000 current liability is

a. increase in asset, increase in liability
b. Decrease in liability, decrease in asset.
c. Increase in expense, increase in asset
d. Decrease in asset, increase in expense.

26. If an entity debits the "Merchandise Inventory" account in purchasing inventory, the entity Is vtng
a. Periodic system
b. Perpetual system
c. Gross method
d. Net method

27. The following are at their normal balances, except:

a. Notes Payable Credit
b. Cost of Sales Credit
c. Accounts Receivable Debit
d. Depreciation Expense Debit

28. The accrual basis of accounting:

 a. is generally accepted for external reporting because it is more useful than cash basis for most business
decisions.
b. Is flowed because il gives complete information about cash fows.
c. Recognizes revenues when received in cash.
d. Recognizes expenses when paid in cash.

29. A journal entry that contains more than two accounts is called
a. A posted journal entry
b. An adjusting entry
c. An erroneous journal entry
d. A compound journal entry
30. Statement 1: The journal is the book of original entry
Statement 2. The ledger serves as an accounting tool to sort and summarize the effects of accounting or business
transactions.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
31. When goods that were purchased are detective, the entity has the nignt to return the said goods to the supplier.
The entry to record the return, provided that the purchase is on account, includes
a. A debit to purchase returns and a credit to purchases
b. A debit to accounts payable and a credit to purchases
c. A debit to accounts payable and a credit to purchase returns
d. A debit to accounts receivable and a credit to purchase returns
32. The special account used only in the closing process to temporarily hold the amounts of revenues and expenses
before the net difference is added to (or subtracted from) the owners capital account is the:
a. Income Summary account.
b. Closing account.
c. Balance column account.
d. Contra account.
33. The issuance of a note by an entity for services received should be recorded as
a. An unearned revenue
b. Prepaid expense
c. A note payable
d. An account payable
34. Closing entries at the end of each accounting period does all of the following except:
a. Serves to transfer the effects of nominal accounts to the owner’s capital account on the balance sheet.
b. Brings the revenue and expense accounts balances to zero.
c. Has no effect on the owner's capital account
d. Causes owner's capital to reflect increases from revenues and decreases from expenses and withdrawals.
35. Statement 1: The effect of the accounting transactions are summarized first in the ledger and then recorded in the
journal
Statement 2: Posting is the accounting process of transferring the debit and credit values from the journal to their
respective accounts in the ledger
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
36. Which of the following transactions will not be recorded in the special journals?
a. Cash collection from a customer
b. Monthly depreciation of warehouse used for storage of merchandise inventory
c. Purchase of merchandise inventory on account
d. Sates of merchandise inventory on account
37. The accounting principle that requires revenue to be recorded when earned is the:
a. Matching principle.
b. Revenue recognition principle.
c. Time period assumption.
d. Accrual reporting principle.
38. Which of the following is not included in the computation of net purchases?
 a. Purchase returns
b. Freight in
c. Purchase allowances
d. Freight out

39. The following types of adjustments require reversing entries, excepts

a. Accrual of income
b. Accrual of expense
c. Prepayments under the asset method
1. Pre-collections under the income method
40. The business acquired equipment, and issued a promissory note for the value. Which of the following could best
describe the effect of the transaction?
a. Debit to asset, credit liabilities
b. Debit asset, credit another asset
c. Debit expense, credit liabilities
d. Debit expense, credit asset

41. The business consumed P1,000 of its supplies stacked in the storeroom. Which of the following could best
describe the effect of the transaction?
a. Debit asset, credit expense
b. Debit expense, credit asset
c. Debit asset, credit asset
d. Debit expense, debit asset, and credit another asset

42 Viscount Company collected P42,000 cash on its accounts receivable. The effects of this transaction as reflected
in the accounting equation are:
a. Total assets decrease and equity increases.
b. Both total assets and total liabilities decrease.
c. Total assets, total liabilities and equity are unchanged.
d. Both total assets and equity are unchanged and liabilities increase.

43. The Unadjusted Trial Balance columns of a company/s work sheet show the balance in the Office Supplies
account as P7500. The Adjustments columns show that P4500 of these supplies were used during the period. The
amount shown as Office Supplies in the Balance Sheet columns of the work sheet is: