COST ACCOUNTING REVIEW OF BASIC ACCOUNTING

CW1A
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
A 1 Accounting is a service activity, its function is to provide
a quantitative information c quantitative & qualitative information
b qualitative information d none of the above
A 2 Provides information about economic activities of an enterprise for a specified period that is
shorter than the life of the enterprise
a time period c measurement of econ res & obligations
b going concern d measurement in terms of money
A 3 Common financial denominator, a pre-requisite in measuring financial position and net income
a unit of measure c exchange price
b measurement of econ res & obligations d accrual
D 4 FS should be stated in terms of common financial denominator
a Accrual b going concern c time period d stable mon. unit
B 5 The principle of objectivity includes the concept of
a summarization b verifiability c classification d conservatism

USERS OF FINANCIAL INFORMATION

B 6 The quality of information that assures readers that the information ia free from bias or error
& faithfully represents what it purports to show
a relevance b reliability c understandability d comparability
C 7 The ability to bring together for the purpose of noting similarities & dissimilarities
a relevance b reliability c comparability d understandability
C 8 Users to enable them to determine whether their loans & the related interest will be
paid when due
a customer b investors c lenders d suppliers

ACCOUNTING EQUATION
C 9 A form of revenue
a check paying a mortgage c credit sales to charge customers
b credit purchase invoice d cash purchase invoice
e decrease cash & increase capital
C 10 Does not include an increase to expenses
a received & paid phone bill c received cash for services performed
b bought office supplies on account d paid the week's salaries
C 11 Components of the Balance Sheet equation B 5 Can be found in an Income Statement, except
c assets, liabilities & owner's equity a income c expenses
A 12 Settlement of a present obligation
a payment of cash d replace of that obligation with another obligation
b transfer of other assets e conversion of the obligation to equity
c provision of services f all of the above
C 13 Expectation of a future payment from a customer for goods sold
a prepaid expense b notes receivable c accounts receivable d all of the above
B 14 Not subject to depreciation
a building b land c equipment d machinery
B 15 Obligations which are expected to be liquidated through the use of existing current assets or the creation
of other current liabilities
a current assets b current liabilities c long term liabilities d unearned revenue
C 16 Expenses are
a increases in owner's equity
b decreases in economic benefits during the accounting period in the form of outflows or depletions of
assets or incurrences of liabilities that results decreases in equity
c decreases in owner's equity
d inflows of assets from delivering or producing goods or rendering services
B 17 Receives cash for services performed c owner's equity decreased
a an asset decreased d total assets remain unchanged
b owner's equity increased e none of the above
B 18 A credit entry decreases the balance of
a owner's equity b assets c income d liabilities
A 19 Withdrawal of cash by proprietor, the withdrawal account is
a debited b credited c debited & credited d not affected
B 20 Issuance of a note by an entity for services received should be recorded as
a an unearned revenue b a notes payable c a prepaid expense d an accounts receivable
JOURNAL ENTRIES
C 21 Withdrawal by proprietor has all of the following effects, except
a reduction of total assets c reduction of profit or loss of the period
b reduction of owner's equity d reduction of cash balance
D 22 Accounts with normal credit balance c liabilities
a withdrawals d revenues & liabilities
b revenues e all of these
C 23 Classification & normal balance of Revenue account c asset, credit
a capital, debit b revenue, credit d asset, debit e expense, debit
24 Second step in the analytical phase of accounting D
c to formulate the entry as a debit to one account and a credit to another account
C 25 Accounts maintained by business for its charged customers
a accounts payable c accounts receivable
b withdrawals d capital
D 26 To locate an error in a trial balance c verify figures transferred to the TB
a re-add d check footings & accounts balances
b look for the correct normal balance e do all these
A 27 A purchase is recognize in the accounting records when
a payment is made for the item purchased c buyer reseives seller's bill
b PRequisition is sent to PDept d title transfers from the seller to the buyer
A 28 Art Supplies account is classified as
a asset b liability (if unpaid) c expense d OE account
A 29 Owner's withdrawal account appears in
a statement of changes in equity only c the balance sheet only
b the income statement only d both the IS & the BS
C 30 If AR has debit postings of P 580,000, credit postings of P 440,000 & a normal ending balance of
P 480,000, what is the beginning balance
a P 620,000 credit b P 620,000 debit c P 340,000 debit d P 349,000 credit
C 31 Account which increased with a credit
a supplies expense b supplies c revenues d owner's withdrawal
D 32 Pair of acccounts follows the rules of debit & credit in the opposite manner
a Owner's withdrawal & medical revenues c Interest payable & owner's capital
b Advertising expense & land d Prepaid insurance & owner's withdrawal
A 33 Accounts which decreased with a debit
a notes payable b cash c interest expense d owner's withdrawal
B 34 Rent is paid six month's advance results in a credit to cash & a debit to
a rent expense b prepaid rent c rent receivable d rent revenue
C 35 Which of the following events does not result in the recording of an expense?
a receipt of a bill from the telephone company c owner withdrawal of cash
b payment of salaries d purchase of gasoline for fill-up of a company car
A 36 When a company has performed a service but has not yet received payment, it
a DR Accounts receivable and CR Service revenues c DR Service revenues and CR Accounts receivable
b DR Service revenues and CR Accounts payable d makes no entry until the cash is received
C 37 When a magazine company receives an advance payment for a subscription, it
a DR Cash and CR Subscriptions revenue c DR Cash and CR Unearned subscriptions revenues
b DR Prepaid subscriptions and CR Cash d DR Unearned Subscriptions Rec. and CR Cash
A 38 Transaction that decreases both assets & owner's equity
a owner withdrawal of cash c receipt of a phone bill to be paid at a later time
b payment of a liability d advance payment made for insurance
C 39 Transaction that increases both assets & owner's equity
a payment received from a CR customer c rendered services, payment not yet received
b received a bank loan d owner withdrawal of cash
C 40 Errors that will not cause the DR and the CR columns of the TB to be unequal
a a DR was entered in an account as a CR
b the balance of an account was incorrectly computed
c the account balance was carried to the wrong column of the TB
d a debit entry was recorded in the wrong account
B 41 Account has a normal CR balance
a owner's withdrawal b advertising revenues c service vehicle d interest expense
C 42 A P 1,000 DR item is accidentally posted as a CR. The TB column totals therefore will differ by
a P0 b P 1,000 c P 2,000 d P 500

D 43 Error that will cause a TB to be out of balance

a forgot to journalize a transaction c JE accidentally posted twice
b forgot to post a JE to the ledger d a CR was posted to an account as a DR
A 44 Account has a normal DR balance
a unexpired insurancce b unearned art rev c art revenues d mortgage payable
C 45 The GJ does not have a column titled
a description b posting reference c account balance d date
B 46 An entry with more than one DR or CR is called a
a double entry b compound entry c dual entry d multiple entry
B 47 Accounts that would be credited in a proper journal entry
a Accounts receivable, when it has been decreased c Salaries payable, when it has been decreased
b Salaries expense, when it has been increased d Owner's withdrawals, when it has been increased
A 48 The posting reference column in the GJ is used to show an account has been posted to the ledger when which
of the following is placed in it?
a journal page no. b account no. c journal no. d an X
A 49 The accrual basis of accounting recognizes
a revenues when products are produced as part of operating activities
b expenses when resources are consumed as part of operating activities
c revenues when cash is received
d expenses when cash is paid
D 50 The accounting cycle is
a the length of time it takes to complete a set of FS after the books are closed
b a process that begins with adjusting entries & ends with the preparation of the FS
c applicable only to manual systems, not to computerized systems
d the sequence of procedures used by a business to process economic information & to produce FS
51 The first step in the accounting cycle
a record transaction in a journal c post journal entries to the ledger accounts
b analyze transaction from the source documents d adjust the general ledger accounts
52 The manner in which the accounting records are organized & employed within a business is
a accounting information system c voucher system
b business document d special journal
53 Transactions are recorded chronologically in the
a journal b T-account c daybook d ledger
54 A JE composed of two or more DRs or two or more CRs ia
a multiple JE b compound JE c complex JE d double JE
55 A JE that contains more than 2 accounts
a a compound JE b a posted JE c an adjusting JE d an erroneous JE
56 The normal balance of an account in on the
a debit side of the account c credit side of the account
b side represented by increases in the acct. balance d side represented by decrease in the account bal.
57 When a customer buys services on CR, the contract is regarded as complee when
a the services are rendered c the cash payment is received
b the bill is presented d the date specified in the contract is at hand
58 When an entity pays for goods or services before actual receipt, the payment should be recorded as a
decrease in Cash & an increase in
a an expense b an asset c an OE account d a laibility
59 Credits are used to record
a decreases in liab b decreases in OE c increases in exp d increases in income
60 When OE decreases, one of the following must occur
a an asset increases b an income increases c a liability increases d wthdrawals decreases
61 The withdrawal account of a SP is debited when
a the owner invests cash b the owner withdraws cash c an expense is paid d a liability is paid
62 Credit to cash results to
a an increase in OE b a decrease in assets c an increase in liab d an increase in income
63 When rent is prepaid for several months in advance, the DR is to
a an expense account b an asset account c a capital account d a liability account
64 When a payment is made to a supplies for goods previously purchased on account, the DR Is to
a an asset account b a liability account c a capital account d an expense account

65 A ledger is defined as a collection of

a transactions c all income statements accounts
b all statement of financial position accounts d account titles, A, L, E, I, and expense accounts
66 A chart of accounts is a(an)
a flowchart of trans c accounting procedure manual
b list of names of all account titles d journal
67 When accounting information is accumulated in individual accounts, a chart of account is
a limited to those accounts that will appear in the balance sheet
b changed each year by an entity depending on the results of operation
c a listing of each account that will be used to accumulate information
d used to determine whether a DR or a CR balance will appear in each of the accounts at the end of
the accounting period
68 Posting is the process of transferring information from the
a journal to the TB b ledger to the FS c ledger to the TB d journal to the ledger
69 Incorrect statements about TB
a test of the equality of the DR & CR balances in the ledger
b list of all open accounts in the ledger with their balances as of a given date
c proves that no errors of any kind have been made in the accounts during the accounting period
d helps to localize errors within an identifiable time period
70 An entity's trial balance
a shows its financial position
b establishes whether its accounting records are correct
c lists all of the entries in its double-entry accounting records
d is a list of all of the accounts with their respective DR or CR balance
71 An error of original entry occurs when
a either the DR or the CR entry for a particular transaction is recorded in the wrong class of account
b a correct figure is entered in the double-entry accounting records, once in the correct ledger account
and once in the wrong person's account
c an incorrect figure is entered on the correct sides of the correct ledger accounts
d none of the above
72 The equality of DRs & CRs in the ledger should be verified at the end of each accounting period by preparing
a an acctg. statement b an acct. verification c a trial balance d a balance report
73 Transaction that correctly maintains the equality in the accounting equation
a to record collections on account, cash and accounts receivable are increased by P 160,000
b to record the purchase of computer equipment, it is increased and cash is decreased by P 46,000
c to record payment of notes, NO is decreaseed and cash is increases by P 70,000
d to record payment of rent, rent expense is decreased and cash is increased by P 8,000
74 The first FS that is prepared from the TB is
a balance sheet b cash flow statement c equity statement d income statement
75 At the end of an accounting period, the equation Assets = Liabilities + Owner's Equity does not necessarily
balance. Actions which balances the equation d subtract revenues from owner's equity & add exp
a add the difference between revenues & expenses to owner's equity to assets
b add revenues & subtract expenses from assets
c subtract revenues & add expenses to owner's equity
76 A business event that is also considered a recordable transaction
a a company hires an employee c a customer orders a product from a supplier
b a customer purchases merchandise d an employee sends a PR to the Purchasing Dept.
77 Purpose of the ledger is to c maintain a separate account for each BS & IS accts.
a record chronologically the day's transactions d make sure that all BS & IS accounts have normal
b keep a record of docu to support each trans. balances at all times
78 Account that is listed after the others in a chart of accounts
a unearned art fees b prepaid rent c owner's capital d art revenues
79 An asset account
a revenues b notes payable c supplies expense d prepaid rent
80 Unearned revenues are recorded by companies that
a pay money in advance of the performance of a svce. c receive money in adv of the performance of a svce.
 b pay money at the time the perf of svce is completed d receive money at the time the perf of svce. Is comp.
81 Office supplies are expensed
a at no time, since they are assets c when they are purchased
b when they are paid for d when they are consumed (used up)
82 Does not directly opr indirectly affect the Owner's capital
a paying an AP b withdrawals by owner c earning of revenues d incurring of expenses

83 Accounts classified differently from the others listed

a notes payable b unearned revenues c mortgage payable d art revenues
84 If AP has DR postings of P 85,000, CR postings of P 70,000, & a normal ending balance of P 30,000, what was
its beginning balance
85 Accounting steps accomplished after the others
a post the entry b prepare the TB c apply rules of DE d record the entry

ADJUSTING THE BOOKS

86 Account which is not adjusted d Owner's capital
a Acc Depreciation b Salaries payable c Depn Exp e Prepaid insurance
87 The carrying value of a depreciable asset equals
a the estimated cost to replace the asset c the est. amt. for which the asset could be sold
b the original cost minus accumulated depreciation d the orginal cost minus depn. exp for the period
88 If an adjusting entry were not made at the end of a period to remove the earned revenue from the UR acct
a assets would be understated c liabilities would be overstated
b liabilities would be understated d owner's equity would be overstated
89 Failure to adjust for accrued salaries at the end of the period will result in an
a overstatement of profit for the period c understatement of profit for the period
b overstatement of liabilities d overstatement of assets
90 Account which would normally be found on the CR side of the ATB
a Prepaid insurance b Depn exp.-Eqpt c Pateno, withdrawals d Acc depn.-Equipement
91 Adjusting entries are
a assign rev. to the period in which they are earned c bring asset and liability accounts to correct bal.
b help to properly measure the period's P/L d all of the above
92 The broad classification of adjusting entries are
a accruals and closing b accruals and deferals c trails and defferals d closing and trials
93 The decrrease in usefulness of property and equipment as time passes is called
a consumption b deterioration c depreciation d contra asset
94 The amount of accrued but unpaid expenses at the end of the period isb both an expense and
a liability b asset c defferal d income
95 An item that reperesents services that have been paid for by a firm, which have not yet been received by that
firm is called
a prepaid expense b unearned income c accrued expense d accrued revenue
96 An item that represents services provided by the firm for which it will receive payment in the future is called
a prepaid expense b unearned revenue c accrued revenue d accrued expense
97 Accrued expense
a decrease assets b decrease liabiites c increase assets d increase liabilities
98 The JE to record an accrued revenue results in which of the following types of accounts being DR & CR
a assets and income b asset and liability c expense and asset d expense and liability
99 A law firm began november with office supplies of P 16 000. During the month, the firm purchased supplies of
P 29 000. On November 30, supplies on hand totaled P 21,000. Supplies expense for the period is
a 21 000 b 24 000 c 29 000 d 45 000
100 A bussines received cash of P 30 000 in advance for revenue that will be earned later. The cash receipt entry
debited Cash and credited Unearned revenues for P 30 000. at the end of the period, P 11 000 is still unearned.
a DR unearned revenues and CR revenues P 19,000 c DR revenues nand CR unearne
b DR unearned revenues and CR revenues P 11,000 d DR revenues and CR unearned revenues P 11,000
101 Adjusting entries involve at least one real &
a only real accts b only nominal accts c only capital accts d one nominal account
102 An adjusting entry to accrue salaries incurred but not yet paid is an example of
a aligning recorded costs with appropriate accounting periods
b aligning recorded revenues with appropriate accounting periods
 c reflecting unrecorded revenues earned during an accounting period
d reflecting unrecorded expenses incurred during the accounting period
103 An end-of-period adjustment involves
a an exchange of resources between two departments in an organization
b a change in an acount balance that is neither an accrual or deferral
c an adjustment that results in revenues or expenses being reported in a different time periods from the
associated cash flows
d a recognition of the extra cash flows related to the year-end delivery of goods and services