Podcast
Questions and Answers
What is the purpose of preparing a worksheet in financial statements?
What is the purpose of preparing a worksheet in financial statements?
- To facilitate adjustments and preparation of financial statements (correct)
- To summarize inventory balances
- To calculate tax liabilities
- To record cash transactions exclusively
What type of adjustment is made for income earned but not yet collected?
What type of adjustment is made for income earned but not yet collected?
- Amortization
- Accrual (correct)
- Deferral
- Reclassification
In the proforma entries for expenses incurred but not yet paid, which accounts are involved?
In the proforma entries for expenses incurred but not yet paid, which accounts are involved?
- Asset and Income
- Income and Expense
- Liability and Asset
- Expense and Liability (correct)
What adjustment is reflected when advance payment for one year of rent is received?
What adjustment is reflected when advance payment for one year of rent is received?
For the advance payment of Php 600,000 for one year’s rent, what is the monthly rent recognized as income?
For the advance payment of Php 600,000 for one year’s rent, what is the monthly rent recognized as income?
What is the first step in the accounting process?
What is the first step in the accounting process?
Which criterion is NOT necessary for a transaction to be recorded?
Which criterion is NOT necessary for a transaction to be recorded?
In a journal entry, what is the typical balance for assets?
In a journal entry, what is the typical balance for assets?
What effectively summarizes Mr.O's initial investment in the business?
What effectively summarizes Mr.O's initial investment in the business?
What does the process of posting involve?
What does the process of posting involve?
What does not belong to the normal balance side for liabilities?
What does not belong to the normal balance side for liabilities?
When analyzing business transactions, what aspect is essential?
When analyzing business transactions, what aspect is essential?
Which of the following is NOT a component of Mr.O's investment?
Which of the following is NOT a component of Mr.O's investment?
What is the formula for calculating Depreciation Expense per year?
What is the formula for calculating Depreciation Expense per year?
If an asset has an original acquisition cost of Php 5,100,000 and a salvage value of Php 100,000 with an estimated useful life of 20 years, what is the annual Depreciation Expense?
If an asset has an original acquisition cost of Php 5,100,000 and a salvage value of Php 100,000 with an estimated useful life of 20 years, what is the annual Depreciation Expense?
In the journal entry for depreciation, which account is credited?
In the journal entry for depreciation, which account is credited?
What does the Allowance for Doubtful Accounts represent?
What does the Allowance for Doubtful Accounts represent?
What approach uses a percentage of net sales to determine the Bad Debt Expense?
What approach uses a percentage of net sales to determine the Bad Debt Expense?
Which of the following accounts is debited in the journal entry for bad debts?
Which of the following accounts is debited in the journal entry for bad debts?
What is the relationship between Depreciable Cost and Salvage Value?
What is the relationship between Depreciable Cost and Salvage Value?
Which of the following is NOT an approach to determine the Allowance for Doubtful Accounts?
Which of the following is NOT an approach to determine the Allowance for Doubtful Accounts?
What is the total amount classified as Rent Expense by December 31 under the Asset method?
What is the total amount classified as Rent Expense by December 31 under the Asset method?
Which total amount is debited to Prepaid Rent by March 1 under the Expense method?
Which total amount is debited to Prepaid Rent by March 1 under the Expense method?
How many months are considered for rent expense when the reporting period ends on September 30?
How many months are considered for rent expense when the reporting period ends on September 30?
What is the monthly rent amount calculated from the total prepaid rent of PHP 600,000?
What is the monthly rent amount calculated from the total prepaid rent of PHP 600,000?
Which entry shows the adjustment for Rent Expense for the period in the Asset method?
Which entry shows the adjustment for Rent Expense for the period in the Asset method?
What total is credited to Rent Expense under the Expense method on December 31?
What total is credited to Rent Expense under the Expense method on December 31?
Which entry is made to record the initial prepaid rent under the Expense method?
Which entry is made to record the initial prepaid rent under the Expense method?
If an asset is depreciable, what must happen to its expense over time?
If an asset is depreciable, what must happen to its expense over time?
What is the amount reported for Cash on Hand?
What is the amount reported for Cash on Hand?
How much is the total amount for Accounts Payable?
How much is the total amount for Accounts Payable?
What is the total amount for Utilities Expense after adjustments?
What is the total amount for Utilities Expense after adjustments?
What is the amount for Professional Fee listed?
What is the amount for Professional Fee listed?
How much is accumulated depreciation for Delivery Equipment?
How much is accumulated depreciation for Delivery Equipment?
What is the amount for Owner, Capital highlighted in the balances?
What is the amount for Owner, Capital highlighted in the balances?
What is the total amount of Salary Expense after adjustments?
What is the total amount of Salary Expense after adjustments?
What is the amount for Loan Payable - Noncurrent?
What is the amount for Loan Payable - Noncurrent?
How much is the total for Accrued Expenses listed?
How much is the total for Accrued Expenses listed?
What is the amount shown for Supplies before adjustments?
What is the amount shown for Supplies before adjustments?
What is the total adjusted balance for Cash in Bank?
What is the total adjusted balance for Cash in Bank?
How much is the Depreciation Expense recorded?
How much is the Depreciation Expense recorded?
What amount is recorded for Accumulated Depreciation - Office Equipment?
What amount is recorded for Accumulated Depreciation - Office Equipment?
What is the amount for total debits in the Unadjusted Trial Balance?
What is the amount for total debits in the Unadjusted Trial Balance?
Study Notes
Accounting Process
- Gathering Source Documents: The process starts by creating a record of the transaction which is a business event that has a monetary value.
- Analyzing Business Transactions: The key criteria for deciding whether to record a transaction are exchange of values, at least two parties involved, and the transaction must be expressed in monetary terms.
- Journalizing: When a transaction is recognized as needing to be recorded, it must be journalized - recorded as a double-entry into the Journal, which is the book of original entry.
- Posting: The next step in the process is to transfer the records from the Journal to the Ledger.
- Preparation of Worksheet: This is a tool that helps adjust information and prepare financial statements to reflect the correct financial position of the business.
- Journalizing and Posting of Adjustments: This step includes adjusting for accrued income and expenses as well as deferrals.
- Accruals: Adjusting for income that has been earned but not collected yet.
- Deferrals: Adjusting for income that has been collected but not yet earned.
- Adjustment for Depreciation Expense: This adjustment is based on the useful life of an asset.
- Depreciation Expense: Depreciable Cost * / Estimated Useful Life.
- Adjusting for Bad Debts: Adjusting for doubtful accounts receivable.
- Allowance for Doubtful Accounts: Based on the % of sales or the % of accounts receivable.
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Description
This quiz covers the essential steps in the accounting process, including gathering source documents, analyzing transactions, journalizing, and posting. Additionally, it discusses the preparation of worksheets and adjustments necessary for accurate financial statements.
