7306 - Accounting Process.pdf

CPA REVIEW SCHOOL OF THE PHILIPPINES Manila FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/SANTOS BATCH 96 OCTOBER 20...

CPA REVIEW SCHOOL OF THE PHILIPPINES Manila FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/SANTOS BATCH 96 OCTOBER 2024 LECPA ACCOUNTING PROCESS 1. Which is done first in the accounting process considering the following? A. Financial statements are prepared. B. Nominal accounts are closed C. Adjusting entries are recorded. D. A postclosing trial balance is prepared. 2. Debits A. Increase assets and decrease expenses, liabilities, revenue and equity. B. Increase assets and expense and decrease liabilities, revenue and equity. C. Increase liabilities, revenue and equity and decrease assets and expenses (for credits) D. Increase assets and equity and decrease liabilities and revenue 3. A general journal A. Chronologically lists transactions and other events in terms of debit and credit B. Contains one record for each asset, liability, equity, revenue and expense C. Lists all increases and decreases in each account in one place D. Contains only adjusting entries and closing entries 4. Which is not a possible combination of a journal entry? A. Increase in asset and increase in liability B. Decrease in equity and increase in liability C. Decrease liability and decrease in asset D. Increase in asset and decrease in equity 5. Posting is the process of transferring information from A. Source document to the journal B. Journal to the source document C. Journal to the general ledger D. General ledger to the journal 6. A general ledger is defined as A. A group of transactions B. A group of real accounts C. A group of nominal accounts D. The entire group of accounts 7. A trial balance may prove that debits and credits are equal, except A. An amount could be entered in the wrong account. B. A transaction could have been entered twice. C. A transaction could have been omitted. D. All of these may prove that debits and credits are equal. 8. Adjusting entries affect A. One nominal account and one real account B. Two nominal accounts C. Two real accounts D. No particular combination of nominal and real accounts 9. What is the adjusting entry for ending inventory? A. Debit ending inventory and credit beginning inventory B. Debit beginning inventory and credit ending inventory C. Debit ending inventory and credit income summary D. Debit income summary and credit ending inventory 10. What is the adjusting entry for doubtful accounts? A. Debit doubtful accounts and credit accounts receivable B. Debit doubtful accounts and credit allowance for doubtful accounts. C. Debit allowance for doubtful accounts and credit doubtful accounts. D. Doubtful accounts do not require an adjusting entry. 7306  Page 2 11. What is the adjusting entry for depreciation? A. Debit depreciation and credit asset B. Debit asset and credit accumulated depreciation C. Debit depreciation and credit accumulated depreciation D. An adjusting entry is not required for depreciation 12. What is the adjusting entry for accrued expenses? A. Debit accrued expenses and credit expense. B. Debit expenses and credit accrued expense C. Debit expenses and credit income D. No need to adjust accrued expense. 13. What is the adjusting entry for prepaid expenses assuming the expense method is used? A. Debit prepaid expenses and credit expenses. B. Debit expenses and credit prepaid expenses C. Debit prepaid expenses and credit accrued expense D. It is not necessary to adjust prepaid expenses. 14. What is the adjusting entry for prepaid expenses assuming the asset method is used? A. Debit prepaid expenses and credit accrued expenses B. Debit expenses and credit accrued expenses C. Debit expenses and credit prepaid expenses D. No adjusting entry 15. What is the adjusting entry for accrued income? A. Debit accrued income and credit income B. Debit income and credit accrued income C. Debit accrued income and credit accrued expenses D. No adjusting entry 16. What is the adjusting entry for unearned income if the income method is used? A. Debit unearned income and credit income B. Debit income and credit unearned income C. Debit accrued income and credit unearned income D. No adjusting entry 17. What is the adjusting entry for unearned income if the liability method is used? A. Debit income and credit unearned income B. Debit accrued income and credit unearned income C. Debit unearned income and credit income D. No adjusting entry 18. Closing entries are A. Made at the end of accounting period B. Prepared after adjusting entries and financial statements have been prepared C. Prepared for the purpose of reducing all nominal accounts to zero D. All choices are correct about closing entries 19. Reversing entries apply to Adjusting entries to reverse: A. All adjusting entries 1. Accrued income and accrued expense B. All deferrals 2. Prepaid expense (expense method) C. All accruals 3. Unearned income (income method) D. All closing entries 20. A reversing entry should never be made for an adjusting entry that A. Accrues unrecorded revenue B. Accrues unrecorded expenses C. Adjusts expired costs from an asset account to an expense account D. Adjusts unexpired costs from expense account to an asset account END 7306