Recording of Transactions Flashcards
True or False
Posting a transaction twice results in unbalanced debits and credits.
False
- The debits and credits will remain balanced.
True or False
The basic summary device of accounting is the ledger.
False
True or False
Double-entry bookkeeping denotes that an increase or decrease in an asset only corresponds to an increase or decrease in a liability.
False
True or False
A credit entry to unearned revenue increases a liability.
True
True or False
Recording 5,126 as 5,162 is an example of a transposition error.
True
True or False
Income statement accounts are permanent accounts, while balance sheet accounts are temporary accounts.
False
True or False
An increase in accounts receivable is recorded as a debit, thus increases the total assets.
True
Multiple Choice (Theory)
A firm’s failure to recognize depreciation expense for the year would
a. overstate assets, understate expenses, overstate net income
b. overstate assets, overstate expenses, overstate net income
c. understate assets, understate expenses, understate net income
d. understate assets, overstate expenses, no effect on net income
a. overstate assets, understate expenses, overstate net income
Dr. Depreciation Expense
Cr. Accumulated Depreciation
Multiple Choice (Theory)
Which of the following is correct under the double-entry bookkeeping?
a. The change in asset must be compensated by a change in liability.
b. An increase in asset must be compensated by a decrease in asset.
c. The change in a debit-side entry must be compensated by a change in the credit-side entry.
c. The change in a debit-side entry must be compensated by a change in the credit-side entry.
Multiple Choice (Theory)
Which of the following does not directly or indirectly affect the owner’s Capital account?
a. Withdrawals by the owner
b. Paying an accounts payable
c. Incurring expenses
d. Earning revenues
b. Paying an accounts payable
Multiple Choice (Theory)
Advance payment of insurance premiums will
a. Decrease unearned income
b. Increase accrued expenses
c. Increase prepaid expense
d. Increase accrued income
c. Increase prepaid expense
Multiple Choice (Theory)
Which of the following is not an application of accrual accounting?
a. Recording advertising revenues when cash payment was received.
b. Recording advertising revenues when service was rendered.
c. Recording the amount of accrued interest
d. Recording telephone expense when the monthly bill is received
a. Recording advertising revenues when cash payment was received.
Multiple Choice (Theory)
When an entity pays for goods or services before actual receipt, the payment should be recorded as a decrease of cash and increase in
a. an expense
b. an asset
c. an owner’s equity account
d. a liability
a. an expense
Multiple Choice (Theory)
Which of the following transactions does not affect the balance sheet totals?
a. Withdrawal of P17,000 by the firm’s owner
b. Paying an interest payable of P1,245
c. Collecting P5,000 from customers on account
d. Purchasing P10,000 supplies on account
c. Collecting P5,000 from customers on account
Multiple Choice (Problem Solving)
In July 2021, Mr. J Printing Press started its business operations. Office supplies of P35,575 and machinery costing P127,000 were purchased. In the same month, the entity bought a piece of equipment worth P123,456 and office supplies costing P7,890. Additionally, the owner withdrew 3,000 from the business to buy home supplies. On July 31, supplies on hand amounted to P30,450. How much is the month’s supplies expense?
a. 16,015
b. 5,125
c. 13,015
d. 1,085
c. 13,015
Office Supplies P35,575 Add: Office Sup. 7,890 ------------------------------------- Total Office Sup. P43,465 Less: Sup. on hand 30,450 --------------------------------------- Total supplies exp. P13,015
Multiple Choice (Problem Solving)
Use the following information to answer items 2-3.
David Banaag, a sole proprietor, established Banaag Delivery Service. The following transactions occurred during the month:
a. David deposited 250,000 in a bank account in the name of the business
b. Bought delivery trucks for 80,000, paying 5,000 in cash and the balance on account
c. Bought office equipment, paying cash, P1,500
d. Paid salaries expense, P2,900
e. Paid gas expense for company trucks, P750
f. Billed customers for delivery services rendered, P5,500
g. Received P2,200 as partial payment from customers who were previously billed
h. David paid her home telephone bill from the company checkbook, P700
I. Received cash for delivery services rendered, P15,000.
j. Rendered delivery service on account, P4,570
After posting these transactions, how much is the balance of the cash account?
a. 257,050
b. 262,550
c. 256,350
d. 255,350
c. 256,350
Cash
Dr. 250,000
2,200
15,000
--------------------
P267,200
Cr. 5,000
1,500
2,900
750
700
---------------------
P10,850
Dr. P256,350
Multiple Choice (Problem Solving)
(Refer to the problem in the previous question.)
How much is the balance of the accounts receivables account?
a. 10,070
b. 3,300
c. 7,870
d. 0
Accounts Receivable
Dr. 5,500
4,570
---------------
P10,070
Cr. 2,200
Dr. P 7,870
Multiple Choice (Problem Solving)
Entity A failed to record an accrued expense of P175,290 and a prepayment of P130,470. The draft income statement shows a loss of P220,000 for the year ended December 31, 2021. What should be the profit or loss following the inclusion of the accrued expense and prepayment?
a. 264,820 loss
b. 264,820 profit
c. 175,180 loss
d. 175,180 profit
a. 264,820 loss
Acc Exp. 175,290 Less: Prepay 130,470 ------------------------------------ Total 44,820 Add: DIS (loss) 220,000 ------------------------------------ Total P264,820
Loss => Expense (Accrued Expense & prepayment)
Multiple Choice (Problem Solving)
During 2021, an entity paid a total of P600,000 for rent, covering the period from October 1, 2020 to March 31, 2022. What figure should appear in the Income Statement for the year ended December 31, 2021?
a. 300,000
b. 100,000
c. 200,000
d. 400,000
d. 400,000
18 months
P600,000 / 18 (months) = P33,333.33 x 3 (Oct. - Dec. 2020) = P1,000 omit
33,333.33 x 12 (Jan. - Dec. 2021) = P400,000
Multiple Choice (Problem Solving)
Based on no. 5, what figure should appear in the prepayment in the Balance Sheet as of December 31, 2021?
a. 200,000
b. 400,000
c. 300,000
d. 100,000
d. 100,000
Remaining P100,000 for Jan. - Mar. 2022
