Basic Accounting Qualifying Exam

Name: __________________________________ Section: ________________________________ Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____

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1. The work sheet is a: a. formal statement issued to creditors b. working paper often used by accountants to summarize adjusting entries c. replacement for the ledger d. replacement for a set of financial statements 2. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on a work sheet: a. is the amount of net income or loss b. indicates there is an error on the work sheet c. is not unusual for preparing the work sheet d. is the net difference between revenue, expenses, and drawing 3. Net income appears on the work sheet in the: a. debit column of the Balance Sheet columns b. debit column of the Adjustments columns c. debit column of the Income Statement columns d. credit column of the Income Statement columns 4. A net loss appears on the work sheet in the: a. debit column of the Balance Sheet columns b. debit column of the Trial Balance columns c. debit column of the Income Statement columns d. credit column of the Adjustments columns 5. A net loss appears on the work sheet: a. when revenue exceeds expenses b. when expenses exceed revenues c. every time the Adjusted Trial Balance columns do not balance on the initial totaling d. every time the Income Statement columns do not balance on the initial totaling 6. After net income is entered on the work sheet, the Balance Sheet debit and credit columns must: a. be the same amount as the total amount of the Income Statement debit and credit columns b. equal each other c. be the same amount as the total amount in the Adjusted Trial Balance debit and credit columns d. not be equal to each other and need not be the same total amounts as any other pair of columns on the work sheet 7. If the work sheet does not contain a pair of columns for the Retained Earnings Statement, the capital stock and dividends amounts are: a. omitted b. extended to the Balance Sheet columns c. extended to the Income Statement columns d. extended to the Adjustments columns 8. Which of the following appears in the Balance Sheet columns of the work sheet? a. Equipment b. Fees Earned c. Depreciation Expense d. Supplies Expense 9. Which of the following appears in the Balance Sheet columns of the work sheet? a. Unearned Fees b. Rent Expense c. Salaries Expense d. Service Revenue 10. Which of the following appears in the Balance Sheet columns of the work sheet? a. Accounts Receivable b. Rent expense c. Supplies Expense d. Service Revenue 11. Which of the following appears in the Balance Sheet columns of the work sheet? a. Prepaid Insurance

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b. Wages Expenses c. Rent Revenue d. Service Revenue An indication that the work sheet columns are in balance and the work sheet is completed is: a. the word "Total" is written at the bottom of each pair of columns b. each pair of columns is double underlined c. each pair of columns has the totals circled d. the final figures are written in ink After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the Debit and Credit columns are P39,750 and P21,750, respectively. What is the amount of net income or net loss for the period? a. P18,000 net income b. P18,000 net loss c. P39,750 net income d. P21,750 net income After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the Debit and Credit columns are P30,750 and P69,750, respectively. What is the amount of net income or net loss for the period? a. P39,000 net income b. P39,000 net loss c. P30,750 net income d. P69,750 net income After all of the account balances have been extended to the Income Statement columns of the work sheet, the totals of the debit and credit columns are P89,900 and P67,600, respectively. What is the amount of the net income or net loss for the period? a. P22,300 net income b. P22,300 net loss c. P89,900 net income d. P67,600 net loss After all of the account balances have been extended to the Income Statement columns of the work sheet, the totals of the debit and credit columns are P92,300 and P67,600, respectively. What is the amount of the net income or net loss for the period? a. P24,700 net income b. P24,700 net loss c. P92,300 net income d. P92,300 net loss When preparing the Retained Earnings Statement, the beginning capital balance can always be found: a. in the Income Statement columns of the work sheet b. in the statement of cash flows c. in the general ledger d. in the general journal Unearned Fees appears on the: a. balance sheet b. Retained Earnings Statement c. income statement d. statement of cash flows Accumulated Depreciation appears on the: a. balance sheet b. Retained Earnings Statement c. income statement d. statement of cash flows Salaries Payable appears on the: a. balance sheet b. Retained Earnings Statement c. income statement d. statement of cash flows Depreciation Expense appears on the: a. balance sheet b. Retained Earnings Statement c. income statement d. statement of cash flows

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____ 22. Long-term Liabilities appears on the: a. balance sheet b. Retained Earnings Statement c. income statement d. statement of cash flows ____ 23. Accounts Receivable appears on the: a. balance sheet b. Retained Earnings Statement c. income statement d. statement of cash flows ____ 24. Accumulated Depreciation appears on the: a. balance sheet in the current assets section b. balance sheet in the fixed assets section c. balance sheet in the long-term liabilities section d. income statement as an operating expense ____ 25. Notes Receivable due in 350 days appears on the: a. balance sheet in the current assets section b. balance sheet in the fixed assets section c. balance sheet in the current liabilities section d. income statement as an expense ____ 26. Unearned Fees appears on the: a. balance sheet in the current assets section b. balance sheet as a current liability c. balance sheet in the Stockholders' equity section d. income statement as revenue ____ 27. Which one of the fixed asset accounts listed below will not have a related contra asset account? a. Office Equipment b. Land c. Delivery Equipment d. Building ____ 28. The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a: a. fixed asset b. current asset c. contra asset d. current liability ____ 29. Prepaid insurance is reported on the balance sheet as a: a. current asset b. fixed asset c. current liability d. long-term liability ____ 30. At the end of an accounting year, in what statement would a balance in the prepaid insurance account appear? a. balance sheet b. income statement c. statement of cash flows d. Retained Earnings Statement ____ 31. Which of the following is reported on the Retained Earnings Statement for the current year? a. Accumulated depreciation b. Stockholders' additional investment made during the current period c. Rent expense d. Wages payable ____ 32. Adjusting entries are dated in the journal as of: a. the date they are actually journalized. b. the last day of the accounting period. c. the first day of the accounting period.D. the middle of the accounting period. ____ 33. Adjusting entries: a. need not be journalized since they appear on the work sheet and the ledger accounts need not be adjusted. b. need not be posted if the financial statements are prepared from the work sheet c. are not needed if reversing entries are prepared d. must be journalized and posted

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____ 34. Closing entries: a. need not be journalized if reversing entries are prepared b. need not be posted if the financial statements are prepared from the work sheet c. are not needed if adjusting entries are prepared d. must be journalized and posted ____ 35. Closing entries are dated in the journal as of: a. the date they are actually journalized, although they are generally prepared after the end of the accounting period b. the last day of the accounting period, although they are actually journalized after the end of the accounting period c. the first day of the accounting period, although they are actually journalized after the end of the accounting period d. the first day of the subsequent accounting period ____ 36. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? a. Supplies Expense b. Accumulated Depreciation c. Prepaid Expenses d. Unearned revenues ____ 37. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? a. Salaries Expense b. Fees Earned c. Unearned Rent d. Depreciation Expense ____ 38. Which of the following accounts will be closed to Retained Earnings at the end of the fiscal year? a. Rent Expense b. Fees Earned c. Income Summary d. Depreciation Expense ____ 39. Which of the following accounts ordinarily appears in the post-closing trial balance? a. Dividends b. Supplies Expense c. Fees Earned d. Unearned Rent ____ 40. The entry to close the appropriate insurance account at the end of the accounting period is debit: a. Income Summary; credit Prepaid Insurance b. Prepaid Insurance; credit Income Summary c. Insurance Expense; credit Income Summary d. Income Summary; credit Insurance Expense ____ 41. Which of the following accounts appears on a post-closing trial balance? a. Insurance Expense b. Prepaid Insurance c. Dividends d. Fees Earned ____ 42. Which of the following accounts appears on a post-closing trial balance? a. Insurance Expense b. Fees Earned c. Dividends d. Unearned Fees ____ 43. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet: Accumulated Depreciation Fees Earned Depreciation Expense Insurance Expense Prepaid Rent Supplies

P 3,000 20,000 3,500 1,000 4,000 500

Net income for the period is: a. P15,500 b. P 8,000 c. P15,000

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d. P11,000 ____ 44. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet: P 6,000 25,000 1,500 1,000 4,000 500 4,500

Accumulated Depreciation Fees Earned Depreciation Expense Insurance Expense Prepaid Insurance Supplies Supplies Expenses

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Net income for the period is: a. P18,000 b. P7,500 c. P8,000 d. P19,000 A fiscal year: a. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month b. for a business is determined by the federal government c. always begins on January 1 and ends on December 31 of the same year d. should end at the height of the business's annual operating cycle In the normal accounting cycle the: a. financial statements are prepared after the adjusting entries are posted b. financial statements are prepared before the closing entries are posted c. adjusting and closing entries are journalized after the financial statements are prepared d. post-closing trial balance is prepared before the closing entries are posted In the accounting cycle of a manual accounting system, the last step is: a. preparing the financial statements b. journalizing the adjusting entries c. posting the closing entries d. preparing a post-closing trial balance Work sheets are not usually prepared: a. during the accounting cycle of a manual accounting system b. during the accounting cycle of a computerized system c. unless they must be present to the bank when applying for a loan d. if the financial statements are going to be prepared by an experienced accountant Reversing entries are: a. used by all entities b. simply the analysis and recording of entries in the subsequent period c. needed to correct closing entries d. not used by all entities A reversing entry reverses a(n): a. closing entry b. transaction entry c. adjusting entry d. correcting entry

TEST II – PROBLEM 1. List the errors in the following trial balance. All accounts have normal balances. Hondo Auto Services, Inc. Trial Balance For Month Ending, September 30, 20-Cash Accounts Receivable Supplies Equipment Prepaid Insurance Accounts Payable

19,475 ? 1,000 15,000 500 2,500

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17,000

Capital Stock Dividends Fees Earned Salary Expense Rent Expense Utilities Expense Supplies Expense Miscellaneous Expense

(A)

1,000 49,600 14,500 9,000 1,400 3,900 250 55,000

81,575

What would be the new balance of the trial balance after errors are corrected? Accounts receivable?

2. After all adjustments have been made, but before the accounts have been closed, the following balances were taken from the ledger: Accounts payable Accounts receivable Accumulated depreciation Capital Stock Cash Depreciation expense Dividends Equipment

P 40,000 54,500 83,325 20,000 7,150 23,500 28,000 155,000

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Insurance expense Prepaid insurance Rent expense Retained earnings Salary expense Salaries payable Service revenue Supplies Supplies expense

8,600 5,275 21,400 80,950 66,000 150 151,000 2,500 3,500

Journalize the entries to close the appropriate accounts. 3. Presented below are a number of adjusting entries: 1.) Dec 31 Printing supplies expense Printing supplies

20,000

2.)

Subscription revenues Unearned subscription revenues

15,000

Insurance expense Prepaid insurance

12,000

3.)

4.)

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6.)

7.)

8.)

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10.)

20,000

15,000

12,000

Interest receivable Interest income

500

Bad debt expense Allowance for bad debt

5,000

500

5,000

Salaries expense Salaries payable

25,000.

Rent revenues Unearned rent revenues

30,000

Depreciation expense-Equipment Accumulated depreciation-Equipment

10,000

Interest expense Interest payable Rent expense Prepaid rent

25,000

30,000

10,000 600 600 20,000 20,000

Required: Prepare the reversing entries. (Indicate “no reversing entry” if not applicable.)

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