Fundamentals of Accounting Theory and Practice

Maria Clara has the following transactions during the month of March: paid salaries of house helper, P 3,500; paid utility expenses of the parlor, P 2,500; at the end of month, hired a parlor helper with a monthly salary of P5, 000. The total expenditures that should be reported for the month of March is

• P 11,000
• P 2,500
• P 7,500
• P 6,000

Profit and Loss Summary is a nominal account.

• True
• False

The summarizing phase of the accounting cycle ends with the preparation of the financial statements.

• True
• False

The account Revenue and Expense Summary is a controlling account where revenues and expenses are closed.

• True
• False

A trial balance is also a tool in checking whether the journal entries are accurately done and posted in the ledger.

• True
• False

Writing the general journal page number in the F column of the ledger and the account number to the F column of the general journal during the posting process is called cross-referencing.

• True
• False

In recording in the general journal, the year and month of the transaction are written once in every page of the journal.

• True
• False

All assets have normal debit balances.

• True
• False

A business transaction can have dual effect on a single accounting element or value.

• True
• False

It is a tool that aids in the accounting process, specifically, in the preparation of the financial statements.

• Posting the journal entries to the ledger
• Closing entries
• Accounting cycle
• Worksheet

Certificates of deposits and checks are part of the Cash on Hand and in Banks or simply, Cash account.

• True
• False

Post-closing trial balances confirms the account balances of the ledger which will be the starting point of the next accounting period.

• True
• False

Assuming, Mr. A. paid rent of P25, 000, this would result to decrease in capital and decrease in liability.

• True
• False

A journal entry can have two or more debits and two or more credits.

• True
• False

The credit side of T-account is used to record increases in liability and capital.

• True
• False

It involves routine performances of the different phases of accounting for a given period of time.

• Posting the journal entries to the ledger
• Accounting cycle
• Worksheet
• Closing entries

This is the category of accounts listed in the income statement.

• Post- closing Trial Balance
• Balance Sheet or Statement of Financial Position
• Revenue and Expense summary or Income Summary or Profit and Loss Summary
• Nominal accounts or temporary accounts

Aside from the adjusting entries, these entries are also done at the end of the accounting period to zero out nominal accounts.

• Accounting cycle
• Worksheet
• Closing entries
• Posting the journal entries to the ledger

It is the second step in the accounting cycle that was done during the accounting period.

• Closing entries
• Posting the journal entries to the ledger
• Accounting cycle
• Worksheet

It is the method of adjusting prepaid expense, the entry of which is reversed.

• Post- closing Trial Balance
• Expense method
• Balance Sheet or Statement of Financial Position
• Reversing entries

Mr. X's Capital account has a balance of P 100,000 on March 31, 2017. Withdrawals for personal expenses during April amounted to P 15,000. At the end of April, the Capital account has a balance of P135, 000. Mr. X's net income for April is

• P 20,000
• P 35,000
• P 85,000
• P 50,000

The difference, if any, between the total debits and total credits of the Cash account should always be shown on the debit side.

• True
• False

After the closing entries are posted in the ledger, all the permanent accounts have zero balances.

• True
• False

Maria Clara invested the following in a Parlor: Cash P 60,000, parlor equipment originally costing P 20,000, with a fair market value of P 18,000. Maria Clara's Capital account should be credited for

• P 60,000
• P 80,000
• P 62,000
• P 78,000

A's Laundry Shop T-accounts for A, Capital, Laundry Income, Laundry Expenses have normal balances of P 200,000, P 180,000, and P80,000, respectively. What is the new balance for A, Capital at the end of the period?

• P 300,000
• P 100,000
• P 380,000
• P 460,000

Maria Clara rendered parlor services during the month: P 5,000 cash basis and P 3,500 on account. The amount to be credited to Service Income is

• P 8,500
• Answer not given
• P 3,500
• P 5,000

A chart of accounts presents a list of account titles, its definition, description of when to debit or credit and its corresponding account numbers.

• True
• False

A non-exchange business transaction does not involve changes in quantifiable monetary values.

• True
• False

Accumulated Depreciation or Allowance for Depreciation is a contra account of Accounts Receivable.

• True
• False

Reversing accrued expense adjustment requires a debit to Accrued Expense and credit Expense.

• True
• False

It is the list of accounts with their balances after the closing entries are recorded and posted in the ledger.

• Balance Sheet or Statement of Financial Position
• Nominal accounts or temporary accounts
• Revenue and Expense summary or Income Summary or Profit and Loss Summary
• Post- closing Trial Balance

The normal balance of an account is always on its right side.

• True
• False

The worksheet is a financial report that should accompany the financial statements.

• True
• False

The right or claim of the owner over the assets of the firm is called liabilities.

• True
• False

Post-closing trial balance contains nominal accounts.

• True
• False

The general journal is also called the book of final entry.

• True
• False

Post-closing Trial Balance is a tool to determine if the ledger accounts are in balance before the start of the new accounting period.

• True
• False

The trial balance of Maria Clara Parlor has a total debit balance of P 300,000. Among the accounts listed are Accounts Payable, P 3,500; Notes Payable, P10,000;Maria Clara, Capital, P180,000. The parlor's revenue is

• P 180,000
• P 120,000
• P 193,500
• P 106,500

The amount corresponding to a debited account can be written on the credit money column of the journal.

• True
• False

Businesses have a common annual accounting period.

• True
• False

It is the controlling account that holds the revenues and expenses in the closing the account process.

• Post- closing Trial Balance
• Nominal accounts or temporary accounts
• Balance Sheet or Statement of Financial Position
• Revenue and Expense summary or Income Summary or Profit and Loss Summary

Assets, Liabilities, and Owner's Equity are permanent accounts

• True
• False

A T-account is a representation of the ledger.

• True
• False

Adjusting entry for Prepaid Expenses-Asset Method is also reversed at the start of the new accounting period.

• True
• False

A credit balance in the Revenue and Expense Summary account represents net loss.

• True
• False

The trial balance extracted from the ledger before the adjusting entries are posted in called the adjusted trial balance.

• True
• False

All the nominal and real accounts are closed at the end of the accounting period.

• True
• False

Using the allowance method, the Accounts Receivable account is credited for the estimated uncollectible from customers.

• True
• False

The following information were taken from the balance sheet of Juan Repair shop as of March 31, 2017: Cash P70,000; Notes Receivable, P10,000; supplies, P5,000; Prepaid Rent,P20,000; total non-current assets, P80,000; Total Liabilities and Capital, P200,000. How much is the Accounts Receivable?

• Answers not given.
• P 25,000
• P 120, 000
• P 15,000

Net loss is closed to capital by debiting Income Summary and crediting capital account.

• True
• False