1. STATEMENT I---Adjusting entries affect cash flows in the current period.

<<<>>>
STATEMENT II---Failure to record the adjusting entry for accrued salaries results in the
current year's profit being overstated. *
 False, True
 True, True
 True, False
 False, False

2. STATEMENT I---Classification reduces the effects of numerous transactions into useful

groups or categories. <<<>>> STATEMENT II---For reporting purposes, the personal
assets and debts of a business owner may not be combined with the assets and debts of
the business. 
 False, False
 True, True
 False, True
 True, False

3. STATEMENT I ---- An accrued expense is a liability. <<<>>> STATEMENT II----An

unearned income is an income. <<<>>> STATEMENT III ---- An Allowance for Bad Debts
is a contra-account. <<<>>> STATEMENT IV----A Purchases Discount is an adjunct
account. *
 Three statements are incorrect.
 Two statements are incorrect.
 One statement is incorrect.
 All statements are incorrect.

4. STATEMENT I---When payment is received for services not yet rendered, no entry is
recorded until that service has been rendered. <<<>>> STATEMENT II--- When a
company receives a product previously ordered, a recordable event has occurred. *
 True, True
 True, False
 False, False
 False, True

5. STATEMENT I---Payment of a liability will not affect total assets but will cause total
liabilities to decrease. <<<>>> STATEMENT II----Expenses cause decreases in owner's
equity and are recorded by credits. *
 False, False
 True, True
 True, False
 False, True
  
6. STATEMENT I---If equipment costing 150,000 is bought by paying 60% as a
downpayment and the remaining 40% in 30 days, accounts payable increased by 45,000.
<<<>>> STATEMENT II----Recording 88,800 as 8,880 is an example of a slide. *
 True, True
 True, False
 False, True
 False, False

7. STATEMENT I---A recording error caused by the erroneous rearrangement of digits, such
as writing 859 as 895, is called a transposition. <<<>>> STATEMENT II---A trial balance
with equal debit and credit totals proves that all transactions have been correctly
journalized and posted to the proper ledger accounts. *
 True, True
 False, False
 False, True
 True, False

8. STATEMENT I---The owner's Withdrawals account is listed with the other expenses of a
business. <<<>>> STATEMENT II--- A cash acquisition of a laptop computer will cause
total assets to decrease. *
 True, True
 False, True
 True, False
 False, False

9. STATEMENT I---The adjusting entry to allocate part of the cost of a one-year fire
insurance policy to expense will cause total assets to decrease. <<<>>> STATEMENT
II----The adjusting entry to recognize earned commission revenues not previously
recorded or billed will cause total assets to increase. *
 False, False
 True, True
 False, True
 True, False

10. STATEMENT I----The adjusting entry to recognize an expense which is unrecorded and
will not cause total liabilities to decrease. <<<>>> STATEMENT II---The adjusting entry to
recognize earned revenues which was received in advance will not cause total liabilities to
increase. *
 False, False
 True, False
 True, True
 False, True
11. STATEMENT I --- When the income statement columns of the worksheet are totaled, the
excess of debits over credits is called profit. <<<>>> STATEMENT II---The totals of the
balance sheet columns of the worksheet will usually be the same as the totals appearing
in the formal balance sheet. *
 True, True
 False, True
 False, False
 True, False

12. STATEMENT I---The function of expense method reports gross margin and income from
operations. <<<>>> STATEMENT II---In the worksheet, the ending inventory amount will
appear in the income statement credit column and the balance sheet debit column. *
 False, False
 True, False
 False, True
 True, True

13. STATEMENT I---All nominal accounts must be closed before the Income Summary
account can be closed. <<<>>>STATEMENT II--- When profit or loss is exactly zero, one
of the usual closing entries will be avoided. *
 True, True
 False, True
 True, False
 False, False
 
14. STATEMENT I---If revenue and expenses were equal for an accounting period, the result
would be neither a profit nor a loss. <<<>>> STATEMENT II----When the Income
Statement columns of the worksheet are initially footed, they should be out of balance by
the amount of profit or loss. *
 False, True
 False, False
 True, True
 True, False

15. STATEMENT I---The cost of merchandise purchased during the period is determined by
subtracting from the net purchases the amount of transportation costs incurred during the
period. <<<>>> STATEMENT II---The purchase of equipment not for resale should be
debited to the purchases account. *
 True, True
 False, True
 True, False
 False, False
 
16. STATEMENT I---The adjusting entries involving Rent Receivable and Salaries Payable
could be reversed. <<<>>> The adjusting entries involving Depreciation Expense and
Supplies Expense could be reversed. *
 True, True
 False, False
 False, True
 True, False

17. STATEMENT I---The debit balance of the inventory account in the trial balance under the
periodic inventory system is the amount of the inventory at the end of current year.
<<<>>> STATEMENT II---The calculation of cost of goods available for sale during the
year is affected by the previous year's ending inventory. *
 False, True
 True, True
 False, False
 True, False

18. STATEMENT I---The difference between reveneus from sales and cost of sales is
operating income. <<<>>> STATEMENT II---Discounts offered to the buyer to encourage
early payment are trade discounts. *
 True, False
 True, True
 False, True
 False, False

19. STATEMENT I---The expiration of usefulness of equipment during an accounting period is

called depreciation. <<<>>> STATEMENT II---Not all increases to cash represent
revenues. *
 True, False
 False, False
 True, True
 False, True

20. STATEMENT I---To simplify the recording of regular transactions in the next accounting
period, all adjusting journal entries are reversed. <<<>>> STATEMENT II---Reversing
entries can be made for accruals but not for deferrals. *
 True, False
 True, True
 False, True
 False, False
21. Recording a single transaction in the double-entry accounting records may *
 Decrease the balance on a liability account by a given amount and decrease the
balance on an asset account by the same amount.
 Decrease the balance on an asset account by a given amount and increase the
balance on a liability account by the same amount.
 Increase the balance on an asset account by a given amount and increase the
balance on another asset account by the same amount.
 Increase the balance on an asset account by a given amount and decrease the
balance on a liability account by the same amount.

22. STATEMENT I---Sales on account of office equipment used in the business would be
recorded in the sales journal. <<<>>> STATEMENT II---Debits to creditors' accounts for
invoices paid are recorded in the accounts payable debit column of the cash payments
journal. *
 False, False
 True, True
 False, True
 True, False

23. Which of the following steps in the accounting cycle are listed in logical order? *
 Post the journal entries to the ledger accounts, prepare a worksheet and then take a
trial balance.
 Prepare the financial statements, post the closing entries and then take a post-closing
trial balance.
 Post the closing entries, take a post-closing trial balance, then reverse all adjusting
entries.
 Prepare the income statement, prepare the statement of financial position and then
prepare a worksheet.

24. Which of the following statements is incorrect? *

 The accrual method which builds directly on the revenue and matching principle
ignores the timing of cash receipts or payments when determining when to recognize
revenue or expenses.
 In accordance with the unit of measure assumption, accountants normally revise the
amounts to reflect the changing purchasing power of money due to inflation or
deflation.
 Expenses are matched with revenues, not the reverse.
 In accordance with the going concern assumption, the life of a business is presumed
to be indefinite.
25. STATEMENT I---Prime costs consist of direct materials and direct labor. Conversion cost
is essentially direct labor. <<<>>> STATEMENT II---Manufacturing overhead includes all
manufacturing costs except direct labor and direct materials. *
 False, True
 True, False
 False, False
 True, True
26. STATEMENT I---The personal liability of a partner is limited to the amount of his
investment. <<<>>> STATEMENT II---The liability of corporate stockholders is limited to
the amount of their investment. *
 True, False
 False, False
 True, True
 False, True
 
27. STATEMENT I---The traditional balance sheet arrangement of assets on the left-hand side
with the liabilities and owner's equity on the right-hand side is called the report form.
<<<>>> STATEMENT I---When preparing a worksheet for a merchandising company that
uses the perpetual inventory system, the cost of goods sold can be derived from the
balances of several accounts in the Income Statement columns. *
 False, True
 True, True
 True, False
 False, False

28. STATEMENT I---Manufucturing costs are regarded as expenses of the current period and
expensed when incurred. <<<>>> STATEMENT II---All costs and expenses incurred by a
manufacturing company are considered product costs rather than period costs. *
 True, True
 False, True
 False, False
 True, False

29. It is the capacity of a financial information to make a difference in decision by helping

users evaluate past, present or future events, or confirming, or correcting, their past
evaluations. *
 Neutrality
 Understandability
 Comparability
 Relevance

30. Withdrawals by the proprietor has all of the following effects, except *
 Reduction of cash balance
 Reduction of profit for the period
 Reduction of total assets
 Reduction of owner's equity
 
31. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report net sales at _______ *
 750,030
 703,750
 703,570
 721,600

32. An adjusting entry to accrue salaries incurred but not yet paid is an example of *
Aligning recorded revenues with appropriate accounting periods.
 Reflecting unrecorded revenues earned during the accounting period.
 Reflecting unrecorded expenses incurred during the accounting period.
 Aligning recorded costs with appropriate accounting periods.

33. The accrual basis of accounting recognizes *

 Expenses when cash is paid.
 Revenues when products are produced as part of operating activities.
 Revenues when cash is received.
 Expenses when resources are consumed as part of operating activities.

34. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
 equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report gross income at _______ *
 341,130
 395,160
 337,910
 338,090
 
35. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report cost of sales at _______ 
 365,840
 326,440
 362,440
 365,480

36. Which of the following transactions increases both assets and owner's equity? *
 Owner's withdrawal of cash.
 Payment received from a credit customer.
 Received a bank loan.
 Rendered services, payment not yet received.

37. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
 and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report operating income at _______ *
 91,350
 91,530
 86,310
 86,130

38. Which of the following is an example of deferral? *

 Legal fees already earned but not yet collected.
 Property taxes accrued but not yet paid.
 The accumulation of interest in a bank account.
 The purchase of a company vehicle.
 
39. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report total operating expenses at _______ *
 255,000
 294,600
 250,500
 249,600

40. If an adjusting entry were not made at the end of a period to remove the earned revenue
from the Unearned Revenues account, 
 Owner's equity would be overstated.
 Liabilities would be understated.
 Liabilities would be overstated.
 Assets would be understated.
 
41. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report ending capital at _______ *
 151,370
 151,730
 160,370
 160,730
 
42. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report net income at _______ *
 86,130
 91,350
 91,530
 86,310
43. Aeron purchased merchandise from Aron costing 200,000. Terms: 2/10, n/30, FOB
Shipping Pt. Aeron paid the transportation cost of 8,000 and returned some defective
goods to Aron costing 20,000. If Aeron paid within the discount period, the sales discount
recorded in his books was ____ *
 3,760
 4,000
 None
 3,600

44. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report total non-current liabilities at _______ 
 54,000
 80,170
 45,000
 80,710
 
45. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report total current assets at _______ *
  124,120
 128,040
 124,210
 128,400
 
46. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report total liabilities at _______ *
 80,710
 89,170
 79,610
 80,170
 
47. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report total assets at _______ *
 236,720
 236,270
 232,440
 270,890
48. Mary sold merchandise to Mary Ann for 300,000. Terms: 3/15, n/30, FOB Destination.
Mary Ann paid the transportation cost of 10,000 and returned some defective goods to
Mary costing 20,000. If Mary collected within the discount period, the purchases discount
recorded in her books was ____ *
 8,700
 8,400
 9,000
 None
 
49. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report total current liabilities at _______ *
 80,710
 35,170
 34,610
 35,710
 
 
50. Kaya Koto Company reported the following account balances for the year ended
December 31,2020: Accounts Payable of 17,950, Accounts Receivable of 44,700,
Accumulated depreciation for office equipment of 22,450, Accumulated depreciation for
store equipment of 16,000, Cash of 8,890, Beginning Kaya Koto, Capital of 74,600, Kaya
Koto, Withdrawals of 9,000, General expenses of 116,700, Interest expense of 5,400,
Interest payable of 1,100, Beginning Merchandise Inventory of 69,350, Ending
Merchandise Inventory of 65,520, Long-term notes payable of 45,000, Office equipment of
58,680, Purchases of 364,000, Purchases discounts of 1,990, Purchases returns and
allowances of 3,400, Salaries payable of 2,840, Sales discounts of 10,400, Sales returns
and allowances of 18,030, Sales of 732,000, Selling expenses of 132,900, Store
 equipment of 88,000, Supplies of 5,100 and Unearned revenues of 13,820. Kaya Koto is a
tax-exempt entity. Kaya Koto should report total non-current assets at _______ *
 108,320
 146,860
 108,230
 146,680

51. On June 3, 2020, Crisnalyn purchased merchandise from Jaymar with list price of 280,000
subject to trade discount of 15%. Terms: 2/10, n/30, FOB Destination. Jaymar paid freight
amounting to 5,000. On June 8, Crisnalyn returned some defective goods to Jaymar with
list price of 25,000 and paid the amount due to Jaymar four days after. The journal entry
on the payment date includes ____ *
 Credit to Purchases Discount for 4,335
 Debit to Accounts Payable for 213,000
 Credit to Cash for 216,750
 Credit to Cash for 208,740
 
52. On October 31, 2020, the Cash in Bank account of Steven Company had a balance pf
72,166. On that date, the bank statement indicated a balance of 95,347.50. Comparison of
returned checks and bank memos revealed the following: (1) Deposits in transit as of
October 31 amounted to 36, 407.50. (2) Outstanding checks as of October 31 totaled
14,679. (3) The bank erroneously charged a 3,250 check of Stelphen Company against
the Steven Company bank account. (4) A bank service charge of 250 has not yet been
recorded in the books. (5) Steven Company neglected to record 45,000 borrowed from the
bank on a 10%, six-month note. The bank statement has already credited the 45,000. (6)
Included with the paid checks is a memo indicating that Eduardo Menoy's check for 6,400
had been returned DAIF. Menoy, a customer, had sent the check to pay an account of
6,600 less a discount of 200. (7) Steven Company recorded a 1,090 payment for repairs
as 10,900. The adjusted book balance should be _____ *
 100,706
 113,826
 115,326
 120,326
 
 
53. On March 14, 2020, Apple purchased merchandise from Berry with list price of 320,000
subject to trade discount series of 12% and 8%, respectively. Terms: 2/10, n/30, FOB
Destination. Apple paid freight amounting to 9,000. On March 20, Apple returned some
 defective goods to Berry with invoice price of 32,384. If Apple paid on March 23, the
amount she paid was _____ *
 222,154
 217,688
 231,154
 213,154
 
54. On July 1, 2020, Kate sold merchandise to Cloyd with list price of 440,000 subject to trade
discount of 10% and 5%, respectively. Terms: 3/15, n/30, FOB Shipping Pt. Cloyd paid
freight amounting to 11,000. On July 5, Kate received return of some defective goods from
Cloyd with invoice price of 34,200 and collected the amount due from Cloyd two weeks
after. The journal entry on the collection date includes ____ *
 Credit to Accounts Receivable for 353,000
 Debit to Cash for 342,000
 Debit to Cash for 331,740
 Debit to Sales Discount for 10,409
 
55. On July 15, 2020, Vince Company received a Php. 500,000 promissory note at 12%
interest for 120 days from one of its customers. Vince Company immediately discounted
the note at BPI-Novaliches at a discount rate of 15%. What is the loss on note
discounting? *
 6,000
 6,176
 6,167
 0
 
56. On April 20, 2020, Silver sold merchandise to Gold with list price of 500,000 subject to
trade discount series of 15% and 7%, respectively. Terms: 3/15, n/30, FOB Destination.
Gold paid freight amounting to 12,000. On April 25, Silver received return of some
defective goods from Gold with list price of 35,000. If Silver collected on May 6, the
amount she collected was _____ *
 355,582
 348,250
 337,442
 344,555
 
57. On July 15, 2020, Vince Company received a Php. 500,000 promissory note at 12%
interest for 120 days from one of its customers. Vince Company immediately discounted
 the note at BPI-Novaliches at a discount rate of 15%. How much the proceeds did Vince
Company receive? *
 520,000
 500,000
 494,217
 494,000
 
58. On May 5, 2020, Edelbrando sold merchandise to Florame with list price of 330,000
subject to trade discount of 20%. Terms: 2/10, n/30, FOB Shipping Pt. Edelbrando paid
freight amounting to 7,500. On May 10, Edelbrando received return of some defective
goods from Florame with invoice price of 20,000 and collected the amount due from
Florame five days after. The amount collected by Edelbrando was _____ *
 251,500
 255,500
 246,260
 246,620
 
59. On February 21, 2020, Duterte purchased merchandise from Marcos with list price of
150,000 subject to trade discount series of 15%, 10% and 5%, respectively. Terms: 2/10,
n/30, FOB Shipping Pt. Marcos paid freight amounting to 5,000. On February 26, Duterte
returned some defective goods to Marcos with list price of 30,000. If Duterte paid on
March 3, the amount he paid was _____ *
 84,013
 90,466
 92,210
 82,433
 
60. On October 31, 2020, the Cash in Bank account of Steven Company had a balance pf
72,166. On that date, the bank statement indicated a balance of 95,347.50. Comparison of
returned checks and bank memos revealed the following: (1) Deposits in transit as of
October 31 amounted to 36, 407.50. (2) Outstanding checks as of October 31 totaled
14,679. (3) The bank erroneously charged a 3,250 check of Stelphen Company against
the Steven Company bank account. (4) A bank service charge of 250 has not yet been
recorded in the books. (5) Steven Company neglected to record 45,000 borrowed from the
bank on a 10%, six-month note. The bank statement has already credited the 45,000. (6)
Included with the paid checks is a memo indicating that Eduardo Menoy's check for 6,400
had been returned DAIF. Menoy, a customer, had sent the check to pay an account of
 6,600 less a discount of 200. (7) Steven Company recorded a 1,090 payment for repairs
as 10,900. The adjusted bank balance should be _____ *
 113,826
 115,326
 120,326
 100,706

61. The Store Supplies account had a debit balance of Php. 4,500 at the end of the
accounting period before adjustment for supplies used and an inventory of Php. 900 worth
of unused supplies was on hand. Which of the following is the required adjusting entry? *
 Debit Store Supplies and credit Store Supplies Expense for 3,600.
 Debit Store Supplies Expense and credit Store Supplies for 900.
 Debit Store Supplies and credit Store Supplies Expense for 900.
 Debit Store Supplies Expense and credit Store Supplies for 3,600.
 

62. Unearned Reveues were 11,000 at the end of April and 12,500 at the end of March.
Service Revenues were 42,000 for March and 47,000 for April. How much cash was
received for services provided during April? *
 40,500
 45,500
 48,500
 43,500

63. On July 15, 2020, a company purchased a fire insurance policy covering a property for a
period of two years. The Php. 12,000 cost of the policy was paid in cash. At the end of
2020, the company will reduce Prepaid Insurance for this policy by *
 3,250
 2,750
 3,750
 9,250

64. At December 31, 2020, Babe Company analyzed the details of its Accounts Receivable
balance and arrived at the aged balances below along with the estimated recovery
percentages: Php. 850,00 represents current accounts with 99% recovery, Php. 200,000
represents accounts that are 30 to 60 days past due with 98% recovery, Php. 110,000
represents accounts that are 61 to 120 days past due with 95% recovery, Php. 60,000
represents accounts that are 121 days to 6 months past due with 90% recovery and Php.
40,000 represents accounts that are over 6 months past due with 75% recovery. The
entity uses the allowance methof of recording uncollectible accounts. On December 31,
 2020, the debit balance of Allowance for Uncollectible Accounts is 2,500 before
adjustments. Babe Company should report Uncollectible Accounts at _____ *
 34,000
 31,500
 38,000
 36,500

65. On December 2, 2020, Harry Potter issued a 10%, 85-day promissory note in settlement
of his account amounting to 80,000. The journal entry to be made on January 1, 2021 is 
 Debit to Interest Payable and Credit to Interest Expense for 644
 Debit to Interest Receivable and Credit to Interest Income for 644
 Debit to Interest Income and Credit to Interest Receivable for 644
 Debit to Interest Expense and Credit to Interest Payable for 644

66. A company's weekly payroll of 10,000 is paid on Fridays. Assume that the last day of the
month falls on Wednesday. Which of the following is the required adjusting entry? *
 Debit Salaries Payable and credit Salaries Expense for 4,000.
 Debit Salaries Payable and credit Salaries Expense for 6,000.
 Debit Salaries Expense and credit Salaries Payable for 4,000.
 Debit Salaries Expense and credit Salaries Payable for 6,000.
 
67. On November 20, 2020, Dilraba Dilmurat received a 9%, 90-day promissory note in
settlement of the account of one of her customers amounting to 120,000. What is the
required entry on December 31, 2020? *
 Debit to Interest Expense and Credit to Interest Payable for 1,230
 Debit to Interest Receivable and Credit to Interest Income for 1,230
 Debit to Interest Receivable and Credit to Interest Income for 2,700
 Debit to Interest Expense and Credit to Interest Payable for 2,700
 
68. On May 15, 2020, Zhang Yunlong acquired an equipment costing 200,000. The equipment
is estimated to be sold for 50,000 at end of its four-year life. The adjusting entry in 2021
includes *
 Debit to Depreciation Expense - Equipment and credit to Accumulated Depreciation -
Equipment for 25,000
 Debit to Depreciation Expense - Equipment and credit to Accumulated Depreciation -
Equipment for 21,875
 Debit to Depreciation Expense - Equipment and credit to Accumulated Depreciation -
Equipment for 37,500
 Debit to Depreciation Expense - Equipment and credit to Accumulated Depreciation -
Equipment for 23,438
69. Salaries Payable were 4,500 at the end of July and 3,800 at the end of August. Salaries
Expense for August was 19,000. How much cash was paid for salaries during October? *
 18,300
 19,700
 10,700
 15,300
 
70. A business received cash of 50,000 in advance for revenue that will be earned later. The
cash receipt entry debited cash and credited unearned revenues for 50,000. At the end of
the periof, 20,000 is still unearned. The adjusting entry for this situation will *
 debit unearned revenues and credit revenues for 30,000
 debit revenues and credit unearned revenues for 30,000
 debit revenues and credit unearned revenues for 20,000
 debit unearned revenues and credit revenues for 20,000