AE 13 FINANCIAL ACCOOUNTING & REPORTING

FINAL EXAM
NAME: __________________ PERMIT NO.: ___________
PART 1. Multiple Choices
1. After identifying an accountable event and recording it in a debit-credit format, the next step is to
a. prepares the unadjusted trial balance
b. classifies the effect of the transaction on the accounts
c. prepares the adjusting entry
d. posts the transaction online and wait for friends to like
2. Transferring the debit and credit amounts of a journal entry to ledger is called
a. recording c. tweeting
b. posting d. liking
3. Which of the following accounts is presented on the credit column of the unadjusted trial balance?
a. Cash c. Owner’s drawings
b. Accounts receivable d. Service fees
4. The heading of the trial balance will least likely show
a. the name of the business c. the title of the report
b. the date covered by the report d. the name of the business owner
5. An entity recorded a P16,830 amount as P16,380. This error is called
a. Transportation error c. Transposition error
b. Transplacement error d. Translation error
6. Adjusting entries are usually made
a. everyday
b. at the end of each month
c. only when the financial statement is prepared
d. when the accountant is happy
7. These accounts are not closed at the end of the accounting period, but rather carried over to the next
period
a. real account c. mixed account
b. nominal accounts d. carryover accounts
8. Which of the following is a nominal account
a. Cash c. Owner’s equity
b. Accumulated depreciation d. Owner’s drawings
9. When preparing a worksheet, real accounts in the adjusted trial balance are extended to the
a. balance sheet column c. real column
b. income statement column d. yellow column
10. The end product of the accounting process is the
a. financial statement c. T-account
b. worksheet d. accountant
PART 2. Problem
Mr. A opened a therapeutic massage clinic called “Wellness Massage” on October 1, 20x1. The following were
the transactions during the three months ended December 31, 20x1:
1. Mr. A invested P1,000,000 cash to the business
2. The business acquired computer equipment for P700,000 cash on October 1, 20x1
3. Total payments for business permit and other licenses amounted to P200,000
4. The business paid one-year insurance for P42,000 covering the months of October 1, 20x1 to Sept. 30,
20x2. The business uses the asset method in recording prepayments.
5. Total service fees billed to client amounted to P3,200,000 on account.
6. Total payments for utilities expense amounted to P420,000
7. Total payments for salaries expense amounted to P2,400,000
8. Total collection on accounts receivable amounted to P2,900,000

Additional information:
 the equipment has a useful life of 5 years
 bad debt expense is estimated at 10% of outstanding accounts receivable.
 Unpaid rent amounted to P120,000

Requirements:
a. Provide journal entries
b. Post the entries to the ledger
c. Prepare the unadjusted trial balance
d. Provide the adjusting entries
e. Complete the worksheet up to post-closing trial balance
f. Prepare the closing entries
g. Prepare the balance sheet and income statement