ADJUSTING ENTRIES (DAY 4) POST TEST

1. Adjusting entries are usually recorded at the beginning of each reporting period. False
2. In accounting, the phrase ‘to accrue’ means to postpone the recognition of an income or
expense. False
3. All adjusting entries affect the profit or loss for the period (or comprehensive income for the
period). True
4. Adjusting entries normally involve
a. Liability accounts only
b. Real accounts only
c. Nominal accounts only
d. Real and nominal accounts
5. Which of the following is a nominal account?
a. Cash
b. Accumulated Depreciation
c. Owner’s Drawings
d. Owner’s Equity
6. As time passes, fixed assets other than land lose their capacity to provide useful services. To
account for this decrease in usefulness, the cost of fixed assets is systematically allocated to
expense through a process called
a. Accumulation
b. Matching
c. Depreciation
d. Equipment Allocation
7. If the effect of the debit portion of an adjusting entry is to increase the balance of an expense
account, which of the following describes the effect of the credit portion of the entity
a. Increases the balance of a liability account
b. Decreases the balance of an expense account
c. Increases the balance of an asset account
d. Decreases the balance of an owner’s equity account
8. The balance in an Unearned Revenue account represents an amount that is
a. Earned: YES; Collected: NO
b. Earned: YES; Collected: YES
c. Earned: NO; Collected: NO
d. Earned: NO; Collected: YES
9. Which account would normally not require an adjusting entry?
a. Capital
b. Accounts Receivable
c. Wages Expense
d. Accumulated Depreciation
10. On April 1, 2022, RAT Company purchased a piece of equipment at P160,000. It has an estimated
residual value of P10,000 and an estimated life of 5 years. It is to be depreciated by the
 straight-line method. What is the amount of depreciation for the year ended December 31,
2022?
a. 22,500
b. 30,000
c. 7,500
d. 24,000
11. An accrued expense can be described as an amount
a. Not paid and not matched with earnings for the current period.
b. Not paid and matched with earnings for the current period.
c. Paid and not matched with earnings for the current period.
d. Paid and matched with earnings for the current period.

12. Which of the following will be included in the adjusting entry to accrue interest expense?
a. A debit to Cash
b. A credit to Interest Payable
c. A debit to Interest Payable
d. A Debit to Prepaid Interest

13. The primary difference between deferred and accrued expenses is that deferred expenses have
a. Been recorded and accrued expenses have not been incurred
b. Not been incurred and accrued expenses have been incurred
c. Been incurred and accrued expenses have not
d. Not been recorded and accrued expenses have been incurred
14. On July 3, a deposit in the amount of P 5,000 was received for services to be performed. By the
end of the month, services in the amount of P 1,200 were performed. The adjusting entry for
this transaction is
a. Debit: Cash 5,000; Credit: Revenue 5,000
b. Debit: Cash 1,200; Credit: Unearned Revenue 1,200
c. Debit: Revenue 5,000; Credit: Unearned Revenue 5,000
d. Debit: Unearned Revenue 1,200; Credit: Revenue 1,200
15. Adjusting entries are usually made
a. Every day, including Sundays and Holidays
b. At the end of each month
c. Only when financial statements are prepared
d. When the accountant is feeling happy and in love