Quiz No.

1
Accounting Cycle
DAT

Multiple Choice
1. The accounting cycle starts with the:

a) Preparation of Ledger accounts

b) Preparation of trial balance
c) Analysis of business transaction
d) Preparation of adjusting entries

2. After a business transaction has occurred, journal entries are recorded in the:

a) General ledger
b) General journal
c) Expense accounts
d) Balance sheet

3. Once journal entries are recorded, they can be posted to:

a) General journals
b) General Ledger accounts
c) Income statements
d) Expense reports

4. Which trial balance lists all the business accounts before year-end adjusting Journal entries
are made?

a) Adjusted trial balance

b) Unadjusted trial balance
c) Post closing trial balance
d) Pre closing trial balance

5. Entries that are made at the end of a period to correct accounts before financial statements are
prepared.

a) Closing entries
b) Adjusting entries
c) Reversing entries
d) Journal entries
6. This trial balance is created after adjusting journal entries have been recorded.

a) Adjusted trial balance

b) Unadjusted trial balance
c) Post closing trial balance
d) Pre closing trial balance

7. Reports that can be prepared from the adjusted trial balance.

a) financial statements
b) Expense reports
c) Inventory reports
d) Payroll spending reports

8. A tool used to help bookkeepers and accountants complete the accounting cycle.

a) Financial ratio estimator

b) Expense calculator
c) Accounting worksheet
d) Excel

9. Entries made to transfer temporary account balances to permanent accounts.

a) Journal entries
b) Adjusting entries
c) Reversing entries
d) Closing entries

10. Accounts with balances that are carried over to future years.

a) Temporary accounts
b) Permanent accounts
c) Expense accounts
d) Withdrawal accounts
True or False

1. After proper analysis, the business transaction is recorded in journal in random order.

2. In the income statement columns of the worksheet, if total debits exceed total credits, there is
profit.

3. Closing entries are prepared at the end of the accounting period to “zero out” the balances of all
nominal accounts in the ledger.

4. The amounts in the “post-closing trial balance” represent the beginning balances of accounts in
the next accounting period.

5. All adjusting entries can be reversed.

6. The trial balance is the end product of the accounting process.

7. Accounts receivable is an example of a real account.

8. The advance payment for rent initially recorded a debit to asset account can be reversed.

9. The financial statements are prepared only after adjusting entries are made.

10. The unexpired portion of an item of expense that was paid in advanced is recognized as
expense.

Find the Solution

1. An entity's trial balance has total debits of P15,100 and total credits of P14,500. In investigating
the cause of the difference, the following errors were determined:
a. A debit to accounts receivable of P2,100 was not posted;
b. A P10,500 credit to be made to the Purchases account was credited to Accounts payable
instead;
c. A ₽26,000 credit to be made to the Sales account was credited to the Accounts receivable
account instead;
d. The prepaid rent account balance of P15,800 was included in the trial balance as P18,500.

What is the correct debit and credit totals of the trial balance?

a. P 60,000
b. P 51,000
c. P 32,700
d. P 30,000