Revision

Model 1
Answer the following questions: Use the Bubble Sheet
Mutiple Choice Questions.
1. Which statement reports the revenues and expenses for a period of time?
A Owner’s Equity B Balance Sheet C Income Statement D None of these
Statement
2. Which assumption requires that the activities of the entity be kept separate and distinct from the activities of
its owner and all other economic entities?
A Economic entity B Monetary unit C Time period D Accounting
assumption assumption assumption assumption
3. ABC Company performed $1,500 of services. The company received cash of $ 500 from customers, and the
balance of $1,000 on account. The effect of this transaction on the accounting equation is:
A Increase in assets by B Increase in assets by C Increase in assets by $ D No effect
$1,500, increase in $1,500, increase in 500, decrease in liabilities
liabilities by $1,000 and owner’s equity by $ by $1,000 and increase in
increase in owner’s equity 1,500. owner’s equity by $ 500.
by $ 500.
4. ABC Company paid $6,000 cash for 12-month insurance policy in advance. The effect of this transaction on the
total assets is:
A Increase by $6,000 B Decrease by $6,000 C Decrease by $2,000 D No effect

5. The process of entering transaction data in the journal is……………….

A Analyzing B Journalizing C Posting D Trial Balance
6. In T ledger account, if the sum of Debit entries is greater than the sum of Credit entries, the account will have a
…………......
A credit balance B Normal balance C No balance D debit balance
7. The process of transferring the information of journal entries to the ledger accounts is……………..
A Analyzing B Journalizing C Posting D Trial Balance
8. Which of the following accounts would be increased with a debit?
A Salaries Expense B Unearned Revenues C Accounts Payable D Owner’s Capital

9. The company received $80 cash for services performed during the month. The journal entry is:
A Cash 80 B Unearned revenue 80 C Cash 80 D None of
these
Unearned revenue 80 Cash 80 Service Revenues 80
10. The company received $70 cash advance from a customer for services to be performed next month.
The journal entry is:
A Cash 70 B Cash 70 C Unearned revenue 70 D None of
these
Service Revenues 70 Unearned revenue 70 Cash 70

Model 1 Page 1 of 5
11. ABC company purchased furniture for $60. The company paid $20 in cash and signed a note for the
remaining balance. The journal entry is:
A Equipment 60 B Cash 20 C Equipment 60 D None of
Cash 20 Accounts Payable 40 Cash 20 these
Notes Payable 40 Equipment 60 Receivables 40

12. ABC company paid $25 cash for office salaries. The journal entry is:
A Salaries expenses 25 B Cash 25 C Cash 25 D None of
these
Cash 25 Salaries expenses 25 Salaries Payable 25
13. Owner withdrew $18 from the business for personal use. The journal entry is:
A Personal expenses 18 B Cash 18 C Owner’s Drawings 18 D None of
these
Cash 18 Owner’s Capital 18 Cash 18
14. ABC company received a bill of $45 for advertising. The journal entry is:
A Advertising expense 45 B Cash 45 C Advertising expense 45 D None of
these
Accounts payable 45 Revenues 45 Cash 45
15. ABC company paid $12 cash for rent in advance. The journal entry is:
A Rent expense 12 B Prepaid rent 12 C Rent expense 12 D None of
these
Cash 12 Cash 12 Prepaid rent 12
16. The equality of the accounting equation can be proven by preparing a…………….
A journal. B trial balance. C general ledger. D T-account.
17. If expenses are recognized when incurred (rather than when paid) and revenues are recognized
when services are performed (rather than when cash is received), the company is applying the:
A Adjustment basis of B Cash basis of C Accrual basis of D The expense basis of
accounting. accounting. accounting. accounting.

18. Unadjusted trial balance showed $150 supplies. Information revealed that supplies on hand $60.
The adjusting entry is:
A Supplies Expense 90 B Supplies Expense 60 C Supplies 90 D None of these

Supplies 90 Supplies 60 Supplies expense 90

19. Unadjusted trial balance showed $200 unearned revenue. Information showed that $120 of unearned
revenuestill unearned. The adjusting entry is:
A Unearned revenue 120 B Unearned revenue 80 C Revenue 80 D None
of
Revenue 120 Revenue 80 Unearned revenue 80 these
20. On January 1, 2020, if ABC company purchased equipment for $1,000, the company estimated annual
depreciation for equipment $250. The adjusting entry to record annual depreciation expense at the
end of the year is………….
A Debit to Depreciation B Debit to Depreciation C Debit to Depreciation D Debit to
expense for $ 250; expense for $ 250; expense for $ 750; Depreciation
Credit to Equipment Credit to Accumulated Credit to Accumulated expense for $ 250;
Credit to Cash for $
for $ 250. depreciation-equipment depreciation-equipment
250.
for $ 250. for $ 750.

21. Equity accounts consist of the following:

A Owner’s Capital, B Owner’s Capital, C Investment by the D None of
Revenues, Expenses, Assets, and Liabilities. owner. these
and Drawing.

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22. ABC company purchased equipment for $60. The company paid $20 in cash and signed a note for
the remaining balance. The journal entry is:
A Equipment 60 B Cash 20 C Equipment 60 D None of
Cash 20 Accounts Payable 40 Cash 20 these
Notes Payable 40 Equipment 60 Receivables 40

23. On January 1, 2020, ABC Company purchased furniture for $20,000. The company expects to use the
furniture for 4 years. The book value of the furniture at December 31, 2020 is:
A $5,000 B $10,000 C $20,000 D $15,000
24. The balance in the Prepaid Rent account before adjustment at the end of the year is $18,000, which
represents three months’ rent paid on December1. The adjusting entry required on December 31 is to:
A Debit Prepaid Rent, B Debit Rent Expense, C Debit Prepaid D Debit Rent Expense,
$12,000; Credit $6,000; Credit Rent, $ 6,000; $12,000; Credit
Rent Expense, Prepaid Rent, Credit Rent Prepaid Rent
$12,000.
$12,000. $6,000. Expense, $ 6,000.

25. The adjusting entry to record $2,500 of revenues that have been earned but not yet recorded would be to:
A Debit Unearned B Debit Service C Debit Accounts D Debit Cash, $2,500;
Revenue, $2,500; Revenue, $2,500; Receivable, Credit Service
Credit Service Credit Accounts $2,500; Credit Revenue, $2,500.
Revenue, Receivable, Service Revenue,
$2,500. $2,500. $2,500.
Use the following information to answer questions No. 26, 27, 28, and 29
The following information is available for ABC Company for the year ended December 31, 2021:
Accounts payable $ 4,300 Accounts receivable 1,900
Accumulated depreciation 5,000 Cash 2,800
Owner’s capital 8,300 Inventory 2,500
Supplies 2,500 Equipment 8,700
Notes payable (due in 5 years) 6,500 Building 5,700
26. What is the total current assets that will appear on the balance sheet?
A $ 4,700 B $ 18,400 C $ 7,200 D $ 9,700
27. What is the net total amount of property, plant, and equipment that will appear on the balance sheet?
A $ 9,400 B $ 14,400 C $ 3,700 D $ 18,400
28. What is the total current liabilities that will appear on the balance sheet?
A $ 10,800 B $ 4,300 C $ 6,500 D $ 19,100
29. What is the total long-term liabilities that will appear on the balance sheet?
A $ 10,800 B $ 4,300 C $ 6,500 D $ 19,100
30. The following accounts are closed at end of period:
A permanent B temporary C both permanent and D permanent or real
accounts only. accounts only. temporary accounts. accounts only.
31. A post-closing trial balance will show:
A only balance sheet B Balance sheets and C zero balances for D only income
accounts. income statements balance sheet statement accounts.
accounts. accounts.

32. If revenues are higher than expenses. The journal entry needed to close income summary is:
A Income summary xx B Owner's capital xx C Income summary xx D None of
these
Owner's capital xx Income summary xx Net income xx
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33. ABC Company uses the perpetual inventory system. On April 3, ABC company sold merchandise with a
cost of $ 300 for $ 800 to a customer on account with terms of 3/15, n/30. The journal entry to record the
cost of goods sold would be:
A Debit Sales revenue B Debit Inventory 300; C Debit Cost of goods D Debit Cost of
800; Credit Cost of Credit Cost of goods sold 800; Credit goods sold 300;
goods sold 800. sold 300. Inventory 800. Credit Inventory
300.
34. XYZ Company uses the perpetual inventory system. On June 2, company purchased $24,500 of
merchandise on account, terms 2/10, n/30. On June 4, company returned $2,000 of damaged goods. What
is the journal entry that will be recorded on June 4 by XYZ Company?
A Debit Accounts B Debit Accounts C Debit Accounts D Debit Inventory
payable 2,000; payable 22,500; payable 22,500; 2,000; Credit
Credit Inventory Credit Inventory Credit Sale Accounts payable
2,000. 450; Cash 22,050. discount 450, Cash 2,000.
22,050.
35. XYZ Company uses the perpetual inventory system. On June 2, company purchased $24,500 of
merchandise on account, terms 2/10, n/30. On June 4, company returned $2,000 of damaged goods. On June
10, the company paid for the merchandise purchased. What is the journal entry that will be recorded on
June 10 by XYZ Company?
A Debit Accounts B Debit Accounts C Debit Accounts D Debit Accounts
payable 24,500; payable 22,500; payable 22,500; payable 22,500;
Credit Inventory Credit inventory Credit Sale Credit Cash 22,500.
490, Cash 24,010. 450, Cash 22,050. discount 450, Cash
22,050.
36. On July 9, ABC Company sold goods on credit to XYZ Company for $10,000, terms 1/10, n/60. ABC
received payment on July 18. What is the journal entry that should be recorded on July 18 by ABC
Company?
A Debit Cash 10,000; B Debit Cash 9,900, C Debit Cash 9900, D Debit Accounts
Credit Accounts Sales Discounts 100; Inventory 100; Receivable 10,000;
Receivable 10,000. Credit Accounts Credit Accounts Credit Cash 10,000.
Receivable 10,000. Receivable 10,000.
37. ABC Company uses a perpetual inventory system and sold inventory to XYZ Company. The shipping costs
were $80 and the terms of the shipment were FOB destination point. ABC would have the following entry
regarding the shipping charges:
A Inventory 80 B Freight out 80 C Cash 80 D None of these

Cash 80 Cash 80 Inventory 80

38. At year end, ABC company has an unadjusted balance of $150 in inventory. Through a physical count, ABC
company determines that its actual inventory at year-end is $130. The company should make the following
adjusting entry:
A Inventory 20 B Income Summary 20 C Cost of goods sold 20 D None of
these
Cost of goods sold 20 Inventory 20 Inventory 20

Model 1 Page 4 of 5
 39. ABC Company reported the following balances at December 31, 2021:
Sales Revenue $33,000
Sales Returns and Allowances 1,600
Sales Discounts 400
Cost of Goods Sold 14,200
Operating expenses 8,000
The Gross profit is:
A $31,000 B $8,800 C $45,200. D $16,800
Use the following information to answer questions No. 40, 41, 42, and 43
ABC Company uses the perpetual inventory system and had the following purchases and sales
during April.
Date Events Units Cost per unit ($)
April 1 Beginning inventory 50 20
April 3 Purchase 30 25
April 5 Sales 35

40. Assume that ABC uses FIFO cost flow assumption, the cost of ending inventory on April 5 is:
A $1,050 B $750 C $700 D None of these
41. Assume that ABC uses FIFO cost flow assumption, the cost of goods sold on April 5 is:
A $1,050 B $700 C $850 D None of these
42. Assume that ABC uses LIFO cost flow assumption, the cost of ending inventory on April 5 is:
A $ 850 B $700 C $900 D None of these
43. Assume that ABC uses LIFO cost flow assumption, the cost of goods sold on April 5 is:
A $ 1,050 B $ 850 C $ 900 D None of these
44. ABC Company applies the lower-of-cost-or-market (LCM) basis for its inventory. The following data are
collected:

Product A
Number of units 100
Market price ($) 10
Cost ($) 17
If ABC applies the LCM basis, the value of the inventory reported on the balance sheet would be:

A $1,700 B $ 700 C $ 1,000 D None of these

45. Applying LCM to the items that make up ending inventory is an application of which of the following
principles?
A Materiality B Consistency C Conservatism D Full disclosure
46. In order to pay the least income tax possible in periods of rising inventory costs, the company should use
which of the following inventory costing assumptions?
A FIFO B LIFO C Average cost D None of these

Best Wishes

Model 1 Page 5 of 5