INTACC - Multiple Choice

Question 1

1. Which of the following is considered as an income?

a. Discount on Notes Receivable
b. Unearned Interest Income
c. Deferred Revenue
d. None of these

Answer 1

d. None of these

Question 2

2. Which of the following adjusting entries may a reversing entry be used?

a. Debit insurance expense, credit prepaid insurance
b. Debit interest receivable, credit interest income
c. Debit unearned rental income, credit rental income
d. Debit depreciation expense, credit accumulated depreciation

Answer 2

b. Debit interest receivable, credit interest income

Question 3

3. Issuing accounting standards is the responsibility of the

a. PICPA
b. FRSC
c. AASC
d. CPE Council

Answer 3

b. FRSC

Question 4

4. These are the principal means through which an entity communicates its financial information to those outside it.

a. Managerial reports
b. Segment reports
c. Financial statement
d. Directors’ statements

Answer 4

c. Financial statement

Question 5

5. Which of the following is not among the economic resources of a business enterprise?

a. Money
b. Products or output of the enterprise
c. Obligations to pay money
d. Ownership interests in other enterprises

Answer 5

c. Obligations to pay money

Question 6

6. An accounting (financial reporting) period may be

a. One month
b. one quarter
c. one year
d. a, b or c

Answer 6

d. a, b or c

Question 7

7. A business entity produces financial statements at arbitrary points in time with which basic accounting concept?

a. Objectivity
b. Periodicity
c. Conservatism
d. Matching

Answer 7

b. Periodicity

Question 8

8. Comparability is sometimes sacrificed for

a. Reliability
b. Conservatism
c. Objectivity
d. Relevance

Answer 8

d. Relevance

Question 9

9. One of the fundamental qualitative characteristics of financial statements is

a. Relevance
b. Timeliness
c. Neutrality
d. Completeness

Answer 9

a. Relevance

Question 10

10. The valuation basis used in conventional financial statements is

a. Replacement Cost
b. Fair Value
c. Original Cost
d. A mixture of cost and value

Answer 10

d. A mixture of cost and value

Question 11

11. They are interested in information that enables them to determine whether their loans, and the interest attaching to them, will be paid when due.

a. Investors
b. lenders
c. suppliers
d. public

Answer 11

b. lenders

Question 12

12. Who has the primary responsibility for the preparation and presentation of the financial statements of
    an entity?

a. Shareholders
b. board of directors
c. management
d. accountant

Answer 12

c. management

Question 13

13. This information is useful in assessing an entity’s investing, financing and operating activities during the reporting period

a. Economic resources
b. Financial structure
c. Cash Flow
d. Performance

Answer 13

c. Cash Flow

Question 14

14. A systematic compilation of a group of accounts; also called a “book of secondary entry”

a. Trial balance
b. ledger
c. worksheet
d. journal

Answer 14

b. ledger

Question 15

15. The appropriate book of account in which the receipt of a cash dividend is recorded

a. cash receipts journal
b. Sales journal
c. Purchases journal
d. general journal

Answer 15

a. cash receipts journal

Question 16

16. The normal balance of any account is the

a. Left side
b. Right side
c. side which increases that account
d. side which decreases that account

Answer 16

c. side which increases that account

Question 17

17. It is the difference between the debit and the credit side of a T account.

a. Normal balance
b. discount
c. account balance
d. a and c

Answer 17

c. account balance

Question 18

18. The effect of the closing entries is to:

a. Change assets
b. Change liabilities
c. Change retained earnings
d. Change the debit balances of all accounts into credits and vice versa

Answer 18

c. Change retained earnings

Question 19

19. Which of the following would not be classified as cash?

a. Personal checks
b. Traveler’s checks
c. Cashier’s checks
d. Postdated checks

Answer 19

d. Postdated checks

Question 20

20. When making payments to suppliers, an entity normally credits this account

a. Cash
b. Vouchers payable
c. Cash in Bank
d. Accounts payable

Answer 20

c. Cash in Bank

Question 21

21. In an imprest system, it is the fund set aside for small disbursements

a. Pretty cash fund
b. Dividends Fund
c. Payroll fund
d. Petty cash fund

Answer 21

d. Petty cash fund

Question 22

22. A petty cash system is designed to

a. Cash checks for employees.
b. Handle cash sales
c. Account for all cash receipts and disbursements
d. Pay small miscellaneous expenses

Answer 22

d. Pay small miscellaneous expenses

Question 23

23. Which of the following should be recorded in Accounts Receivable?

a. Receivables from officers
b. Receivables from subsidiaries
c. Dividends receivable
d. None of These

Answer 23

d. None of These

Question 24

24. Receivables arising from sales to customers are best described as

a. Accounts receivables
b. Note receivables
c. Trade receivables
d. Non-trade receivables

Answer 24

a. Accounts receivables

Question 25

25. Materials amounts of anticipated discounts and allowances should be recorded a. In the period of sale b. When discounts are availed of c. when the boss says so d. they are not recorded

Answer 25

**a. In the period of sale**

Question 26

26. The allowance for uncollectible accounts is based on all of the following except: a. Experience b. Profitability expectancy c. Customer Fortunes d. Industry Expectations

Answer 26

**b. Profitability expectancy**

Question 27

27. Loans and receivables are measured, subsequent to initial recognition at a. Historical value b. Fair value c. net realizable value d. effective Value

Answer 27

**c. net realizable value**

Question 28

28. On December 31, before adjusting and closing the accounts had occurred, the Allowance for Doubtful Accounts of Wise Corporation showed a debit balance of P5,300 of the accounts receivable indicated the amount is probably uncollectible to be P3,900. Under these circumstances, a year–end adjusting entry for uncollectible account expense would include a: a. Debit to the Allowance for Doubtful Accounts for P1,400 b. Debit to Uncollectible Accounts Expense, P9, 200 c. Credit to the Allowance for Doubtful Accounts for P1,400 d. Debit o Uncollectible Accounts Expense, P3,900

Answer 28

**b. Debit to Uncollectible Accounts Expense, P9, 200**

Question 29

29. Consistency is an important factor in comparability within a single entity, although the two are not the same. The consistency standard of reporting requires that a. Some costs should be recognized as expenses on the basis of a presumed direct association with specific revenue. b. Assets whose prices or utility are increased by external events other than transfers should be retained in the accounting records at their recorded amounts until they are exchanged. c. Historical cost should be the primary basis used in measuring inventory; intangible assets and property, plant and equipment. d. Changes in circumstances or in the nature of the underlying transactions should be disclosed.

Answer 29

**d. Changes in circumstances or in the nature of the underlying transactions should be disclosed.**

Question 30

30. A T-Account is a. A way of depicting the basic form of an account. b. A special account used instead of a journal. c. A special account used instead of a trial balance d. None of these

Answer 30

**a. A way of depicting the basic form of an account.**

Question 31

31. The inclusion of footnotes and supporting schedules in the financial statements reflect application of the a. Time period assumption b. Industry peculiarities constraint c. Full-disclosure principle d. Relevance quality

Answer 31

**c. Full-disclosure principle**

Question 32

32. During the accounting period, transactions involving revenue, expenses, and withdrawals are recorded in a. permanent accounts b. financial statements c. temporary financial accounts d. temporary capital accounts

Answer 32

**d. temporary capital accounts**

Question 33

33. The basic accounting concept that refers to the tendency of accountants to resolve uncertainty in favor of understating assets and revenues and overstating liabilities and expenses is known as the a. conservatism constraint. b. materiality constraint. c. substance over form principle. d. industry practices constraint.

Answer 33

**a. conservatism constraint.**

Question 34

34. A proof of cash, also known as a four-column bank reconciliation, is a. A reconciliation of beginning balances, deposits-receipts, checks-disbursements, and ending balances. b. Bank reconciliation for four selected periods. c. Reconciliation of beginning balances, receipts, and disbursements, usually for 1 month. d. Reconciliation of the beginning account balance and the ending account balance, taking into account deposits in transit, outstanding checks, and other reconciling items.

Answer 34

**a. A reconciliation of beginning balances, deposits-receipts, checks-disbursements, and ending balances.**

Question 35

35. The fundamental qualitative characteristic of faithful representation has the components of a. Predictive value and confirmatory value. b. Comparability, consistency, and confirmatory value. c. Comparability, verifiability, timeliness, and understandability. d. Completeness, neutrality, and freedom from error.

Answer 35

**d. Completeness, neutrality, and freedom from error.**

Question 36

**Use the following data for items 36 and 37:** The general ledger trial balance of Jovy Company includes the following statement of financial position accounts as of December 31, 2016: Accounts Receivable P 550,000 Accounts Payable P 270,000 Accu. Dep. – equip. P 100,000 Equipment P 280,000 Cash & Cash Equival. P 560,000 Bonds Payable P 670,000 Bank Overdraft P 75,000 Treasury Stock P 230,000 Inventory P 280,000 Prepaid Rent P 97,000 Allow. for Doubt. Acc. P 50,000 Utilities Payable P 80,000 36. What amount should be reported as current assets in the statement of financial position of Jovy Company? a. 1,362,000 b. 1,462,000 c. 1,437,000 d. 1,587,000 37. What amount should be reported as current liability in the statement of financial position of Jovy Company? a. 425,000 b. 350,000 c. 1,095,000 d. 1,020,000

Answer 36

36. **c. 1,437,000** 37. **a. 425,000**

Question 37

**Use the following data for items 38 and 39** The general ledger of Angel Company contains the following accounts for December 31, 2016: Net income (after 30% tax) P 399,000 Operating Expenses P 320,000 Dividends paid-2012 P 123,000 Cost of Goods Sold P 230,000 Retained earnings, end bal. P 750,000 38. How much is the sales that is reported in the statement of the comprehensive income of Angel Company? a. 949,000 b. 1,120,000 c. 1,243,000 d. 476,000 39. How much is the beginning balance of the Retained Earnings of Angel Company? a. 627,000 b. 1,026,000 c. 873,000 d. 474,000

Answer 37

38. **b. 1,120,000** 39. **d. 474,000**

Question 38

**Use the following data for items 40 and 41* Jovelyn Company established a petty cash fund amounting to 12,000 on July 1, 2016. The following expenses were incurred by the company: Postage Stamps P 500 Miscellaneous expense P 1,100 Travel Expense P 2,100 A petty cash count shows that the balance of the petty cash fund as of July 31, 2016 is P5,200 40. How much is the cash shortage or overage? (indicate after the amount if it is a cash shortage or overage) a. 6,800 shortage b. 6,800 overage c. 3,100 shortage d. 0 41. How much should be credited to “Payable to Petty Cashier account” upon the discovery of the cash shortage or overage? a. 6,800 b. 3,700 c. 3,100 d. 0

Answer 38

40. **c. 3,100 shortage** 41. **c. 3,100**

Question 39

Clark Co.’s advertising expense account had a balance of P146,000 at December 31, 2016, before any necessary year-end adjustment relating to the following: • Included in the P146,000 is the P15,000 cost of printing catalogs for a sales promotional campaign in January 2017. • Radio advertisements broadcast during December 2016 were billed to Clark on January 2, 2017. Clark paid the P9,000 invoice on January 11, 2017. 42. What amount should Clark report as advertising expense in its income statement for the year ended December 31, 2016? a. 146,000 b. 161,000 c. 131,000 d. 140,000

Answer 39

**d. 140,000**

Question 40

An analysis of Thrift Corp.’s unadjusted prepaid expense account at December 31, 2016, revealed the following: • An opening balance of P1,500 for Thrift’s comprehensive insurance policy. Thrift had paid an annual premium of P3,000 on July 1, 2015. • A P3,200 annual insurance premium payment made July 1, 2016. • A P2,000 advance rental payment for a warehouse Thrift leased for one year beginning January 1, 2017. 43. In its December 31, 2016 balance sheet, what amount should Thrift report as prepaid expenses? a. 3,600 b. 5,200 c. 6,700 d. 5,100

Answer 40

**a. 3,600**

Question 41

44. Malatik Company showed net income of P480,000 in its income statement for the current year. Selling expenses were equal to 15% of sales and also 25% of cost of sales. All other expenses were 13% of sales. Ignoring Income Tax, what is the gross profit for the current year? a. 4,000,000 b. 2,400,000 c. 1,600,000 d. 480,000

Answer 41

**c. 1,600,000**

Question 42

45. One-Day-Millionaire received cash (P106,208 from Customer A and P53,104 from Customer B) in advance for revenue that will be earned later. The cash receipt entry debited cash and credited unearned revenues. At the end of the period, P51,151 is still unearned relating to the services to customer A and P13,331 is earned relating to the services to customer B. The adjusting entry will include a credit to Revenue account of how much? a. 64,482 b. 68,388 c. 94,830 d. 159,312

Answer 42

**c. 94,830**

Question 43

46. On December 31, Ruth Company has the following data: Trade receivables P 232,500 Allow. for uncollect. acc. P (5,000) Claim against shipper for goods lost in transit, FOB shipping point P 7,500 Selling price of unsold consigned goods P 65,000 Security deposit P 75,000 How much is the total current receivables? a. 310,000 b. 300,000 c. 240,000 d. 235,000

Answer 43

**d. 235,000**

Question 44

47. The following changes in Patriot Corporation's account balances occurred during 2016: Increase Assets. . . . . . . . . . 267,000 Liabilities. . . . . . . . . 81,000 Capital Stock. . . . . 198,000 Patriot paid dividends of P39,000 during the year. There were no changes in Retained Earnings for 2016 except dividends and net income. What was Patriot's net income for 2016? a. 27,000 b. 186,000 c. 225,000 d. 147,000

Answer 44

**a. 27,000**

Question 45

48. Thompson Company sublet a portion of its office space for ten years at an annual rental of P36,000, beginning on May 1. The tenant is required to pay one year's rent in advance, which Thompson recorded as a credit to Rental Income. Thompson reports on a calendar-year basis. The adjusting entry on December 31 of the first year would include a debit to? a. Rental Income P36,000 b. Unearned Rental income P36,000 c. Rental Income P12,000 d. Unearned Rental Income P12,000

Answer 45

**c. Rental Income P12,000**

Question 46

49. Zita Co. uses a four-column bank reconciliation. The bank reconciliation for March shows outstanding checks for P3,000. During May, the company wrote checks totaling P236,000. The bank statement for May shows P230,100 of checks clearing the company’s account. What is the amount of outstanding checks on the May bank reconciliation? a. 2,000 b. 8,900 c. 5,900 d. None

Answer 46

**b. 8,900**

Question 47

50. The bank reconciliation for Ronnie Company includes the following: balance per bank P 147,300; balance per accounting records P142,100; Unrecorded services charges P200; Unrecorded NSF cheque P100; Outstanding cheques P13,700; The amount of deposits in transit is: a. 7,800 b. 8,800 c. 8,000 d. 8,200

Answer 47

**d. 8,200**