1. Which of the following events would be associated with an end-of-period

adjustment?

a. The decision to start a second production shift.

b. The payment of salaries and wages. b9T

C. The recording of depreciation on equipment.

d. The transfer of staff to another department.

2. Deferred revenues should be reported as

a. contributed capital on the balance sheet.

b. expenses on the income statement.

C. income on the income statement.

d. liabilities on the balance sheet.

3. Accrued revenues should be reported as

a. assets on the balance sheet.

b. expenses on the income statement.

C. liabilities on the balance sheet.

d. revenues on the income statement.

4. WIN.com sells one-year and two-year subscriptions for its electronic book-of-the

month download business. Subscriptions are collected in advance and credited to

sales. An analysis of the recorded sales activity revealed the following:

2018 2019

Sales P420,000 P500,000

Less: Cancellations 20,000 30,000

Net Sales P400,000 P470,000

Subscriptions Expirations:

2018 P120,000

2019 155,000 P130,000D

2020 125,000 200,000

2021 P400,0000 140,000

P470,000

In WIN.com's Dec. 31, 2019 balance sheet, the balance for unearned subscription

revenues should be

a. P470,000.

b. P465,000.

C.P400,000.

d. P340,000.

5. A deferred expense should be recorded when

a. an expense is incurred as cash is paid.

b. a non-cash resource is consumed after cash is paid.

C. a service is rendered before payment of cash.

d. cash is paid before an expense has been incurred.

6. An accrued expense should be recorded

a. by a buyer when a service is received on payment of cash.

b. by a seller when a service is rendered before payment of cash.

C. when an expense is incurred as cash is paid.

d. when an expense is incurred before cash is paid.

7. An analysis of Angelina Tagay Antiques unadjusted prepaid expense account at Dec.

31, 2019 revealed the following:

An opening balance at P15,000 for Angelina Tagay's comprehensive

insurance policy. Angelina Tagay paid an annual premium of P30,000 on

July 1, 2018.

A P32,000 annual insurance premium payment made July 1, 2019.

A P20,000 advance rental payment for a warehouse leased for one year

beginning Jan. 1, 2020.

In its Dec. 31, 2019 balance sheet, what amount should Angelina Tagay report as

prepaid expenses?

a. P52,000

b. P36,000

C. P20,000

d. P16,000

8. An accrued revenue should be recorded by a

a. buyer when a service is received on payment of cash.

6. seller when a customer pays for a service before the service is rendered.

c. seller when a service is rendered before receipt of cash.

d. seller when a service is rendered on receipt of cash.

9 On Nov. 1, 2019, Alevir Pido Portraits paid P36,000 to renew its insurance a policy balance for

policy for

years. On Dec. 31, 2019, Alevir Pido's unadjusted trial balance showed at a amounts balance

of P900 for prepaid insurance and P44,100 for insurance expense. What

should be reported for prepaid insurance and insurance expense in Alevir Pido's

Pido's

Dec. 31, 2019 financial statements?

Prepaid Insurance nsurance Expense

a. P33,000 P12,000

b. P34,000 P12,000

c. P34,000 P11,000

d. P34,900 P10,100

10. An entity that pays employees every two weeks has paid workers P375,000 in wages

and salaries for work completed during 2018. In addition, the employees earned

one week's salary of P7,200 at the end of December that will be paid as part of the

P14,400 payroll at the end of the first week of January in 2019. How much should

the company report for salaries and wages expense for 2018?

a. P367,800.

b. P375,000.

C. P389,400

d. P382,200.

11. Deferred expenses should be reported as

a. assets on the balance sheet.

b. expenses on the income statement.

C. income on the income statement.

d. liabilities on the balance sheet.

12. Accrued expenses should be reported as

12.

a. assets on the balance sheet.

a.

b. expenses on the income statement.

C. liabilities on the balance sheet.

C.

d. revenues on the income statement.

13 Roberto Orcajada Realty pays Commissions to its sales stff at the rate of 3% of ne

sales. Sales staff are not paid salaries but are given monthly advances of

Advances are charged to commission expense, and reconciliations P15,000 aga

commissions are prepared quarterl Net sales for the year ended Mar. against

31, 2019

were P15,000,000. The unadjusted Dalance in the commissions av Count on

March 31, 2019 was P400,000. Marcn aavances were paid on Apr. 3, 2019,

In its income statement for the year ended Mar. 31, 2010 unt shoul

Roberto Orcajada report as commission expense? , What amount shoU

year ended Mar. 31, 2019, what amount

a. P465,000 9

b. P450,000

C. P415,000

d. P400,000

14. At the beginning of 2018, an entity purchased a fire insurance policy covering a

property for a period of two years. The P5,600 cost of the policy was paid in cash.

At the end of 2018, the company will reduce Prepaid Insurance for this policy by

a. PO.

b. P467.

C. P5,600.

d. P2,800.

15. An end-of-period adjustment involves

a. a change in an account balance that is neither an accrual or a deferral.

b. a recognition of the extra cash flows related to the year-end delivery of goods

and services.

C. an adjustment that results in revenues or expenses being reported in a different

time period from the associated cash flows.

d. an exchange of resources between two departments in an organization.

16. A deferred revenue should be recorded by a

a. buyer when a service is received on payment of cash.

b. seller when a customer pays for a service before the service is rendered.

C. seller when a service is rendered before receipt of cash.

d. seller when a service is rendered on receipt of cash.

17. Based on 2019 sales of music recorded by an artist under a contract with Therese

IndieMusic, the artist earned P200,000 after an adjustment of P16,000 for

anticipated returns. In addition, Therese paid the artist P150,000 in 2019 as a

reasonable estimate of the amount recoverable from future royalties to be earned

by the artists.

What amount should Therese report in its 2019 income statement as royalty

expense?

a. P200,000

b. P216,000

C. P350,000

d. P366,000

18. How would the proceeds received from the advance sale of non-refundable tickets

for a theatrical performance be reported in the seller's financial statements before

the performance?

a. Revenue for the entire proceeds.

b. Revenue to the extent of related costs expended.

C. Unearned revenue for the entire proceeds.

d. Unearned revenue to the extent of related costs expended.

19. Under Maurice Sabio Vintage Clothing Services accounting system, all insurance

premiums paid are debited to prepaid insurance. For interim financial reports,

Maurice Sabio makes monthly estimated charges to insurance expenses with credits

to prepaid insurance. Additional information for the year ended Dec. 31, 2019 is as

follows:

Prepaid insurance at Dec. 31, 2018 P110,0000

Charges to insurance expense during 2019 (including a year 437,500

end adjustment of P10,500) 120,500

Prepaid insurance at Dec. 31, 2019

What was the total amount of insurance premiums paid by Maurice Sabio during

2019?

a. P327,500

b. P427,000

c. P437,500

d. P448,000

20. Salaries and wages that are recorded as expenses at year end but remain unpaid are

an example of

a. a deferred expense.

b. a deferred revenue.

C. an accrued expense.

d. an accrued revenue.

21. An entity has P1,500 of supplies on hand at the end of 2018. During 2019, P2,750 of

supplies were purchased. A count of supplies on hand at the end of 2019 found an

inventory of P875. What was the amount of supplies expense for 2019?

a. P1,875.

b. P5,125.

C. P3,375.

d. P4,250.

22. Edgar Detoya Law must determine the Dec. 31, 2019 year-end accruals for

advertising and rent expenses. A P5,000 advertising bill was recelved Jan. 7, 2020.

It related to cost of P3,750 for advertisements in Dec. 2019 issues and P1,250 for

advertisements in Jan. 2020 issues of the newspaper.

A store lease, effective Dec. 16, 2018 calls for fixed rent of P12,000 per month,

payable one month from the effective date and monthly thereafter. In addition,

rent equal to 5% of net sales over P3,000,000 per calendar year is payable on Jan. 31

of the following year. Net sales for 2019 were P5,500,000. In its Dec. 31, 2019

balance sheet, Edgar Detoya should report accrued liabilities of

a. P125,000. 10

b. P128,750.

C. P131,000.

d. P134,750.

23. SuySan Real Estate owns an office building and leases the office under a variety of

rental agreements involving rent paid in advance monthly or annually. Not all

tenants make timely payments of their rent. SuySan's balance sheets contained the

following data:

2018 2019

Rental Receivable P192,000 P248,0000

Unearned Rentals 640,000 480,000

During 2019, SuySan received P1,600,000 from tenants. What amount of rental

revenues should SuySan record for 2019?

a. P1,816,000

b. P1,708,000

C. P1,440,000

d. P1,332,000

24. The purchase ofa prepaid insurance policy would initially be recorded as

a. a deferred expense.

b. a deferred revenue.

C. an accrued expense.

d. an accrued revenue.

Multiple Choice

1. of the following transactions will not result in the recogniion or dn expense?

a. A cash withdrawal by the owner.

b. Expiration of prepaid insurance.

C. Interest accrued on a bank loan.

d. Use of machinery during the period.

.heaccountant may spread the cost of a building over many years primarily because

of the

a. fiscal year assumption.

b. going concern assumption.

C. periodicity assumption.

d. periodicity assumption and going concern assumption.

3. Which of the following accounts would probably need to be adjusted at year-end?

3.

a. Land

b. Notes Payable

C. Supplies

C.

d. Withdrawals

4. Which of the following is an example of an accrual?

4.

a. Bookkeeping fees collected but not yet earned.

b. Equipment purchased for use in the business.

C.Interest earned but not yet received.

d. Six months' rent paid in advance.

5. Which of the following accounts would likely not need to be adjusted at vear-end ?

a. Land

b. Office Supplies

C. Prepaid Advertising

d. Unearned Revenues

6. Which of the following is an example of a deferral?

a. A commission collected in advance.

b. Interest earned on a bank account.

C. Interest expense incurred but not yet paid.

d. Medical fees earned but not yet collected.

L.he recording of an expense could result in a corresponding increase in

a. a liability.

b. an asset.

C. owner's equity.

d. revenue.

13. Office Supplies were P9,000 at the end of January and P11,400 at the end of

February. During February, Office Supplies Expense equaled P3,000. How much

How much

cash was paid for office supplies during February?

a. P2,400

b. P14,400

C. P17,400

d. P5,400

14. An adjusting entry would not include which of the following accounts?

a. Cash

b. Interest Receivable

C. Property Taxes Payable

d. Unearned Revenues

15. Salaries Payable were P3,500 at the end of September and P2,800 at the end of

October. Salaries Expense for October was P18,000. How much cash was paid for

salaries during October?

a. P18,700

b. P24,100

C. P17,300

d. P11,700

16. An adjusting entry can include a debit to a(n)

a. asset and a credit to a liability.

b. expense and a credit to a revenue.

C. liability and a credit to a revenue.

d. revenue and a credit to an asset.

17. The adjustment for that portion of revenue received in advance which now has

been earned is to debit

a. Cash and credit Unearned Revenues.

a.

b. Service Revenues and credit Unearned Revenues.

C. Unearned Revenues and credit Cash.

d. Unearned Revenues and credit Service Revenues.

18. Which of the following transactions during the year would most likely not need an

adjusting entry at the end of the period?

a. Cash withdrawal by the owner.

b. Performance of a service that previously was paid for.

C. Purchase of a two-year insurance policy.

d. Purchase of office equipment.

19. An adjusting entry cannot include a debit to a(n)

a. asset and a credit to a liability.

b. asset and a credit to a revenue.

C. expense and a credit to an asset.

d. liability and a credit to a revenue.

20. An adjusting entry made to record accrued interest on a note payable due next year

consists of a debit to

a. Interest Expense and a credit to Cash.

b. Interest Expense and a credit to Interest Payable.

C.Interest Expense and a credit to Notes Payable.

d. Interest Receivable and a credit to Interest Earned.

2 T

21. Failure to record depreciation at year-end will result in ai

a. overstatement of total assets.

b. overstatement of total liabilities.

C. understatement of profit.

d. understatement of total liabilities.

22. Which of the following transactions will not result in an increase in revenues ?

a. Accumulation of interest in bank account

b. An investment in the business by the owner not

C. Sale of goods on credit.

d. Sale of services for cash.

23. Unearned Revenues was P6,000 at the end of February and P7,500 at the end of

March. Service Revenues was P42,000 for the month of March. How much cash was

received for services provided during March?

a. P55,500

b. P40,500

c. P28,500

d. P43,500

24. Failure to adjust for accrued Salaries at year-end will result in an

a. overstatement of liabilities.

b. overstatement of profit.

C. understatement of assets.

C.

d. understatement of owner's equity.

d.

Use the following information to answer questions 25 to 29 below. The following

information pertains to Luz Un Machine Shop:

a. Accrued interest on a note receivable amounted to P1,000. Three months have

b. A one-year insurance policy was purchased for P20,000. Three months have

a.

passed since the purchase.

C. Depreciation on buildings is at P50,000.

d. The company received a P36,000 advance payment during the year on service

on services

C. still to be performed. By the end of the year, one-fourth of the services ha

d. had

The company's Supplies account showed a beginning debit balance of P2,0

been performed. P2,000

and supplies purchased of P8,000; P3,000 of supplies were on hand at year-eno

e. at year-end.

25. The adjusting entry for Supplies would include a

a. credit to Supplies for P3,000.

b. credit to Supplies Expense for P8,000.

C. debit to Supplies Expense for P7,000.

d. debit to Supplies Expense for P8,000.

26. The adjusting entry for depreciation on buildings would include a

a. credit to Accumulated Depreciation-Buildings for P50,000.

b. credit to Buildings for P50,000.

C. credit to Depreciation Expense-Buildings for P50,000.

d. debit to Accumulated Depreciation-Buildings for P50,000.

27. The adjusting entry for the insurance policy would include a

a. credit to Insurance Expense for P15,000.

b. credit to Prepaid Insurance for P5,000.

C. debit to Insurance Expense for P15,000.

d. debit to Prepaid Insurance for P5,000.

28. The adjusting entry to record the accrued interest on the note would include a

28.

a. credit to Interest Income for P1,000.

b. credit to Interest Receivable for P1,000.

C. debit to Interest Expense for P1,000.

d. debit to Interest Payable for P1,000.

29. The adjusting entry to record the amount of service revenues earned during the

period would include a

a. credit to Unearned Service Revenues for P9,000.

b. debit to Service Revenues for P27,000.

C. debit to Unearned Service Revenues for P9,000.

d. debit to Unearned Service Revenues for P27,000.