QUIZZER 1 BOOKKEEPING SYSTEMS
Bookkeeping Concepts/Accounting Equation/Rules of Debit and Credit
1. This is the means by which a reporting entity records and stores the financial and managerial information from its transactions or
economic events so that it can retrieve and report the information in an accounting statement
a. Accounting system c. Internal control system
b. Bookkeeping system d. Ledger system
2. The systematic and chronological recording of transactions and events in books of account is known as
a. Accounting c. Recordkeeping
b. Bookkeeping d. Auditing
3. Accounting records of an enterprise include which of the following?
a b c d
Source documents of accountable events yes no yes no
Journals and ledgers yes yes no no
4. Which of the following phrases are descriptive of bookkeeping?
a b c d
Routine, mechanical and repetitive yes yes no no
Creative, analytical, judgmental no yes yes no
Follows method prescribed by accounting yes yes no yes
5. Which one of the following is among the conditions that will qualify a situation, particular action or set of circumstances as an
accountable event?
a. It has happened or will happen within a short period of time
b. It affects an accounting element (s) either increasing and decreasing it
c. It involves an exchange of values between the business enterprise and a third party
d. It can be measured accurately in monetary terms
6. The system of bookkeeping that recognizes the two-fold effect of an accountable event is known as
a. Double-entry c. Cash basis
b. Single-entry d. Accrual basis
7. The system of bookkeeping whereby, as a general rule, only cash and personal accounts are recognized and is deemed to be
incomplete bookkeeping
a. Double-entry c. Cash basis
b. Single-entry d. Hybrid accounting
8. Which of the following statements about bookkeeping systems is (are) true?
I. Single-entry bookkeeping is the same as cash basis of accounting
II. In both single-entry bookkeeping and cash basis of accounting, receipt and payment of cash is used as the basis for
recording transactions.
III. Single-entry bookkeeping offers a better internal control than double-entry bookkeeping
a. Only I is true c. Both II and III are true
b. Only II is true d. All statements are true
9. Which of the following statements about single-entry bookkeeping is (are) true?
I. Single-entry bookkeeping uses the net assets approach or indirect approach in determining net income for a period.
II. The single-entry or net assets formula in determining net income or loss cannot be used in a corporate form of organization
III. There are certain instances when a trial balance can be prepared from a single-entry set of books
a. Only I is true c. II and II are true
b. I and II are true d. All statements are true
10. The following books of account are used in single-entry bookkeeping
a. Cashbook and subsidiary ledger
b. Cash receipts book and general ledger
c. Cash receipts book , cash disbursements book, general ledger and subsidiary ledger
d. Cashbook and general ledger
11. Which of the following transactions are recognized in single-entry bookkeeping?
a b c d
Purchase of office supplies for cash yes yes no no
Collection on accounts receivable no yes no yes
Unsold merchandise at the end of the year yes no yes no
12. Which one of the following bases of income and expense recognition is used in accounting for revenue and expenses under
single-entry bookkeeping?
a. Cash basis c. Modified cash basis
b. Accrual d. None of these is used
13. The two basic concepts or theories underlying double-entry bookkeeping are
a. Value received and value parted with c. Debit and credit
b. Duality and equilibrium d. Check and balance
14. Which of the following should be recognized as an accountable event in financial accounting according to GAAP?
a. LMN Corporation declares an issuance of stock rights to its stockholders
b. OP Inc. increases its recorded goodwill due to good customer relations and high employee morale.
c. The estimated recoverable value of an intangible asset becomes lower than its carrying value
d. RST’s building, which is carried in the books using the cost model, has increased in fair value at year-end
15. The primary characteristic that distinguishes double-entry bookkeeping from single-entry is
a. It recognizes the two-fold effect of each event affecting the enterprise
b. A complete set of journals and ledgers is maintained
c. A trial balance is periodically prepared
d. Accrual basis accounting is used
16. Double entry bookkeeping requires that
a. Every transaction affects both an asset account and either a liability or owner’s equity account
b. The number of ledger accounts with debit balance is equal to the number with credit balances
c. The total peso amount of debit entries posted to the ledger is equal to the total peso amount of the credit entries
d. The number of debit entries posted to the ledger equals the number of credit entries
17. The basic classification category and storage unit for information in a double-entry system is the
a. Business document c. Ledger
b. Journal d. Account
18. Which of the following statement is false concerning double-entry bookkeeping?
I. The duality and equilibrium principles in double – entry are expressed through an accounting equation, “ Assets = Liabilities +
Equity”
II. If an economic entity has no liabilities, the assets will be equal to equity unless some assets are impaired.
III. In double entry bookkeeping, an accountable event always has an effect on assets and / or liabilities or capital account
a. Only I is false c. I and II are false
b. Only II is false d. All statements are false
19. Given the dual effects of accountable events, an increase in an asset cannot possibly be accompanied by a (an)
a. Decrease in another asset c. Increase in a liability
b. Decrease in owner’s equity d. Increase in revenue
20. A transaction caused a P60,000 increase in both assets and total liabilities. This transaction could have been
a. Purchase of office supplies for P60,000 cash
b. Exchange of assets with no commercial substance , at carrying amount, P60,000
c. Purchase of a piece of ornate office furniture for P100,000 paying P40,000 cash and issuing a note payable for the balance
d. Repayment of a P30,000 bank loan
21. Owner’s equity was understated and liabilities were overstated. Which of the following errors could have been the cause?
a. Making the adjustment entry for depreciation expense twice
b. Failure to record interest accrued on a note payable
c. Failure to make the adjusting entry to record revenue which had been earned but not yet billed to customers
d. Failure to record the earned portion of rent received in advance
22. Which is false concerning the rules of debit and credit?
a. The left side of an account is always the debit side and the right side is always the credit side.
b. The normal balance of any account appears on the side used for recording increases.
c. The rules of debit and credit cannot be amended over time.
d. The word “debit” means to increase and the word “credit” means to decrease.
23. Which of the following explains the debit and credit rules relating to the recording of revenue and expenses
a. Expenses appear on the left side of the balance sheet and are recorded by debits; revenue appears on the right side of the
balance sheet and is recorded by credits
b. Expenses appear on the left side of the income statement and are recorded by debits; revenue appears on the right side of
the income statement and is recorded by credits
c. The effects of revenue and expenses upon owner’s equity
d. The realization principle and the matching principle
24. All of the following are disadvantages of the single-entry bookkeeping system except
a. Accounting records are incomplete.
b. Accrual basis financial statements cannot be prepared.
c. Internal control is inadequate.
d. Financial statements are not likely to be fairly presented in accordance with GAAP.
25. Which of the following is a book of account utilized in both a single-entry bookkeeping system and a double-entry bookkeeping
system?
a. cash receipts book c. general journal
b. subsidiary ledger d. sales journal
26. Which of the following statements about bookkeeping systems is (are) true?
I. Net income or loss under single entry bookkeeping is computed using an approach that directly matches cost with revenue.
II. Double-entry bookkeeping is sometimes known as transactions approach of accounting for Assets, liabilities, equity,
revenue and expenses.
III. Double-entry bookkeeping is the generally acceptable method of bookkeeping because it offers an accurate and more
complete income measurement than single-entry.
a. Only III is true c. I and II are true
b. Only II is true d. I, II, and III are true
27. In double-entry bookkeeping system which of the following may be used as basis for recognizing income and expenses?
a. b. c. d.
Cash basis yes no yes no
Modified cash basis yes yes no no
Accrual basis yes no no yes
Accounting Process/Accounting Cycle
1. Which of the following statements is true?
a. “Accounting process” and “accounting cycle” may be used interchangeably as they have exactly the same meaning.
b. The accounting cycle represents the steps taken to accomplish the accounting process.
c. The accounting process implements the steps of the accounting cycle.
d. The steps of the accounting process culminates in the preparation of reversing entries.
2. The series of well-defined steps followed and completed within an accounting period to record transactions and prepare
financial statements under the double-entry bookkeeping system is
a. Operating cycle c. Accounting cycle
b. Business cycle d. Accounting process
3. Which of the following operations in the financial accounting process determine how events affect the assets, liabilities, owners’
equity, revenue, and expenses of the enterprise?
a. Selecting the events c. Measuring the effects
b. Analyzing the events d. Classifying the measured effects
4. Which of the following operations involves the assignment of peso amounts to accountable events?
a. Analyzing the events c. Recording the measured effects
b. Measuring the effects d. Classifying the measured effects
5. Which of the following operations can be performed by a computer without requiring an accountant’s judgment?
a. Selecting the events c. Summarizing the recorded effects
b. Measuring the effects d. Adjusting the records
6. Identify the following as pertaining to the recording phase (RP) and summarizing phase (SP) of an accounting cycle
(1) Analyzing each event (3) Posting to ledger accounts
(2) Preparing a trial balance (4) Preparing the financial statements
a. RP, RP, RP, SP c. RP, SP, RP, SP
b. SP, RP, RP, RP d. SP, RP, SP, SP
Journalizing
7. The first step in the accounting cycle is
a. Record transactions in the journal c. Post journal entries to general ledger accounts
b. Analyze transactions from source documents d. Adjust the general ledger accounts
8. At what step in the accounting cycle is GAAP typically applied?
a. Journalizing c. Trial balance preparation
b. Posting d. All of these
9. Transactions and events are analyzed according to the rules of debit and credit
a. After selecting the event and before an entry is recorded in the journal.
b. After the entry is recorded in the journal and before it is posted in the ledger
c. When adjusting entries are prepared.
d. After adjusting entries and before preparation of the financial statements and closing entries
10. Which of the following documents does not initiate an entry to be made in the books of accounts?
a. Sales invoice c. Purchase order
b. Purchase invoice d. Credit memorandum
11. A firm’s chart of accounts is
a. A flowchart of all transactions
b. A list of names of all account titles used by an economic entity
c. An accounting procedures manual
d. A journal
12. Which of the following statements the primary purpose of a general journal?
a. The general journal provides a continuing balance of the amount to date in each of the temporary accounts
b. The general journal provides an organized summary, in chronological order, of the transactions of the entity.
c. The general journal directly provides the data for a trial balance.
d. The general journal eliminates the need for control accounts in the ledger
13. Which is false concerning use of special journals?
a. Sale of merchandise is recorded in the sales journal and sale of any item for cash is recorded in the cash receipts journal.
b. Only cash sales are recorded in the cash receipts journal
c. Investment of non-cash asset by the owner of the entity is recorded in the general journal
d. Purchase of property and equipment on account is recorded in the general journal.
14. One of these is not an advantage of using special journals:
a. Division of labor is possible
b. Possibility of error is minimized
c. Number of postings is reduced
d. Space and effort in recording transactions is reduced
15. A company uses the periodic inventory system and records purchases net of discounts. On April 1, the company purchased
merchandise worth P20,000 under terms 2/10, n/30. The journal entry to be made to record the purchase on April 1 will include
a
a. credit to accounts payable of P 20,000
b. credit to accounts payable of P 19,600
c. debit to purchases of P 20,000
d. debit to allowance for purchase discounts of P 400
16. Which of the following pertaining to the use of special journals is (are) true?
Statement 1 – Transactions that cannot be appropriately recorded in a special journal are recorded in the general journal.
Statement 2 – If entity is using a one-column Sales Journal, sale of merchandise on account are recorded in the sales journal
while cash sales are recorded in the cash receipts journal.
Statement 3 – Voucher register and check register are also classified as special journals.
a. Only statement 1 is true c. Statements 1 and 2 are true
b. Only statement 2 is true d. All of the statements are true
17. Which of the following statements pertaining to the voucher system is incorrect?
a. A voucher system is used in connection with transactions involving payment of cash.
b. When installments or other payments are made on an invoice, a separate voucher is prepared for the amount of each check
issued
c. A file of unpaid vouchers shows only the total amount of outstanding liabilities for merchandise purchased.
d. Payments of purchases with discounts is recorded in the check register by a debit to vouchers payable at gross and
appropriate credits to cash and purchase discounts.
18. The voucher system strengthens internal accounting control by requiring that a voucher be prepared to authorize payment of the
liability at the time the liability is
a. Paid c. Planned
b. Incurred d. Audited
19. Which of the following best describes a voucher?
a. A supporting document prepared for each cash receipt or disbursement
b. A promise to pay an amount owed within a discount period
c. A written authorization prepared for each check written
d. A written record sent to a payee along with the signed check
20. Which of the following statements about the voucher system is (are) true?
I. A voucher need not be prepared for a purchase on account since it will not require an immediate cash payment.
II. Since the voucher system is costly to apply, repetitive and time-consuming, it is not recommended for use in accounting for
cash disbursements.
III. The voucher system offers a more effective internal control than the non- voucher system.
a. I only c. I and III only
b. III only d. I, II and III
Posting
21. A systematic compilation of account titles of asset, liability, equity, revenue and expense accounts which is also called a “book of
secondary entry” is known as
a. Journal c. Worksheet
b. Ledger d. Trial balance
22. Which of the following statements is incorrect?
a. Accounts are arranged in the general ledger following the “financial statement order”.
b. The ledger is more important than the journal.
c. Posting is the process of transferring debit and credit changes in account balances from the ledger to the journal.
d. A ledger account shows in one place all the information about changes in a specific asset or liability, or owners’ equity.
23. A listing of the components of account balances which relieves the general ledger of detail thereby facilitating the preparation of
a trial balance is known as
a. Subsidiary ledger c. Worksheet
b. Private ledger d. Register
24. Which of the following types of accounts measure economic flows over a period of time?
a. Real accounts c. Mixed accounts
b. Nominal accounts d. Summary accounts
25. An auxiliary account that has the same balance as the principal account is a
a. Contra account c. Offset account
b. Adjunct account d. Controlling account
26. Which of the following best defines a controlling account?
a. A summary account in the general ledger that is supported by detailed accounts in a subsidiary ledger
b. A listing of the balances in all accounts
c. An account which increases due to sale of goods or services during the normal operations of a business
d. A chronological listing of all transactions for a specific time period.
27. You are given the following statements. Which one is true?
I. A mixed account involves a mixture of asset and income elements
II. Transactions are posted only at the end of the month when special journals and controlling accounts are used.
III. The “Share Premium” account is both an auxiliary and adjunct account
a. Only I is true c. I and II are true
b. II and III are true d. Only III is true
28. Which of the following statements is false?
a. Before year-end adjustments are prepared, a building account is a mixed account
b. Offset accounts are neither assets nor liabilities
c. Contra accounts appear only in the balance sheet
d. A principal account is an account that can stand alone
29. A notation entered in a journal or ledger, not intended to be formally incorporated in the accounts, which describes a situation
or event, with or without money values is known as
a. a footnote c. a memorandum entry
b. a negative entry d. a reciprocal entry
Trial Balance
30. Which of the following statements regarding a trial balance is incorrect?
a. A trial balance should always balance.
b. A trial balance is a test of the equality of the debits and credits in the ledger.
c. A trial balance that is in balance proves that no error of any kind has been made in the accounts during the accounting
period.
d. A trial balance is useful in the preparation of the income statement and the balance sheet.
31. The primary purpose of preparing a trial balance is to determine that
a. The ledger contains an equal peso amount of debit and credit entries
b. The ledger contains an equal number of debit and credit entries
c. The number of ledger accounts with debit balances is equal to the number of accounts with credit balances
d. Each transaction was recorded with equal amounts of debits and credits.
32. A trial balance will disclose that an error has been made in
a. a. Entering an amount on the wrong side of an account
b. b. Computing the interest expense on a note payable
c. c. Posting an amount to the wrong ledger account
d. d. Double-posting two both sides of an entry 33. A trial balance that contains real accounts only is
a. an interim trial balance
b. an unadjusted trial balance
c. an adjusted trial balance
d. a post-closing trial balance
Adjusting Entries
34. Adjusting entries are needed
a. Whenever revenue is not received in cash
b. Whenever expenses are not paid in cash
c. Primarily to correct errors in the initial recording of business transactions
d. Whenever transactions affect the revenue or expenses of more than one accounting period
35. Which one of the following concepts is least related to adjusting entries.
a. Accrual c. Materiality
b. Approximation d. Matching of cost against revenue
36. Adjusting entries involve
a. Only real accounts c. Only capital accounts
b. Only nominal accounts d. At least one real and one nominal account
37. Which one of the following is a purpose of adjusting entries?
I. To apportion the proper amounts of revenue and expense to the current accounting period.
II. To establish the proper amounts of assets and liabilities in the balance sheet.
III. To accomplish the objective of offsetting the revenue of the period with all the expenses incurred in generating that
revenue.
IV. To prepare the revenue and expense accounts for recording transactions of the following period.
a. I and II only c. I, II and III only
b. II and III only d. All of these
38. The entry to record depreciation is an example of an adjusting entry
a. To apportion a recorded cost c. To record unrecorded expense
b. To apportion unearned revenue d. To record unrecorded revenue
39. Assume that a company’s fiscal year ends on December 31. Which of the following events involves an adjusting entry that would
be affected by how the event was originally recorded?
a. Sale of merchandise on account
b. Signing a one-year lease for a building
c. Salaries earned by employees this year will be paid next year.
d. Payment of rent for 6 months coverage starting October 1 of current year
40. If the advance payment of an expense was initially recorded in an expense account, the adjusting entry will involve
a. A debit to the asset account and a credit to the expense account in the amount of the unexpired portion.
b. A debit to the asset account and a credit to expense in the amount of the expired portion.
c. A debit to expense and a credit to the asset account in the amount of the unexpired portion.
d. A debit to expense and a credit to the asset account in the amount of the expired portion.
41. The entry to record merchandise inventory for goods unsold at the end of the accounting period is
a. An adjusting entry c. Both an adjusting and closing entry
b. A closing entry d. A regular entry
42. Rent revenue collected one month in advance should be accounted for as
a. Revenue in the month collected c. A separate item in equity
b. An accrued liability d. A current liability
Worksheet
43. An analytical device used by accountants to facilitate the gathering of data for adjustments, and the preparation of adjusting and
closing entries.
a. trial balance c. account
b. worksheet d. ledger
44. Which of the following is not a factor to consider in determining the money columns of a periodic worksheet?
a. the nature of the business
b. the concept or basis used in accounting for revenue and expenses
c. the amount of capital of the business
d. the type of ownership of the business
Closing Entries/ Post-closing Trial Balance/ Reversing Entries
45. The purpose of making closing entries is to
a. Prepare revenue and expense accounts for the recording of the next period’s revenue and expenses
b. Enable the accountant to prepare financial statements at the end of the accounting period
c. Establish new balances in the balance sheet accounts
d. Reduce the number of revenue and expense accounts
46. The effect of closing entries is to
a. Change assets
b. Change liabilities
c. Change retained earnings
d. Change debit balances of all accounts into credits and vice-versa
47. The purpose of the post-closing trial balance is to
a. Provide the account balances for preparation of the balance sheet.
b. Ensure that the ledger is in balance for the start of the next period
c. Aid the journalizing and posting of the closing entries.
d. Ensure that the ledger is in balance for completion of the worksheet
48. Reversing entries are used
a. primarily to simplify the bookkeeping during the next accounting period
b. to adjust the inventory account under a periodic inventory system
c. to close the income summary account
d. to establish appropriate contra accounts
49. The following six adjusting entries were recorded by RNQ Corp. at the end of the fiscal year:
(1) Bank service charge expense xx (4) Wages expense xx
Cash xx Wages payable xx
(2) Unearned rent xx (5) Insurance expense xx
Rent revenue xx Prepaid insurance xx
(3) Bad debts expense xx (6) Prepaid rent xx
Allowance for bad debts xx Rent expense xx
If the firm reverses all adjusting journal entries that should be appropriately reversed, which of the six adjusting journal entries
would be reversed?
a. (3), (4), and (6) c. (4) and (6)
b. (1), (2), and (5) d. All six adjustments should be reversed
50. Which of the following steps in the accounting cycle are optional?
Adjusting entries Worksheet Closing Entries Reversing entries
a. NO NO NO NO
b. NO YES YES YES
c. NO YES NO YES
d. YES YES YES YES
