WEEK 4

SAMPLE
EXERCISES
ANSWERS
1. Which two steps in the accounting cycle are aided by the
preparation of a worksheet?
a. Adjusting the accounts and preparing financial
statements
b. Analyze source documents and preparing financial
statements
c. Posting journal entries and adjusting the accounts
d. Journalizing transactions and closing the accounts
1. Which two steps in the accounting cycle are aided by the
preparation of a worksheet?
a. Adjusting the accounts and preparing financial
statements
b. Analyze source documents and preparing financial
statements
c. Posting journal entries and adjusting the accounts
d. Journalizing transactions and closing the accounts

ANSWER: A
2. Posting a P3,000 debit as a credit causes an error.

a. In the journal
b. Known as transposition
c. That is divisible by 9.
d. That is divisible by 2.
2. Posting a P3,000 debit as a credit causes an error.

a. In the journal
b. Known as transposition
c. That is divisible by 9.
d. That is divisible by 2.

ANSWER: A
3. The profit figure appears in all of the following financial
statements except the

a. Balance sheet
b. Income statement
c. Statement of cash flows
d. Statement of changes in equity
3. The profit figure appears in all of the following financial
statements except the

a. Balance sheet
b. Income statement
c. Statement of cash flows
d. Statement of changes in equity

ANSWER: A
4. Profit for Dangal Greetings Company is P250,000 for the
current year. The owner withdrew P30,00 per month for
personal living expenses. The owner’s capital account will
show a net

a. Decrease of P110,000
b. Decrease of P360,000
c. Increase of P610,000
d. Increase of P110,000
e. Increase of P360,000
4. Profit for Dangal Greetings Company is P250,000 for the
current year. The owner withdrew P30,00 per month for
personal living expenses. The owner’s capital account will
show a net

a. Decrease of P110,000
b. Decrease of P360,000
c. Increase of P610,000
d. Increase of P110,000
e. Increase of P360,000

ANSWER: A
5. If the amount of profit for the current period is less than
the amount of the owner’s withdrawals, there will be a(n)

a. Decrease in the cash account

b. Decrease in the owner’s capital account
c. Increase in liabilities on the balance sheet
d. Increase in the cash account
e. Increase in the owner’s capital account
5. If the amount of profit for the current period is less than
the amount of the owner’s withdrawals, there will be a(n)

a. Decrease in the cash account

b. Decrease in the owner’s capital account
c. Increase in liabilities on the balance sheet
d. Increase in the cash account
e. Increase in the owner’s capital account

ANSWER: B
6. If the balance of Ikudane, Capital account was P210,000,
what would be the balance of the Building account?

a. 250,000
b. 40,000
c. 90,000
d. 210,000
6. If the balance of Ikudane, Capital account was P210,000,
what would be the balance of the Building account?

a. 250,000
b. 40,000
c. 90,000
d. 210,000

ANSWER: C
7. If the balance of the Building account was P170,000, what
would be the total of liabilities and owner’s equity?

a. 170,000
b. 270,000
c. 320,000
d. 350,000
7. If the balance of the Building account was P170,000, what
would be the total of liabilities and owner’s equity?

a. 170,000
b. 270,000
c. 320,000
d. 350,000

ANSWER: D
 8. If the balance of the Building account was P150,000 and
the equipment was sold for P70,000, what would be the total
of owner’s equity?

a. 150,000
b. 160,000
c. 270,000
d. 330,000
 8. If the balance of the Building account was P150,000 and
the equipment was sold for P70,000, what would be the total
of owner’s equity?

a. 150,000
b. 160,000
c. 270,000
d. 330,000

ANSWER: C
9. If the balance of the Building account was P140,000 and
P30,000 of Accounts Payable were paid in Cash, what would
be the balance of Ikudane, Capital account?

a. 210,000
b. 260,000
c. 320,000
d. 340,000
9. If the balance of the Building account was P140,000 and
P30,000 of Accounts Payable were paid in Cash, what would
be the balance of Ikudane, Capital account?

a. 210,000
b. 260,000
c. 320,000
d. 340,000

ANSWER: B
 10. If the balance of the Building account was P80,000 and
P30,000 of Accounts Payable were paid in cash, what would
be the total liabilities and owner’s equity?

a. 140,000
b. 180,000
c. 190,000
d. 230,000
 10. If the balance of the Building account was P80,000 and
P30,000 of Accounts Payable were paid in cash, what would
be the total liabilities and owner’s equity?

a. 140,000
b. 180,000
c. 190,000
d. 230,000

ANSWER: D
LIT EM AP 2.0
(CHAPTER 5)
 WEEK 5

LAST
SESSION!
STEP 8: PREPARATION OF THE CLOSING
ENTRIES

- It is the journal entries that bring temporary accounts

to zero balance and balance their balances to the
permanent capital account at the end of the accounting
period.
 1. CLOSE ALL INCOME ACCOUNTS

Income xx
Income Summary xx
 2. CLOSE ALL EXPENSE ACCOUNTS

Income Summary xx
Expenses xx
3. CLOSE THE BALANCE OF THE INCOME
SUMMARY ACCOUNT TO THE
DRAWING/DIVIDENDS ACCOUNT
4. CLOSE THE DRAWING ACCOUNT TO THE
EQUITY ACCOUNT
 STEP 9: PREPARATING OF THE POST-
CLOSING TRIAL BALANCE

- The purpose is to check the equality of debits and credits in the

ledger after all the closing entries are recorded and posted.

- It is only optional.
STEP 10: PREPARATION OF REVERSING
JOURNAL ENTRIES
- Also an optional step in the accounting process that
is usually made at the beginning of the next
accounting period.

- It is made if an adjustment previously entered

increases a real account
STEP 10: PREPARATION OF REVERSING
JOURNAL ENTRIES
The following entries are allowed to be reversed:
✓ Accrued Expense
✓ Accrued Income
✓ Prepayments under the expense method
✓ Prepayments under the income method
COMPREHENSIVE PROBLEM!