FABM Grade 11 Week 11-20 Exam
AMA OED ANSWERAccounting Cycle and Journal Entries
Question: The accounting cycle begins by recording _____________ in the form of journal entries.
Question: A chart of accounts is limited to 50 accounts.
Question: Rent is prepaid for an office for the business, is the accounting entry to the prepaid rent account a debit or a credit?
Question: Supplies are purchased for cash, is the double entry posting to the supplies on hand account a debit or credit entry?
Question: The business carried out work for a customer and was paid in cash, is the entry to the revenue account a debit or a credit?
Question: Cash paid to a supplier for goods supplied by them on credit terms, is the entry to accounts payable a debit or credit entry?
Question: Work was completed and invoiced to a customer for payment within 30 days, is the posting to accounts receivable a debit or a credit?
Question: Every transaction affects two or more accounts and is recorded by equal amounts of debits and credits.
Question: All entries must be supported by a source document.
Question: A business transaction can affect two or more accounts on the same side of the accounting equation and still leave the equation in balance.
Adjusting and Closing Entries
Question: Which is NOT a type of adjusting entry?
Question: Which of the following is never debited when making closing entries?
Question: Temporary accounts would include:
Debit and Credit Rules
Question: Debit and credit rules for accounts on one side of the accounting equation are mirror images of those on the other side.
Question: The payment of a liability is recorded by a debit to the liability account and a credit to the owner's capital account.
Question: A credit to an account always increases it; a debit to an account always decreases it.
Question: The top of the T account is used for account titles. Credits are entered on the left side of the T; debits, on the right.
Question: An asset account appears on the right side of the accounting equation and is also increased on the right side of its T account.
Financial Statements
Question: Equity is shown in which financial statement?
Question: The income statement shows which of the following?
Question: Which financial statement is used to show what the firm owns?
Question: Which financial statement displays the revenues and expenses of a company for a period of time?
Question: Which of the following will not be reported in the statement of changes in equity?
Question: Which of the following account titles will not appear in the balance sheet of a single proprietorship?
Question: Which is the last step of accounting as a process of information?
Question: Financial statements are prepared primarily for the benefit of persons outside of the business organizations.
Assets and Liabilities
Question: Which of the following is an asset account?
Question: Which of the following accounts is not an asset?
Question: Inventory and accounts receivable are classified in the balance sheet as?
Question: Probable future sacrifices of economic benefits arising from past transactions are known as:
Question: The debts which are to be repaid within a short period (year or less) are known as?
Question: The liabilities that are payable in more than a year and are not to be liquidated from current assets.
Question: A loan can be described as a short-term loan if the period is:
Question: Which of the following is a current asset?
Question: Which of the following statements is false?
Question: Which of the following is not a characteristic of an economic resource so that it could be classified as an asset of the business?
Revenue and Expenses
Question: Which of the following is NOT considered revenue?
Question: Which of the following expenses is recognized under the direct association with revenue criterion?
Question: Amount generated from sales in a business is called:
Question: It is usually used in connection with activities and events that result to the inflow of assets and/or outflow of liabilities.
Merchandising and Inventory
Question: A form of discount granted by a retailer to encourage a customer to buy the goods is called:
Question: A supporting document prepared by a seller that is used as evidence of a downward adjustment in the amount that is due from a customer is known as:
Question: Which of the following is NOT part of the cost of inventory purchased?
Question: Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system?
Accounting Principles and Standards
Question: Which of the following is not an acceptable basis of recognizing expenses?
Question: Information is cost effective when:
Question: Information is material if:
Question: The four principal qualitative characteristics of useful financial statements are:
Question: What are the accounting standards issued by the IASB called?
Question: Accounting deals with quantifiable information.
Question: Accounting involves communication.
Question: Accounting is the language of business.
Question: The term book keeping and accountancy can be used interchangeably.
Question: Accounting aims to communicate financial information to investors only.
Question: All of the following are characteristics of managerial accounting, except:
Accounting Roles and Organizations
Question: Person who manages all of a firm's accounting activities.
Question: Government agency gives a CPA certificate to an accountant after he passes a series of rigorous examinations administered by the Board of Accountancy (BOA).
Question: The type of accounting which reports on the performance of the firm to essential external users.
Question: Which of the following is more appropriate definition for Accountancy?
Question: The basic function of financial accounting is to:
Question: The basic purpose of accounting is to:
Question: Which of the following groups use financial accounting?
Cash Flow and Other Concepts
Question: The purchase of a new delivery truck to be used in the business?
Question: An increase in the balance in Accounts payable.
Question: The term operating, financing and investing as used to categorize what type of item?
Question: Which of these is not a Financial Statement?
Question: A one year reporting period that begins on January 1 ends on December 31 is:
Question: Financially, shareholders are rewarded by:
Question: Although accounting information is used by a wide variety of external parties, financial reporting is primarily directed toward the information needs of:
Question: Accounting provides information on:
Frequently Asked Questions
What is the accounting cycle?
The accounting cycle is the process of recording, classifying, and summarizing financial transactions to prepare financial statements. It begins with recording business transactions as journal entries and ends with the preparation of financial statements.
What is the difference between current and fixed liabilities?
Current liabilities are debts payable within a year, often settled with current assets, like accounts payable. Fixed liabilities are payable over a longer period, typically more than a year, and not liquidated from current assets, such as long-term loans.
What is a sales discount, and how does it differ from a credit memorandum?
A sales discount is a reduction in the invoice amount offered to encourage early payment within a specified period. A credit memorandum is a document issued by a seller to reduce the amount owed by a customer, typically due to returns or allowances.
Why is financial accounting important for external users?
Financial accounting provides standardized financial information through reports like balance sheets and income statements, which are crucial for external users such as investors, creditors, and regulators to assess a firm's performance and make informed decisions.
What are the qualitative characteristics of useful financial statements?
The four principal qualitative characteristics of useful financial statements are understandability, relevance, reliability, and comparability, ensuring the information is clear, pertinent, accurate, and consistent for decision-making.