FAR Reviewer 3

Which of the following does not directly or indirectly affect the owner capital account? a. Paying an accounts payable b. Withdrawals by the owner c. Earning of revenues d. Incurring of expenses

Which of the following transactions correctly maintains the equality in the accounting equation? a. To record collections on account, cash and accounts receivable are increased by P160,000. b. To record the purchase of computer equipment, computer equipment is increased and cash is decreased by P46,000. c. To record payment of notes, notes payable is decreased and cash is increased by P70,000. d. To record payment of rent, rent expense and cash are increased by P8,000.

Which of the following combinations of trial balance totals suggest the presence of either a transposition error or a number slide? a. P55,470 debit and P68,170 credit b. P33,220 debit and P35,420 credit C. P25,670 debit and P26,670 credit d. P14,517 debit and P15,477 credit

The first financial statement that is prepared from the trial balance is the a. statement of cash flows. b. statement of changes in equity. c. income statement. d. balance sheet.

The amount of cash received or paid during a period is not an adequate measure of the economic consequences of an organization's activities because a. many activities may not involve the use of cash. b. cash inflows may represent the result of activities completed in a previous period. c. cash outflows may precede or follow the activities with which they are associated. d. All of the above reasons are correct.

Which of the following is a business event that is not considered a recordable transaction? a. ' An entity receives a product previously ordered. b. An entity pays an employee for work performed. c. A customer inquires about the availability of a service. d. A customer purchases a service.

Which of the following is a business event that is also considered a recordable transaction? a. An entity hires a new employee. b. A customer purchases merchandise. c. An entity orders a product from a supplier. d. An emplovee sends a purchase requisition to the purchasing department.

Balance sheet accounts are a. permanent accounts. b. temporary accounts. c. accounts with debit balances only. d. adjusting accounts.

A journal entry that contains more than two accounts is called a. a posted journal entry. b. a compound journal entry. c. an adjusting journal entry. d. an erroneous journal entry.

When accounting information is accumulated in individual accounts, a chart of accounts is a. limited to those accounts that will appear in the balance sheet. b. changed each year by an entity depending on the results of operations. c. a listing of each account that will be used to accumulate information. d. used to determine whether a debit or credit balance will appear in each of the accounts at the end of the accounting period.