FABM1 (THIRD QUARTER -TEACHER MADE EXAM)

Accounting defined as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least of financial character, and interpreting the results thereof." This is a definition from :

• American Institute of Certified Public Accountant (AICPA)
• Accounting Standard Council (ASC)
• American Accounting Association (AAA)
• Philippine Institute of Certified Public Accountant

Which of the following statements about an account is true?

• The right side of an account is the debit or increase side
• An account is an individual accounting record of increases and decreases in specific asset, liability, and owner’s equity items
• There are separate accounts for specific assets and liabilities but only one account for owner’s
• The left side of an account is the credit or decrease side

Debits:

• increase both assets and liabilities
• decrease both assets and liabilities.
• increase assets and decrease liabilities.
• decrease assets and increase liabilities.

A revenue account:

• is increased by debits.
• is decreased by credits
• has a normal balance of a debit
• is increased by credits.

Accounts that normally have debit balances are:

• assets, expenses, and revenues
• assets, expenses, and owner’s capital.
• assets, liabilities, and owner’s drawings.
• assets, owner’s drawings, and expenses

The expanded accounting equation is:

• Assets + Liabilities = Owner’s Capital +Owner’s Drawings - Revenues + Expenses
• Assets = Liabilities + Owner’s Capital -Owner’s Drawings + Revenues - Expenses
• Assets = Liabilities + Owner’s Capital -Owner’s Drawings + Revenues +Expenses
• Assets = Liabilities + Owner’s Capital +Owner’s Drawings + Revenues -Expenses

Which of the following is NOT part of the recording process?

• Analyzing transactions.
• Preparing a trial balance
• Entering transactions in a journal
• Posting transactions.

Which of the following statements about a journal is FALSE?

• It is not a book of original entry.
• It provides a chronological record of transactions
• It helps to locate errors because the debit and credit amounts for each entry can be readily compared.
• It discloses in one place the complete effect of a transaction

A ledger:

• contains only asset and liability accounts.
• should show accounts in alphabetical order
• is a collection of the entire group of accounts maintained by a company
• is a book of original entry

Posting:

• normally occurs before journalizing.
• transfers ledger transaction data to the journal
• is an optional step in the recording process.
• transfers journal entries to ledger accounts.