NOTE: These are MCQS: MCQS 21 Adjusting entries are prepared: a)Before financial statements and after a trial balance has been prepared. b)After a trial balance has been prepared and after financial statements are prepared. c)After posting but before a trial balance is prepared. d)Anytime an accountant sees fit to prepare the entries. MCQS 22 Which of the following statements is incorrect? (a) Liabilities + Assets = Capital (b) Assets – Liabilities = Capital (c) Liabilities + Capital = Assets (d) Assets - Capital = Liabilities MCQS 23 Each of the following are particularly interested in the statement of cash flows except a)creditors. b)employees. c)shareholders. d)government agencies. MCQS 24 The amount calculated by subtracting total liabilities from total assets is called ___ a)Equity b)Revenue c)Expenses d)None of above MCQS 25 Which of the following forms of business does not protect owners from business creditors? (a) Partnership (b) Sole proprietorship (c) Limited liability company (d) Both a and b MCQS 26 Which one of the following statement completely and correctly describes accounting? (a) Recording, classifying and summarizing economic activities in systematic way (b) Recording, classifying and summarizing all activities in useful manner (c) Accounting is the systematic process of recording social activities only (d) Recording, classifying and summarizing economic activities in informal manner MCQS 27 Purchased goods from Ahmed for cash should be credited to? (a) Account Payable _ Ahmed (b) Cash A/c (c) Purchases A/c (d) Account Receivable _ Ahmed MCQS 28 The payment of a liability causes an increase in owners' equity. a)True b)False MCQS 29 Unearned revenue is: a)An asset. b)Income. c)A liability. d)An expense. MCQS 30 Adama Company reported a net loss of $6,000 for the year ended December 31, 2014. During the year, accounts receivable increased $15,000, merchandise inventory decreased $12,000, accounts payable decreased by $20,000, and depreciation expense of $12,000 was recorded. During 2014, operating activities a)used net cash of $17,000. b)used net cash of $29,000. c)provided net cash of $24,000. d)provided net cash of $21,000.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
NOTE: These are MCQS:
MCQS 21
Adjusting entries are prepared:
a)Before financial statements and after a
b)After a trial balance has been prepared and after financial statements are prepared.
c)After posting but before a trial balance is prepared.
d)Anytime an accountant sees fit to prepare the entries.
MCQS 22
Which of the following statements is incorrect?
(a) Liabilities + Assets = Capital
(b) Assets – Liabilities = Capital
(c) Liabilities + Capital = Assets
(d) Assets - Capital = Liabilities
MCQS 23
Each of the following are particularly interested in the statement of cash flows except
a)creditors.
b)employees.
c)shareholders.
d)government agencies.
MCQS 24
The amount calculated by subtracting total liabilities from total assets is called ___
a)Equity
b)Revenue
c)Expenses
d)None of above
MCQS 25
Which of the following forms of business does not protect owners from business creditors?
(a) Partnership
(b) Sole proprietorship
(c) Limited liability company
(d) Both a and b
MCQS 26
Which one of the following statement completely and correctly describes accounting?
(a) Recording, classifying and summarizing economic activities in systematic way
(b) Recording, classifying and summarizing all activities in useful manner
(c) Accounting is the systematic process of recording social activities only
(d) Recording, classifying and summarizing economic activities in informal manner
MCQS 27
Purchased goods from Ahmed for cash should be credited to?
(a) Account Payable _ Ahmed
(b) Cash A/c
(c) Purchases A/c
(d) Account Receivable _ Ahmed
MCQS 28
The payment of a liability causes an increase in owners' equity.
a)True
b)False
MCQS 29
Unearned revenue is:
a)An asset.
b)Income.
c)A liability.
d)An expense.
MCQS 30
Adama Company reported a net loss of $6,000 for the year ended December 31, 2014. During the year,
a)used net cash of $17,000.
b)used net cash of $29,000.
c)provided net cash of $24,000.
d)provided net cash of $21,000.
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