BKAL1013 BUSINESS ACCOUNTING

MATRIC NO: _______ GROUP NO______________

OBJECTIVE QUESTIONS (50 MARKS: 90 MINUTES)

Please choose the BEST answer. Please answer on the OMR sheet provided.

1. ‘Accounting is the process of identifying, measuring and ……………………. financial

information about an entity to permit informed judgements and decisions by users of the
information’. Which of the following words completes this definition of accounting?
A. Translating
B. Communicating
C. Extracting
D. Summarising

2. Four accounting assumptions that provide a basis for the accounting process are:
A. monetary unit, going concern, time period, economic entity
B. conservatism, materiality, objectivity, economic entity
C. going concern, monetary unit, full disclosure, materiality
D. objectivity, going concern, revenue recognition, time period

3. The recording process in accounting begins by documenting _____________ in the form

of journal entries.
A. business transactions
B. financial information
C. business minutes
D. business contracts

4. The record in which transactions are initially recorded in chronological order as they
occur is a(an):
A. account
B. general journal
C. general ledger
D. chart of accounts

5. Which of the following entries records the receipt of cash for two months' rent in
advance?
A.Dr. Prepaid rent
Cr. Rent revenue
B.Dr. Cash
Cr. Unearned rent
C.Dr. Cash
Cr. Prepaid rent
D.Dr. Cash
Cr. Rent expense

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 BKAL1013 BUSINESS ACCOUNTING
MATRIC NO: _______ GROUP NO______________

6. The matching principal:

A. addresses the relationship between the journal and the balance sheet.
B. determines whether the normal balance of an account is a debit or credit.
C. requires that the dollar amount of debits equal the dollar amount of credits on a
trial balance.
D. states that the revenues and related expenses should be reported in the same
period.

7. Which of the following statements about users of accounting information is

INCORRECT?
A. Management is an internal user.
B. Taxing authorities are external users.
C. Creditors are external users.
D. Regulatory authorities are internal users.

8. Which of the following items represents a deferral?

A. Fees earned.
B. Prepaid insurance.
C. Wages payable.
D. Accumulated depreciation.

9. Accrued Revenues are:

A. revenues that have not been earned but have been recorded.
B. revenues that have been earned and recorded.
C. revenues that have been earned but have not been recorded.
D. revenues that have not been earned and not recorded.

10. Which of the following accounts is increased by a credit entry?

A. Sales Revenue
B. Salary Expense
C. Accounts Receivable
D. Dividends

11. Which pair of accounts has the same set of rules for debit and credit entries?
A. Service Revenue and Rent Expense
B. Dividends and Retained Earnings
C. Equipment and Salaries Expense
D. Accounts Receivable and Accounts Payable

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 BKAL1013 BUSINESS ACCOUNTING
MATRIC NO: _______ GROUP NO______________

12. The account unearned revenue is a(an)

A. asset.
B. expense.
C. revenue.
D. liability.

13. Saas Ent., purchased supplies for RM1,300 during January 2016. At month-end details
had RM800 of supplies on hand. The adjusting entry should include:
A. Dr. Supplies RM800.
B. Cr. Supplies RM800.
C. Dr. Supplies RM500.
D. Dr. Supplies expense RM500.

14. The TWO most common specialized fields of accounting in practice are:
A. forensic accounting and financial accounting
B. managerial accounting and financial accounting
C. managerial accounting and environmental accounting
D. financial accounting and tax accounting

15. Which of the following event is NOT considered as a business transaction?

A. Paid cash for current month rent and the following three months.
B. Received utility bills.
C. Placed an order for three units of machineries.
D. Received cash for previous month sales.

Use the following five transactions for Newton & Associates to answer question 16 to 20.
May 1 Bills are sent to clients for services provided in April in the amount of
RM800.
9 City Office Bhd. delivers office furniture (RM1,060) and office supplies
(RM160) to Newton leaving an invoice for RM1,220.
15 Payment is made to City Office Bhd. for the furniture and office supplies
delivered on May 9.
23 A bill for RM430 for electricity for the month of April is received and will
be paid on its due date in June
31 Salaries of RM850 are paid to employees.

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MATRIC NO: _______ GROUP NO______________

16. The journal entry to record the 1st May transaction will include an increase of RM800 to:
A. accounts payable
B. accounts receivable
C. cash
D. unearned revenues

17. The journal entry to record the 9th May transaction will include a credit of RM1,220 to:
A. office furniture
B. cash
C. accounts payable
D. administrative expenses

18. The journal entry to record the 15th May transaction will include a decrease of RM1,220
to:
A. salaries expense
B. salaries payable
C. prepaid expenses
D. accounts payable

19. The journal entry to record the 23rd May transaction will include a credit of RM430 to:
A. salaries expense
B. cash
C. prepaid expenses
D. accounts payable

20. The journal entry to record the 31st May transaction will include a credit of RM 850 to:
A. Salaries Expense
B. Salaries Payable
C. Prepaid Salaries
D. Cash

21. The following items appear in the Statement of Financial Position / Balance Sheet
EXCEPT for:
A. current assets
B. long term liabilities
C. revenues
D. capital

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MATRIC NO: _______ GROUP NO______________

22. Assets should be recorded at the value exchanged at the time the asset is acquired. This
statement reflects the
A. matching principle
B. historical cost principle
C. business entity assumption
D. monetary unit assumption

23. Which of the following statements is INCORRECT concerning the adjusted trial
balance?
A. An adjusted trial balance proves the equality of the total debit balances and the
total credit balances in the ledger after all adjustments are made.
B. The adjusted trial balance provides the primary basis for the preparation of
financial statements.
C. The adjusted trial balance lists the account balances segregated by assets and
liabilities.
D. The adjusted trial balance is prepared after the adjusting entries have been
journalized and posted.

24. Which of the following account is NOT closed?

A. Withdrawing.
B. Depreciation expense.
C. Interest revenue.
D. Accumulated depreciation.

25. Which of the following statements about the accrual basis of accounting is FALSE?
A. Events that change firms’ financial statements are recorded in the periods in
which the events occur.
B. Revenue is recognized in the period in which it is earned.
C. This basis is in accord with generally accepted accounting principles.
D. Revenue is recorded only when cash is received, and expense is recorded only
when cash is paid.

26. The owner of a stationery store took three coloring sets for his children and no record
has been made. This action has violated the
A. historical cost principle
B. matching principle
C. business entity assumption
D. monetary unit assumption

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 BKAL1013 BUSINESS ACCOUNTING
MATRIC NO: _______ GROUP NO______________

27. The income statement reflects the

A. financial position of a business.
B. revenue generated by a business
C. the movement of cash during the period
D. the profit or loss generated from business activities for the period

28. Once journal entries are recorded, they can be posted to:
A. journal
B. ledger
C. income statement
D. trail balance

29. Which trial balance lists all the business accounts before year-end adjusting journal
entries are made:
A. adjusted trial balance
B. unadjusted trial balance
C. post-closing trial balance
D. pre-closing trial balance

30. The process of transferring amounts from a book of original entry to specific assets,
liabilities, owner`s equity revenues and expenses accounts is:
A. double-entry system
B. posting
C. credit
D. journalizing

31. Reporting income when it is earned and expenses when they are incurred is called the:
A. Accrual basis of accounting.
B. Cash basis of accounting.
C. Adjustment process.
D. Closing process.

32. Adjustments for prepaid expenses:

A. Decrease assets and increase revenues.
B. Decrease expenses and increase assets.
C. Decrease assets and increase expenses.
D. Decrease revenues and increase assets.

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MATRIC NO: _______ GROUP NO______________

33. The three types of business entities are:

A. proprietorships, small businesses, and partnerships.
B. proprietorships, partnerships, and corporations.
C. proprietorships, partnerships, and large businesses.
D. financial, manufacturing, and service companies.

34. How does loan received from bank affect the accounting equation?
A. Increase in liability; increase in equity
B. Increase in equity; increase in asset
C. Increase in asset; increase in liability
D. No effect on total equation

35. What would be the consequence in accounting equation if the business received cash
from customer for previous month’s sales?
A. Increase in asset; increase in equity
B. Increase in asset; decrease in equity
C. Decrease in asset; increase in equity
D. No effect on total equation

36. The correct term for an entry made to the left side of an account is:
A. double-entry system
B. debit
C. credit
D. journalizing

37. The system of accounting in which there are at least two accounts affected in every
transaction so that the accounting equation stays in balance is a:
A. double-entry system
B. debit
C. credit
D. journalizing

38. Trails & Vacations Sdn. Bhd. has an account receivable of RM2,200 from Kiwanis
Enterprise. On March 11, the Kiwanis Enterprise makes a partial payment of RM1,050
to Trails & Vacations Sdn. Bhd. The transaction recorded on March 11 by Trails &
Vacations Sdn. Bhd. will include:
A. an increase in the cash account of RM1,150.
B. an increase in the accounts receivable account of RM1,150.
C. an increase in the service revenue account of RM1,050.
D. a decrease in the accounts receivable account of RM1,050.

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MATRIC NO: _______ GROUP NO______________

39. A customer had a consultation and asks the company to mail him the bill. The company
should make which entry to record the invoice?
A. Dr. Fees revenue
Cr. Accounts receivable
B. Dr. Cash
Cr. Fees revenue
C. Dr. Accrued fees revenue
Cr. Fees revenue
D. No entry until the cash is received.

40. The entry to close Fees revenue would be:

A. Dr. Fees revenue
Cr. Income summary
B. Dr. Income summary
Cr. Fees revenue
C. Dr. Fees revenue
Cr. Service revenue
D. Fees Revenue does not need to be closed.

41. A business in which two or more persons combine their assets is called a:
A. corporation.
B. sole proprietorship.
C. partnership.
D. merchandising business.

42. Effect from the following will result in increase in equity

A. increase in revenue
B. increase in expenses
C. decrease in revenue
D. decrease in liability

43. An owner brought in his own car worth RM50,000 for business use. The effect on the
accounting equation would
A. increase in asset RM50,000; increase in equity RM50,000.
B. increase in asset RM50,000; increase in liability RM50,000.
C. increase in liability RM50,000; decrease in equity RM50,000.
D. not affect the total equation.

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MATRIC NO: _______ GROUP NO______________

44. Which of the following entries causes a decrease in assets and in net income?
A. The entry to record the payment of utilities with cash.
B. The entry to record the payment of rent for three months in advance.
C. The entry to record accrued wages payable.
D. The entry to record revenue earned but not yet received.

45. Sally and Sammy each invest RM15,000 in a business and are given shares of stock in
SS Enterprise as evidence of their ownership interests. For this transaction, identify the
effect on the accounting equation.
A. Assets increase and liabilities increase.
B. Assets increase and stockholders’ equity increases.
C. Liabilities increase and stockholders’ equity decreases.
D. Liabilities decrease and assets decrease.

46. The purchase of office equipment on credit has what effect on the accounting equation?
A. Assets decrease and owner`s equity decreases.
B. Liabilities increase and owner`s equity decreases.
C. Assets increase and liabilities increase.
D. Assets decrease and liabilities decrease.

47. The payment of employee salaries has what effect on the accounting equation?
A. Assets decrease and owner`s equity decreases.
B. Liabilities decrease and owner`s equity decreases.
C. Assets decrease and liabilities increase.
D. Assets increase and liabilities decrease.

48. During March, Upton Enterprise purchased office supplies for cash. The supplies will be
used in April. What effect does this purchase transaction have on the total accounting
equation?
A. Assets increase and stockholders’ equity decreases.
B. Assets increase and liabilities increase.
C. Assets decrease and liabilities decrease.
D. There is no effect on the total accounting equation as one asset account increases
while another asset account decreases.

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MATRIC NO: _______ GROUP NO______________

49. The adjustment entry for salaries earned by employees but not yet paid is:
A. Dr. Salaries payable
Cr. Salaries expense.
B. Dr. Salaries expense
Cr. Cash.
C. Dr. Salaries expense
Cr. Salaries payable.
D. Dr. Salaries expense
Cr. Accounts receivable.

50. Which of the following that is related to depreciation?

A. Current assets.
B. Non-current assets.
C. Current liabilities.
D. Non-current liabilities.

-- END OF QUESTIONS –

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