1. Principles of Accounting
Asst.Prof.Dr. Panchat Akarak
School of Accounting
Chaingrai Rajabhat University
Accounting I

2. Exercises 5 Vocabulary Matching True-False questions Multiple choice questions Demonstration Problem

3. Vocabulary Meaning in Thai Put your explain in the appropriate column.
Items
Meaning in Thai
Income Statement
งบกำไรขาดทุน
Balance sheet
งบแสดงฐานะการเงิน
Work sheet
กระดาษทำการ
Income Summary
สรุปผลกำไรขาดทุน
Profit and Loss summary
สรุปผลการไรขาดทุน
Reversing Entries
การกลับรายการปรับปรุงในวันต้นงวด
Net Income
กำไรสุทธิ
Financial Position Statement
Comprehensive Income
งบกำไรขาดทุนเบ็ดเสร็จ
Retain Earning
กำไรสะสม

4. Vocabulary Put (/) in the appropriate column. Items Nominal Account
Real
Account
Accumulated depreciation  /
Depreciation
Prepaid advertising
Prepaid insurance
Prepaid rent
Unearned consulting fees

5. Vocabulary Unearned revenue / Prepaid Expense Advertising revenue
Put (/) in the appropriate column.
Items
Nominal Account
Real
Account
Unearned revenue  /
Prepaid Expense
Advertising revenue
Office Supplies on hand
Doubtful accounts

6. Vocabulary Put (/) in the appropriate column. Nominal Account Real
Items
Nominal Account
Real
Account
Allowance for doubtful accounts  /
Bad debt
Office supplies expense
Accrued Expense
Accrued Revenue
Unearned Revenue
Deferred Income

7. Vocabulary / / Put (/) in the appropriate column. Nominal Account Real
Items
Nominal Account
Real
Account
Interest expense /
Accrued interest payable
Bad debts Expense  /
Accounts Receivable / 
Accounts Payable
Doubtful debt
Unexpired insurance

8. Vocabulary Note Receivable Put (/) in the appropriate column.
Items
Nominal Account
Real
Account
Payroll Expense /
Miscellaneous Expenses  /
Salaries and wages expense
Accrued salaries and wages payable
Note Receivable

9. Matching
Referring to the terms listed in the left and right column, place the appropriate letter next to the corresponding description. A.
Owner’s equity account G.
Closing entries B.
Profit & loss summary account H.
Income Statement C.
Assets
I .
Statement of Owner’s Equity D.
Accrued expenses J.
Prepaid expense
E .
Contra account K.
Work sheet F.
Adjusting entries L.
Accrued Liability

10. Matching
 A &C 1.
Classifications of accounts remaining open after the accounting records are closed. b  2.
Is the account to which commissions earned is closed. d  3.
Expense incurred before they are paid for.  l 4.
Amount owed for expenses incurred but not yet billed or due to be paid.  f 5.
Used to record the cost of prepaid insurance that has expired.

11. Matching e  6.
Account subtracted from plant and equipment to arrive at book value.  a 7.
The owner’s drawing account is closed to this account. g  8.
Entries required at the end of the accounting period to clear out the temporary accounts.  e 9.
Accumulated depreciation.  d
10.
Unpaid and recorded amounts for which payment is not due.

12. Matching i h k e f 11. A statement showing changes in owner’s equity.
12.
After these entries are posted, revenue and expense account have no balance.  k
13.
A form that provides a convenient way for summarizing information needed for preparing financial statement  e
14.
The account’s balance is subtracted from the balance of an associated account to show the appropriate balance.  f
15.
Used to record the cost of office supplies used from Inventory.

13. Solutions-Matching 1 A and c 9 E 2 B 10 D 3 11 I 4 L 12 G 5 F 13 k 6 e14 7 A 15 8

14. True-False Questions
Indicate whether the following statements are true or false by inserting in the blank space provided a capital “T” for True or “F” for false. F 1.
The profit and loss summary account appears on the income Statement along with Owner’s Equity.  F 2.
Mortgage Note Payable due in 8 years would be classified as part of owner’s equity on a classified Balance Sheet.

15. True-False Questions T 3.
One of the purpose of closing entries is to prepare revenue and expense accounts for the recording of the next period’s revenue and expense.  F 4.
The company has earned an income for the period if a credit is needed to close the Profit and Loss summary account.

16. True-False Questions T 5.
If a company reports a net income for the current year, this amount will be shown on the work sheet in the debit Income Statement column and credit Balance Sheet column.  F 6.
Owner’s drawing are an expense because they reduce Owner’s equity.

17. True-False Questions T 7.
An expense account is normally closed by crediting it. F  8.
The Profit and loss Summary account reveals that an operating loss of $800 has been incurred. Before closing entries are posted, the owner’s drawing account shows a balance of $460. The entry to close the profit and loss summary account is a debit of $340 to Profit and loss summary.

18. True-False Questions F 9.
The adjusted trial balance contains only revenue and expense accounts. T 
10.
It is not necessary to close the accounts each time financial statements are prepared.

19. True-False Questions F 11.
Entering the adjustments in the adjustments columns of a work sheet makes it unnecessary to record and post adjusting entries.
12.
The post-closing trial balance is prepared immediately after all adjustments have been journalized and posted.

20. True-False Questions F 13.
If a firm’s expenses are greater than its revenue, the owner’s equity is increased. F 
14.
An adjusting entry in needed to transfer the information in the individual revenue and expense accounts to the profit and loss summary account.

21. True-False Questions T 15.
The purpose of the profit and loss summary account is to summarize all expense and revenue of the period in one account.  F
16.
Following the adjustment and closing process, the revenue and expense accounts are the only accounts remaining open.

22. True-False Questions T 17.
The important role of the work sheet is to aid the accountant by bringing together all the data needed for preparing the financial statement.  F
18.
In a properly classified balance sheet net income for the period would be included in the total of current assets.

23. True-False Questions T 19.
Work sheets furnish in a convenient from the information required for the periodic financial statement.  T
20.
When a work sheet’s Income Statement debit column total exceeds the Income Statement credit column total a loss is indicated.

24. True-False Questions T 21.
The post closing trial balance contains assets, Liability and owner’s equity.  T
22.
If the balance in Profit and Loss summary is a credit balance, this means that the organization has earned a net income of this amount.

25. True-False Questions F 23.
The Profit and loss summary account allows for the adjustment of any revenues and expense that have not been previously recorded.  T
24.
On a properly classified balance sheet. Wages Payable should be classified as a current Liability.

26. True-False Questions  F
25.
The account “Accounts Receivable” is closed to Profit and loss summary account in the closing procedure.

27. Solutions-True-False Questions1 F 11 21 T 2 12 22 3 13 23 4 14 24 5 15 25 6 16 7 17 8 18 9 19 10 20

28. Multiple Choice Questions
For each of the following questions, indicate the single, best answer by circling the appropriate letter.
The depreciating expense on office equipment was
recorded by a debit to depreciating expense and a
credit to office equipment. If statements are now
prepared:
a. Net income and owner’s equity are correct.
b. The total dollar amount of total assets is correct but the
details shown on the balance sheet are in error.
c. Total liabilities are correct.
d. All of the above.
e. A and c, but not B.

29. Multiple Choice Questions
Which of the following is true regarding the work sheet?
It is a form which the accountant uses for his/her
own aid and convenience.
It assists in the orderly preparation of the
adjustments and financial statements at the end
of accounting periods.
c. It can substitute for journals and ledgers.
d. All the above are true.
e. Only A and B are true.

30. Multiple Choice Questions
3. Malee Sporting Goods began business on January 1, 2016, with owner’s capital of $15,000. At December 31, 2016, assets amounted to $ and Liabilities were $6,000. Revenue from service during the year amounted to $30,000 and malee took $8,000 from the business to pay his living expenses, The expenses of Malee Sporting Goods for 2016 amounted to:
a. $10,000.
b. $18,000.
c. $26,000.
d. $19,000.
e. Some other amount.

31. Multiple Choice Questions
The Trial Balance columns of a work sheet total
$62,000. The Adjustments columns contain the
following:
-Depreciation expense of $3,500.
-Rent expense of $500.
-Accrued salaries of $2,500.
-Insurance expense of $1,200.
-Supplies expense of $600.
The total of the Adjusted Trial Balance columns is:

32. Multiple Choice Questions
4.(Cont.)
The total of the Adjusted Trial Balance columns is:
a. $69,800.
b. $68,000.
c. $65,000.
d. $63,800.
e. $54,200.

33. Multiple Choice Questions
Supplies on hand are shown as $315 in the Trial
balance columns of the work sheet. The
Adjustments columns show that $290 of these
supplies were used during the month. The
amount shown as supplies on hand in the
Balance Sheet columns is:
a. $25 debit.
b. $315 debit.
c. $290 debit.
d. $25 credit.
e. $290 credit.

34. Multiple Choice Questions
The Trial balance columns of the work
sheet show store fixtures of $4,000.
Estimated depreciation for the period is
$400. The store fixtures amount in the
Balance Sheet columns of the work sheet will be:
a. $3,600 debit.
b. $3,600 credit.
c. $4,400 debit.
d. $4,000 debit.
e. $4,000 credit.

35. Multiple Choice Questions
7. If the subtotal of the income statement debit
column is $250,000, the subtotal of the income
statement credit column is $300,000 and the
subtotal of the balance sheet debit column is
$475,000 what is the subtotal of the balance
sheet credit column?
a. $425,000.
b. $
c. $525,000.
d. $300,000.
e. None of the above.

36. Multiple Choice Questions
8. Salary expense before adjustment at September 30, the end of the fiscal year, has a balance of $140,000. The amount accrued is $3,100. The Adjusting entry would be:
a. Salaries Expense 3,100
Salaries Payable 3,100
b. Salaries Payable 3,100
Salaries Expense 3,100
c. Profit and Loss summary account 3,100
d. Profit and Loss summary account 143,100
Salaries Expense ,100
e. None of these.

37. Multiple Choice Questions
The closing entry for Salary Expense in the previous
problem would be:
a. Salaries Expense 3,100
Salaries Payable 3,100
b. Salaries Payable 3,100
Salaries Expense 3,100
c. Profit and Loss summary account 3,100
Salaries Expense ,100
d. Profit and loss summary account 143,100
Salaries Expense ,100

38. Multiple Choice Questions
10. In adjusting and closing the books of Sawat at the end of the fiscal year no provision was made for accrued sales salary expense of was made for accrued sales salary expense of $600. The effect of this omission was as follows:
a. The assets on the balance sheet were the same
regardless of the omission.
The owner’s equity on the balance sheet is
understated by $600.
The liabilities reported on the balance sheet are
overstated by $600.
d. The profit for the year was understated by $600.
e. None of the preceding answers is correct.

39. Multiple Choice Questions
11. Office Supplies on Hand shows up on the work sheet in the following columns assuming office supplies expense must be deducted from the prepaid amount.
Trial Balance, Adjustments, Adjusted Trial
balance, Balance Sheet
b. Income Statement and Adjustments
c. Balance Sheet and Adjustments only
d. Balance Sheet and Income Statement

40. Multiple Choice Questions
12. If at the end of a period there is a debit balance in the Profit and Loss summary account, this means that:
a. Total assets have decreased during the period.
The business has suffered a net loss during the
period.
c. Revenues have exceeded expenses.
the owner has drawn out more than the income
for the period.

41. Multiple Choice Questions
13. On a properly classified balance sheet, Taxes Payable should be classified as:
a. Current Asset.
b. Plant and Equipment.
c. Current Liability.
d. Long-term Liability
e. Owner’s equity

42. Multiple Choice Questions
14. If the debit subtotal of the Income Statement on the work sheet is $159,000 and the credit subtotal is $147,000, there is
a. net income of $12,000.
b. net loss of $12,000.
c. net loss of $159,000.
d. net income of $147,000.

43. Multiple Choice Questions
15. Which of the following statements is incorrect?
a. The work sheet eliminates the need for
adjusting and closing Journal entries.
b. The work sheet serves as the basis for
preparing the Income Statement.
c. The work sheet serves as the basis for
preparing the Balance Sheet.
d. The work sheet serves as the basis for
journalizing the adjusting entries.
e. None of these.

44. Multiple Choice Questions
SOLUTIONS
Multiple Choice Questions 1 d 6 11 A 2 e 7 a 12 B 3 b 8 13 C 4 9 14 5 10 15

45. Demonstration Problem
1. The trial balance of the Brown Company at December 31, 2016, contains the following account balance (the accounts are listed in alphabetical order to increase your skill in sorting amounts to the proper work sheet columns.

46. Demonstration Problem
Brown Company
Trial Balance Account Balance
December 31, 2016
Account Titles
Amount $
Accounts payable
12,000
Accounts receivable
40,800
Accumulated depreciation-building
13,700
Accumulated depreciation-equipment
7,500
Building
65,000
Brown, Capital
40,100
Brown, Drawing
10,000

47. Demonstration Problem
Cash
16,900
Commissions revenue
232,400
Equipment
20,000
Land
90,000
Payroll expense
55,000
Store supplies on hand
3,500
Unexpired insurance
2,400
Utilities expense
2,100

48. Demonstration Problem
a. Using the account balance given above and the additional information presented below, prepare a work sheet for the Brown Company
Additional data:
1. Store supplies on hand at December 31, have a cost of $800.
2. The balance in the Unexpired Insurance account represents the Cost of a twenty-month insurance policy beginning January 1, 2016.

49. Demonstration Problem
3. Depreciation for the building is $370
and for the equipment, $1,200.
b. Prepare the adjusting and closing journal entries.
(Solutions Net Income=169,590)

50. Demonstration Problem
Dec. 31 Store Supplies expense 2,700 Store Supplies on hand 2,700 To Adjusted Supplies Insurance Expense 1,440 Unexpired Insurance 1,440 To Adjusted Insurance

51. Demonstration Problem
Dec. 31 Depreciation expense-Building 370 Depreciation expense-Equipment 1,200 Accumulated Depreciation- Building 370 Equipment 1,200

52. Demonstration Problem
Dec.31 Service Revenue 232,400 P/L summary account 232,400 (Income Summary) To close revenue account.

53. Demonstration Problem
Dec.31 P/L summary account 62,810 (Income Summary) Payroll Expense 55,000 Utilities expense 2,100 Store Supplies expense 2,700 Insurance expense 1,440 Depreciation Expense-Building 370 Depreciation expense-Equipment 1,200 To close expense accounts.

54. Demonstration Problem
Dec.31 P/L summary account 169,590 (Income summary) Brown Capital 169,590 To close net income to capital Brown Capital 10,000 Brown, Drawing 10,000 To close owner’s drawing account

55. Demonstration Problem
2. The following account balance.
Service revenue
92,000
Rent revenue
3,000
Utilities expense
5,500
Advertising expense
10,000
Accumulated depreciation
30,000
Miscellaneous expense
2,000
Salaries and wages expense
72,000
Accrued salaries and wages payable
4,000
Depreciation expense
5,000
Mr.Lee, Capital
20,000
Prepare one entry to close the revenue accounts, prepare one entry to close out the balance in the Profit and Loss summary account (Solutions Net Income=500)

56. Demonstration Problem
Dec.31 Service Revenue 92,000 Rent Revenue 3,000 P/L summary account 95,000 (Income summary) To close revenue account.

57. Demonstration Problem
Dec.31 P/L summary account 94,500 (Income summary) Salaries and Wages Expense 72,000 Depreciation Expense 5,000 Advertising Expense 10,000 Utilities expense 5,500 Miscellaneous expense 2,000 To close expense accounts.

58. Demonstration Problem
Dec.31 P/L summary account 500 (Income summary) Lee Capital 500 To close net income to capital

59. Demonstration Problem
3. The following account balances appeared
in the Income Statement columns of the
work sheet prepared for the Papaya Company for
the year ended December 31, 2015.
Commissions earned
150,000
Painting revenue
280,000
Advertising expense
1,800
Payroll expense
200,000
Utilities expense
3,000
Insurance expense
Rent expense
8,100

60. Demonstration Problem
Office supplies expense
3,500
Depreciation expense-building
5,800
Interest expense
600
Rent revenue
1,500
Prepare the Work sheet 6 columns, closing journal
entries, Assume Papaya Company, Drawing account
has a balance of $34,000 on December 31, 2015.
(Solutions Net Income=206,900)

61. Work Sheet Trial Balance Income Statement Balance sheet
Commissions earned
150,000
Painting revenue
280,000
Advertising expense
1,800
Payroll expense
200,000
Utilities expense
3,000
Insurance expense
Rent expense
8,100
Office supplies expense
3,500
Depreciation expense-building
5,800
Interest expense
600
Rent revenue
1,500
430,000

62. Demonstration Problem
Dec.31 Commissions Revenue 150,000 Painting Revenue 280,000 Rent Revenue 1,500 P/L summary account 431,500 (Income summary) To close revenue account.

63. Demonstration Problem
Dec.31 P/L summary account 224,600 (Income summary) Advertising expense 1,800 Payroll Expense 200,000 Utilities expense 3,000 Insurance expense 1,800 Rent Expense 8,100 Office Supplies expense 3,500 Depreciation Expense-Building 5,800 Interest expense 600 To close expense accounts.

64. Demonstration Problem
Dec.31 P/L summary account 206,900 (Income summary) Papaya Capital 206,900 To close net income to capital Papaya Capital 34,000 Papaya, Drawing 34,000 To close owner’s drawing account

65. The End