Basic Accounting Exam
Basic Accounting Exam
Basic Accounting Exam
Accounting equation
I. Review of Previous Chapters- Indicate your answer in the space provided before each number
that corresponds to the applicable accounting assumption/principle described below.
_____b__1. Requires that expenses incurred in producing revenues be matched with related
revenues during the accounting period.
_____e__2. Under this principle, regardless of cash flow, income is recognized as earned when
service has been rendered and expense is recognized as incurred when service has been received
or asset has been used up.
____a___3. Cash paid or its equivalents should be used to measure assets on the date that these
are acquired.
___d____4. Revenue should be recorded when there is an inflow of net assets from the sale of
goods or delivery of service.
___c____5. The life of the business is divided into uniform periods of time so that the accountant
may be able to prepare financial statements.
II. Write the word TRUE if the statement is correct and the word FALSE if incorrect in the blank
space provided for in each statement below:
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_____f__6. Liabilities are established by debiting and decreased by crediting
____f___12. A cash acquisition of a Samsung computer for business use will cause a decrease in
the total assets of the company. (remain the same, exchange of assets)
___f____18. Increase in asset account and decrease in equity account is a possible entry.
____f___19. Gains arise in the ordinary course of business, while revenue does not. (reverse)
II. Multiple Choice (Theory) Indicate your answer by encircling the correct letter of your answer.
Basic Accounting(ACC 122) CHAPTER 3
Accounting equation
1. A company received P 5,000 cash from customers to apply on account. The effect of the
transaction is (entry: debit CASH credit AR)
c. A check paying debt to creditors’ (payment of liab) d. Sales from the business
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a. assets b. capital c. revenue d. liabilities
a. the word "debit" means increase and the word “credit" means decrease
12. A common business transaction that would not affect the amount of owner's equity is
a. signing a note payable to purchase equipment (this decreases both assets and liabilities, so
no effect on OE)
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13. Which of the following is a liability of the firm?
c. Money in which the firm has borrowed but not yet paid d. Money set aside for current
purposes.
a. 4 2 2
b. 2 4 2
c. 1 2 1
d. 4 4 0
15. The first name of your professor in accounting is ______ Marmolejo (HAHA)
III. Identify each of the following according to its classification. Answers may be: Capital, Income,
Liability, Asset and Expense (e.g.: Cash - asset)
1. Vidal, capital C
2. Inventory A
3. Sales I
4. Accounts payable L
5. Accounts receivable A
6. Intangible assets A
Basic Accounting(ACC 122) CHAPTER 3
Accounting equation
7. Rafa, drawings C
8. Notes payable L
9. Interest income I
13. Equipment A
The accounts and transactions of Mr. Benj Seeyah, Service Consultant, are shown below:
f. Bought a desktop computer for business use; paid 50% down balance in 30 days for P 15,000
g. Acquired a Xerox machine for 20,000 on credit: paid P 5,000 balance due in 30 days.
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j. Collected P 6,000 on accounts receivable
*Required: Record the transactions for the month using a financial transaction worksheet. Use the
following accounts: Cash; Accounts receivable; Office furniture; Office equipment; Accounts
payable; Seeyah, Capital. If the owner's equity account is affected by a transaction, identify it as a
revenue, expense, investment or withdrawal.
Dr. Afazer C. Talinga, a CPA and a taxation expert in the Philippines opened a taxation firm
named "Bluekeepers" on April 1 by leasing an office space. He invested cash of P 500,000 and
furniture and fixtures of P 100,000. Additional transactions are as follows:
April 3 Purchase a computer costing P 80,000. Paid 50% and promised to pay the
balance after 30 days
5 Paid for the publication in a newspaper of the opening of the taxation firm,
P15, 000
9 Installed a set of accounting software for P 350,000 and issued a promissory note
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14 Banco de Oro grants a loan to Talinga amounting to P 500,000 for a purchase of
condominium for residential purpose.
* Required
1. With the aid of the T accounts, record the transactions listed above. Use the following
accounts: Cash; Accounts receivable: Office Supplies: Furniture and Fixtures; Office equipment:
Accounting Software: Accounts Payable: Notes Payable: Talinga, Capital; Talinga, Withdrawals;
Accounting Fees Revenues; Advertising expense; Salaries expense; Rent expense; Utilities
expense; office supplies expense.