1. What term defines reduction in the prices given by entities for payment of obligations before due date?

 Seasonal Discount
 Cash Discount
 Trade Discount
 Personal Discount

2. A P6, 420 credit item is accidentally posted as debit. The trial balance column totals will therefore differ
by
 P6,420
 P0
 P12, 840
 P3,210

3. Which of the following is a function of statement of changes in equity?

 It provides a link between the income statement and the balance sheet
 It indicates whether the cash position of the entity will permit withdrawals by the owner
 It shows the income and expenses of the firm for a given period
 It has no relationship with the SFP

4. How are entries required at the end of the accounting period to bring the accounts up to date and to
ensure the proper matching of income and expenses called?
 Reversing Entries
 Adjusting Entries
 Correcting Entries
 Closing Entries

5. What is the final products of the accounting process showing the performance of an entity?
 Post-closing Trial Balance
 Worksheet
 Financial Statement
 Subsidiary Ledgers
6. Reduction from invoice price arising from goods that are damaged, defective or inferior quality
 Discount
 Cost of Sales
 Returns and Allowances
 Expense

7. If the income is greater than the total expenses of sole proprietorship, the income summary account will
be closed by debiting
 Income summary and crediting owner’s capital
 Owner’s capital and crediting Income summary
 Cash and crediting income summary
 Income summary and crediting cash

8. At the end of an accounting period, the equation Assets = Liabilities + Owner’s Equity does not
necessarily balance. Which of the following action balances the equation?
 Subtract revenues and add expenses to owner’s equity
 Add the difference between revenues and expenses to owner’s equity
 Subtract revenues from owner’s equity and add expenses to assets
 Add revenues from owner’s equity and add expenses to assets

9. Which of the following statement is true?

 A post-closing trial balance has balance in the nominal accounts
 Income summary is a clearing or suspense account that is often used to hold balances of
income and expenses and its balance is closed to owner’s capital
 Financial statements cannot be prepared properly until adjusting entries are posted in the ledger
 The income statement and balance sheet reflect external transactions only and notes refer only
to internal transactions

10. In which of the following arrangement does the freight become the expense of the buyer?
 FOB shipping point, freight prepaid
 FOB destination, freight collect
 FOB destination, freight prepaid
 None of the choices
11. The trial balance of Smiley shows an account receivable balance of P30, 000. If service totaling P12,
345 had been performed but not yet billed, the adjusting entry to record this would include a
 Credit unearned services for P12,345.
 Debit to service revenue for P12, 345.
 Credit to service revenue for P42, 345.
 Credit to service revenue for P12, 345.

12. Which reports shows the financial condition of an entity at a given date?
 Statement of Financial Position
 Statement of Cash Flow
 Statement of Income
 Statement of Changes in Equity

13. The amount of cost of goods available for sale during the period depends on the amount of
 Beginning inventory and net purchases
 Beginning inventory and cost of goods sold
 Beginning inventory, cost of goods sold and ending inventory
 Beginning inventory, net purchase and ending inventory

14. On June 1, 2021, Pussy borrowed P300, 000 from a bank. She issued a promissory note that carried
12% interest per annum. The accrued interest on August 10, 2021 amounts to:
 P7, 000
 P3, 600
 P3, 000
 P6, 000

15. Which of the following accounts does not bear an estimated amount?
 Deferrals
 Depreciation
 Doubtful Accounts
 Amortization

16. Which types of accounts will adjusting entries affect?

 Normal accounts only
 At least a nominal account and a real account
 Real accounts only
 Capitals only

17. Which of the following will be reported as revenue for the year, under accrual basis?
 Professional fees collected for services to be completed next year
 Pre-collections of interest, with maturity date next year, reckoning January of next year
 Advance collection of fees to be rendered next year
 Rent of current year, still uncollected as of end of the year

18. Which of the following best justifies the adjusting entry for a deferral?
 Cash flow precedes revenue or expense recognition
 Revenues or expenses are recognized in the absence of cash flow
 Cash flow and revenue or expense recognition are simultaneous
 Revenue or expense recognition precedes cash flow

19. In subsequent accounting periods, which of the following is the last step in accounting cycle?
 Recording and posting of closing entries
 Preparation of a post-closing trial balance
 Preparation of reversing entries
 Preparation of Financial Statements

20. It is a written promise that a customer will pay the business a fixed amount of money on a certain date.
 Note Receivable
 Account Payable
 Account Receivable
 Note Payable
21. Which of the following is reported as selling expense?
 Sales Discount
 Freight Out
  Sales Return
 Sales Allowance

22. A law firm began in August 1 with office supplies of P1, 600. During the month, the firm purchased
supplies of P2, 900. On August 31 supplies on hand total P2, 100. Supplies expense for the month is
 P2, 900
 P2,400
 P2,100
 P4, 500

23. Which of the following will increase the gross profit of the merchandising business?
 Increase in purchase discount
 Decrease in freight out
 Decrease in purchase return
 Increase in freight in

24. The receipt of P2, 000 from a client on account was posted as a P2, 000 debit to cash and a P2, 000
credit to revenue. The difference between the trial balance total column is
 P2, 000
 P1, 000
 P4, 000
 P0

25. The cost incurred to acquire or produce goods sold to customer during the period is called
 Financing Cost
 Cost of Sale
 General Cost
 Marketing Cost

26. On August 19, 2021, Maharlika received from customers P200, 000.00 twelve and three eights percent
interest bearing notes whose term is two and one-third months. When is the maturity of the note?
 October 29, 2021
 October 27, 2021
 October 28, 2021
 October 19, 2021

27. Which of the following is a process of bringing back certain accounts to their original status to conform
with consistency principle recognizing income and expenses?
 Journal entries
 Reversing entries
 Adjusting entries
 Closing entries

28. Unearned revenue was P6, 000 at the end of July a P7, 500 at the end of August. Service revenue was
P42, 000 for the month of August. How much cash was received for service provided during the month?
 P40, 500
 P43, 500
 P55, 500
 P28, 500

29. Which of the following is to be included in the inventory of the seller?

 Goods in transit sold FOB destination
 Goods in transit sold FOB shipping point
 Both A and B
 None of the choices

30. Gross profit of the Company amounted to P105, 000. Ending inventory amounted to P50, 000 while Net
Purchases totaled P85, 000. Beginning inventory is equivalent to half of the ending inventory. How
much is the company’s net sales? 165000

31. A one-year policy was purchased for P20, 000. Three months have passed since the purchase. The
adjusting entry for the insurance policy would include a
  Credit to insurance expense for P5, 000
 Debit to insurance expense for P15, 000
 Debit to prepaid insurance for P5, 000
 Credit to prepaid insurance for P5, 000

32. On April 1, 2021, Mahal Enterprise bought an equipment for P560, 000 with an estimated salvage value
of P80, 000. Its estimated useful life is four years or 24, 000 working hours.

a. Using the straight line method, how much is the depreciation for 2021? 120000
b. What is the net book value of the equipment on December 31, 2022? 90000

33. Magalang Store sells novelty products. On February 14, the following data were gathered

PURCHASES SALES
Units Cost Units Cost
s
Feb 1 500 10 Feb 4 700 15
Feb 3 2000 12 Feb 6 900 18
Feb 5 1500 14 Feb 8 1300 20
Feb 7 2500 16 Fen 1600 24
10
Feb 9 1000 18

a. How much is the amount of ending inventory? 50000

b. How much is the cost of goods sold under the FIFO method of costing inventory? 58000
c. how much is the gross margin under the FIFO method? 33100

34. If Lucky Store had a net purchase of P900, 000 during the year and that the ending merchandise
inventory was P20, 000 less than the beginning inventory of P250, 000, how much was the cost of
goods sold? 920000

35. On June 1, 2020 Wilson Company acquired an office equipment costing P120, 000. This equipment is
expected to be used for 3 years and has an estimated residual value of P30, 000. On June 30, 2020,
the same equipment was sold to another entity and was able to realize P50, 000.

a. What is the carrying amount of the equipment on June 30, 2020 prior to sale? 117500
b. How much is the loss on sale of the equipment? 67500

36. A business received cash of P3, 000 in advance for services that will be provided later. The cash
receipt entry debited Cash and credited Unearned Revenue of P3, 000. At the end of the period, P1,
100 is still unearned. The adjusting for the situation is
 Debit revenue and credit unearned revenue for P1, 100
 Debit unearned revenue and credit revenue for P1, 100
 Debit revenue and credit unearned revenue for P1, 900
 Debit unearned revenue and credit revenue for P1, 900

37. On August 19, 2021, Maharlika received from customers P200, 000. 00 twelve and three eights percent
interest bearing notes whose term is two and one-third months.

a. How much is the interest due on the note on September 30, 2021? 2888
b. How much will Maharlika receive from customers on maturity date? 204813

38. On July 31, 2020, Balance Company paid the rent for one year and recorded the entire amount as
“Prepaid rent”. The entity prepares its financial statement on a quarterly basis on March 31, June 30,
September 30, and December 31. Adjustments for the quarter ended September 30 were properly
recorded by the entity. On December 31, the following adjustments was recorded by the entity

Rent Expense………………. P37, 500

 …………Prepaid Rent…………………………….. P37, 500

a. How much was paid by the entity for the 1-year rent on July 31, 2020? 150000
b. What is the balance of the “Prepaid rent” accounts as of December 31, 2020? 87500

39. Fiery Supplies Inc. was razed by fire on the night of October 25, 2021. The company does not keep
perpetual records and must therefore estimate the loss. To aid the determination of the loss, the
bookkeeper compiled the following information:

Inventory, September 30, 2021 P987, 000

Inventory, October 25, 2021 based on actual count 234, 000
Purchase for the month 456, 000
Purchase discounts 147, 000
Sales, Oct 1-25, 2021 1, 200, 000
Transportation-in 16, 000
Average gross profit margin 35%

How much inventory was lost due to the fire? 298000

40. The selected accounts and balances for Angel Mart appear as follows:

Advertising Expense P140, 000

Interest Income 240, 000
Merchandise Inventory, Jan 1 700, 000
Merchandise Inventory, Dec 31 560, 000
Purchases 600, 000
Purchase Discount 40, 000
Rent Expense 90, 000
Sales 1, 500, 000
Sales Discount 60, 000
Sales Returns and Allowances 130, 000
Salaries expense 320, 000
Transportation in 70, 000
Transportation out 10, 000

Compute for the:

a. Amounts of net sales on the income statement? 1310000
b. Goods available for sale? 1330000
c. Gross Profit? 540000
d. Net Profit? 220000

41. You were approached by the owner of Sarado Computer Store to prepare the following financial
statements:

1) Statement of Income
2) Statement of Changes in Equity
3) Statement of Financial Position

Accumulated Depreciation- Building P152, 000

Accumulated Depreciation- Equipment 26, 000
Accounts Payable 108, 000
Accounts Receivable 132, 470
Building 350, 000
Cash 58, 940
Computer Rental Income 345, 500
Depreciation 29, 500
Equipment 65, 000
Insurance Expense 18, 000
Interest Expense 20, 500
Interest Payable 7, 000
Land 90, 000
Maintenance Expense 22, 000
Marketing Expense 25, 000
Mortgage Expense 200, 000
Notes Receivable 60, 000
Permits and license 30, 000
Prepaid Insurance 17, 000
Printing Revenue 196, 500
 Repair Expense 70, 150
Supplies Cost 5, 170
Tax Expense 12, 000
Unearned Rent 8, 000
Unused Supplies 27, 900
Utilities Expense 35, 870
Wages Paid 185, 500
Wage Payable 17, 000
Yang Capital, 1/1/2020 280, 000
Yang withdrawal 150, 000

Mr. Yang made an additional investment for P65, 000 during the month

1) Total Income 542000

2) Total Expenses 453690
3) Net Income 88310
4) Yang, capital on August 31, 2020 283310
5) Current Assets 296310
6) Property, plant and equipment 327000
7) Current Liability 140000
8) Total Liability 340000
42. Which of the following statements regarding a trial balance is incorrect?
A list of all of the open accounts in the ledger with their balances as of a given date
43. If the prepayment is initially recoded as asset, part of the year-end adjustment will be
Credit to Asset
44. Crown Hostel had an accounts receivable balance of P1,500,000 and the allowance for doubtful account
was P30,000 on September 30, 2021. Credit Sales for the month amounted to P4,500,000
a. If it was estimated that only 3% of credit sales would be uncollected, how much accounts receivable
would the company record? 5835000
b. Assume instead that Crown Hostel estimated that 8% of its accounts receivable would be
uncollected. How much allowance account would appear on the statement of financial position?
477,600
c. How much account receivable should be presented in the statement of financial position of Crown
Hostel using the percentage of accounts receivable?

45. Which document assists the accountant in the preparation of the entity's financial reports? Worksheet

46. Which of the following is not recorded in the books of accounts? Trade Discount

47. If the delivery of merchandise sold is FOB destination, freight prepaid, to which of the following would the
buyer debit the payment of the seller for transportation cost?

 Freight in
 Freight out
 Accounts Payable
 None of the choices
48. A company's weekly payroll of P5,000 is paid on Fridays. Assume that the last day of the month falls on a
Wednesday. The required adjusting entry would be
Debit salaries expense P3,000 and credit salaries payable P3,000
49. Net income for a company is P250,000 for the current year. The owner withdrew P30,000 per month for
personal expenses. The owners' capital account will show a net
Decrease of P110,000

50. What document assist the accountant in the preparation of the entity financial statements?
Trial Balance