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REVIEW PROGRAM
THIRD QUIZ

1. Expenditures for items that are expected to be used by the business for more than one year are
also called
a. capital expenditures.
b. period costs.
c. accrued expenses.
d. capital.

2. The first step in the accounting cycle is

a. posting to the ledger.
b. journalizing.
c. preparing the adjusting entries.
d. analyzing events.

3. Credit is on which side of an account?

a. Right
b. Left
c. Top
d. Bottom

4. A debit may signify an increase in

a. liability account.
b. asset account.
c. revenue account.
d. liability and revenue account.

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

a. Cash
b. Accounts receivable
c. Accounts payable
d. Owner’s drawings

Instruction for next ten (10) questions: Choose the letter corresponding to the correct account
titles used in recording each of the transactions described.

6. During the year, you started a sole proprietorship business. You invested ₱10M cash to the
business.
a. Accounts receivable Owner’s drawings
b. Cash Owner’s capital
c. Cash Investment expense
d. Owner’s capital Owner’s drawings

7. The business acquires equipment for ₱6M cash.

a. Equipment Owner’s capital

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 b. Equipment Accounts receivable
c. Owner’s capital Equipment
d. Equipment Cash

8. The business recognizes depreciation of ₱250,000 on the equipment.

a. Prepaid supplies Equipment
b. Depreciation expense Accumulated depreciation
c. Depreciation expense Equipment
d. Equipment Accumulated depreciation

9. The business purchases inventories for ₱2M cash.

a. Inventory Owner’s capital
b. Inventory Sales
c. Inventory Cash
d. Cost of sales Freight out

10. The business makes a ₱3M sale to a customer who orally promises to pay for the purchase price
after 30 days.
a. Accounts receivable Sales
b. Accounts receivable Owner’s capital
c. Cash Sales
d. Cost of sales Accounts receivable

11. The business pays ₱1M rent in advance.

a. Rent expense Rent payable
b. Prepaid rent Accounts payable
c. Prepaid rent Cash
d. Rent expense Owner’s drawings

12. The business spends ₱1M in marketing and promoting the products.
a. Advertising expense Owner’s capital
b. Advertising expense Cash
c. Accounts receivable Equipment
d. Accounts payable Cash

13. The business collects ₱3M accounts receivable from a customer.

a. Cash Accounts receivable
b. Cash Accounts payable
c. Accounts receivable Sales
d. Cash Sales

14. The business purchases inventory costing ₱900K on account or on credit.

a. Cash Accounts payable
b. Inventory Cash
c. Inventory Accounts payable
d. Accounts payable Owner’s capital

15. The business pays accounts payable of ₱900K.

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a. Cash Sales
b. Inventory Cash
c. Inventory Accounts payable
d. Accounts payable Cash

16. Obtaining a loan results to

a. an increase in asset but a decrease in liability.
b. a decrease in asset but anincrease in liability.
c. increase in both asset and liability.
d. decrease in both asset and liability.

17. Liabilities, owners' equity, and income are

a. increased by credits and decreased by debits.
b. decreased by debits and increased by credits.
c. decreased by both debits and credits
d. its depen on the situation

18. The general ledger account that summarizes the detailed information in a subsidiary ledger is
known as a
a. summary account.
b. controlling account
c. balance sheet
d. any of these

19. If total assets is ₱100 while total liabilities is ₱80, owner’s equity must be
a. ₱180
b. ₱120
c. ₱20
d. My calcu is low bat

20. A business sells goods in Year 1 but collects the sale price only in Year 2. According to the
accrual basis and time period concepts, the business should include the sale in its income
statement in
a. Year 1
b. Year 2
c. Year 3
d. Every year

21. Debit and debit result to

a. addition.
b. deduction.
c. multiplication.
d. two debits.

22. Which of the following accounts is increased by debiting it?

a. Accounts payable
b. Equipment
c. Sales

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 d. Accumulated depreciation

23. At the beginning of the period, Entity A’snotes payable had a balance of ₱1,200. During the
period, Entity A obtained an additional loan of₱800 and made total payments of ₱500. How
much is the ending balance of Entity A’s notes payable?
a. 1,800
b. 1,500
c. 1,200
d. 900

24. Which of the following is not a special journal?

a. General Journal
b. Sales Journal
c. Purchase Journal
d. Cash Receipts Journal

25. A business sells goods on cash basis. This transaction is most likely recorded in which of the
following special journals?
a. Sales journal
b. Purchases journal
c. Cash receipts journal
d. Diary journal

26. Which of the following special journal is used when a business purchases inventoryon cash
basis?
a. Cash disbursements journal
b. Purchases journal
c. Inventory journal
d. Cash receipts journal

27. The beginning balance of “Cash” is placed on which side of the T-account?
a. Left side
b. Right side
c. Bottom side
d. Every side

28. Imagine you are a business manager. Your company has an opportunity to venture out into a
new market with a new product. However, your current resources are limited. In order to take
the opportunity, you need to discontinue the production of one of your existing products. Your
company’s accountant provided you with the following information to help you decide which
product to discontinue.

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  Product A Product B Product C

Net sales (income) 5,000,000 3,500,000 2,100,000
Attributable costs (expenses) (4,800,000) (2,275,000) (630,000)

Which product will you most likely consider to stop producing?

a. Product A
b. Product B
c. Product C
d. All them

29. If the ending balance of accounts payable is ₱100,000 and the total debits and credits to that
account during period were ₱60,000 and ₱40,000, respectively, the beginning balance must be
a. 0
b. 20,000
c. 80,000
d. 120,000

30. A business has total assets of ₱640,000 and total equity of ₱360,000 at the beginning of the
period. The business earns income of ₱220,000 during the period and reports profit of ₱80,000.
There were no transactions with the owner during the period. Total liabilities increased by
₱40,000 by the end of the period. How much is the total assets at the end of the period?
a. 560,000
b. 440,000
c. 860,000
d. 760,000

Use the following information for the next three questions:

Entity A started operations on November 1, 20x1. The following were the transactions during the
month:

Nov. 1, 20x1 The business owner provides ₱2,000,000 cash as investment to the business.
Nov. 5, 20x1 Entity A obtains a ₱500,000 loan and issues a promissory note.
Nov. 8, 20x1 Entity A acquires land costing ₱1,000,000 on cash basis.
Nov. 16, 20x1 Entity Arenders services worth ₱1,200,000 on account.
Nov. 30, 20x1 Entity Apays salaries expense of ₱280,000.

31. How much is the total assets at the end of the period? (Hint: use the basic accounting equation)
a. 4,320,000
b. 3,840,000
c. 3,420,000
d. 2,980,000

32. How much is the total liabilities at the end of the period?
a. 500,000
b. 520,000
c. 580,000

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 d. 680,000

33. How much is the equity at the end of the period after taking into account income and expenses?
a. 2,920,000
b. 2,980,000
c. 3,120,000
d. 3,280,000

34. On January 1, 20x1, Johnny Company acquires a building for ₱10M. The building is estimated to
have a useful life of 20 years. How much expense is recognized in 20x1 in relation to the
building?
a. 10,000,000
b. 1,000,000
c. 500,000
d. 0

35. The main purpose of accounting is

a. to account for money so it will not be lost.
b. to provide information that is useful in making economic decisions.
c. to safeguard the assets of a company.
d. to provide a clear view of the industry’s econ

36. This branch of accounting focuses on catering to the information needs of external users.
a. Management accounting
b. Financial accounting
c. Auditing
d. External accounting

37. Entity A’s income statement shows a line item described as “Cost of goods sold.” Entity A is
most likely a
a. service business.
b. merchandising business.
c. sole proprietorship business.
d. partnership business.

38. Under this concept, the business is treated separately from its owners.
a. Separate entity concept
b. Historical cost concept
c. Going concern
d. Matching principle

39. Which of the following statements regarding owner’s capital is not valid?
a. It is increased by investments to the business by the owner.
b. It is increased by income earned by the business.
c. It is increased by distributions to the owners (drawings by owners).
d. It is decreased by expenses incurred by the business.

40. Which of the following is a purpose of preparing an unadjusted trial balance?

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a. to facilitate the preparation of the financial statements

b. to provide reasonable assurance that all accountable events are recorded
c. to facilitate the preparation of adjusting entries
d. to provide reasonable assurance that all nominal accounts are zeroed-out

41. Which of the following does not describe an advantage of a partnership over the other forms of
business organizations?
a. “Two heads are better than one.”
b.“The more the merrier.”
c.Making business decisions may give rise to conflict among the partners.
d.Sharing of risk.

42. Entity A has accounts receivable of ₱500,000 and a related allowance for bad debts of ₱120,000.
How much is the carrying amount of the accounts receivable?
a. 620,000
b. 500,000
c. 480,000
d. 380,000

Instruction for the next twelve (12) questions: Choose the letter corresponding to the correct
journal entry for each of the transactions described.

43. Owner’s cash investment to the business.

Debit Credit
a. Cash Owner’s capital
b. Cash Owner’s drawings
c. Owner’s capital Cash
d. Cash Sales

44. Acquisition of equipment on cash basis.

Debit Credit
a. Cash Equipment
b. Expense Cash
c. Equipment Cash
d. Equipment Owner’s capital

45. Acquisition of inventory on cash basis

Debit Credit
a. Inventory Accounts payable
b. Expense Cash
c. Inventory Cash
d. Cost of sales Cash

46. Acquisition of inventory on credit.

Debit Credit
a. Inventory Accounts payable
b. Accounts payable Inventory
c. Accounts payable Cash

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 d. Cost of sales Accounts payable

47. Payment (settlement) of accounts payable

Debit Credit
a. Inventory Accounts payable
b. Cash Accounts payable
c. Accounts payable Cash
d. Cost of sales Inventory

48. Sale of inventory on cash basis

Debit Credit
a. Inventory Sales
b. Cash Accounts receivable
c. Cash Sales
d. Cost of sales Cash

49. Sale of inventory on credit

Debit Credit
a. Cost of sales Sales
b. Cash Accounts receivable
c. Cash Sales
d. Accounts receivable Sales

50. Collection of accounts receivable

Debit Credit
a. Cost of sales Sales
b. Cash Accounts receivable
c. Cash Sales
d. Accounts receivable Sales

51. Payment of advertising expense

Debit Credit
a. Advertising expense Cash
b. Cash Advertising expense
c. Cash Advertisement payable
d. Advertising expense Accounts payable

52. Owner’s drawings (owner’s withdrawal of cash from the business)

Debit Credit
a. Drawings expense Cash
b. Cash Owner’s drawings
c. Owner’s drawings Cash
d. Cash Owner’s capital

53. Recognition of depreciation

Debit Credit
a. Depreciation expense Cash
b. Depreciation expense Equipment

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c. Depreciation expense Accumulated depreciation

d. Accumulated depreciation Depreciation expense

54. Recognition of bad debts

Debit Credit
a. Bad debts expense Cash
b. Bad debts expense Accounts receivable
c. Bad debts expense Allowance for bad debts
d. Allowance for bad debts Bad debts expense

55. In a worksheet, which of the following is prepared after the unadjusted trial balance?
a. Adjusted trial balance columns
b. Income statement columns
c. Adjusting entries columns
d. Balance sheet columns

56. If total debits exceed total credits in the balance sheet columns of a worksheet, there is
a. profit.
b. loss.
c. owner’s drawings.
d. an error.

57. Adding amounts horizontally in a worksheet is called

a. Footing
b. Cross-footing
c. Cross-legging
d. Nosing

58. Which of the following is not a correct expanded accounting equation?

a. Assets = Liabilities + Equity + Income - Expenses
b. Assets + Expenses = Liabilities + Equity + Income
c. Assets – Liabilities = Equity + Income - Expenses
d. Assets = Liabilities + Equity + Income + Expenses

59. The financial statement that shows information on assets, liabilities and equity is the
a. balance statement.
b. income sheet.
c. balance sheet.
d. income statement.

60. This represents the unused portion of rentals that have been paid in advance.
a. Prepaid rent
b. Travel expense
c. Rent expense
d. Cost of sales

61. At the beginning of the period, Andy had a cash balance of ₱20,000 and a notes payable of
₱15,000. During the period, Andy collected ₱11,000 accounts receivable, paid ₱8,000 notes

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 payable, and issued additional notes payable of ₱5,000 in exchange for cash. How much are the
ending balances of cash and notes payable, respectively?
Cash Notes payable
a. 17,000 20,000
b. 20,000 12,000
c. 28,000 12,000
d. 36,000 20,000

62. The balance of accumulated depreciation in Entity A’s unadjusted trial balance is ₱100,000. If the
adjustments columns in the worksheet show a debit adjustment of ₱20,000, how much is the
balance of accumulated depreciation that is extended to the adjusted trial balance columns of the
worksheet?
a. 80,000
b. 100,000
c. 120,000
d. 0

63. When preparing closing entries, which of the following accounts is debited when closing to the
“Income summary” account?
a. Depreciation expense
b. Owner’s drawings
c. Sales
d. Salaries payable

64. If the “Income summary” account has a credit balance after all income and expense accounts are
closed, there is
a. profit.
b. loss.
c. owner’s drawings.
d. an error.

65. Which of the following adjustments can be reversed in the next accounting period?
a. Adjusting entry to take up depreciation expense
b. Adjusting entry to record bad debts expense
c. Adjusting entry to record accrued interest income
d. All of these

66. Which of the following is not an adjusting entry?

a. An entry to take up bad debts expense at the end of the period.
b. An entry to take up depreciation expense for the period.
c. An entry to recognize interest expense for the period.
d. An entry to record the cash acquisition of equipment.

67. Entity A received a 12%, ₱200,000, one-year, note receivable on October 1, 20x1. Entity A uses a
calendar year period. The principal and interest on the note are due on October 1, 20x2. How
much is the interest income to be accrued on December 31, 20x1?
a. 24,000
b. 12,000

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c. 6,000
d. 0

68. Accounts are listed in the trial balance in this sequence.

a. Asset, Liabilities, Equity, Expense, and Income
b. Asset, Equity, Liabilities, Expense, and Income
c. Asset, Liabilities, Equity, Income, and Expense
d. Asset, Expense, Liabilities, Equity, and Income

69. At the beginning of the period, a business has a cash balance of ₱20,000. During the period, total
cash collections and total cash payments amounted to ₱100,000 and ₱70,000, respectively. How
much is the ending balance of cash?
a. 10,000
b. 30,000
c. 50,000
d. 70,000

70. At the beginning of the period, a business has accounts payable of ₱200,000. During the period,
the total debits and credits to the accounts payable account were ₱100,000 and ₱70,000,
respectively. How much is the ending balance of accounts payable?
a. 230,000
b. 170,000
c. 370,000
d. 30,000

71. At the beginning of the period, the owner’s capital account of a business has a balance of
₱220,000. During the period, the total debits and credits to that account were ₱60,000 and
₱70,000, respectively. How much is the ending balance of the owner’s capital account?
a. 230,000
b. 210,000
c. 350,000
d. 90,000

72. If the ending balance of accounts receivable is ₱100,000 and the total debits and credits to that
account during period were ₱60,000 and ₱40,000, respectively, the beginning balance must be
a. 0
b. 20,000
c. 80,000
d. 120,000

73. The equipment of ABC Co. has a historical cost of ₱500,000 and an accumulated depreciation of
₱120,000. How much is the carrying amount of the equipment?
a. 620,000
b. 500,000
c. 480,000
d. 380,000

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74. Imagine you are a business manager of a manufacturing company. Your company’s
manufacturing process involves four (4) stages. The first stage takes most of the manufacturing
time and costs and is the bottleneck (i.e., obstacle, hindrance or handicap) in the manufacturing
process. The demand for your product is high and your company can sell all that it can produce.
Your predicament now is your productive capacity.

You want to streamline the first stage and came up with two proposals. Each of those proposals
decreases the manufacturing time but entails additional costs, such as additional investment in
new machines and employment of additional personnel. Your accountant prepared the
following cost analysis to help you decide which of those proposals to implement:

  Existing set-up Proposal #1 Proposal #2

Units of production 4,000 4,400 5,300
Manufacturing time (in days) 30 30 30
Attributable costs 1,000,000 1,249,600 1,346,200
Sale price per unit 450 450 450

So what is your decision? (Hint: Prepare pro-forma statements of profit for each of the proposals,
including the existing set-up.)
a. Implement Proposal #1
b. Implement Proposal #2
c. Retain the existing set-up
d. This is too difficult for me. I’m quitting my job.

75. Who invented the calculator?

a. Wency Giron
b. Albert Einstein
c. Juan Ponce Enrile
d. Blaise Pascal

“I press on toward the goal to win the prize for which God has called me heavenward in Christ
Jesus.”(Philippians 3:14)

- END –

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