MOCK QUIZ

1. Which of the following is considered as an asset to be presented in the statement of

financial position?
a. Prepaid insurance expense
b. Accrued rent expense
c. Unearned revenue from customers
d. Advances from customers

2. On January 1, 2020 Mr. AB Cruz started his service business. The following are the
transactions during the month of January:
a. On January 1, 2020, Mr. Cruz contributed his personal savings of PHP100,000 to the
business.
b. Bought Office Supplies for PHP10,000 on account on January 15, 2020.
c. Purchase Office Equipment for PHP20,000 on January 16, 2020, Mr. Cruz paid
PHP5,000 and the balance on account.
d. On January 31, 2020, Mr. Cruz is in need of cash so he withdrew PHP2,000 cash from
the business.

Required: The total of cash account as of January 31, 2020 is: 93,000

3. There are only three elements of financial statements mentioned in the Framework: assets,
liabilities and equity.
a. True
b. False

4. On January 1, 2020 Mr. AB Cruz started his service business. The following are the
transactions during the month of January:
a. On January 1, 2020, Mr. Cruz contributed his personal savings of PHP100,000 to the
business.
b. Bought Office Supplies for PHP10,000 on account on January 15, 2020.
c. Purchase Office Equipment for PHP20,000 on January 16, 2020, Mr. Cruz paid
PHP5,000 and the balance on account.
d. On January 31, 2020, Mr. Cruz is in need of cash so he withdrew PHP2,000 cash from
the business.

Required: The total equity (Cruz, Capital account) as of January 31, 2020 is: 98,000

5. A ____________________ is an evidence of a business transaction such as official receipt,

cash voucher and invoice.
Answer: SOURCE DOCUMENT OR BUSINESS DOCUMENT

6. ____________________ is a financial report prepared to show financial performance of the

business.
Answer: INCOME STATEMENT

7. The company’s assets are P12,000,000 of which 1/3 represents owner’s equity. How much
is total liabilities?
a. P6,000,000
b. P8,000,000
c. P5,000,000
d. P4,000,000

8. Identify which statement does not correctly describe net income:

a. It affects the statement of financial position
b. It appears in the income statement
c. It is the excess of expenses over revenues
d. It appears in the statement of owner’s equity

9. Accounting is considered the ___________________ of business because it communicates

relevant financial information to decision-makers.
Answer: LANGUAGE

10. A set of moral values and principles that is required of a professional so that the reports
submitted can be trusted by the users is called ________________.
Answer: ETHICS

11. Passing the CPA Board Exams is a requirement in order to join the accountancy profession
in the Philippines.
a. True
b. False

12. On January 1, 2020 Mr. AB Cruz started his service business. The following are the
transactions during the month of January:
a. On January 1, 2020, Mr. Cruz contributed his personal savings of PHP100,000 to the
business.
b. Bought Office Supplies for PHP10,000 on account on January 15, 2020.
c. Purchase Office Equipment for PHP20,000 on January 16, 2020, Mr. Cruz paid
PHP5,000 and the balance on account.
d. On January 31, 2020, Mr. Cruz is in need of cash so he withdrew PHP2,000 cash from
the business.

Required: The total assets of the business as of January 31, 2020 is: 128,000

13. The right side of an account is referred to as a

a. Debit
b. Credit
c. Balance
 d. Footing

14. For every debit (Dr.) entry, there must be a corresponding credit (Cr.) entry. The accounting
equation must always be maintained.
a. True
b. False

15. On January 1, 2020 Mr. AB Cruz started his service business. The following are the
transactions during the month of January:
a. On January 1, 2020, Mr. Cruz contributed his personal savings of PHP100,000 to the
business.
b. Bought Office Supplies for PHP10,000 on account on January 15, 2020.
c. Purchase Office Equipment for PHP20,000 on January 16, 2020, Mr. Cruz paid
PHP5,000 and the balance on account.
d. On January 31, 2020, Mr. Cruz is in need of cash so he withdrew PHP2,000 cash from
the business.

Required: The total liability of the business as of January 31, 2020 is: 15,000

16. ____________________ is a disadvantage from the viewpoint of owners/investors because

once business becomes insolvent , the creditor can attach their personal properties.
Answer: UNLIMITED LIABILITY

17. Investment made by the owner will

a. Increase both assets and owner’s equity
b. decrease both assets and owner’s equity
c. Increase both assets and liabilities
d. decrease both assets and liabilities

18. On January 1, 2020 Mr. AB Cruz started his service business. The following are the
transactions during the month of January:
a. On January 1, 2020, Mr. Cruz contributed his personal savings of PHP100,000 to the
business.
b. Bought Office Supplies for PHP10,000 on account on January 15, 2020.
c. Purchase Office Equipment for PHP20,000 on January 16, 2020, Mr. Cruz paid
PHP5,000 and the balance on account.
d. On January 31, 2020, Mr. Cruz is in need of cash so he withdrew PHP2,000 cash from
the business.

Required: The net assets as of January 31, 2020 is: 98,000

19. Management accounting is concerned primarily with external reporting.

a. True
b. False
20. Unpaid water bill was not recorded. Which of the following is correct?
a. Owner’s equity will be overstated
b. Expenses will be overstated
c. Liabilities will not be affected
d. Assets will be affected

21. Users of financial statements include: the primary users (existing and potential investors,
lenders and other creditors) and other users such as employees, management, government
and their agencies, and the public.
a. True
b. False

QUIZ 1

1. Because of his book in 1494 entitled “Summa de Arithmetica, Geometria, Proportioni et

Proportionalita”, Friar Luca Pacioli was considered the father of Double-Entry Bookkeeping.
a. True
b. False

2. The assets of the business at the start of the month is P1,000,000 and the owner’s equity is
P800,000. Equipment worth P500,000 were purchased during the month of which only
P150,000 were paid for. At the end of the month, owner’s equity will become
a. P1,000,000
b. P800,000
c. P550,000
d. P1,150,000

3. Credits are used to record increases in:

a. Assets, revenues, liabilities, and owner’s equity
b. Expenses, liabilities, and owner’s equity
c. Revenues, expenses, and assets
d. Revenues, liabilities, owner’s equity

4-11. This problem contains 8 questions.

KJ Santos has just begun a new small repair business which he named KJ Car Repair Shop,
and the following were the transactions completed by the business in September, 2020.

1 – Mr. Santos withdrew his personal bank deposit from Security Bank amounting to P575,000
and began his business by investing the amount of P500,000.
3 – Purchased repair equipment costing P275,000 on account from Banawe Trading.
6 – Purchase of office supplies, P7,000, on account.
8 – Completed repair work to customer, P50,000 and out of this amount, P30,000 has been
collected.
12 – Completed repair work on credit for Jerry Musni, P50,700.
15 – Paid semi-monthly salary of Jun, KJ’s automotive specialist, P8,500.
18 – Partial payment of P137,500 for the September 3 purchase of repair equipment.
22 – Collection of P128,000 cash from various customers for repair services rendered.
23 – Billed customers for services rendered amounting to P48,000.
25 – Mr. Santos withdrew P25,000 cash from the business to pay personal expenses.
26 – Paid 50% of the September 6 purchase of office supplies.
27 – Collections from clients amounting to P23,250, for billings dated September 23.
28 – Receipt of billing from MERALCO, P21,000 for the utility expense of KJ Car Repair Shop.
The bill will be paid in October.
29 – Paid P8,000 for the monthly rental on the shop space.
30 – Paid September 16-30 salary of Jun amounting to P8,500.

Required: Analyze the above business transactions to describe the effects on the accounting
equation. Use T-accounts and give the final balances of the accounting elements to answer the
questions.

Use the following accounts: Cash, Accounts Receivable, Office Supplies, Repair Equipment,
Accounts Payable, KJ Santos, Capital, KJ Santos, Drawings, Service Income, Salary Expense,
Utility Expense and Rent Expense.

What is the balance of accounts payable as of September 30, 2020? Answer: 162,000
What is the balance of accounts receivable as of September 30, 2020? Answer: 95,450
What is the balance of the cash account based on the foregoing transactions? Answer: 490,250
How much is the profit for September? Answer: 230,700
How much is the cash flows from operating activities? Answer: 152,750
How much is the total service income? Answer: 276,700
What is the ending capital account of Mr. KJ Santos? Answer: 705,700
How much is the total assets of KJ Car Repair Shop as of September 30, 2020? Answer: 867,700

12. Who is primarily responsible for the financial statements?

a. The accountant
b. Company’s management
c. The company’s auditor
d. The Philippine Securities and Exchange Commission

13. The basic accounting equation principle dictates that a business owner’s personal expenses
should not be recorded on the books of the business.
a. True
b. False

14. Income and expenses are the elements that relate to financial position.
a. True
b. False
15. The owner of the grocery store took home a loaf of bread and a bottle of milk from the
grocery’s shelf was not recorded by the accountant. This
a. will understate the assets of the business
b. will overstate assets and owner’s equity
c. is not a business transaction.
d. will understate assets and owner’s equity

16. Prepaid expense is an example of a nominal account.

a. True
b. False

17. Unlike expenses, liabilities and owner’s equity are on the right side of the accounting
equation. Increases in expenses are recorded as debits and decreases are entered as
credits.
a. True
b. False

18. A complete set of financial statements include: the statement of financial position, statement
of comprehensive income, statement of changes in equity, and statement of cash flows.
a. True
b. False

19. The following transactions occurred during the month of September:

Paid P1,500 cash for store equipment.

Paid P1,000 in partial payment of store supplies purchased 30 days previously.
Paid October’s utility bill of P600.
Paid P1,200 to owner of the business for his personal use
Paid P1,400 salary of office employee for September

What was the amount of expenses during September?

a. P3,500
b. P4,500
c. P3,000
d. P2,000

20. A customer brought his car to your repair shop and after the work was done he made a cash
payment of P10,000 representing 50% of the repair bill and then issued a note for the
balance of P10,000 promising to pay after one month. The accountant immediately recorded
P20,000 as revenue of the repair shop. This supports the principle of
a. Objectivity
b. Accrual
c. Cost
d. Matching
21. Government accounting encompasses the process of analyzing, classifying, summarizing
and communicating all transactions involving the receipt and disposition of government
funds and property and interpreting the results thereof.
a. True
b. False

22. Net income which increases owner’s equity is considered a recovery on capital while Cash
withdrawn by the owner is considered a recovery of capital.
a. True
b. False

23. At the beginning of the year, the liabilities of DGP Advertising amounted to P120,000 but it
decreased by P50,000 during the year. The assets increased by P160,000 during the year
and at the end of the year amounted to P360,000. The owner’s equity at the start of the year
is
a. P240,000
b. P1,060,000
c. P80,000
d. P260,000

24. The financial structure may be stated in the following accounting equation, except
a. Assets = Owner’s Equity
b. Assets = Claims of Creditors and Owners
c. Assets – Creditors’ Claims = Owner’s Equity
d. Assets = Liabilities

25. The objective of financial statements is to provide all the information that users may need in
making decisions.
a. True
b. False

26. Additional information that is relevant to the needs of users about the items in the balance
sheet and income statement are presented on the face of the financial statements or in the
notes to the financial statements.
a. True
b. False

27. The following statements relate to the scope of practice of accountancy. Which one
constitutes in public practice?
a. A person involved in decision-making requiring professional knowledge in the science of
accounting, as well as the accounting aspects of finance and taxation, or is employed in
a position that requires a CPA.
 b. A person who is in an educational institution which involves teaching of accounting,
auditing, advanced accounting, accounting aspect of finance, taxation, and other
technically-related subjects.
c. A person who holds, or is appointed to a position in an accounting professional group in
government or in a government-owned and/or controlled corporation, where decision-
making requires professional knowledge in the science of accounting.
d. A person who holds out himself or herself as one skilled in the knowledge,
science and practice of accounting, and as someone qualified to render
professional services as CPA.

28. Debit refers to the left side of an account and credit means the right side. To debit means to
increase while to credit means to decrease.
a. True
b. False

29. Ben Watch Repair Services has a total assets on January 1, 2019 totaled P70,000, and its
liabilities amounted to P40,000. Net income for the period was P24,000 and owner’s
withdrawals amounted to P25,000. At December 31, 2019, assets totaled P90,000, and
liabilities amounted to P57,000. What is the amount of additional investment during the
period?
a. P2,000
b. P4,000
c. P3,000
d. P-0-

30. Bookkeeping is the procedural or mechanical aspect of accounting while Accounting is

conceptual that includes the interpretation of information recorded under bookkeeping.
a. True
b. False

31. Income is an increase in assets or decrease in liability that results in increase in equity other
than that relating to contribution from the owner.
a. True
b. False

32. The following data were extracted from the records of Zulueta Legal Consultancy:

Owner, Capital, August 1, 2020 P57,000

Total expenses during August P27,900
Withdrawals during the month P15,750
Owner, Capital, August 31, 2020 P63,300

How much was the total revenues during August, 2020?

a. P29,100
 b. P47,550
c. P49,950
d. P46.350

33. A transaction caused a P50,000 decrease in total assets. This could have been due to a
purchase of equipment for cash.
a. True
b. False

34. Payment of owner’s liability out of the cash of the business decreases both assets and
liabilities.
a. True
b. False

35. A current liability is an obligation that:

a. Will be reported as an expense within the year or operating cycle that follows the
balance sheet date, whichever is longer.
b. Is expected to require the use of current assets or the creation of another current
liability to liquidate it.
c. Was paid during the current period
d. Will be converted to a long-term liability within the next year

36. If on September 1, 2020, Michael J. rendered services for a customer in exchange for
P7,500 cash. What would be the effects on the accounting equation?
a. Assets, no effect; Liabilities, P7,500 decrease; Owner’s equity, P7,500 increase
b. Assets, P7,500 increase; Liabilities, no effect; Owner’s equity, P7,500 increase
c. Assets, P7,500 increase; Liabilities, P7,500 increase; Owner’s equity, no effect
d. Assets, P7,500 increase; Liabilities, P7,500 decrease; Owner’s equity, P15,000 increase

37. Referral Fee was given to a doctor for bringing his patients for laboratory exam at Medex
Laboratories. Referral Expense and Laboratory Fees are both recorded by Medex. The
method of recording expense and revenue supports the principle of
a. Matching
b. Materiality
c. Cost
d. Accrual

38. As of January 1, 2019, ALLAN LAUNDRY SERVICES had a total assets of P500,000 and
total owner’s equity of P280,000. During 2019, total assets decreased P40,000, and total
liabilities decreased P22,000. What was the total owner’s equity on December 31, 2019?
a. P262,000
b. P280,000
c. P18,000
d. P298,000
39. Bien D., had a capital balance of P12,300 on June 30, 2020 and P23,800 on July 31, 2020.
Net income for the month of July was P14,000. What were the owner’s withdrawals during
July?
a. P2,500
b. P22,100
c. P25,500
d. P11,500

40. One of the following is found in the heading of an income statement:

a. As of 5:30 in the afternoon of December 31, 2019
b. For the year ended December 31, 2019
c. As at December 31, 2019
d. December 31, 2019

41. Which of the following statements best describes the matching principle?
a. Total debits to expense accounts should equal total credits to revenues accounts
b. Total debits must be matched with total credits in the ledger accounts
c. Expenses should be recognized in the same period that the related revenues are
recognized
d. Amounts on the balance sheet must be matched with amounts reported on the income
statement

42. The International Accounting Standards Board (IASB) issues accounting standards called
Philippine Financial Reporting Standards (PFRS) which include Philippine Accounting
Standards (PAS), Philippine Financial Reporting Standards (PFRS) and Philippine
Interpretations developed by the Philippine Interpretations Committee.
a. True
b. False

43. The ability of the business to pay for its long-term obligations is an indication that the
business is solvent.
a. True
b. False

44. A manufacturing business cannot be organized by a sole proprietor because sole

proprietorship may not have several employees.
a. True
b. False

45. The normal balance is the usual balance of an account assuming proper accounting has
been made. It is normal that some of the asset accounts may have a credit balance at the
end of the accounting period.
 a. True
b. False

46. Accounting is a profession mainly because of three attributes: mastery of a particular

intellectual skill; adoption of a common code of values or conduct; and acceptance of a duty
or responsibility to society.
a. True
b. False

47. Which of the following transactions does not affect the owner’s equity in a sole
proprietorship?
a. Cash receipts for unearned revenues
b. Cash payments for expenses
c. Withdrawals of cash or other assets by the owner
d. Cash receipts for revenues

48. Which of the following statements is associated with the accrual basis of accounting?
a. This method is used less frequently by businesses than the cash method of accounting
b. Revenues are recognized in the period they are earned, regardless of the time
period the cash is received
c. The timing of cash receipts and disbursements is emphasized
d. A minimum amount of record keeping is required