POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

COLLEGE OF ACCOUNTANCY AND FINANCE

This will serve as self assessment. Answer it by yourself
and find out your knowledge in the completion of
the accounting process. Goodluck everyone and
happy answering!!!

TRUE OR FALSE. Shade A if the statement is True and C if the Statement is False.
1. Auditing is the independent examination of the financial statements of a company and expressing
an opinion as to the accuracy of the calculations of the bookkeeper.
2. The expense recognition principle which requires that costs and expenses incurred in generating the
revenue should be properly matched against the related revenue to come up with the net income or
loss is known as the Time period assumption.
3. Depreciation causes the decline of various assets including Land, Building and Equipment due to
passage of time.
4. Assets for a period shall remain the same if the liabilities increased by P10,000 while capital
decreased by P20,000.
5. A credit to the unearned professional fees accounts denotes an increase in the revenue account.
6. Transactions such as the receipt of a utility bill is not recorded on the books of a company on the
basis that payment has not been made yet.
7. Double entry bookkeeping is the recording of journal entries with two or more debits and or credits.
8. The difference in the totals of the debits and credits of a trial balance after committing the slide error
will always be divisible by 9.
9. An entry was erroneously recorded twice, therefore the trial balance will not have equal amounts
10. Worksheets are optional tools to simplify the preparation of Financial statements.
11. Correcting entries and adjusting are one and the same.
12. The book value of a depreciable asset is the difference after the accumulated depreciation is
deducted from its asset purchase price.
13. Accounting for deferred items includes adjustment for a previous account such as Accounts
Receivable.
14. Closing entries are made at the end of an accounting period to bring the balances of nominal
accounts to zero in preparation for the next accounting period.
15. Adjusting entries for accrued expenses and accrued revenue are accounts that are to be reversed at
the option of the company accountant and/or management.
16. The income summary account is a real account used to close the Revenue, Expense and drawing
account of a company.
17. The overstatement of merchandise inventory, end will overstate the Net income for the same period.
18. A credit memorandum is issued by the seller as evidence for the returns made by the buyer of
merchandise.
19. FOB Shipping point refer to the delivery agreement where the buyer is obliged to pay for the
shipment and shall report the cost as his expense.
20. Cost of goods sold refers to the total available merchandise than can be sold less the inventory left
unsold.
21. When using special journals, adjustments involving selling expenses will be recorded in the sales
journal.
22. The return of merchandise previously purchased on account will be reflected in the Purchases
Journal.
23. Deposits in transit are collections already recorded in the depositor’s books but not yet credited by
the bank.
24. To replenish a petty cash fund debit Petty Cash Fund and credit Cash in Bank.
25. All businesses are taxed with an income tax rate of 30% of Net Income.

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 PROBLEMS. Choose the letter of the best answer.
26. On December 1, 2018, a client advanced P 80,000 for services to be rendered first quarter of 2019. The
liability method was used to record the collection of the said amount. What amount is recognized as revenue
for the year 2018?
A. P80,000 B. P0 C. P20,000 D. P60,000

Data for item nos. 27 to 29

At the end of March 2018, the first quarter of operations, the following selected data were taken from the
financial records of Lacoste Company:
First Quarter profit P 39,750
Total Assets as of March 31, 2018 189,700
Total liabilities as of March 31, 2018 20,200
In preparing the financial statements, the following adjustments were overlooked:
❖ Supplies used during the first quarter, P 1,750
❖ Unbilled fees earned at March 31, 2018, P 2,900
❖ Depreciation of equipment for the quarter, P 2,500
❖ Accrued salaries at March 31, 2018, P 1,500
27. How much is the adjusted amount of profit for the first quarter ending March 31, 2018?
A. P38,400 B. P38,650 C. P36,900 D. P34,000

28. How much is the adjusted amount of assets?

A. P190,850 B. P188,350 C. P185,450 D. P186,850

29. How much is the adjusted balance of the capital account?

A. P166,650 B. P169,500 C. P206,400 D. P209,250

30. Elizabeth Arden, owner of an apartment building, had a tenant who only paid P 25,500 for a three
months rent on September 1, 2018. As of December 31, 2018, the tenant is still using the apartment. The
entry to record the adjustment as of December 31, 2018 includes
A. a debit to Prepaid Rent of 8,500 C. a credit to Unearned Rent of P 8,500
B. a debit to Rent Income of P 8,500 D. a credit to Rent Income of P 8,500

31. Lanvin Company obtained a loan from PN Bank amounting to P 750,000 on November 21, 2018. On
the same date, the company issued a 60 day, 12% promissory note to the bank. Upon closing of the
company’s book on December 31, 2018, adjustment for accrued interest expense must be prepared in the
amount of (assume a 360-day a year)
A. P12,000 B. P60,000 C. P10,000 D. P15,000

32. Insurance expense account has a balance of P 108,000 before adjustment. This amount represents
insurance premium for three months beginning November 1, 2018. Based on these data, the Prepaid
Insurance that should be reported in the December 31, 2018 statement of financial position is
A. P0 B. P36,000 C. P72,000 D. P108,000

33. Rent Income account has a credit balance of P 240,000 composed of the following:
❖ Rental for three months ending March 31, 2018, P 45,000
❖ A credit of P 195,000 representing advance rental payment for one year beginning April 1, 2018
The Dec. 31, 2018 adjusting entry will require a debit to Rent Income and a credit to Unearned Rent of
A. P45,000 B. P48,750 C. P191,250 D. P195,000

34. The following information pertains to Polo Company’s accounts receivable at December 31, 2018.
Days Outstanding Amount % Uncollectible
0-60 P 1,200,000 1%
61-120 900,000 2%
Over 120 1,000,000 6%
Polo Company’s Allowance for Bad Debts has a P 10,000 debit balance before adjustment on December
31, 2018. How much is the Bad Debts expense for 2018?
A. P30,000 B. P100,000 C. P80,000 D. P90,000

35. Using data in number 34, how much is the Allowance for bad Debts to be shown in the Statement of
Financial Position as of December 31, 2018?

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 A. P100,000 B. P90,000 C. P120,000 D. P170,000
36. Before the year end adjustments were made, Victoria Company has a net income amount of P319,470.
Adjustments are necessary for the following items:
❖ Of the P1,200 Insurance expense account, P450 is still unexpired
❖ Fees earned but not yet billed as of year end, P27,840
❖ Of the P9,850 Unearned Income account, P2,600 has already been earned
❖ Depreciation amounting to P8,440
After the necessary adjustments had been made, how much is the adjusted net income?
A. P340,720 B. P342,220 C. P 336,720 D. P 341,920

37. In preparing its 2018 adjusting journal entry, the bookkeeper omitted to adjust prepaid insurance for the
amount of insurance expired for the period. As a result
A. Net income is understated, capital is understated and asset is understated
B. Net income is overstated, capital is overstated and asset is correct
C. Net income is overstated, capital is overstated and asset is overstated
D. Net income is understated, capital is understated and asset overstated

38. Dior Co. subleased a portion of its office space to a tenant beginning May 1, 2018. The tenant is required
to pay a one year’s rent in advance of P 600,000. Dior reports on a calendar year basis. How much is the
unearned rent revenue as of December 31, 2018?
A. P400,000 B. P200,000 C. P600,000 D. P50,000

39. Zara Company’s three employees earned a total of P 3,000 per day. They are paid each Friday for a five
day workweek that begins on Monday. The next payment for five days’ work will be January 2, 2019. The
employees worked five days until January 2, 2019 (payday). The accrued wages as of December 31, 2018
is
A. P15,000 B. P3,000 C. P9,000 D. P6,000

40. Salaries expense of P 25,000 was erroneously credited while Prepaid rent was understated by P 3,300.
The total debits in the trial balance was P 340,000. After correcting the trial balance, the total debits in the
trial balance will be
A. P368,300 B. P393,300 C. P343,300 D. P340,000

Data for item nos. 41 to 44

At December 31, 2018, Mr. Andres Cruz, a sole proprietor engaged in service business has the following
account balances:
Cash 400,000
Accounts Receivables 280,000
Supplies 100,000
Prepaid Insurance 60,000
Equipment 100,000
Accounts Payable 450,000
Notes Payable 200,000
Cruz, Drawing 120,000
Cruz, Capital 390,000
Service Revenue 200,000
Salary Expense 80,000
Utilities Expense 55,000
Miscellaneous Expense 45,000
Additional data:
❖ The equipment was purchased on June 30, 2018 with an estimated useful life of 5 years.
❖ The insurance premium covering one-year period was paid on May 1, 2018.
❖ Accrued salaries at December 31, 2018, P2,500
41. How much is the net income or net loss on December 31, 2018?
A. P20,000 B. P22,500 C. (P22,500) D. (P32,500)

42. How much is the total debits of the adjusted trial balance at December 31, 2018?
A. P1,240,000 B. P1,242,500 C. P1,252,500 D. P1,262,500

43. How much is the total credits in the Balance Sheet column on the worksheet at Dec. 31, 2018?
A. P1,052,500 B. P1,050,500 C. P1,020,500 D. P1,062,500

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44. How much is the Cruz, Capital at December 31, 2018?
A. P237,500 B. P242,500 C. P250,000 D. P252,500

45. Supplies has a P60,000 unadjusted balance on your trial balance. At year-end you count supplies of
P20,000. What adjustment will appear on your worksheet?
A. Supplies 40, 000
Supplies Expense 40, 000
B. Supplies Expense 20. 000
Supplies 20, 000
C. Supplies Expense 40, 000
Supplies 40, 000
D. No adjustment is needed because the Supplies account already has a correct balance.

46. Beam Company has a P180,000, 10%, 120-day note receivable outstanding on December 31. The note
is dated December 1, 2017. What is the reversing entry on January 1, 2018?
A. Debit Interest Revenue and credit Interest Receivable, P1,500
B. Debit Interest Receivable and credit Interest Revenue, P1,500
C. Debit Interest Revenue and credit Interest Receivable, P4,500
D. Debit Interest Receivable and credit Interest Revenue, P4,500

47. What is the final closing entry for a proprietorship?

A. Owner, Drawing xxx C. Owner, Capital xxx
Owner, Capital xxx Owner, Drawing xxx

B. Service Revenue xxx D. Income Summary xxx

Income Summary xxx Expenses xxx

48. What is the closing entry for Salary Expense with a balance of P24,000?
A. Salaries Expense 24,000 C. Income Summary 24,000
Income Summary 24,000 Salaries Expense 24,000

B. Salaries Expense 24,000 D. Salaries Payable 24,000

Salaries Payable 24,000 Salaries Expense 24,000

49. The profit is P250,000 for the current year. The owner withdrew P30,000 per month for personal living
expenses. The owner’s capital account will show a net
A. decrease of P110,000 C. decrease of P360,000
B. increase of P610,000 D. increase of P220,000

50. The balance sheet of ABC Company shows owner’s equity of P680,000, which is equal to 2/3 of the
amount of total assets. What is the amount of the total assets?
A. P453,333 B. P1,133,333 C. P1,000,000 D. P1,020,000

51. On October 1, Adobo Company purchased P6,000 worth of goods on terms of 2/15,n/30. Freight of
P500 was prepaid by the seller under the term FOB shipping point. Goods worth P1,000 were returned on
October 2 and the account was paid on October 3. The discount received from the seller was
A. P100 B. P110 C. P90 D. 120

52. Using the information of Adobo Company, how much is the net cost of purchases?
A. P4,900 B. P5,400 C. P5,900 D. P4,880

53. Sinigang Appliance Store purchased appliance worth P200,000 and got a trade discount of P4,000.
The accountant should
A. debit to Purchase discount for P4,000 and debit to Purchases for P196,000
B. debit to Purchase discount for P4,000 and debut to Accounts payable for P196,000
C. debit to Purchases for P200,000
D. debit to Purchases for P196,000

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54. Mechado Company, the buyer, received an invoice for P60,000, inclusive of 12% VAT dated November
2. If the terms are 2/10, n/30 and the buyer paid the invoice within the discount period, what amount will
the seller receive?
A. P58,656 B. P53,571 C. P52,500 D. P58,800

55. Sisig store purchased goods worth P150,000. Half of which were sold at a mark-up of 40% on cost. The
gross profit is amounted to
A. P60,000 B. P30,000 C. P75,000 D. P45,000

Data for item nos. 56 and 57

Beef Steak Company
Adjusted Trial Balance
For the Period Ended December 31, 2018

Account Title Debit Credit

Sales P1,652,000
Sales returns and allowances P35,000
Sales discount 13,000
Purchases 1,120,500
Purchase returns and allowances 70,000
Purchase discount 18,000
Freight in 36,000
Selling expense 55,000
Gen and administrative expense 40,000
Total P2,322,000 P2,322,000
56. Beginning and ending balance of Merchandise Inventory amounted to P 56,500 and P65,500
respectively. How much is the net sales?
A. P1,604,000 B. P1,617,000 C. P1,652,000 D. P1,700,000

57. How much is the net income?

A. P449,500 B. P361,500 C. P485,500 D. P384,000

58. The balances of the following accounts were closed to the Income Summary account: Salary Expense,
P50,000; Cost of Goods Sold, P180,000; Utilities Expense, P25,000; Sales, P200,000; Interest expense,
P10,000. The amount of the entry to close Income Summary to the capital account would be
A. P65,000 cr to the Income Summary account
B. P55,000 dr to the Income Summary account
C. P155,000 dr to the Income Summary account
D. P210,000 cr to the Income Summary account

Please refer to below table for the data of item nos. 59 and 60
Item Caldereta Item Tocino
Invoice Date July 2, 2018 Oct. 12, 2018
Catalog Price per item P120,000 P230,000
Quantity Ordered 8 5
Trade Discount 1 5% 10%
Trade Discount 2 10% 15%
Trade Discount 3 15%
Credit Term 2/10, n/30 3/15, n/30
Date Paid July 31, 2018 Oct. 26, 2018
59. How much is the invoice price of item Caldereta?
A. P87,210 B. P120,000 C. P697,680 D. P960,000

60. How much is the total cash to be paid for item Tocino?
A. P1,115,500 B. P853,358 C. P879,750 D. P1,150,000

61. Siomai Company purchased goods worth P7,500. Term: n/30, FOB Shipping point, freight prepaid.
The entry of Siomai if freight amounted to P500 is
A. debit Purchases P7,500 and credit Accounts Payable P7,500
B. debit Purchases P7,500 , debit Freight-in P500 and credit Accounts payable P8,000

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 C. debit Purchases P7,000, debit Freight-in P500 and credit Accounts payable P7,500
D. debit Purchases P7,500, debit Freight-in P500, credit Cash P500 and credit Accounts payable
P7,500
62. Net sales amounted to P50,000 with cost of representing 75%. If operating expenses is 10% of sales,
the net income will be
A. P5,000 B. P7,500 C. P12,500 D. P17,500

63. On March 30, Shanghai Hardware received a check from a customer for the payment of an invoice
dated March 22 amounting to P6,000. The credit term given was 1/10, n/45. On March 25, the customer
returned P600 of the merchandise because it was defective. How would this transaction be recorded in
Shanghai’s cash receipt journals?
A. Cash P5,400; Sales returns P600; Accounts receivable, P6,000.
B. Cash P5,940; Sales Discounts, P60; Accounts receivable P6,000.
C. Cash P5,346; Sales discounts, P54; Accounts receivable, P5,400.
D. Cash P6,000; Accounts receivable P6,000.

64. The Cash Receipts Journal of the Meatballs Company shows the following accounts and account
balances:
❖ Sales P 125,000
❖ Accounts receivable 65,000
❖ Sundry accounts (credit) 1,802,650
❖ Sales discount ?
If sales discount is 4% of sales balance, how much is the cash balance per cash receipts journal?
A. P1,737,650 B. P1,987,650 C. P 1,992,650 D. P 1,857,650

65. The end-of-the month balance in Igado’s cash disbursement journal “Sundry Account” column is
P19,870. How will the column be posted and what is the posting reference will be entered?
A. The total will be posted to cash as a credit, and the cash general ledger account number is the
posting reference.
B. The individual item is posted rather than total amount and an account number is entered as a
posting reference.
C. The total will not be posted and there will be no posting reference for all.
D. None of these.

Believe in yourself! Have faith in your own abilities! Without a humble but reasonable confidence in your own
power you cannot be successful or happy. Have faith that you can answer everything to the best that you can.

The struggle is real but do not forget GOD is also real and according to Jeremiah 29:11 “For I know the plans I have for
you, declares the LORD, plans to prosper you and not to harm you, to give you hope and a future.” Be expectant of what
God prepared for you, the journey to success is never easy but it is all worth it!
Concentrate === Pray === Achieve

/jgf
/msb
/mmd
/cds
/nab

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