Professional Documents
Culture Documents
2. Which accounting concept which in times of rising prices, tends to understate asset values and overstate profits?
a. The going concern concept c. The realisation concept
b. The prudence concept d. The historical cost concept
5. Which of the following does not answer the question “how financial reporting is done?”
a. Assumptions b. Principles c. Constraints d. Objectives
6. They are also known as accounting postulates that serves as the bedrock of accounting?
a. Accounting concepts c. Accounting principles
b. Accounting conventions d. GAAP
7. To carry the value of an asset in the SFP based on its historical cost is application of
a. accounting entity c. accounting period
b. going concern d. monetary unit
8. To report the export sales denominated in foreign currency in the financial statements of a domestic entity at Philippine peso
value is an application of
a. going concern c. accounting period
b. accounting entity d. monetary unit
9. They represent the claims of creditors and owners over the asset of the enterprise
a. Asset b. Liabilities c. Equities d. Capital
10. Statement 1: In accounting, for every value received there is always a corresponding value that is parted with.
Statement 2: The debit side of the accounting equation is always equal to its credit side
a. Only statement 1 is correct c. Both statements are correct
b. Only statement 2 is correct d. Both statements are not correct
11. When the magazine entity receives an advance payment for a subscription, it
a. debits Cash and credit Unearned Subscription Revenues
b. debits Cash and credits Subscription Revenues
c. debits Prepaid Subscription and credit Cash
d. debits Unearned Subscription Revenues and credits Cash
12. Which of the following errors will cause a trial balance to be out balance?
a. Incorrectly recording the purchase of land for cash as a debit to Cash and credit to Land
b. Forgetting to enter an entire transaction into the journal
c. Posting a debit to Land as a debit to Machinery
d. Placing a debit balance amount unto the credit balance column of the ledger
13. A P800 credit item accidentally posted as a debit. The trial balance column totally will therefore differ by
a. P 0 b. P400 c. P800 d. P1,600
14. The trial balance will not expose which of the following problems?
a. Recording half an entry
b. Leaving out an entire entry
c. Recording both halves of an entry on the same side
d. Recording half an entry and leaving out an entire entry
16. Which of the following errors will cause a trial balance to be put of balance?
a. A journal entry was accidentally posted twice.
b. A credit was posted to an account as a debit
c. The bookkeeper forgot to journalize transactions
d. The bookkeeper forgot to post a journal entry to the ledger.
18. In which of the following arrangements does the freight become the expense of the buyer?
a. FOB destination, collect c. FOB destination, prepaid
b. FOB shipping point, collect d. None of these
19. Which of the following is equal to gross profit plus cost of sale?
a. Beginning inventory c. Ending Inventory
b. Goods available for sale d. Sale
20. Which of the following is equal to cost of sale plus ending inventory?
a. Beginning inventory c. Gross profit
b. Goods available for sale d. Sale
M Servicing acquired P3,000 worth of supplies on account. The business used P2,000 supplies for rendering service to client.
The client was billed for P30,000 of which P20,000 was collected.
24. The accounting clerk of W Services recorded the collection of accounts receivable related to recorded service income as
P23,000 instead of P32,000. The effect of such error will
a. Understate total income by P9,000. c. Understate total owner’s capital by P9,000
b. Understate total assets by P9,000. D. No effect on the total of assets, liabilities and owner’s capital.
25. Bayo Clothing Store shows the following data for a calendar year:
Accounts receivable, beginning P100,000
Allowance for doubtful accounts, beginning 10,000
Credit sales during the year 500,000
Collections 525,000
Accounts written-off 5,000
How much is the doubtful accounts expense during the year?
a. P10,000 b. P7,000 c. P5,000 d. P2,000
26. Dimacali received P60,000 advance payment of his fee in January. In February, ½ of the amount is already earned, and ¼ is
still to be earned in March and ¼ is to be returned to the customer because it could no longer be earned. How much is the
correct revenue?
a. P60,000 in January under accrual basis
b. P45,000 in February under cash basis
c. P15,000 in March under accrual, when ¼ is actually earned
d. P60,000 total earnings January to March in either accrual or cash basis
27. The prepaid rent is P12,000 good for three months starting November 30, 200A. The Statement of Financial Position date is
December 31, 200A. The prepayment was recorded under asset method. The correct rent expense for the given period would
be
a. P4,000. b. P8,000. c. P12,000. d. None.
28. The business received a 90-day promissory note of P20,000, carrying an interest of 12% per year. The promissory note is
dated May 1, 200A and the Statement of Financial Position date of the business is June 30, 200A. the accrued expense is
a. P200. b. P400. c. P800. d. P1,600.
30. Bank charges of P500 were not taken up. This error, if not corrected, will
a. overstate the amount of expenses for the current period.
b. understate the income for the current period.
c. overstate the cash in bank.
d. understate the capital.
31. Office machine of P20,000 was erroneously recorded as expense. This error will
a. understate the liability. c. overstate the asset.
b. understate the income. d. overstate the revenue.
32. Under the periodic inventory system, the ending inventory of P65,000 was erroneously recorded as P56,000. The error had
been discovered when all nominal and temporary accounts were already closed to the real account. The correct entry would be
a. debit to capital account. c. credit to cost of sale.
b. debit to income summary account. d. credit to owner’s capital.
34. The purchases of G has a list price of P250,000; terms 10, 5; n/30. To record the purchase, the journal entry would be
a. Purchases 213,750
Cash 213,750
b. Purchases 212,500
Accounts payable 212,500
c. Purchases 213,750
Accounts payable 213,750
d. Purchases 191,250
Accounts payable 191,250
35. O sold merchandise at list price of P150,000; 10; 1 / 10; n/30. If the account is collected 8 days from the invoice date, O will
receive
a. P148,500. b. P133,650. c. P135,000. d. P133,500.
36. The cost of sale is P250,000. Total purchases amounted to P300,000 which increased the total goods available for sale to
P310,000. The ending inventory is
a. P10,000. b. P70,000. c. P50,000. d. P60,000.
37. The gross profit is P100,000; goods available for sale, P1,100,000; beginning inventory, P100,000; purchases P1,000,000 and
sales, P1,000,000. The ending inventory is
a. P300,000. b. P200,000. c. P100,000. d. None.
39. The beginning inventory was 100 units at P1,000 per unit. Purchases for the period were as follows:
First batch, 900 units at P1,100 per unit P 99,000
Second batch, 500 units at P1,200 per unit 600,000
Physical count at the end of the period was 50 units. Under the FIFO costing, the value of ending inventory would be
a. P60,000. b. P55,000. c. P50,000. d. P45,000.
40. H paid freight for P200 on its purchase on account from X, F.O.B. shipping point. The journal entry in both books of H and X
would be
Books of H Books of X
a. Freight-out 200 Freight-in 200
Cash 200 Accounts payable 200
41.-43. The following data were taken from Celeste Company for 200A:
Raw materials purchased 300,000
Direct labor payroll 150,000
Indirect labor 50,000
Taxes and depreciation – factory building 25,000
Taxes and depreciation – salesroom and office 20,000
Salesmen’s salaries 40,000
Office salaries 30,000
Utilities (60% factory) 50,000
Freight-out 30,000
Increase in raw materials inventory 15,000
Decrease in goods-in-process inventory 10,000
Decrease in finished goods inventory 25,000
41. What is the cost of goods sold?
a. P550,000 b. P575,000 c. P525,000 d. P595,000
42. What is the total manufacturing cost?
a. P550,000 b. P540,000 c. P560,000 d. P570,000
44.-46. The following transactions were made by Kimchu Store during the period:
Purchases:
Date Paticulars Terms Amount
12/05 Gerald Mfg. Cash P100,000
12/09 Kimerald Wholesalers On account 200,000
12/15 Anderson Suppliers 60% on account 300,000
Sales:
Date Particulars Terms Amount
12/10 Kris 40% on account P150,000
12/16 Kiram Cash 300,000
12/15 Abnoy On account 450,000
Based on the following above, determine the correct answer of the following:
44. How much is the amount of total cash receipts and disbursements balance?
a. P390,000 b. P220,000 c. P170,000 d. P60,000
47. The following information was taken from the accounting records of Gomez Company for the year ended December
21,2014:
Decrease in finished goods inventory P 700,000
Increase in raw materials inventory 300,000
Freight-out 900,000
Factory overhead 6,400,000
Direct labor 4,000,000
Raw materials purchased 8,600,000
There was no work in process inventory at the beginning or at the end of the year. The cost of goods sold is-
a. P17,600,000 b. P18,200,000 c. P18,400,000 d. P19,000,000
48. The following information pertains to Burgos Company’s 2014 cost of sales:
Inventory, January 1 P 3,000,000
Inventory, December 31 900,000
Purchases 9,000,000
Write-off of obsolete inventory 1,050,000
The company has chosen an accounting policy to include obsolete amount of inventory in other expense category, what
amount should the company report as cost of sales?
a. P10,050,000 b. P10,950,000 c. P11,100,000 d. P12,100,000
49. On January 1, 2014, Glow Company leased a building to Blow Corporation for a ten-year term at an annual rental of
P75,000. At inception of the lease, Glow received P300,000 covering the first two years’ rent of P150,000 and a deposit of
P150,000. This deposit will not be returned to Blow upon expiration of the lease but will be applied to payment of rent for the
last two years of the lease. What portion of the P300,000 should be shown as a current and long-term liability in Glow’s
December 31,2014 statement of financial position?
Current Liability Long-term Liability
a. -0- P300,000
b. P75,000 P150,000
c. P150,000 P75,000
d. P150,000 P150,000
50. Seattle Company sells boats for P300,000 each. Seattle Company also provides mooring facilities for P20,000 per annum.
Seatlle Company sells these goods and services separately. If a purchaser of a boat to buy mooring facilities for a year there is a
5% discount on the whole package, thus the ‘package’ costs P320,000 less P16,000 (5% discount). On July 1, 2014 Seattle
Company has sold 2 boats for a package. On December 1, 2014, Seattle Company has also sold 2 boats for a package price.
What amount of revenue from sale of boats should Seattle Company report in its Decemeber 31, 2014 profit or loss?
a. P570,000 b. P600,000 c. P1,140,000 d. P1,200,000