St.

Paul University Manila

(St. Paul University System)
680 Pedro Gil St. Malate, Manila

Fundamentals of Accounting
Final Examinations
Second Semester, AY2016-2017
Subject Teacher: Mr. Clarence Revadillo, C.P.A.
Diamonds are stones under pressure.- Anonymous

NAME: ____________________________________ SCORE: _______________

SECTION: __________________________________ DATE: ________________

Test I
Instructions: Identify the best answer for each question. Write the answer in the space provided before
the number. Avoid erasures. (1 point each)

Use the following information for questions 1 and 2:

A company receives P500 of cash as an additional investment in the company by its owner, Nilo Kho. The
company's Cash account is increased and Capital, Nilo Kho is increased.

_______________1. Should the P500 entry to the Cash account be a DEBIT? Yes, or No

_______________2. Should the P500 entry to Capital, Nilo Kho be a DEBIT? Yes, or No

Use the following information for questions 3 through 6:

Papa Ethan Co., using the accrual method of accounting, performed services on account in August. The
services were for P2,000 and the company gave the customer credit terms that state the amount is to be
paid to the company in September.

_______________3. Assuming that the company prepares monthly income statements, what will be the account
debited for P2,000 in August?
A. Cash C. Service Income
B. Accounts Receivable D. Accounts Payable

_______________4. Which account should the company credit for P2,000 in August?
A. Cash C. Service Income
B. Accounts Receivable D. Accounts Payable

_______________5. In September when the company receives the P2,000 from the customer, which account
should the company debit?
A. Cash C. Service Income
B. Accounts Receivable D. Accounts Payable

_______________6. In September when the company receives the $2,000 from the customer, which account
should the company credit?
A. Cash C. Service Income
B. Accounts Receivable D. Accounts Payable

_______________7. Generally, when revenues are involved in a transaction, a revenue account will be? Debited
or Credited
_______________8. Generally, when an expense is involved in a transaction, an expense will be? Debited or
Credited
_______________9. The accountant's word to indicate that an entry will be recorded on the left-side of an
account is? Debit or Credit
_______________10. A contra-asset account such as Accumulated Depreciation will likely have which balance?
Debit or Credit
Use the following information to answer questions 11 - 16:
Lou Gao Inc. borrowed P100,000 on December 1, 2017 by signing a six-month note that specifies interest at
an annual percentage rate of 12%. No interest or principal payment is due until the note matures on May
31, 2018. The company prepares financial statements at the end of each calendar month. The following
questions pertain to the adjusting entry that should be entered in the company's records

_______________11. What date should be used to record the December adjusting entry?
A. December 1 C. January 31
B. December 31 D. May 31

_______________12. What is the account name that will be debited for initial entry for the loan obtained?
A. Cash C. Interest Expense
B. Notes/Loan Payable D. Interest Payable

_______________13. What is the name of the account that will be debited on December 31 for the adjusting
journal entry?
A. Cash C. Interest Expense
B. Notes/Loan Payable D. Interest Payable

_______________14. What is the name of the account that will be credited on December 31 for the adjusting
journal entry?
A. Cash C. Interest Expense
B. Notes/Loan Payable D. Interest Payable

_______________15. How much is the interest expense to be recognized on December 31, 2017?
A. P1,000 C. P12,000
B. P6,000 D. P100,000

_______________16. Is Cash account be affected in the adjusting entry recorded on December 31, 2017? Yes, or
No

_______________17. If total assets increased P40,000 during the period and total liabilities decreased P24,000
during the same period, the amount and direction (increase or decrease) of change in
equity for that period:
A. A P64,000 increase C. A P16,000 decrease
B. A P64,000 decrease D. A P16,000 increase

_______________18. As of Dec. 31, 2016, Revapeeps Co. has assets of P350,000 and equity of P200,000. How
much are the liabilities as of Dec. 31, 2016?
A. P100,000 C. P550,000
B. P150,000 D. P250,000

_______________19. The Accounting concept that the business entity would continue for the next reporting
period:
A. Accrual Basis C. Going Concern
B. Cash Basis D. Separate Legal Entity

_______________20. A classification of Accounts which are required to be closed or returned to zero balance at
the end of the reporting period.
A. Real Accounts C. Nominal Account
B. Cash Account D. Capital Account
Test II Problem Solving

Instructions: Read the whole business transaction provided then supply the correct answer for each
questions. Use your calculator in deriving your answers. (2 points each)

Use the following information to answer questions 1 - 3:

A Chinese restaurant, owned by Dino Guan and Vina Go-Ong, borrowed P100,000 from RCBC on September
1, 2016 that requires to pay an annual percentage rate of 12% on the amount of the loan. The loan is due in
six months and no payment of interest or principal is to be made until the note is due on February 28, 2017.
The bank prepares monthly financial statements at the end of each calendar month.

_______________1. How much is the Interest expense recognized for the month of October 2016?
_______________2. How much is the outstanding Interest payable as of December 31, 2016?
_______________3. How much is the outstanding Loan Payable after February 28, 2017?

Use the following information to answer questions 4 - 6:

On December 1, 2016 XYZ Publishing Co. received P12,000 from Carl de Reta, a valued customer, for a one-
year, monthly subscription of LBM Magazine. The issue shall be mailed to Carls residence every end of the
month. XYZ Publishing Co. recorded the P12,000 receipt as of December 1, 2016 with a debit to the asset
Cash and a credit to the liability Unearned Revenues (Advances from Customers). XYZ Insurance Co. prepares
monthly financial statements at the end of each calendar month.

_______________4. How much is the remaining liability of XYZ Publishing Co. as of January 31, 2017?
_______________5. How much is the Service Income recognized on the month of December?
_______________6. How much is the outstanding balance of Unearned Revenues (Advances from
Customers) as of January 1, 2017?

Use the following information to answer questions 7 - 9:

On December 1, BEBE MO Co. began operations. On December 3, 2016 it purchased P1,500 of supplies and
recorded the transaction with a debit to the current asset Supplies and a credit to the current liability Accounts
Payable. BEBE MO Co. prepares monthly financial statements at the end of each calendar month. At the end of
the day on December 31, BEBE MO Co. estimated that P700 of the supplies were still on hand in the supply room.

_______________7. How much expense recognized on December 3, 2016?

_______________8. How much expense recognized on December 31, 2016?
_______________9. How much is the outstanding Supplies?

Use the following information to answer questions 10 - 12:

On March 1, Aray-Kum Beh Inc. purchased P105,500 of equipment. The equipment has a useful life of 5 years and
has a Salvage Value of P5,500.

_______________10. How much is the Depreciation Expense for the month of March.
_______________11. How much is the Accumulated Depreciation as of December 31?
_______________12. How much is the book value (true value) of the Equipment as of December 31?

Use the following information to answer questions 13 - 15:

At the end of December 2016, Revapeeps Spa incurred the following items: Rent expense for the whole year
P30,000; Depreciation Expense P55,000; Initial Supplies amounted to P50,000 but P25,000 was seen remaining;
Utility bills P8,000; Salaries of two employees P15,000 each.
During the year, Revapeeps Spa rendered its services to various customers amounting to P250,000, one-fourth of
which is still yet to be collected.

_______________13. How much is the total Expense?

_______________14. How much is the outstanding Accounts Receivable?
_______________15. How much is the Profit or (Loss)?