ABM 002/ Fundamentals of Accountancy,

PHINMA Araullo University Business and Management 1

Teacher/Facilitator Lesson Plan Grade Level 11
Day/Session#27

Part I. TRUE OR FALSE. Write TRUE if the statement is correct and FALSE if the
statement is incorrect.
_______1. Expenses cause decreases in owner’s equity and are recorded by credits.
_______2. Owner’s equity is the excess of an entity’s capital over its liabilities
_______3. The basic summary device of accounting is the accounting equation.
_______4. Not all financial transactions can be analyzed in terms of the basic accounting
equation.
_______5. Income increases owner’s equity and is recorded by a debit.
_______6. A debit entry always decreases the balance of an account.
_______7. For every transaction, there is at least one account affected.
_______8. The owner’s withdrawals account is listed with the other expenses of a
business.
_______9. Accounts that appear on the left side of the accounting equation usually have
credit balances.
_______10. Payment of liability will not affect total assets but will cause total liabilities to
decrease.

Part II. ELEMENTS OF FINANCIAL STATEMENTS. Compute the amount of the

missing element of financial position.

1. Johnell Dela Cruz Pest Control has assets of P600,000 and owner’s equity of
P450,000.
2. Paulo Salas Realtors has liabilities of P530,000 and owner’s equity of P410,000.
3. Ronalyn Diaz Plumbing Contractor has assets of P473,000 and liabilities of P153,700.
4. Armin Glenn Araneta Acting Studio has liabilities of P147,000 and owner’s equity of
P236,500.
5. Jam Manangan Dance Studio has assets of P624,000 and liabilities of P237,000.
1. _________________ __________________
2. _________________ __________________
3. _________________ __________________
4. _________________ __________________
5. _________________ __________________

Part III. MULTIPLE CHOICES. Choose the letter which corresponds to your answer.

1. The financial statements should be stated in a. Objectivity

terms of a common financial denominator. b. Materiality
a. Accrual c. Adequate disclosure
b. Going concern d. Accounting entity
c. Time period
d. Stable monetary unit 3. The matching principle implies that
expenses
2. This principle requires relevant information a. Should be deducted from revenue in the
to form part of the financial statements for period in which the suppliers of goods or
decision making purposes. services are paid.

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 ABM 002/ Fundamentals of Accountancy,
PHINMA Araullo University
Teacher/Facilitator Lesson Plan
b. Should be offset against the revenue
produced by these expenditures.
c. Should be equal to the cash payments made
during the period.
d. For a period should be equal in amount to
the revenue recognized during the period.
4. The entity concept means that
a. Because a firm is separate and distinct from
its owners, those owners cannot have access
to its assets unless the firm ceases ton trade.
b. Account must be prepared for every firm.
c. The financial affairs of the firm and its
owner are always kept separate for the
purpose of preparing accounts.
d. None of the above.
5. Which of the following best describes the
attributes of a partnership?
a. Limited ability to raise capital; unlimited
personal liability of owners
b. Limited liability to raise capital; limited
personal liability of owners
c. Ability to raise larger capital; unlimited
personal liability of owners
d. Ability to raise larger capital; limited
personal liability of owners
6. If a business is not being sold or closed, the
amounts reported in the accounts for assets
used in the business operations are based on
the cost of the assets. This practice is
justified by
a. Accrual
b. Time period
c. Going concern
d. Accounting entity
7. A business receive P6,000 cash from charge
customers to apply on account. The effect of
the transaction is
a. An increase in asset and an increase in
revenue
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Business and Management 1
Grade Level 11
Day/Session#27
b. An increase in an asset and a decrease in
capital
c. An increase in an asset and decrease in a
liability
d. An increase in an asset and decrease in an
asset
8. It is the result of the standard of adequate
disclosure.
a. Completeness
b. Neutrality
c. Faithful Representation
d. Substance over form
9. Which users need financial information to
enable them to determine whether their
loans and related interest will be paid when
due?
a. Customers
b. Investors
c. Creditors
d. Suppliers
10. The owner of a business invested P50,000 in
the business. What are the effects on the
fundamental accounting equation?
a. Assets increase P50,000; liabilities, no effect;
owner’s equity increases P50,000.
b. Assets increase P50,000; liabilities, decrease
P50,000; owner’s equity increases P50,000.
c. Assets increase P50,000; liabilities, no effect;
owner’s equity decreases P50,000.
d. Assets decrease P50,000; liabilities, no effect;
owner’s equity increases P50,000.
11. Which of the following transactions does
not include an increase to expense?
a. Received and paid the phone bill.
b. Bought office supplies on account.
c. Paid the week’s salaries.
d. Paid the rental fee for the month of June.
2
 ABM 002/ Fundamentals of Accountancy,
PHINMA Araullo University Business and Management 1
Teacher/Facilitator Lesson Plan Grade Level 11
Day/Session#27
12. If the total assets amount to P270,000 and c. Debited and credited
total liabilities amount to P70,000, then the d. Not affected
owner’s equity will amount to:
a. P70,000 18. A credit entry decreases the balance of
b. P340,000 a. Owner’s equity
c. P270,000 b. Assets
d. P200,000 c. Income
d. Liabilities
13. When an owner deposits cash in an account
in the name of the business, it is an increase 19. All of the following affect the owner’s equity
to account except
a. Cash and Accounts Receivable a. Original investment
b. Cash and Withdrawals b. Payment of liability
c. Cash and Capital c. Additional investment
d. Cash and Accounts Payable d. Withdrawal by the owner

14. Amounts owed by a business are referred to 20. Which of the following is not subject to
as depreciation?
a. Assets a. Building
b. Equities b. Land
c. Liabilities c. Equipment
d. Capital d. Machinery

15. The purchase of an asset on account will
a. Increase total liabilities and decrease total
assets
b. Have no effect on total assets or total
liabilities
c. Increase total assets and increase total
liabilities
d. Increase total assets and increase owner’s
equity
16. Which of the following equations is the
fundamental accounting equation?
a. Assets – Liabilities = Owner’s Equity
b. Assets = Liabilities + Owner’s Equity
c. Assets + Liabilities = Owner’s Equity
d. Assets – Owner’s Equity = Liabilities
17. When the proprietor withdraws cash or
other assets, the withdrawal account is
a. Debited
b. Credited
21. Which of the following is an intangible
asset?
a. Trademark
b. Copyright
c. Patents
d. All of the above
22. Another way of stating the accounting
equation is
a. Assets + Liabilities = Owner’s Equity
b. Assets = Liabilities – Owner’s Equity
c. Assets – Liabilities = Owner’s Equity
d. Assets = Owner’s Equity – Liabilities
23. Which is false concerning the rules of debit
and credit?
a. The left side of an account is always the
debit side and the right side is always the
credit side.
b. The word “debit” means to increase and the
word “credit” means to decrease.

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 ABM 002/ Fundamentals of Accountancy,
PHINMA Araullo University Business and Management 1
Teacher/Facilitator Lesson Plan Grade Level 11
Day/Session#27
c. Increases in assets and expenses are debit d. Depreciation expense
entries, and increase in liabilities, equity and
revenue are credit entries. 27. Which of the following is not an asset?
d. The normal balance of any account appears a. Equipment
on the side for the recording increases. b. Accounts receivable
c. Cash
24. Which of the following is correct? d. Accounts payable
Asset Liabilities
Capital 28. When a business entity receives payment
a. P7,850 P1,250 P6,600 before delivering goods, the unearned
b. P8,200 P2,800 revenue account is
P11,000 a. Debited
c. P9,550 P1,150 P8,200 b. Debited and credited
d. P5,420 P6,540 P1,120 c. Credited
d. Not affected
25. Debits
a. Increase assets and decrease expenses, 29. If an owner invests his laptop computer and
liabilities, revenues, and owner’s equity printer in the business, there is an increase to
b. Increase assets and owner’s equity and a. Cash and capital
decrease liabilities, expenses, and revenue. b. Computer equipment and withdrawals
c. Increase assets and expenses and decrease c. Cash and withdrawals
liabilities, revenue, and owner’s equity. d. Computer equipment and capital
d. Decrease assets and expenses and increase
liabilities, revenue and owner’s equity. 30. The following can be found in an income
statement except
26. The following can be found in an income a. Income
statement except b. Assets
a. Service income c. Expense
b. Prepaid rent d. Profit or loss
c. Rent expense
Part IV. Following is the chart of accounts of AP Gabriel Assurance Company.

Chart of Accounts

100 Cash 310 Gabriel, Withdrawal

110 Accounts Receivable 400 Service Revenue
120 Notes Receivable 500 Electrical Supplies Expense
130 Prepaid Rent 510 Office Supplies Expense
140 Office Supplies 520 Rent Expense
150 Land 530 Salaries Expense
160 Furniture and Fixtures 540 Repair and Maintenance
170 Office Equipment 550 Taxes and Licenses
200 Accounts Payable 560 Communication Expense
210 Notes Payable 570 Utilities Expense
220 Loans Payable 580 Miscellaneous Expenses
300 Gabriel, Capital

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UNIVERSITY 4
 ABM 002/ Fundamentals of Accountancy,
PHINMA Araullo University Business and Management 1
Teacher/Facilitator Lesson Plan Grade Level 11
Day/Session#27

The following transactions of AP Gabriel Assurance Company took place during the
month of June 2016.

1-Jun Invested cash of P120,000, land costing P58,000, and 2 units desktop computer
costing P18,000 to the business.
1-Jun Purchased bond papers, fasteners, folders and other supplies for office use,
P4,500 in cash.
1-Jun Bought tables and chairs for clients' waiting area, P16,000 on account.
2-Jun Rendered services to Mr. Aluning, a client and billed him P8,000.
2-Jun Bought laptop computer in cash, P23,000.
3-Jun Received P22,000 from various clients for services rendered.
4-Jun Paid P1,800 to laborer for fixing broken windows in the rented office space.
5-Jun Paid P5,600 for mayor's permit to operate business and other city licenses.
6-Jun Received P10,000 for consulting services from GH Cervantes.
6-Jun Paid the supplier 80% of the amount owed (see transaction of June 1)
7-Jun Received payment from Mr. Aluning for his account (see transaction on June 2)
8-Jun Bought additional papers, ink and folders for office use, P2,000 cash.
11-Jun Called a computer technician for the repair of one of the computers. Paid
P2,500 for the repair.
15-Jun Bought paintings and center table display accessories amounting to P28,000.
Paid P15,000 in cash and issued a promissory note for the balance.
17-Jun Received P20,000 for assurance services rendered to Cinense Co.
20-Jun The owner withdrew P25,000 cash from the business for personal use.
23-Jun Sent a bill to Salting Co. for services rendered, P15,000.
28-Jun Received 50% payment from Salting Co. on her June 23 account.

Required:

1. Using the Chart of Accounts as your guide, record the following

transactions in the general journal. Use the format below for your answers.

PART I – TRUE OR FALSE (10 PTS)

1. FALSE 6. FALSE
2. FALSE 7. FALSE
3. FALSE 8. FALSE
4. FALSE 9. FALSE
5. FALSE 10. FALSE

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 ABM 002/ Fundamentals of Accountancy,
PHINMA Araullo University Business and Management 1
Teacher/Facilitator Lesson Plan Grade Level 11
Day/Session#27
PART II – ELEMENTS OF FINANCIAL STATEMENTS (5PTS)

1. Liabilities = P150,000
2. Assets = P940,000
3. Owner’s Equity = P319,300
4. Assets = P383,500
5. Owner’s Equity = P387,000
PART III – MULTIPLE CHOICE (30 PTS)

1. D 11. B 21. D

2. B 12. D 22. C

3. B 13. C 23. B

4. C 14. C 24. A

5. C 15. C 25. C

6. C 16. B 26. B

7. D 17. A 27. D

8. A 18. B 28. C

9. C 19. B 29. D

10. A 20. B 30. B

PART IV - JOURNAL ENTRIES

Date Account Title PR Debit Credit

Jun Cash 120, 000
1
Land 58, 000

Office Equipment 18, 000

Gabriel, Capital 196, 000

To record the initial investment of Gabriel

1 Office Supplies 4, 500

Cash 4, 500

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UNIVERSITY 6
 ABM 002/ Fundamentals of Accountancy,
PHINMA Araullo University Business and Management 1
Teacher/Facilitator Lesson Plan Grade Level 11
Day/Session#27
To record the purchase of office supplies

Jun Furniture and Fixtures 16, 000

1
Accounts Payable 16, 000

To record the purchase of tables and chairs on account

2 Accounts receivable 8, 000

Service Revenue 8, 000

To record receivable from Mr. Aluning for services rendered

2 Office equipment 23, 000

Cash 23, 000

To record the purchase of laptop

3 Cash 22, 000

Service revenue 22, 000

To record service revenue from various customers

4 Repair and maintenance 1, 800

Cash 1, 800

To record payment of laborer for fixing broken windows

5 Taxes and licenses 5, 600

Cash 5, 600

To record payment of permit and licenses

6 Cash 10, 000

Service revenue 10, 000

To record service revenue from GH Cervantes

This document and the information thereon is the property of PHINMA ARAULLO
UNIVERSITY 7
 ABM 002/ Fundamentals of Accountancy,
PHINMA Araullo University Business and Management 1
Teacher/Facilitator Lesson Plan Grade Level 11
Day/Session#27
6 Accounts payable 12, 800

Cash 12, 800

To record payment of liability from buying furniture

7 Cash 8, 000

Accounts receivable 8, 000

To record the payment of Mr. Aluning

8 Office Supplies 2, 000

Cash 2, 000

To record purchase of office supplies

11 Repair and maintenance 2, 500

Cash 2, 500

To record payment of computer technician for repairs

15 Office equipment 28, 000

Cash 15, 000

Notes payable 13, 000

To record purchase of paintings and center table display

accessories
17 Cash 20, 000

Service revenue 20, 000

To record service revenue from Cinense Co.

20 Gabriel, withdrawal 25, 000

Cash 25, 000

To record withdrawal of Gabriel

23 Accounts receivable 15, 000

Service revenue 15, 000

This document and the information thereon is the property of PHINMA ARAULLO
UNIVERSITY 8
 ABM 002/ Fundamentals of Accountancy,
PHINMA Araullo University Business and Management 1
Teacher/Facilitator Lesson Plan Grade Level 11
Day/Session#27
To record receivable from Salting Co.

28 Cash 7, 500

Accounts receivable 7, 500

To record payment of Salting Co.

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UNIVERSITY 9