Pre-Basic Qualifying Test for Accountancy Program (BQTAP)

Academic Year 2018-2019

Name:________________________________ Section:____________________ Date:_______________

Theories – Basic Accounting a. Bookkeeping

Instructions: Write the letter of your
answerbefore each number. NO ERASURES.
1. Accounting is a service activity and the
function is to provide quantitative information,
primarily financial in nature, about economic
entities, that is intended to be useful in making
economic decision. This definition is given by
a. Accounting Standards Council
b. AICPA Committee on Accounting
Technology
c. American Accounting Association
d. Board of Accountancy
2. The overall objective of accounting is
a. To provide the information that the managers
of an entity need to control the operations.
b. To provide information that the creditors can
use in deciding whether to make additional
loans.
c. To measure the periodic income of the entity.
d. To provide quantitative financial information
about an entity that is useful in making
economic decision.
3. RA 9298 is officially known as
a. The Revised Accountancy Act
b. The Revised Accountancy Law
c. The Philippine Accountancy Act of 2004
d. The Accountancy Law of the Philippines,
2007
4. A profession whose members collect and
summarize financial data, and present
information so users may take effective
decisions
b. Accountancy
c. Auditing
d. Taxation
5. The checking of prepared accounts and the
reporting on them
a. Bookkeeping
b. Accountancy
c. Auditing
d. Taxation
6. A mechanical task involving the collection of
basic financial data
a. Bookkeeping
b. Accountancy
c. Auditing
d. Taxation
7. It is the body authorized by law to promulgate
rules and regulations affecting the practice of
accountancy profession in the Philippines.
a. Board of Accountancy
b. Philippine Institute of Certified Public
Accountants
c. Securities and Exchange Commission
d. Financial Reporting Standards Council
8. It is the accounting standard setting body in
the Philippines at the present time
a. Accounting Standard Council
b. Auditing and Assurance Standards Council
c. Philippine Accounting Standards Board
d. Financial Reporting Standards Council
9. The singularly unique function performed by
Certified Public Accountants is the attest
function which means that CPAs are primarily
responsible for

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a. Preparing financial statements in conformity a. Economic entity assumption
with GAAP b. Going concern assumption
b. Certifying the accuracy of financial c. Monetary unit assumption
statements d. Periodicity assumption
c. Expressing an opinion as to the fairness of
15. During the lifetime of an entity, accountants
financial statements
produce financial statements at arbitrary points
d. Filing financial statements with the regulatory
in time in accordance with which basic
authority
accounting concept?
10. The preparation and subsequent publication
a. Cost and benefit constraint
of highly summarized information
b. Expense recognition principle
a. Financial Management c. Materiality constraint
b. Financial Accounting d. Periodicity assumption
c. Management Accounting
16. The adjusting entry for depreciation has the
d. Auditing
same effect as the adjusting entry for
11. Setting financial objectives, making plans,
a. A prepaid expense
obtaining finance, and safeguarding the financial
b. An accrued expense
resources of the entity
c. An accrued revenue
a. Financial Management d. An unearned revenue
b. Financial Accounting
17. Which of the following statements is false
c. Management Accounting
regarding adjusting entries?
d. Auditing
a. Adjusting entries involve accruals or deferrals
12. Incorporates cost accounting data and adapts
b. Cash is neither debited nor credited as a result
them for management decisions of adjusting entries.
a. Cost Accounting c. Each adjusting entry affects one revenue
b. Financial Accounting account and one expense account.
d. Each adjusting entry affects one statement of
c. Management Accounting
financial position and one income statement
d. Taxation
account.
13. Which of the following terms best describes
18. The failure to properly record an adjusting
financial statements whose basis of accounting
entry to accrue an expense results in
recognizes transactions and other events when
they occur? a. Overstatement of expense and an
understatement of asset.
a. Accrual basis of accounting
b. Understatement of expense and an
b. Cash basis of accounting
overstatement of asset.
c. Going concern basis of accounting
c. Understatement of expense and an
d. Invoice basis of accounting
overstatement of liability.
14. Which of the following basic accounting d. Understatement of expense and an
assumptions is threatened by severe inflation in understatement of liability.
the economy?

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19. The failure to properly record an adjusting
entry to accrue a revenue results in
a. Overstatement of revenue and an
overstatement of asset.
b. Overstatement of revenue and an
overstatement of liability.
c. Understatement of revenue and an
understatement of asset.
d. Understatement of revenue and an
understatement of liability.
20. A supporting document prepared by a seller
that is used as an evidence of a downward
adjustment in the amount that is due from a
customer is known as:
a. Receiving report
b. Purchase order
c. Credit memorandum
d. Debit memorandum
21. A supporting prepared by a buyer that is
used as an evidence of a downward adjustment
in the amount that is due to the seller is known
as:
a. Receiving report
b. Purchase order
c. Credit memorandum
d. Debit memorandum
22. Which of the following equations best
exemplifies the PROPRIETARY theory of
accounting?
a. Assets = Liabilities + Capital
b. Assets – Liabilities = Capital
c. Assets + Liabilities = Capital
d. Assets – Liabilities – Preferred Equity =
Common Equity
23. It is a memorandum of agreement made
between IASB and FASB (US) and signed in
Norwalk Connecticut, USA with the goal of
achieving comparability in financial reporting
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standards by eliminating or minimizing
differences between IFRS and US GAAP.
a. The Convergence Covenant
b. The IASB-FASB Pact
c. The Norwalk Agreement
d. The Reporting Standard Treaty
24. The fundamental qualitative characteristics
are
a. Relevance and faithful representation
b. Relevance, faithful representation and
materiality
c. Relevance and reliability
d. Faithful representation and materiality
25.. The ingredients of faithful representation
are
a. Completeness and neutrality
b. Completeness and free from error
c. Completeness, neutrality and free from error
d. Completeness, neutrality, free from error, and
conservatism
26. The enhancing qualitative characteristics of
financial information are
a. Comparability and understandability
b. Verifiability and timeliness
c. Comparability, understandability and
verifiability
d. Comparability, understandability,
verifiability, and timeliness
27. What is the underlying concept governing
the generally accepted principles pertaining to
recording gain contingencies?
a. Consistency
b. Conservatism
c. Substance over form
d. Materiality
28. It is the amount of cash or cash equivalent
that could currently be obtained by selling the
asset in an orderly disposal.
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a. Historical cost 33. It is an account device for accumulating
b. Current cost increases and decreases relating to a particular
c. Realizable value accounting value such as an asset or a liability.
d. Present value
a. Account
29. Depreciation, amortization, and allocation of b. Journal
prepayments are examples of which of the c. Trial balance
following principles? d. Worksheet
a. Cause and effect association principle 34. The double-entry concept in accounting
b. Systematic and rational allocation means which of the following?
c. Immediate recognition
a. The debit-credit convention must be used.
d. Objectivity
b. Only two accounts are affected by each
30. Which of the following is not part of the transaction recording.
inventory of the business? c. At least two accounts are affected by each
transaction recorded.
a. Goods in transit to the customer. Term: F.O.B
d. For every asset increased, a revenue or
Destination
liability must also be increased.
b. Goods in transit from the supplier. Term:
F.O.B Shipping Point 35. FOB shipping point and freight prepaid
c. Goods that are ready for shipment to the means
customer
a. The seller actually paid the freight charges but
d. Goods held for sale in behalf of Monte
is not responsible for the same.
Company, a consignor
b. The buyer actually paid the freight charges
31. Which of the following is not a characteristic but is not responsible for the same.
of the periodic inventory system? c. The seller actually paid for the freight charges
and is responsible for the same.
a. The trial balance shows the balance of the
d. The buyer actually paid for the freight charges
inventory at the beginning of the period.
and is responsible for the same.
b. Sales are recorded both at cost and at selling
price. 36. The excess of net sales over cost of goods
c. A count of the inventory on hand is made sold is called
before financial statements are prepared.
a. Gross Income
d. Ending inventory is adjusted at the end of the
b. Operating Income
period
c. Net Income
32. Which of the following is not a nominal d. Merchandising Income
account?
37. If the term is 2/10; n/60, the length of the
a. Purchases credit period is:
b. Sales
a. 10 days
c. Ending Inventory
b. 60 days
d. Beginning Inventory
c. 2 days
d. 70 days

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38. Which of the following is not subject to
reversal?
a. Accrued expenses
b. Accrued revenues
c. Prepaid expenses recorded as assets upon
payments
d. Deferred revenues recorded as revenue upon
receipts
39. Which of the following statements regarding
reversing entries is incorrect?
a. All accruals should be reversed.
b. Adjusting entries for depreciation and bad
debts are never reversed.
c. Deferrals entered in statement of financial
position accounts make reversing entries
unnecessary.
d. Reversing entries change amounts reported in
the statement of financial position for the
previous period.
40. It is defined as increase in economic
benefits during the accounting period in the form
of inflows or enhancements of assets or
decreases in liabilities that result in increases in
equity, other than those relating to contributions
from equity participants.
a. Gain
b. Income
c. Profit
d. Revenue
41. Which of the following is not a characteristic
of the periodic system?
a. Merchandise inventory, beginning is a
nominal account
b. Inventory records are always up-to-date
c. Purchases are recorded by debiting purchases
at cost
d. Cost of goods sold is computed at the end of
the period
PREPARED BY: Gabriel Cordero, Vice President for Academics
42. When the seller advances the transportation
cost and the term of sale are FOB Shipping
Point, the seller records the payment of the
transportation cost by debiting
a. Accounts Receivable
b. Sales
c. Transportation-in
d. Accounts Payable
43. The document used to indicate to the
customer the amount of a sale and due date of
payment is the
a. Sales order
b. Bill of lading
c. Shipping document
d. Sales invoice
44. A business pays bi-weekly salaries of
P20,000 every other Friday for a ten-day period
ending on that day. The adjusting entry
necessary at the end of the fiscal period ending
on the second Wednesday of the pay period
includes a:
a. Debit to Salary Expenses of P8,000
b. Debit to Salary Payable of P8,000
c. Credit to Salary Expense of P16,000
d. Credit to Salary Payable of P16,000
45. It is an error that involves interchanging, or
switching around, digits during the recording of
a number.
a. Slide
b. Transposition
c. Transplacement
d. Mathematical error
46. If the storekeeper making count of inventory
at the end of the year failed to include P10,000
worth of goods, cost of sales will be:
a. Over by P10,000
b. Under by P10,000
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c. Over by P5,000 c. Mutual agency
d. Not Affected d. Ease of formation
47. The accountant erroneously recorded a credit 52. It is a contract whereby two or more persons
sale as a cash sale. Which of the statements is bind themselves to contribute money, property
wrong, assuming that the business uses a or industry to a common fund with the intention
periodic inventory system? of dividing the profits among themselves.
a. The cash balance is overstated. a. Voluntary association
b. The total of the current assets is understated. b. Corporation
c. Net working capital is not affected c. Sole proprietorship
d. The net income is not affected d. Partnership
48. It is a discount given to the buyer for paying 53. It is a kind of partner who is actually not a
within a specified period of time which is partner but who may become liable as such to
usually earlier than the credit period. third persons.
a. Sales discount a. Secret partner
b. Trade discount b. Ostensible partner
c. Purchase discount c. Nominal partner / Partner by estoppel
d. Discount Period d. Dormant partner
e. Silent partner
49. In determining the cost of goods sold,
f. Managing partner
a. Freight-in is deducted from net purchases g. Liquidating partner
b. Freight-out is added to net purchases
54. A and B formed a partnership, each
c. Purchase returns and allowances is added to
contributing non-cash assets into the partnership.
purchases
Partner A contributed inventory with a current
d. Freight-in is added to purchases
market value in excess of its carrying amount.
50. The present worth of an asset or the amount Partner B contributed fixed asset with a carrying
that would be received if the asset were sold to amount in excess of its current market value. At
an outsider on the open market. what amount should the partnership record each
of the assets contributed?
a. Realizable value
b. Carrying value
Inventory Fixed Asset
c. Fair market value
d. Net proceeds a. Carrying amount Market value
b. Market value Carrying amount
Theories – Partnership & Corporation c. Carrying amount Carrying amount
51. Which of the following is not a characteristic d. Market value Market value
of most partnership?
a. Limited liability
b. Limited life

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55. It is a kind of partnership that operates but
fails to fully comply with the legal requirements
for its existence.
a. Partnership at Will
b. Partnership for a Fixed Term
c. Particular Partnership
d. Universal Partnership of All Present Property
e. Universal Partnership of Profits
f. De Facto Partnership
g. De Jure Partnership
h. Partnership by estoppel
56. A 1:3:2 ratio is the same as
a. 1/6 ½ 1/3
b. 10% 30% 20%
c. 1/10 3/10 2/10
d. 20% 50% 30%
57. The following are the characteristics of
admitting a new partner by purchase of interest
from one or old partners, except:
a. The cash paid by the buyer is not recorded in
the books of the partnership.
b. The gain or loss arising from the sale of
interest is not recorded in the partnership books.
c. There is no increases in total assets and no
increase in total partners’ equity.
d. It is a transaction between the partnership and
the incoming partner.
58. If the partnership agreement does not specify
how profit is to be allocated, profits or losses
should be allocated
a. Equally
b. In accordance with their capital contributions
c. In proportion to the average of capital
invested during the period
d. Equitably so that partners are well
compensated for their time and effort.
59. When partnership profits are allocated based
on partnership capital, the allocation should be
based upon:
PREPARED BY: Gabriel Cordero, Vice President for Academics
a. Capital at the beginning of the period.
b. Weighted average capital
c. Whatever has been established in the
partnership agreement.
d. Capital after withdrawals have been applied
60. Which of the following is false?
a. A limited partnership must have at least one
general partner.
b. In a limited partnership, the general partner’s
liability is limited to his investment.
c. The limited partners are liable only to the
extent of their personal contributions.
d. A partnership is created by mere agreement of
the partners.
61. Which of the following statements is true
concerning the treatment of salaries in
partnership accounting?
a. The salary of a partner is treated in the same
manner as salaries of corporate employees.
b. Partner salaries are equal to the annual partner
draw.
c. Partner salaries may be used to allocate profits
and losses; they are not considered expenses of
the partnership.
d. Partner salaries are directly closed to the
capital account.
62. In a partnership, interest on capital
investment is accounted for as a(n)
a. return on investment
b. expense
c. reduction of capital
d. allocation of net income
63. Under the Revised Uniform Partnership Act
and in the absence of any partnership agreement
to the contrary, which of the following
statements is correct regarding sharing of losses?
a. The partners will share equally in any
partnership losses.
b. The partners will share in losses on a pro rata
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basis according to the capital contributions and
loans made to the partnership.
c. The partners will share in losses according to
the allocation of profits specified in the
partnership agreement.
d. The partners will share in losses on a pro rate
basis according to the capital contributions.
64. Partnership drawings are
a. Equal to partners’ salaries
b. Usually maintained in a separate draw
account with any excess draws being debited
directly to the capital account
c. Not discussed in the specific contract
provisions of the partnership
d. Always maintained in a separate account from
the partner’s capital account.
65. Which of the following is not considered a
legitimate expense of a partnership?
a. Interest paid to partners based on the amount
of invested capital.
b. Depreciation on assets contributed to the
partnership by partners.
c. Salaries for management hired to run the
business.
d. Supplies used in the partners' offices.
66. Which of the following results in dissolution
of a partnership?
a. The contribution of additional assets to the
partnership by an existing partner.
b. The receipt of a draw by an existing partner.
c. The winding up of the partnership and the
distribution of remaining assets to the partners.
d. The withdrawal of a partner from a
partnership
67. In the Adel-Brick Partnership, Adel and
Brick had a capital ratio of 3:1 and a profit and
loss ratio of 2:1, respectively. The bonus method
was used to record Colter’s admittance as a
partner. What ratio would be used to allocate, to
PREPARED BY: Gabriel Cordero, Vice President for Academics
Adel and Brick, the excess of Colter’s
contribution over the amount credited to Colter’s
capital account?
a. Adel and Brick’s new relative capital ratio.
b. Adel and Brick’s new relative profit and loss
ratio.
c. Adel and Brick’s old profit and loss ratio.
d. Adel and Brick’s old capital ratio.
68. When Mil retired from the partnership of
Mill, Yale, and Lear, the final settlement of
Mill’s interest exceeded Mill’s capital balance.
Under the bonus method, the excess
a. Was recorded as goodwill
b. Was recorded as an expense
c. Had no effect on the capital balances of Yale
and Lear.
d. Reduced the capital balances of Yale and
Lear.
69. The dissolution of partnership occurs
a. Only when a partner leaves the partnership
b. At the end of each year, when income is
allocated to the partners.
c. Only when the partnership sells its assets and
permanently closes its books.
d. Only when a new partner is admitted to the
partnership.
e. When there is any change in the individuals
who make up the partnership.
70. Which partner is considered the most
vulnerable as a result of a computation of
vulnerability rankings?
a. The partner who has the lowest loss
absorption potential.
b. The partner who has the highest loss
absorption potential.
c. The partner with the highest capital balance
d. The partner with the lowest capital balance
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71. In a partnership liquidation, the final cash
distribution to the partners should be made in
accordance with the
a. Partners’ profit and loss sharing ratio
b. Balances of the partners’ capital accounts
c. Ratio of capital contributions made by the
partners.
d. Ratio of capital contributions less withdrawals
made by the partners.
72. A schedule prepared each time cash is to be
distributed is called a(n)
a. Advance cash distribution schedule
b. Safe payment schedule
c. Loss absorption potential schedule
d. Marshaling of assets schedule
73. In an advance plan for installment
distributions of cash to partners of a liquidating
partnership, each partner’s loss absorption
potential is computed by
a. Dividing each partner’s capital account
balance by the percentage of that partner’s
capital account balance to total partner’s capital.
b. Multiplying each partner’s capital account
balance by the percentage of that partner’s
capital account balance to total partner’s capital.
c. Dividing the total of each partner’s capital
account less receivables from the partner plus
payables to the partner by the partner’s profit
and loss percentage.
d. Some other method.
74. The following is the priority sequence in
which liquidation proceeds will be distributed
for a partnership:
a. Partnership drawings, partnership liabilities,
partnership loans, partnership capital balances.
b. Partnership liabilities, partnership loans,
partnership capital balances.
c. Partnership liabilities, partnership loans,
partnership drawings, partnership capital
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balances.
d. Partnership liabilities, partnership capital
balances, partnership loans.
75. If all partners are included in the first
installment of an installment liquidation, then in
the future installments
a. Cash will be distributed according to the
residual profit and loss sharing ratios
b. Cash should not be distributed until all non-
cash assets are converted into cash
c. Vulnerability rankings for each partner should
be prepared.
d. A cash distribution plan must be prepared so
that partners will know when they will be
included in cash distributions.
76. An arbitrary amount assigned by the board
of directors to each share of a given class of no-
par stock is
a. Par Value
b. Stated Value
c. Redemption Value
d. Liquidation Value
77. An individual shareholder is entitled to
receive any dividends declared on shares owned,
provided the share is held on the
a. Date of Declaration
b. Date of Record
c. Date of Payment
d. Last day of fiscal year
78. Treasury stocks may result in
a. Increase in balance of retained earnings
b. Decrease in balance of retained earnings
c. Decrease in balance of retained earnings
authorized to be issued
d. Decrease in the amount of shares
79. Reissuing treasury stock at a price above
cost results in
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a. A gain to be reported as a separate item in the
statement of recognized income and expenses
b. A restriction of retained earnings
c. An increase in Contributed capital
d. A prior period adjustment to be reported in
the statement of retained earnings
80. If share capital is issued for outstanding
liability, the share capital is recorded at
a. Fair value of share capital
b. Fair Value of liability set off
c. Par value of shares
d. Book Value of liability set off
81. When preference shareholders have the right
to receive a specified dividend and to receive
more after a matching dividend percentage is
given to ordinary shareholders, the preference
shares are said to be
a. Callable
b. Cumulative
c. Convertible
d. Participating
82. The entry to record declaration of share
dividends includes
a. Debit to Retained Earnings for the market
value of the shares to be distributed
b. Credit to Shares Distributable to the fair value
of the shares to be distributed
c. A credit to Share Premium for the difference
between fair market value and par value of the
shares to be distributed
d. Debit to retained earnings for the par value of
the shares to be distributed
83. When a par value common stock is
exchanged for an asset such as a building, the
common stock should be credited at the
a. Par Value
b. Fair Value of the asset received
c. Book value of the asset
d. Original cost of the asset
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84. The credit balance of income and expense
summary of a corporation is closed to
a. Owner’s Capital
b. Share Capital
c. Paid in Capital
d. Retained Earnings
85. A CPA received shares of stock for services
rendered during incorporation. This should be
a. Debited to accounting fees
b. Debited to Organization cost
c. Debited to Share capital
d. Debited to Treasury Shares
86. Subscription receivable callable within one
year should be presented as
a. Current Asset
b. Non-Current Assets
c. Part of Paid in Capital
d. Deduction from paid in capital
87. Unissued Share Capital is credited to record
a. Authorization
b. Issuance
c. Collection
d. Subscription
88. Discount on share capital
a. May be recorded as either an asset or an
expense
b. Shall be closed to income summary account
c. May be offset against share premium on the
same class.
d. None of the above may be done
89. The par value of an ordinary share represents
a. The liquidation value of the share
b. The book value of the share
c. The legal nominal value assigned to the share
d. The amount received by the entity when the
share was originally issued
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90. If the stock dividend is less than 20%, what
amount of the retained earnings should be
capitalized?
a. Par value of the shares
b. Fair value of the shares on the date of
declaration
c. Fair value of the shares on the date of record
d. Fair value of the shares on the date of
issuance
91. An entity issued what is called a “20% stock
dividend”. At what amount per share should
retained earnings be reduced for the transaction?
a. Zero
b. Par value
c. Fair value at the declaration
d. Fair value at the date of issuance
92. Which of the following is false?
a. The subscription must be at least 25% of the
authorized capital stock.
b. The amount paid-in must be at least 25% of
the subscription.
c. In no cases the paid-in must be lower than
P5,000
d. If the shares are without par value, more than
25% of the authorized shares must be subscribed
93. Which of the following would not affect
retained earnings?
a. Conversion of preference shares into ordinary
shares
b. Share split
c. Reissue of treasury shares
d. Stock dividend
94. When shares with par value are sold, the
proceeds shall be credited to
a. Share capital account
b. Share premium
c. Retained earnings
d. Share capital account to the extent of the par
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value of the shares issued with any excess being
reflected in share premium
95. When shares without par value are sold, the
excess proceeds over stated value shall be
credited to
a. Income
b. Retained earnings
c. Share premium
d. Share capital
96. Loss from sale of treasury shares hall be
charged to
a. Loss on sale of treasury shares to be reported
as other expense
b. Retained earnings and then share premium
from treasury shares
c. Share premium from treasury shares and then
retained earnings
d. Share premium from original issuance, share
premium from treasury shares and then retained
earnings.
97. At the date of financial statements, shares
issued would exceed shares outstanding as a
result of
a. Declaration of share split
b. Declaration of a stock dividend
c. Purchase of treasury shares
d. Payment in full of subscribed shares
98. Total shareholders’ equity represents
a. A claim against specific assets contributed by
the owners
b. The maximum amount that can be borrowed
by the entity
c. A claim against a portion of the total assets of
an entity
d. Only the amount of retained earnings
99. The preemptive right of an ordinary
shareholder is the right to
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a. Share proportionately in corporate assets upon liquidation
b. Share proportionately in any new issue of shares of the same class
c. Receive cash dividends before distribution to preference shareholders
d. Exclude preference shareholders from voting rights
100. When the total shareholders’ equity is smaller than the amount of contributed capital, the deficiency
is called
a. A net loss
b. A dividend
c. A liability
d. A deficit

-end-

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