Académique Documents
Professionnel Documents
Culture Documents
I. True or False
1. In a prosperous and solvent business the accounts with credit balances will
normally exceed in total peso amount the accounts with debit balances.
2. The term debit may signify either an increase or a decrease; the same is true of
the term credit.
4. An entry on the left side of a ledger account is called a debit entry and an entry
on the right side is called a credit entry, regardless of whether the account
represents an asset, a liability, or owners’ equity.
5. Accounts representing items which appear on the left-hand side of the balance
sheet usually have credit balances.
6. A trial balance with equal debit and credit total proves that all transactions have
been correctly journalized and posted to the proper ledger accounts.
7. The sequence of the account titles in a trial balance depends upon the size of the
account balances.
8. A journal entry may include debits to more than one account and credits to more
than one account but the total of the debits must always equal the total of the
credits.
10. In a journal entry recording the purchase of a desk for P 275.80, both the debit
and credit were recorded and posted as P257.80. this transposition error would
not be disclosed by the preparation of trial balance.
11. The double-entry accounting system means that transactions are recorded both
in the journal and in the ledger.
12. An income statement relates to a specified period time whereas a balance sheet
shows the financial position of a business at a particular date.
13. The realization principle states that a business should never recorded revenue
until cash is collected from the customer.
14. Expense cause a decrease in owners’ equity and are recorded by debits.
15. If cash receipts are P10,000 greater than total expenses for a given period, the
business will earn a net income of P10,000 or more.
16. The journal entry to recognize a revenue or an expense usually affects an asset
or liability account as well.
17. Under accrual basis accounting, revenue is recognized when cash is received,
and expense are recognized when cash is paid.
18. An expense may be recognized and recorded even though no cash outlay has
been made.
19. Buying a building for cash is just exchanging one asset for another and will not
result in an expense even in future.
2. Which of the following statements about the rules for debiting and crediting
balance sheet account is not true?
a. Liability accounts are reduced by debit entries.
b. Accounts on the left side of the balance sheet are reduced by credit entries
c. Each transaction is recorded by equal dollar amounts of debits and credits.
d. Owners’ equity accounts and asset accounts are increased by the debit
entries.
9. On April 1, Hudson Company received and paid a P700 bill for advertising done
in March. In addition to this bill, the company paid P6,100 during April for
expenses incurred in that month. On May 2, Hudson Company paid a P4,600
payroll to employees for work done in April. Based on these facts, total expenses
for the month of April were:
a. P 6,100 c. P 10,700
b. P 6,800 d. P 11,400
PROBLEM A
The books of Abigail Placement Agency showed among others the following accounts and
their balances as at December 31, 2018, the second year of operation.
Cash P 80,000
Accounts Receivable 30,000
Allowance for Bad Debts 1,500
Notes Receivable 6,500
Insurance Expense 3,750
Car 365,000
Accumulated Depreciation 22,500
Supplies 2,500
Accounts payable 25,000
Notes Payable 15,000
Sy, Capital 334,050
Sy, Personal 35,000
Placement Income 380,000
Rent Expense 76,500
Salaries Expense 168,000
Interest Income 2,500
Interest Expense 1,800
Gas and Oil Expense 11,500
The following information were given to you by Mr. Arnel Lara, Chief of Staff of Abagail
Placement Agency, for the preparation of the adjusting entries as of December 31.
a. P 1,000 worth of supplies are still unused at the end of the year.
b. The car was purchased on March 31 of the previous year with an estimated salvage
value of P65,000
c. Insurance expense represents the amount of a one-year premium expiring on February
28, 2019
d. The note was received from a customer on November 16, 2018 for 60 days at 24%
interest.
e. Salaries of workers and clerks amounted to P800 per day from Monday to Saturday and
payable every Monday. The next payroll date is January 4 covering the previous week
payroll from December 28 to January 2.
f. An advanced payment for placement fee of P30,000 was included in the income
account.
g. The allowance for bad debts/allowance for impairment(required allowance) is 10% of
accounts receivable.
Required:
a. Use the corresponding worksheet format on the following page to come up with an
adjusted trial balance, based on the information above. (The worksheet is not graded
and is only used for facilitation purposes.)
b. The statement of final position and statement of comprehensive income columns do not
appear in the worksheet provided. The examinee will be the one who will provide for
these columns (if needed only) after coming up with the adjusted trial balance.
Answer the following questions: (the corresponding worksheet is found at the next page)
PROBLEM B
6. _________________
7. _________________
8. _________________
PROBLEM C
Ferdie Timbang Consulatancy has provided the following information regarding cash payments
to its employee in May and June:
Applying the accrual concept (except when cash basis is used) answer the following:
PROBLEM D
The information below appears in the financial records at the end of the year of Toby’s SPA
which is a health, beauty and fitness center.
12. If the owner’s capital at the start of the year was P400,000, no additional investment nor
withdrawals were made, how much was the net income or loss for the year?
PROBLEM E
Ricablanca’s Eatery has the following unadjusted account balances on December 31, 2018:
Profit: P 100,000
Assets: P 300,000
Liabilities: P 100,000
The following are the transactions in 2018. Make the necessary adjusting journal entries (on
these transactions) and effect these adjusting journal entries on the balances given above.
a. A fire insurance policy for July 1, 2018, through June 30, 2019 was purchased on May
15, 2018. The premium paid was P 24,000 and was recorded as a prepaid insurance
b. The Eatery purchased a new cash register costing P12,000 on September 1, 2018. The
cash register is expected to have useful life of seven years and a salvage value of P
1,000. No depreciation has been recorded
c. The employees were paid for their work through December 26, 2018, Monday. They
worked 300 hours for the period of December 27-31, 2018, and will be paid on January
3, 2019. the average hourly wage is P500
d. AR for the year totaled P50,000. the ALLOWANCE FOR doubtful accounts should be at
8% of AR for the year. The allowance for doubtful accounts has a beginning balance of
P 2,000.
e. The electric bill for the period of December, 2018 was P 2,000. it has not been recorded
and will be paid in 2019.
PROBLEM F
Show the change in total assets, total liabilities, and total owners’ equity that will be caused by
posting each amount in the following journal entries. In the effect of the transaction row, show
the total change in asset, liabilities, and owners’ equity that has occurred after all parts of the
transaction have been posted. Hint: The effect of each transaction should be total change on
the left side of the balance sheet (change in asset) should equal the change on the right side
(change in liabilities and change in owners’ equity). explanations have been omitted from journal
entries to conserve space. Transfer the corresponding amount to the answer sheet. (only a
single amount which represents both the right and left side of the accounting equation will be
transferred to the answer sheet.)
Example:
Office Equipment…... 600 +600
Cash……………….. 150 -150
Accounts Payable…. 450 +450
Effect of Transaction +450 = +450 + 0
17 Cash………………. 1,230
Accounts Rec. ………1,230
Effect of Transaction
18 Cash………………. 5,000
Capital……………….. 5,000
Effect of Transaction
20 Land………………. 9,000
Cash………………….1,000
Notes Payable……….8,000
Effect of Transaction
PROBLEM G
The records of MATALINO Company shows the following balances:
PROBLEM H
The incorrect Trial balance of MAYAMAN Company is shown below:
Debit Credit
Cash 80,000
Accounts Receivable 10,000
Accounts Payable 30,000
Service Income 14,500
Maya, Capital 16,100
PROBLEM I
The owner of Schneider Company invested P950,000 in his business. The total revenues
earned during the year amounted to one-half of his initial investment while withdrawals during
the year amounted to one-third of his initial investment. Expenses amounted to three fourths of
total revenues. There are no additional investments during the year.
23. What is the amount of the company’s Net income or Net loss?
24. What is the balance of the Owners’ equity account end?
PROBLEM J
The accountant of Salvador Company gathered the General Ledger account balances of the
company’s operations for the year ended, December 31, 2018 as follows:
25. What is the amount of Net income or Net loss at the end of the period?
26. What is the amount of Capital (missing xxxx) in the trial balance?
PROBLEM K
Rafael Barbin Company’s transactions during the month of August 2018 are as follows:
August
1 Barbin, the owner invested to the business P100,000 cash and Land worth
P1,500,000. the land is currently mortgage with BPI for P350,000. the business
would assume said liability.
5 Acquired Audio equipment on account P15,500
6 Office Supplies for P10,000 were purchased on account.
9 Paid rent for the month, P5,500 (use and expense account)
12 Paid Telephone bill for the month, P1,500
14 Received cash for services rendered on this date from a customer, P40,000
16 Made a 50% cash payment to the audio equipment purchased on account.
18 The company settled its account for the office supplies purchased on account
20 Billed customers for services rendered, P30,000
24 Withdrew cash from the business, P8,500
26 Collected customers account, P20,000
30 Paid Salaries of Staff for the month, P15,500
30 Paid electric bill for the month, P1,000
27. What is the amount of the business Net income for the month of August before adjusting
entries are made?
28. What is the amount of Total Assets of the business at the end of August?