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1. Cash 20,000
Terrible Capital 20,000
2. Store Supplies 6,000
Cash 6,000
3. Rent Expense 5,000
Cash 5,000
4. Store Equipment 12,000
Accounts Payable 12,000
5. Cash 8,250
Service Income 8,250
6. Wages expense 1,250
Cash 1,250
7. Cash 19,300
Service Income 19,300
8. Accounts Payable 4,000
Cash 4,000
9. Terrible, Drawing 9,000
Cash 9,000
Required:
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2. Equation 1: Profit = Revenue > Expenses
Equation 2: Assets = Liabilities + Capital
a. Only equation 1 is correct
b. Only equation 2 is correct
c. Both equations are correct
d. Both equations are not correct
4. Statement No. 1: Current assets are expected to be realized, or are held for sale or
consumption in the normal course of the business operating cycle.
Statement No. 2: Current assets are held primarily for trading purposes or for short-term
period and expected to be realized into cash within one year from the SFP date.
a. Only statement 1 is correct.
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are not correct
8. Statement 1: Under accrual accounting, the enterprise profit is the difference of cash
receipts and cash disbursements.
Statement 2: Under accrual accounting, the enterprise’s income will include income earned
from uncollected sales.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are not correct
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9. Statement No. 1: the statement of financial position reports the performance of the
business.
Statement No. 2: The statement of financial position reports whether the business is liquid
or not.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are not correct.
11. All of the following are operating activities of the business, except
a. The owner put in his personal cash as initial working capital of the business
b. Spent portion of cash to pay salaries and wages of employees of the business
c. Render service t the customer and earned service income
d. Paid the accounts payable arising from previous purchase of supplies.
The total assets of the business amount is P210,000. The claim of the owner is 1/3 of the total
assets. The working capital during the year is P40,000. The liabilities falling due within 12 months
is P70,000.
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17. The amount of total assets is
a. P25,000 credit c. P70,000 debit
b. P35,000 credit d. P90,000 debit
“If a man empties his purse into his head; nobody can take away from him. An investment in
knowledge pays the best interest!”
Benjamin Franklin
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