UNIVERSITY OF SAN JOSE – RECOLETOS

Senior High School Department

S.Y. 2018 – 2019 First Semester

STATEMENT OF CHANGES IN EQUITY (SCE)

STATEMENT OF FINANCIAL POSITION (SFP)

QUIZ
KNOWLEDGE
TEST I. TRUE OR FALSE: Write “True” if the statement is correct and “False” if it is wrong.
1. (False) An entry on the same side of the normal balance of an account means to decrease the account.
2. (False) The normal balance of liabilities and equity is debit.
3. (False) The normal balance of notes payable is debit.
4. (True) Credit means the right side of an account.
5. (True) The normal balance of unearned income is credit.
6. (False) The SFP tells users about the company’s financial performance as of a specific date.
7. (False) Assets = Liabilities + Owner’s Equity is the governing equation of the SCE.
8. (True) Asset is an element of the SFP that has a normal debit balance.
9. (True) Debit means the left side of an account.
10. (False) T-account is a representation of the general journal used in teaching accounting.
11. (False) Payables are assets that pertain to the company’s right to collect or right to claim payment.
12. (False) Merchandise inventory found in SFP refers to the cost of sold merchandise.
13. (False) Prepaid expense is an expense account that refers to future expenses paid in advance by the company.
14. (False) Property, plant and equipment are long-term assets which are not used in the business operations.
15. (False) Intangible assets are long-term assets that have tangible properties.
16. (False) Receivables are obligations to make payments.
17. (True) Accounts payable are obligations to the suppliers of purchased inventories.
18. (False) Notes receivable refers to obligation to pay documented in a promissory note.
19. (False) Accrued income refers to advance payments made by customers to the company.
20. (False) Long-term liabilities are obligations to be settled within one year away from SFP date.
21. (False) The SCE is dated as of a specific date.
22. (False) The drawing account is used for sole proprietorship, partnership and corporation.
23. (False) Retained earnings account has a normal debit balance.
24. (False) Dividends declared by a corporation are credited to retained earnings account.
25. (False) A corporation consists of a minimum of 5 stockholders and a maximum of 15.

PROCESS
TEST I. SHORT PROBLEMS: Write the correct answer on the space provided for each item.

1. If total assets is 100,000 and total liabilities is equal to owner’s equity, how much is owner’s equity? _________

100,000 = 50,000 + 50,000

2. On January 1, 2017, total assets is 100,000 and total liabilities is 60,000. On December 31, 2017, how much is
total liabilities if total assets increased by 25% and owner’s equity decreased by 10%? ______________

100,000 = 60,000 + 40,000

125,000 = 89,000 + 36,000

3. Joseph invested 200,000 to start his business. During the first year of operations, the business had a net
income of 30,000. During the second year, Joseph invested additional 200,000 and the net income was 100,000.
At the end of the second year, his capital balance was 400,000. How much was his total drawing? ___________

200,000 + 30,000 = 230,000

230,000 + 200,000 + 100,000 – 130,000 = 400,000

4. Ending owner’s equity amounted to 100,000. Beginning owner’s equity amounted to 150,000. Additional
investments during the year amounted to 50,000. Net loss was 25,000. The net decrease in owner’s equity for
the year is ____________.

150,000 – 50,000 = 100,000

5. Consider the following accounts with normal balances:

Cash in bank 120,000
Prepaid insurance (1 year coverage) 15,000
Accrued rent expense 10,000
Unearned interest income 35,000
Supplies inventory 20,000
Accounts receivable (collectible within 3 months) 100,000
Allowance for bad debts 3,000
Office equipment 65,000
Accumulated depreciation – Office equipment 13,000
The total assets is _______________.

120,000 + 15,000 + 20,000 + 100,000 – 3,000 + 65,000 – 13,000 = 304,000

6. Based on the data in No. 5 above, how much is the net realizable value of accounts receivable? ____________

100,000 – 3,000 = 97,000

 7. Based on the data in No. 5 above, how much is the net book value of office equipment? ____________

65,000 – 13,000 = 52,000

8. Based on the data in No. 5 above, how much is the total current assets? ____________

304,000 – 52,000 = 252,000

9. Based on the data in No. 5 above, how much is the total noncurrent assets? ____________

65,000 – 13,000 = 52,000

10. Consider the following accounts with normal balances:

Notes payable (mature in 1 year) 100,000
Accrued salaries expense 8,000
Accrued rent income 7,000
Accounts payable (to be paid in 2 months) 35,000
Unearned rent income (will be earned in 5 months) 15,000
Cash in bank 90,000
Petty cash fund 5,000
Mortgage payable (due in 3 years) 150,000
Bad debts expense 2,000
The total liabilities is _______________.

100,000 + 8,000 + 35,000 + 15,000 + 150,000 = 308,000

11. Based on the data in No. 10 above, how much is the total current liabilities? ____________

100,000 + 8,000 + 35,000 + 15,000 = 158,000

12. Based on the data in No. 10 above, how much is the total noncurrent liabilities? ____________

150,000

SCORING:
TRUE OR FALSE: 25 x 1 = 25 points PROBLEMS: 12 x 2 = 24 + 1 = 25 points TOTAL = 50 points