Fundamentals of Accounting 1

Part I- True or False

Write A if the statement is true and write B if the statement is False.
1. A simple entry has only one debit and credit while a compound entry has two or more debits
and credits.
2. There are four distinct functions of accounting namely, recording, classifying, summarizing
and interpreting. Of the four functions, the interpreting function may be considered as the
most important simply because the first 3 functions can now be easily performed faster and
with reasonable degree of accuracy by the computer.
3. The Professional Regulatory Board of Accountancy is composed of a Chairman and 6
members. all of whom are appointed by the President of the Republic of the Philippines
4. A person convicted of any criminal case involving moral turpitude is eligible to apply for the
Certified Public Accountant Board Examination
5. Friar Luca Pacioli was considered as the Father of Single Entry Bookkeeping
6. Under the accrual basis of accounting, income is recorded or recognized only when collected
and expenses are recorded only when paid
7. Under the Going Concern assumption, a business enterprise is assumed that is has no
intention nor the need to liquidate or curtail materially the scale of its operation
8. The sole purpose of the Conceptual Framework is to assist standard setting bodies (local and
international) in the formulation of new accounting standards.
9. All accounts appearing in the Statement of Financial Position are called nominal accounts in
the sense that their balances are carried forward from period to period.
10. Financial statements are the means by which the information accumulated in and processed
by financial accounting is communicated to the users on a periodic basis
11. Financial information is capable of making a difference in the decisions if it has predictive
and confirmatory value
12. A liability is a future obligation of the entity arising from past events, the settlement of
which is expected to result in an outflow from the entity of resources embodying economic
benefits.
13. Generally Accepted Accounting Principles (GAAP) are principles (including concepts and
assumptions) which have gained international acceptance in the business world and the
accountancy profession that are used in preparing financial statements
14. The Trial Balance is a listing of account titles to be used in the recording business of
transactions
15. A T Account is an accounting device that is used to summarize the changes in the
accounting elements
Part II- Multiple Choice
16. Accounts receivable reduced by Allowance for Doubtful Accounts or Allowance for
Uncollectible Accounts equals
a.) Carrying amount b.)Liquidation value c.)Net realizable value d.) Appraised value
17. Which of the ff. accounts is a liability?
a.) Accrued income b.) Accrued Expense c.) Prepaid Expense d.) Deferred Expense
18. Which of the ff has the most complex operations?
a.) Manufacturing b.) Merchandising c.)Trading d.) Service
19. Which of the following is not a requirement for taking the CPA licensure examination?
a.) Holder of a BSA degree b.) Filipino Citizen c.) Good Moral Character d.)21 years of age or more
20. Which of the following has/have unlimited liability for the unpaid debts of the business?
a.) Sole proprietor b.) General partner c.) Both a & b d) Neither a orb
21. Plant, Property and Equipment less Accumulated Depreciation equals
a. Net book value b.) Liquidation value c. Net realizable value d.) Appraised value

22. Which of the following is not an function of accounting?

a. Bookkeeping b. Budgeting C.)Interpreting d.) Summarizing

23. The owner's equity is computed as

a. Revenues less expenses c. Cash inflows less cash outflows
b. Beg. capital less withdrawals d. Assets less liabilities

24. A business organization whose owners are called shareholders

a. Partnership b. Sole proprietorship c Corporation d. Cooperative

25. The statement of Financial Position contains what types of accounts

a. Real accounts b. Nominal accounts c. Mixed accounts d. Bot a&b

26. The Statement of Comprehensive Income contains

a. Permanent Accounts b Temporary Accounts c. Mixed accounts d. Special Journals

27. The book of original entry

a. General Ledger b. General journal c. Subsidiary ledgers d. Special Journals

28. General Purpose financial statements are one type of financial accounting report that is
distributed to:
a. Internal Users b. Stakeholders c. External Users d. All of them

29. Financial statements are prepared at the end of every accounting period, a typical example
of which will include
a. Balance Sheet b. Income statement c. Notes to financial statements d All of them

30. Which of the following is a Generally Accepted Accounting Principle (GAAP)

a. Business entity b. Matching of cost against revenue c. Going concern d. Accounting period

PART III- Problem Solving

A. Dan Albert Besinal is the owner and operator of a motivational consulting business. At the
end of its accounting period, December 31,2013, it has assets of P800,000 and liabilities of
P450,000. Using the accounting equation, determine the following amounts:
1. Owner's equity as of December 31,2013
2. Owner's equity as of December 31,2014, assuming that assets increased by P175.000
and liabilities decreased by P60,000 during 2014
B. The revenues and expenses of Vincent Sales’ Travel Service for the year ended June
30,2013 are listed as follows: Fees earned P950,000; Office expenseP222,000, Miscellaneous
expense P16,000, Office supplies P.28,000 and Salaries and wages expense P478,000.
3. What is the net income as of June 30,2013?

C. Effect of transactions on accounting equation. State the effect whether increase by how
much, decrease by how much or no effect, A vacant lot acquired for 100,000 is sold for
P350,000 in cash
4. What is the effect of the sale on the total amount of the seller's asset
5. What is the effect of the sale on the total amount of the seller's liabilities?
6. What is the effect of the sale on the total amount of the seller's owner's equity?
D. On June 1, the cash account balance was P17,200. During June, cash payments totaled
P178,300 and the June 30 balance was P23,900.
7. Determine the cash receipts during June.
E. 8. The income statement of a proprietorship for the month of December showed a net income
of P120,000. During the same period, the owner withdrew P130,000 in cash from the business
for personal use.
8. Would it be safe to say that the business incurred a net loss of P10,000 during the
month? Yes or No
F. As of January 1, Barut Capital has a credit balance of P125,000. During the year,
withdrawals was totalled P7,000 and the business incurred a loss of P130,000.
9. Compute the balance of Barut Capital as of the end of the year

G. On March 1,2018, Renart Sese established Marine Beauty Queen Realty, which completed
the following transactions during the month:
a.) Transferred cash from personal bank to an account to be used for the business, P18,000
b.) Purchased supplies on account P1,200
C.) Earned sales commissions receiving cash, P14,000
d.) Paid rent on office and equipment for the month, P3,000(Use an expense account)
e.) Paid creditor on account, P750
f.) Withdrew cash for personal use, P2,000
g.) Paid automobile expense including rental charger for month P 1,500 and miscellaneous
expense P400
h.) Paid office salaries expense P2,800
i.) Made additional investment of P8,000
10.What is the unadjusted trial balance total?
11. What is the amount of total revenues recorded in the ledger?
12. What is the amount of total expenses recorded in the ledger?
13. What is the amount of net income (loss) for March 2018?
14. How much is the increase or decrease in the owner's equity for March?
H. Items 15-21 Compute the missing items from the independent cases.
CASE Asset Liability Owner’s Equity
A 10,000 2,000 (15)
B 31,000 (16) 20,000
C (17) 20,000 80,000
D 36,000 48,000 (18)
E (19) 60,000 (11,500)
F 14,600 (20) (34,000)
G 56,000 (21) 56,000

I. The following balances of the different accounts of Unclear Photocopying Center on

December 31,2018
Cash 37,500
Accounts Receivable 28,000
Notes Receivable 1,000
Furniture & Fixture 34,500
Photocopying Equipment 220,000
Accounts Payable 26,500
Loan Payable 58,000
Note Payable 3,000
Capital 200,000
Drawing 5,000
Service Income 150,000
Rental Income 8,000
Salaries Expense 32,000
Supplies Expense 60,000
Utilities Expense 10,000
Advertising Expense 15,500
Miscellaneous Expense 2,000

22. What is the unadjusted trial balance total?

23. Determine the total expenses as of December 31,2018
24. How much is the total revenues as of December 31,2018
25. Compute for the net income (loss) for the month of December 31,2018.
J. The following balance were extracted from the general ledger of Zeus Company on
December 31,2018, its first year of operations.
Rent Expense 27,000
Loan Payable 31,750
Cash ?
Personal 30,750
Supplies Expense 47,216
Accounts Payable 43,928
Accounts Receivable 17,424
Insurance Expense 4,888
Delivery Van 115,862
Laundry Equipment 86,275
Utilities Expense 3,334
Salaries and Wages Expense 101,039
Income from laundry and services 271,357
Advertising Expense 5,472
Miscellaneous Expense 1,506
Capital 150,000
Transportation Expense 3,464
Repairs and maintenance expense 9,080

26. What is the balance of cash as of December 31,2018?

27. What is the unadjusted trial balance total as of December 31,2018?
28. Determine the Net Income.
NAME:________________________________
SECTION:_____________________________

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