FY: 2019-2020

Name:

Year & Section:

1. It is any lawful economic activity which is concerned with making goods available as well as the
rendering of useful services to those who want them with the intention of gaining a profit.
a. Business
b. Services
c.
2. This assumption means that the accounting entity is viewed as continuing in operations
indefinitely in the absence of evidence to the contrary.
a. Time period
b. Going Concern
c. Accounting Concern
d. Continuing entity
3. Which of the following is not one of the four P’s of Marketing?
a. Price
b. Promotion
c. Process
d. Product
4. Which account would normally not required an adjusting entry?
a. Wages Expenses
b. Accounts Receivable
c. Accumulated Depreciation
d. Delos Reyes,Capital
5. Angelie Company received P96,000 on April 1, 2019 for one year’s rent in advance and recorded
the transaction with a credit to a nominal account. The December 31,2019 adjusting entry is
a. Debit rent revenue and credit unearned rent revenue, P72,000
b. Debit rent revenue and credit unearned rent revenue, P24,000
c. Debit unearned rent revenue and credit rent revenue, P72,000
d. Debit unearned rent revenue and credit rent revenue, P24,000
6. On December 31,2019, Kampilan Company’s bookkeeper made an adjusting entry debiting
supplies expense and credit supplies inventory for P12,600. The supplies inventory accounts had
a P15,300 debit balance on December 31, 2018. The December 31,2019 balance sheet showed
supplies inventory of P11,400. Only one purchase of supplies was made during the month, on
account. The entry for that purchase was
a. Debit supplies inventory and credit cash, P8,700
b. Debit supplies expense and credit accounts payable, P8,700.
c. Debit supplies inventory and credit accounts payable, P8,700
d. Debit supplies inventory and credit accounts payable, P16,500
7. At the end of 2019, Javier Company made four adjusting entries for the following items:
(1)depreciation expense, P35,000; (2)expired insurance, P2,200 (originally recorded as prepaid
insurance); (3)interest payable, P9,000; AND (4)rental revenue receivable, P10,000
 In the normal situation, to facilitate subsequent entries, the adjusting entry or entries that may
be reversed is/are
a. Entry 1
b. Entry 4
c. Entries 3 and 4
d. Entries 2,3, and 4
8. What is the overall objective of accounting?
a. To supply financial information so that statement users could make informed judgement
and better decisions
b. To provide quantitative financial information about business that is useful to statement
users particularly owners and creditors in making economic decisions
c. To assist management in planning and controlling the operations of the entity
d. All of the above
9. It is a factor of production that refers to those that are used in the process of making other
goods and services such as tools, machineries, factories and etc.
a. Capital
b. Land
c. Labor
d. Entrepreneur
10. Which of the following is not a possible combination of a journal entry?
a. Increase in asset and increase in liability
b. Decrease in equity and increase in liability
c. Decrease in liability and decrease in asset
d. Increase in asset and decrease in equity
11. A subsidiary ledger is
a. A listing of the components of account balances
b. A back up system to protect against record destruction
c. A listing of all account balances just before closing entries are prepared.
d. A listing of accounts of a subsidiary company
12. Which of the following best defines a prepayment and deferral?
a. Adjusting entries where cash flow precedes revenue or expense recognition.
b. Adjusting entries where revenue or expense recognition precedes cash flow.
c. Adjusting entries where cash flow and revenue or expense recognition are simultaneous.
d. Adjusting entries where revenues or expenses are recognized in the absence of cash flow.
13. After the accounts have been closed
a. All the accounts have zero balances’
b. The asset, liability and equity accounts have zero balances
c. The revenue, expense, income summary and retained earnings accounts have zero balances.
d. The revenue, expense and income summary accounts have zero balances.
14. A post closing trial balance
a. Is a listing of general ledger accounts and their balances after closing entries have been
made.
b. Consists entirely of real accounts
c. Helps to ensure that the closing process has been performed correctly.
 d. All of the above
15. A debit balance in the income summary represents
a. Net income
b. Net loss
c. A drawing account
d. None of the above
16. Reversing entries
a. Are normally prepared for accrued, prepaid and estimated items.
b. Are necessary to achieve a proper matching of revenue and expenses.
c. Are desirable to exercise consistency and establish standardized procedures.
d. Must be made at year-end.
17. A reversing entry should never be made for an adjusting entry that
a. Accrues unrecorded revenue
b. Adjusts expired costs from an asset account to an expense account
c. Accrues unrecorded expenses
d. Adjusting unexpired costs from an expense account to an asset account

18. These accounts are not closed and carryover to the next accounting period.
a. Nominal Account c. Clearing Account
b. Real Account d. Controlling Account

19. ______POSTING_____ It is the process of transferring data from the journal to the
appropriate accounts in the general ledger and subsidiary ledger.

20. What is the common practice in the Philippines in presenting the statement of financial
position?
a. Current Assets plus Non-current assets minus current and non-current liabilities
equals equity.
b. Noncurrent assets before current assets, noncurrent liabilities before current liabilities
and equity after liabilities.
c. Equity before assets and liabilities, noncurrent liabilities before current liabilities and
noncurrent assets before current assets.
d. Current assets before noncurrent assets, current liabilities before noncurrent liabilities
and equity after liabilities.
21. A trial balance (choose the incorrect one)
a. Is a test of the equality of the debits and credits in the general ledger
b. Is a list of all open accounts in the ledger with their balances as of a given date
c. Provides information that is helpful when making adjusting entries
d. Proves that no errors of any kind have been made in the accounts during the
accounting period.
22. The payment of insurance premium is initially debited to a prepaid expense account. This
approach is known as ___ASSET METHOD___________

23. A _____PARTNERSHIP________ is a contract of two or more parties who bind

themselves to contribute Money, Property, or Industry to a common fund, with intention
of dividing profits among themselves.
 24. The one who takes active part in the business but is not known to be a partner by
outside parties.
a. Secret partner b. Silent partner c. Dormant partner d. Nominal partner

25. A partnership in which no time is specified and is not formed for a particular undertaking
or venture and which may be terminated any time by mutual agreement of the partners
or by the will of one alone.
a. Partnership with a fixed term c. Partnership with a limited term
b. Partnership at will d. Partnership by estoppels

26. A loan due from a partner is classified in the statement of financial position as a/an
__CURRENT ASSET____________

27. the liquidation of a partnership, any partner who has a capital deficiency
a. has a personal debt to the partnership for the amount of the deficiency.
b. is automatically terminated as a partner.
c. will receive a cash distribution only on the basis of his or her income-sharing ratio.
d. it may be written off to a Loss account

28. An entry is not required in the liquidation of a partnership to record the

a. payment of cash to creditors.
b. distribution of cash to the partners.
c. sale of noncash assets.
d. allocation of a capital deficiency to partners with credit balances when the deficient
partner is expected to pay the deficiency.

29. Which of the following is correct when admitting a new partner into an existing partnership?
Purchase of an Interest Admission by Investment
a. Total net assets unchanged unchanged
b. Total capital increased unchanged
c. Total net assets unchanged increased
d. Total capital unchanged unchanged

PROBLEMS

Presented below is unadjusted trial balance of AJD Company for the year ended December
31, 2020:

AJD Company
Unadjusted trial balance
December 31, 2020

Cash P 94,500
Accounts receivable 483,750
Office supplies 47,250
Prepaid rent 270,000
Furniture & Fixture 1,631,250
Accumulated depreciation P 326,250
Accounts payable 213,750
24% Note payable 675,000
Angel, Capital 1,421,250
Angel, Drawing 900,000
Service income 3,849,750
Salaries expense 2,828,250
Utilities expense 161,250
Taxes & licenses expense 69,750 ______
Total P6,486,000 P6,486,000

Additional information:
 Depreciation expense for furniture & fixture is 10% per annum.
 Office supplies on hand at December 31, 2020 amounted to P21,250.
 On October 31, 2020. Angel paid lessor for one year worth of rent on the office building,
commencing on November 1, 2020.
 As of December 31, 2020, the following expenses were still unrecorded and unpaid:
a. Salaries of employees for the second half of December, P78,750.
b. Telephone, heat, light, and power for the December P21,500.
 Interest 24% on note issued should be accrued. The note is dated October 1, 2020.
(Interest is computed on a monthly basis)

Compute the following:

30. Adjusted trial balance__6,789,875__________

31. Net income___415,625_________
32. Total Assets____1,966,375_________

In each of the independent cases given below.

December 31, 2019 Raffy Kyrie Barbie

Assets 100,000 200,000 520,000
Liabilities 60,000 120,000

December 31, 2020

Assets 150,000 240,000 670,000
Liabilities 90,000 130,000 300,000

33. If Kyrie made additional investment of P50,000 on August 1 and a cash withdrawal of
P95,000 on December 15, how much was the net income for 2020?
___ 75,000________
34. If Barbie made no additional investment but made a cash withdrawal of P50,000 and
incurred a net loss of P20,000 for 2020, how much was the liabilities December 31,
2019?____ 80,000__________
35. Barbara Company bought merchandise on January 2, 2020 from Kurimaw Company
costing P15,000; terms, less 20%, 20% down payment, balance 2/10, n/30. Two days
after, P2,000 worth of merchandise was returned due to wrong specification. Barbara
Company paid the account within the discount period. How much Barbara Company
paid to kurimaw Company? _____7,448______
36. On January 10, 2020, Lao Company sold merchandise on account fob destination to
Febryan Co. for P20,000. Febryan Co. paid the freight cost of P1,500 to be deducted from
its account. How much Febryan Company paid to Lao Company? ____18,500____
On January 3, 2020, the owners of QUAD-A Enterprises decided to dissolve the partnership due
to successive losses during the previous years. Capital balances on December 31, 2019 before
adjustment: Allan, 112,000; Adrian, 58,200; Arianne, 75,000; Aleli, 84,400. Withdrawals made by
them were 12,000, 1,500, 3,000, 5,000 respectively. Adriann made an additional investment in
March amounting to 9,200. Their profits and losses ratio is 1:4:1:2. All partners are solvent except
for Aleli. Adrian could only invest more up to 10,000 in case of capital deficiency. Certain amount
of cash is to be withheld for the unpaid and unrecognized liabilities and liquidation expenses.

Partnership assets and liabilities on January 2, 2020

Cash 9,000
Inventory, net 451,500
Accounts Receivable 245,000
Loan to Arianne 12,000
Equipment 182,000
Liabilities ?
Loan from Allan 20,000

Loss from operation in 2019 amounted to 32,000

JANUARY
Inventory and Equipment with carrying amount of 280,000 and 100,000 respectively were sold at
75% of their book value. Cash in excess of the liabilities and expenses were distributed to
partners. One-fourth of the accounts receivable were collected.

FEBRUARY
The remaining accounts receivable were collected at 20% loss. Inventory of 100,000 were sold
at 40,000 gain and liquidation expenses of 7,000 were paid. Unrecorded liabilities of 11,000 were
discovered. Cash in excess of the liabilities and expenses were distributed to partners.

MARCH
Sold all the remaining noncash assets for 200,000 and paid the outstanding liabilities; Distributed
cash to partners.

37. Amount due to outside creditors before liquidation___594,200____

38. Share of Adrian in the maximum possible loss in January___ 218,625_____
39. Cash received by Aleli in January__0______
40. Cash received by Arianne in March___ 48,093.75____

41. A partnership recorded the following journal entry:

 This entry reflects:
a. Admission of a new partner who invests P70,000 and receives a P20,000 bonus.
b. Withdrawal of a partner who pays a P10,000 bonus to each of the other partners.
c. Admission of a partner who pays a bonus to each of the other partners.
d. Additional investment into the partnership by Tanner and Jackson.

Partners Adan and Eba have capital balances in a partnership of P400,000 and P600,000,
respectively. They agree to share profits and losses as follows:
Adan Eba
As salaries P100,000 P120,000
As interest on capital at the beginning of the year 10% 10%
Remaining profits or losses 50% 50%

42. If income for the year was P500,000, what will be the distribution of income to Eba?_
270,000_
43. If income for the year was P300,000, what capital ending for Adan?__ 530,000_____

Jameson and Larryare forming a partnership. Jameson will invest a truck with a book value of
P100,000 and a fair market value of P140,000. Larry will invest a building with a book value of
P300,000 and a fair market value of P420,000 with a mortgage of P150,000.

44. At what amount should the building be recorded? _____420,000_________

45. What amount should be recorded in Larry’s capital account? ______270,000_____