Name:____________________________________________ be able to appreciate the financial reports,

Section:_________________Date:________ Quiz #:_______ come up with good judgement in evaluating the

QUIZ 1: ACCOUNTING EQUATION 9. S1: This is a business set up and managed by one
person. Most small businesses such as beauty
PART I. TRUE OR FALSE: Identify if the statements are parlors, dress shops, barbershops, and bakers
true or false. Choose the letter that represents the correct are sole proprietor-owned.
combination of answers. (2PTS EACH) S2 When Income is greater than the Expenses, the
difference is Net Income. It shall be deducted in
a. Both c. Only statement II is the computation of ending balance of Equity.
statements true.
are true. 10. S1: Partnership means a business owned by two or
b. Only d. Both statements are more persons called partners who contribute
statement I is false. money, property and talent into common fund.
true. S2 Cash Concept recognizes revenue only when
1. S1: The first accounting book was written by cash is collected and expenses only when cash
Cotrugli in Naples and the modern double entry is paid. This concept is applicable for a small
bookkeeping system could be traced from the business which has short operating cycle and
book prepared in 1494 by an Italian where the focus of attention may be more on
mathematician, fr. Luca Pacioli, entitled Summa liquidity or short-term cash position of the firm.
de Arithmetica.
S2 Owner’s equity is affected by four elements: PART III. IDENTIFICATION: Write the answer in the space
contributions and revenues on one hand
provided. (1PTS EACH)
(increasing owner’s equity), withdrawals and
expenses on the other hand (decreasing 1. _____________ is defined as a service activity whose
owner’s equity).
function is to prepare financial reports that will provide
2. S1: Both sole proprietorship and partnership can be relevant information about the business. It may also be
easily terminated. defined as a process of recording, classifying and
S2 Prepaid expense is an example of Asset summarizing transactions and events which are financial
account. in nature and interpreting the results thereof.
2. _____________ is a resource obtained and controlled by
3. S1: Corporation has a separate legal entity.
S2 Capital – account title used to show the original the enterprise as a result of past event and from which
and additional investment of the owner of the probable future economic benefits are expected to flow
business enterprise. Drawing- account title to to the enterprise.
show the cash withdrawn by the owner/s for 3. ________________________________is an accounting
business expenses. principle which states that a business enterprise should
4. S1: Manufacturing business automatically has a
be separate and distinct from its owner or investor.
longer operating cycle compared to 4. _____________is defined as a present obligation arising
Merchandising or Service. from past event, the settlement of which is expected to
S2 Unearned income is Income account. result in an outflow of resources from the enterprise.
5. _____________ is the residual right or interest of the
5. S1: When a business ordered merchandise
owner(s) in the entities net assets.
inventory, it is a transaction that affects the
elements of financial statements. 6. ________________________________ is an accounting
S2 The sole proprietor has unlimited liability with principle which states that entity should be expected to
regards to the obligations of the sole continue exist indefinitely.
proprietorship. It means that the sole owner up 7. ________________________________ is an accounting
to his/her capital investment in the business. principle which states that assets, liabilities, revenues or
6. S1: If Asset is greater than the Liability, it is a
expenses should be recognized based on the period they
positive net worth. relate or based on the occurrence of the transaction /
S2 Prudence requires that the information should event rather than based on cash received or paid.
be useful to all users. 8. _____________________________is a list of assets,
liabilities, and owner’s equity of a business. This
7. S1: Partners have unlimited liability. Meaning they statement informs users of the wealth and obligations
are liable up to their personal assets.
S2 Conceptual framework is a structure of accumulated by the business.
theoretical principles, rules, and procedures 9. _____________________________is a statement which
used as reference for financial reporting and for requires an entity to present income and expenses.
standard development. 10. _____________________________is a cash report
showing where the money came from and where the
8. S1: It is possible to have asset from liability.
money was used.
S2 Verifiability requires that the users have enough
knowledge of finance, accounting, economics to
 Php 5,000 each
worker.
d.) He bought cooking
equipment and paid
Php 350,000.
e.) He bought office
PART III. MULTIPLE CHOICE PROBLEM: Choose the letter equipment form Da
that correspond your answer. (2PTS EACH) Best for Php 125,000
PROBLEM 1 on credit.
f.) He paid half of the
Jasper Cyril started his own computer shop business. He account due to Da
invested P200,000 as his capital and borrowed additional Best.
P70,000 to finance the needs of the business. He bought g.) He took home Php
Furniture and fixtures worth P84,000 in cash. Rent Expense for 5,000 cash for his own
the month is P8,000 and utilities Expense (Electric, water, use.
5.) Net effect on Assets:
internet) amounting to P7,000. He also bought supplies worth
a. 1,565,000 b. 1,865,000 c. 1,575,000 d. 1,585,000
P120,000 in cash – half of this was used. Cash sales for the
month amounts to P70,000. Before the month ends, He paid 6.) Net effect on Liabilites:
50% for his liability. He withdraw P30,000 for his personal a. 150,000 b. 75,000 c. (75,000) d. 225,000
needs.
7.) Net effect on Equity:
a. 1,490,000 b. 1,500,000 c.1,510,000 d. (10,000)
1.) How much is the ending balance of Cash?
a. 86,000 b. 56,000 c. 116,000 d. P91,000 PROBLEM 3

2.) How much is the Net Income / (Net Loss)? As of the end of the year, the balance sheet of the business,
a. (P 65,000) b. P 55,000 c.P 3,000 d.(P 5,000) MJ’s shop total liabilities of P543,650 , and capital balance of
P450,800. During the year, total assets increased by P124,440
3.) How much the ending balance of his Capital?
a. P 165,000 b.P 173,000 c.P 225,000 d.P 105,000 , and total liabilities increased by P165,670. The proprietor,
Mary Joy, also had total drawings for personal use of P66,600.
4.) How much is the total Assets?
a P 230,000 b.P 260,000 c.P 200,000 d.P 235,000 Based on the above, compute for the following:

8.) Total assets as of the end of the year.

Determine the total effect to the Assets, Liabilities and 9.) Total liabilities as of the beginning of the year.
Owner’s equity of transactions of Wilson’s Enterprise: a. 492,030 b.377,980 c. 870,010 d. 994,450

Transactions Assets Liabilities Owners 10.) Capital balance as of the beginning of the year.
Equity a. 492,030 b.377,980 c. 870,010 d. 994,450
a.) Wilson received a
retirement pat of Php
3,000,000 cash and
invested half of this to
put up his business.
b.) From the remaining
pension of Php
500,000, he got a car
for his own use, Php
750,000 and issued a
note for the balance.
c.) He hired a cook, a
cashier and a server
for a monthly salary of