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Central Mindanao University

COLLEGE OF BUSINESS AND MANAGEMENT


Department of Accountancy
FINAL EXAM
ACCY 21* Principles of Accounting
December 1, 2016

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GENERAL INSTRUCTIONS:
1. Write ALL your answers in clear and legible CAPITAL LETTERS.
2. Avoid copying the answer of your seatmate.
3. Do not cheat. Anyone caught cheating will be automatically given a 5.0 in the final term
exam.
4. Provide only what is asked. Do not write anything on the paper, unless required.
5. Wrong spelling is considered wrong.
I hereby affix my signature as a sign of adherence to the above-mentioned general instructions.

____________________________
SIGNATURE OVER PRINTED NAME
Date: _______________________
I.

TRUE or FALSE. Write VEN if the statement is true, otherwise write PARSNIP.
1. Revenue is equal to the cash received by a company during an accounting
period.
2. Applying accrual accounting results in a more accurate measurement of profit
for the period than does the cash basis of accounting.
4. A deferral is the recognition of an expense that has arisen but has not yet been
recorded.
5. An adjusting entry includes at least one balance sheet account and at least one
income statement account.
7. When a reduction in prepaid insurance is not properly recorded, this causes the
asset accounts and expense accounts to be understated.
9. The amount of accrued revenues is recorded by debiting an asset account and
crediting an income account.
11.The adjusting entry to recognize earned commission revenues not previously
recorded or billed will cause total assets to increase.
13.The adjusting entry to recognize an expense which is unrecorded and unpaid will
cause total assets to increase.
15.Business activities are said to be accountable when they affect the accounting
elements.
16.Omission in posting in either debit or credit entry in the journal will affect the
total of a trial
balance.

II. Classify each item as Asset, Liability, Owners Equity, Revenue, or Expenses. Write your answer
before the number.
11.Prepaid Insurance
16.Accrued Rent Expense
12.Furniture and Fixtures
17.Prepaid Insurance
13.Bonds Payable
18.Unearned Service
Revenues
14.Retained Earnings
19.Service Revenue
15.Accrued Rent Income
20.Salaries and Wages
III. MULTIPLE CHOICE. Write the letter of your answer before the number.
For questions 21 to 23, use the following data.
Brytko Diri made the following investment:
Cash
Equipment
TOTAL

P90,000
100,000
P190,000

At the end of the month, the total income earned and total expenses incurred and paid by
the business were P70,000 and P40,000 respectively. If all income and expenses are all
accounted for cash and there is no liability incurred, answer the following questions:

21. How much is the amount of cash left for the


business?
a. P100,000
c. P150,000
b. P120,000
d. P160,000
22. How much is the amount of total assets after considering the month's
transactions?
a. P220,000
c. P260,000
b. P250,000
d. P220,000
23. How much is the new owner's equity balance of
Brytko Diri?
a. P180,000
c. P205,000
b. P195,000
d. P220,000
24. Gong Yoo Co. has an unpaid rental in the amount of P6,000. The bookkeeper mistakenly
recorded
the adjustment at P9,000. The adjusting entry to correct the balances of accounts affected in the
entry would be CREDI
DEBIT
T
Accrued Rent Expense,
a. Rent Expense, P3,000
P3,000
Accrued Rent Expense,
b. Rent Expense, P6,000
P6,000
c. Accrued Rent Expense, P3,000
Rent Expense, P3,000
d. Accrued Rent Expense, P6,000
Rent Expense, P6,000
25. Song Hye-kyo was engaged in printing industry in Korea for the first time. She offered
credit terms
to customers and collections are satisfactorily done. During the peak season of
December,
Accounts Receivable showed a debit balance of P65,000 representing credit charges to
customers
and a credit of P25,000 representing collections from customers. If Accounts
Receivable
at the end of December was P85,000, Accounts Receivable at December 1 should have
been
a. P45,000
c. P60,000
b. P50,000
d. P75,000
26. An error in trial balance wherein the orders of the figure are written in reverse
order as
257 instead of 275.
c. posting
a. transposition error
error
b. sliding error
d. footing error
27. An error in placing the decimal point of a figure as P2.75 is incorrectly written as
P275.
c. posting
a. Transposition error
error
b. sliding error
d. footing error
28. A statement that summarizes the debit and credit entries of each account in a general
ledger
a. Balance Sheet
c. Trial Balance
b. Income Statement
d. Statement of Account
29. Which of the following transactions would not result in an increase in
revenues?
a. Sale of goods on credit
b. accumulation of interest in bank account

c. Sale of services for cash


d. An investment in the business by the owner
30. Failure to record depreciation at year end will result
in an
a. Overstatement of total liabilities
b. overstatement of total
assets
c. overstatement of profit
d. understatement of total liabilities
31. Failure to adjust for accrued wages at year end will result in an
a. overstatement of liabilities
b. understatement of owner's equity
c. overstatement of profit
d. understatement of assets
32. An adjusting entry made to record accrued interest on notes payable due next
year
consist of a debit to
a. Interest Expense and a credit to Interest
Payable
b. Interest Receivable and a credit to Interest Earned
c. Cash and a credit to Notes Payable
d. Unearned Revenues and credit to Service Revenues
33. The adjustment for that portion of revenue received in advance which
now has
been earned is to debit
a. Unearned Revenues and credit to
Cash
b. Service Revenues and a credit to Unearned Revenues
c. Cash and credit to Unearned
Revenues
d. Unearned Revenues and credit to Service Revenues
34. Which of the following transactions will not result in the recognition of an
expense?
a. A cash withdrawal by the owner
b. Expiration of prepaid insurance
c. interest accrued on bank
loan
d. Use of machinery during the period
35. The recording of an expense could result in the corresponding increase
in
a. an asset
c. a liability
b. owner's equity
d. revenue
36. Which of the following transactions during the year would most likely no need
an
adjusting entry at the end of the period?
a. purchase of a two-year insurance policy
b. cash withdrawal by owner
c. purchase of office equipment
d. performance of a service that previously was paid for
37. Which of the following is an example of a deferral?
a. a commission collected in advance
b. interest earned on bank account

c. interest expense incurred but not yet paid


d. medical fees earned but not yet collected
38. Which of the following is an example of an accrual?
a. Equipment purchased for use in the business
b. bookkeeping fees collected but not yet
earned
c. interest earned but not yet received
d. six months' rent paid in advance

Use the following information to answer questions 19 to 23 below. The trial balance
for
Matt Damon Company appears as
follows:
Matt Damon Company
Trial Balance
December 31, 2016

Cash
Accounts Receivable
Prepaid
Insurance
Suppli
es
Office
Equipment
Accumulated
Depreciation
Accounts
Payable
Damon,
Company
Service
Revenue
Salaries
Expense
Rent Expense

P20,00
0
50,000
5,000
15,000
40,000
P20,00
0
30,000
60,000
50,000
10,000
20,000
P160,
000

P160,
000

39. If on December 31, 2016, supplies on hand were P2,000, the adjusting entry
would contain
a. debit to supplies for P2,000
b. credit to supplies for P2,000
c. debit to supplies for
P13,000
d. Debit to supplies expense for
P13,000
40. If on December 31, 2016, the unexpired insurance amounted to P2,000, the
adjusting
entry would contain a
a. debit to prepaid insurance for
P3,000
b. credit to prepaid insurance for
P3,000
c. debit to insurance expense for

P2,000
d. credit to prepaid insurance for
P2,000
41. If the estimated depreciation for the office equipment were P20,000, the
adjusting
entry would contain a
a. credit to Accumulated Depreciation for
P20,000
b. credit to Depreciation Expense for P20,000
c. debit to Accumulated Depreciation for
P20,000
d. credit to office Equipment for
P20,000
42. If as of December 31, 2016, the rent of P10,000 for December had not
been
recorded or paid, the adjusting entry would include a
a. credit to Accumulated Rent for
P10,000
b. debit to Rent Payable for P10,000
c. debit to Rent Expense for P10,000
d. credit to Cash for P10,000
43. If services totaling P12,500 had been performed but not yet billed, the adjusting
entry to record this would include a
a. debit to Service Revenues for
P12,500
b. debit to Unearned Service Revenues for
P12,500
c. credit to Service Revenues for
P62,500
d. credit to Service Revenues for
P12,500
44. Wages Payable were P3,500 at the end of September and P2,00 at the end of
October.
Wages Expense for October was P18,000. How much cash was paid for
wages
during October?
a. P18,700
c. P17,300
b. P24,100
d. P11,700
45. Unearned Revenue was P6,000 at the end of February and P7,500 at the end of
October.
Wages Expense for October was P18,000. How much cash was received for
services
provided during March?
a. P2,400
c. P17,400
b. P14,400
d. P5,400
46. If the business is not being sold or closed, the amounts reported in the
accounts
for assets used in the business operations are based on the cost of the
assets.
This practice is justified by
c. Going
a. Accrual
Period
b. Time-period
d. Accounting Period
47. It is the quality of the information that assures readers that the
information is
free from bias or error and faithfully represents what it purports to show.

a. Relevance
b. Reliability

c. Understandability
d.
Comparability

48. Amounts owed by the business are referred to as


a. assets
c. equities
b. liabilities
d. revenues
49. Which of the following equations is the fundamental accounting
equation?
a. Assets - Liabilities = Owner's Equity
b. Assets = Liabilities + Owner's
Equity
c. Assets + Liabilities = Owner's
Equity
d. Assets + Owner's Equity =
Liabilities
50. The purchase of an asset for cash
will
a. increase total assets and decrease total
liabilities
b. has no effect on total assets or total
liabilities
c. increase total assets and increase total
liabilities
d. increase total assets and increase total
equity
51. Over a period, if total assets increase by P270,000 and total liabilities
increase by P70,000, then owner's equity will be increase by
a. P70,000
c. P270,000
b. P340,000
d. P200,000
52. Which of the following is a form of
revenue?
a. a check paying a mortgage
b. a credit purchase invoice
c. a credit sales to customers
d. a cash paying invoice
53. The purchase of supplies for cash
will
a. increase Supplies and decrease
Cash
b. increase Supplies Expense and decrease
Cash
c. decrease Cash and increase Accounts
Payable
d. decrease Cash and increase Capital
54. The following can be found in an income statement
except
a. income
c. expenses
b. assets
d. profit or loss
55. Which of the following is not subject to depreciation?
a. building
c. equipment
b. land
d. machinery
56. Obligations which are expected to e liquidated through the use of
existing

current assets or the creation of other current liabilities are


called
a. current assets
c. long-term liabilities
b. current liabilities
d. unearned revenues
57. A credit entry decrease the
balance of
a. owner's equity
c. income
b. assets
d. liabilities
58. It is the capacity of information to make a difference in decision by helping
users
evaluate past, present, or future events, or confirming, or correcting,
their past evaluations.
a. Relevance
c. Understandability
b. Reliability
d. Comparability
59. If Accounts Receivable has debit postings of P580,000, credit postings of
P440,000, and a normal ending balance of P480,000, which of the following was
its beginning balance?
a. P620,000 credit
c. P340,000 debit
b. P620,000 debit
d. P340,000 credit
60. Which of the following accounts is decreased with a debit?
a. Notes Payable
c. Interest Expense
b. Cash
d. Owner's withdrawals

Use the following information to answer the questions below. The following
is the trial balance of CENBSIT3 Company:
CENBSIT3 Company
Trial Balance
January 31, 2016

Cash
Accounts Receivable
Art Supplies
Office Supplies
Prepaid Rent
Prepaid Insurance
Art Equipment
Office Equipment
Accounts Payable
CENBSIT3, Capital
CENBSIT3, Withdrawals
Advertising Revenues
Wages Expense
Utilities Expense
Telephone Expense

P30,000
20,000
30,000
50,000
70,000
50,000
50,000
30,000
P50,000
150,000
?
?

?
50,000
30,000
A

61. If the balance of the CENBSIT3, Withdrawals account were P120,000 and the
balance of the Wages Expense account was P50,000, what would be
the amount of B?
a. P180,000
c. P370,000
b. P580,000
d. P380,000

62. If the trial balance showed a balance of P70,000 in the CENBSIT3, Withdrawals
account and a balance of P50,000 in the Wages Expense account, what would
be the amount of Advertising Revenues for the period?
a. P330,000
c. P180,000
b. P480,000
d. P430,000
63. In the trial balance, total assets equal
a. P330,000
c. P430,000
b. P230,000
d. P410,000
64. If the trial balance showed a balance of P40,000 in the Wages Expense
account
and a balance of P300,000 in the Advertising Revenues account, what would be
the amount of the CENBSIT3, Withdrawals account?
a. P250,000
c. P140,000
b. P190,00
d. P50,000
65.How much is the working capital (Current Asset less Current Liabilities)?
Provide the answer only.
The assets, liabilities, and owners equity of Newt Scamander who operates a Witchcraft
and Sorcery Academy (WS&A) are expressed in the equation form below. Scamander completed
the following transactions: (Complete the table by filling the amount in its appropriate column.)
ASSETS
Cash

+ Suppli
es

+ Land

LIABILI
OE
TIES
= Accounts + Scamand
Payable
er,
Capital

66.Organized WS&A and


deposited P500,000 cash in
the bank for use by the
business.
67.Purchased P20,000 of
supplies on account.
68.Purchased land for
academy site for P140,000
cash.
69.Paid P18,000 to creditors.
70.Withdrew P25,000 for
personal use.
71.Paid P28,000 for site and
equipment rent for the
month.
72.During the month, P10,000
expenses were incurred on
account by the business.
73.During the month,
Scamander invested
another P100,000 of
personal funds in the
business.
74.Received P5,000 for a cash
service call.
75.Scamander used P6,000
worth of supplies.
Balance

______End of Final Term Exam______


When you are doing your best, there is nothing to worry about failure.

Prepared by:
ERWIN DAVE DAHAO, CPA