FUNDAMENTALS OF ACCOUNTING 2

Enumeration:List down the correct answers

1. – 3. Essential Elements in the definition of assets.

4. – 5. Essential Elements in the definition of liabilities.
6. – 7. Expanded Accounting Equation
8. – 13. Variation of Accounting Equation

Computation: Compute for the following base on the Accounting Equation

14. Assets – 360,000 : Liabilities – 240,000 : Loss – 20,000

15. Liabilities – 500,000 :Income – 35,000 : Assets – 600,000
16. Capital, End – 200,000 : Expense – 65,000 : Capital, Beg – 100,000
17. Assets – base on No. 15 : Capital – base on No. 16 : Profit – base on No. 16
18. Assets – base on No. 14 increased by 20% : Liabilities – based on no. 15 decreased by 25%
19. Income - 25,000 : Expense - 45,000 : Capital – base on no. 18
20. Capital – base on no. 15 increased by 40% : Liabilities – base on no. 17

MULTIPLE CHOICE: Choose the correct answer.

21. Which of the following is not an essential element of a liability?

a. Present obligation
b. A past event resulting to a present obligation
c. Outflow of future economic benefits
d. Intention to obligate oneself in the future

22. Income could not possibly result from/to

a. An increase in assets
b. A decrease in liability
c. An increase in liabilities
d. An increase in equity

23. Purchase of inventories on account

a. Increases the total Assets
b. Increases Current liabilities
c. Increase in equity
d. Increases Total liabilities

24. In the expanded basic accounting equation, why are expenses deducted from Equity/Capital?
a. Because expense increase equity
b. Because expense decrease equity
c. Because expenses do not affect equity
d. Because Fr. Luca Pacioli says so.

25. An entity’s total assets and total equity decreased but total liabilities remained the same. Also,
there were no transactions involving the entity and its owner during the period. Which of the
following could be a valid reason for this:
a. The entity obtained a loan
b. The entity earned profit
c. The entity incurred loss
d. Di ka Crush ng Crush Mo!

UNIVERSITY OF MAKATI 1