Merchandising business are charging fees for rendered services.

False Transactions which are financial in

nature, such as payment and purchases in cash. Financial Character A promissory note issued by the
customer is an evidence of the notes receivable account. True Noncurrent assets are kept principally for
trading. False Manufacturing business converts raw materials to finished goods. True What type of
accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses? Asset ABC Store records the
transaction by a debit to Accounts Receivable for P1,000 and a credit to Service Revenues for P1,000.
What is the effect of this entry upon the accounting equation for ABC Store? Asset Increase, Equity
Increase Increase in assets is recorded as a Debit.. True Cash and cash equivalents are current assets.
True Revenues are commonly called the "cost of doing business." True Property, plant, and equipment
are not assets. False This principle has two aspects, the quantifiability and stability of peso. Stable
monetary unit A liability is a present obligation arising out of past events. True If Revenue is greater
expenses, there is a Gain. False Manufacturing business changes the basic inputs into products that are
sold to individual customers. True Capital is another term for equity. True When the owner makes
withdrawal from the business for personal use, only the asset decreases. False The Income Statement is
composed of the revenues and expenses. True Which of the following will cause owner's equity to
increase? Revenue In August 2016, ABE Store receives the P4,000 for services rendered. What is the
effect on the accounting equation and which accounts are affected? Owners WRONG Operating
expenses and operating income or operating loss are items which can be found in an income statement
prepared in a multi-step approach. True These are reductions in the total sales price given to the
customer if the account will be paid within a short period of time. Sales discount Mr. Alvarez , capital is
an example of account title used for the equity of the owner in what form of business organization? Sole
Proprietorship This is the common transaction happening in the organization. All W What item do we
deduct from the beginning capital of the statement of changes in equity to arrive at the ending capital?
Withdrawals It is a basic accounting principle that states that income is earned regardless of when cash
is received, and expenses are incurred regardless of when cash is pai~ Accrual The equation for cost of
goods sold is: + - Accrual basis of accounting is a basic accounting principle that states that income is
earned regardless of when cash is received, and expenses are incurred regardless of when cash is paid
True Cash receipts from customers is P200,000, cash paid to suppliers is P10,000 and cash paid to
employees is P25,000, how much is the net cash from operating activities. 165,000 The following
consists an income statement for merchandising businesses except: Net profit W The firm can create as
many capital accounts as there are owners in a corporation. True Cash flows are categorized into three
types; these activities does not determine the purpose for which the cash has been used. True Losses
are outflows that result from the main activity of the business. False Net sales is P450,000, sales
discounts is P35,000, and sales returns and allowances is P15,000. Compute for the gross sales. Cannot
be determined The acquisition and disposal of long-term assets, including investments not considered
cash equivalents are parts of an investing activities. True Beginning inventory is P50,000, net cost of
purchases is P125,000, and ending inventory is P35,000. Compute for the cost of goods sold. 140,000
Net sales is P450,000, sales discounts is P35,000, and sales returns and allowances is P15,000. Compute
for the gross sales. 500,000 It is the difference arrived at after deducting withdrawals from the sum of
the beginning capital, additional investments, and profit. Ending Capital Cash flows are categorized as
follows except: Developing activities An income statement for _________________ could be written
using a single-step approach. Service It relies entirely on the payment and receipt of cash. Cash basis
acc. Its use varies depending on the form of business organization. Capital The following are terms
pertaining to Owner's Equity except: Net worth It is the common account title in the financial statement.
Cash These are deducted in the purchase price either because of returns or reductions due to defects or
damages of goods purchased. Purchase returns and allowances Activities related to the acquisition and
disposal of long-term assets, including investments not considered cash equivalents is called financing
activities. False There are common account titles between assets and liabilities.. True Property, plant,
and equipment are assets. True Assets minus Liabilities is equal to Equity is also considered an
Accounting Equation. True This is the type of business which offers services for a fee Service Services
businesses offer products. False Long-term liabilities are noncurrent. True Cash and cash equivalents are
current assets. True A mortgage payable is a noncurrent liability. False Owner's Equity is to sole
proprietorship as Capital is to corporation. False Owner's equity usually consists of the owner's
investment and the earned profit less any withdrawals made during a given period. True The following
are the advantages of forming a partnership except ~Minimal regulatory requirements than corporation.
can exist for a period of 50 years The cash in a financing activity mostly involve current assets or income
and expense accounts. True Operating activities may be presented using either the direct method or
indirect method. True The cost accountant handles Management Accounting. False The Calendar year
ends on January 01. True A liability is a present obligation arising out of past events. True Liabilities are
present obligations arising from past events.. True We could find the period covered by the statement at
the ________________ of the statement of the account. Heading These are added to the capital
beginning to arrive at the total investments used during the year Investments These are reductions in
the total sales price given to the customer if the account will be paid within a short period of time. Sales
discounts It is consists of the owner's investment and the earned profit less any withdrawals made
during a given period. Capital It is the difference arrived at after deducting withdrawals from the sum of
the beginning capital, additional investments, and profit. Ending These are added to the capital
beginning to arrive at the total investments used during the year. Investments The single-step approach
could be used in writing the income statement for _______________. Service The following are included
in the income statement for merchandising businesses except: Business name Net Profit is derived from:
Statement of Income These are resources of the firm which were taken by the owner for personal use.
Withdrawals Owner's equity represents the right of the owner over the resources of the firm. True A
sole proprietor's equity account is written as follows: name of owner, capital. True The Statement of
Changes in Equity for a Sole Proprietorship may include the following except: Stockholder's equity
account An accounting principle where in income shall only be recognized when cash is received, and
expenses shall only be recorded when cash is paid. Cash Basis Accounting Income of a merchandising
business comes from _________________. Sales of the product It represents the right of the owner over
the resources of the firm. Equity Cost of goods sold items can be found in a multi-step approach of
preparing the income statement. True Revenues of a service business is synonymous to the following
except: Sales The first part of a statement of income for a merchandising business is composed of the
following except: Beginning inventory The following are cash flow transactions under the direct method
except Cash paid to creditors In this principle, it is assumed that the business owners or managers are
separate from the business enterprise. Business entity principle This occurs whenever the enterprise
purchased goods or received services on account issuing a promissory note to settle the account in a
specified future date. Notes Payable This is derived from the income statement and is also added to the
beginning capital and additional investments done during the year. investment Among all the activities,
only financing activities have different ways of being presented. True The following are examples of non-
current assets except ~Property, plant and equipment. Accounts Receivable Stockholders are the
owners of a corporation. False The Statement of Financial Position is commonly prepared at the year
ended December 31. False Cash flows are categorized into three types: operating, investing, and
financing activities. False The transactions falling under operating activities does not primarily involve
cash received from customers and paid to suppliers, lenders, or employees. False CPA means Certified
Public Accountant. True The income statement for merchandising businesses usually has eight sections:
Net sales, Cost of goods sold, Gross profit, Operating expenses, Operating income or operating loss,
Other revenues and gains (expenses and losses), Net profit or net loss. True Cost of goods sold items can
be found in a multi-step approach of preparing the income statement. True The owner's equity is also
called capital, net assets, or net worth. True Withdrawals or drawings are resources of the firm which
were taken by the owner for personal use. True It is a voluntary association of at least 15 persons having
a common bond of interest for the purpose of generating capital from among themselves through a
systematic and continuous savings program in order to grant loans to each other at reasonable rates of
interest. partnership In cash basis accounting, income shall only be recognized when cash is received,
and expenses shall only be recorded when cash is paid. True Operating expenses and operating income
or operating loss are items which can be found in an income statement prepared in a multi-step
approach. False Investing activities cannot be presented in direct or indirect method. True In the
statement of changes in equity of a sole proprietor, this is deducted from the beginning capital to arrive
at the ending capital net profit Gross profit is P150,000, total selling expenses is P39,000, and total
general and administrative expenses cost P52,000. Compute for the operating income. 59,000 Accrual
basis of accounting is a basic accounting principle that states that income shall only be recognized when
cash is received, and expenses shall only be recorded when cash is paid. False These are activities
related to the acquisition and disposal of long-term assets. investing activities Which one is not a cash
flow activity? Assessing Financing activities are the common transactions happening in the organization.
False Income statement for merchandising businesses usually have how many sections? 7 The heading
of a statement of income usually consists of the following except: None of the choices How many
sections do income statement for merchandising businesses usually have? 7 The story of the success, or
failure, of operations is shown in the _______________________. Statement of Income It represents
the total amount of inventory on hand. Beginning Inventory W Merchandise Inventory It is the usual
account title used for corporations. Stockholder's Equity These are deducted in the purchase price either
because of returns or reductions due to defects or damages of goods purchased. Purchase returns and
allowances Total is synonymous to ___________. Gross If the firm has been operating in the past year,
the beginning capital of the current year is _____________ the ending capital of the previous year. The
same This could be deducted to the beginning capital and additional investments done during the year.
Net Loss Liabilities are present obligations arising from past events.. True Land is a current asset.. True
Long-term debts are noncurrent. False Current assets are obligations expected to be settled after a year.
False Capital is also known as a residual asset.. False Accounting is the language of business. True Capital
are claims by creditors against the company's assets. False Accrual basis of accounting records income
when earned regardless of when cash is received. True Sole proprietorships mostly managed by their
owners. False The law that manages Corporations Corporate code The Statement of Financial Position
commonly adopts the Calendar Year. True A mortgage payable is a noncurrent liability.. False Account
form is more commonly used form of an SFP. True Residual asset is the result of combining liabilities and
equity. False SFP is also the Balance sheet. True A liability is a present obligation arising out of past
events. True The Statement of Financial Position is commonly prepared at the year ended December
31.. False Accounting is just all about recording. False CPA means Certified Public Accountant. True
Stockholders are the owners of a corporation. Any twelve-month period starting from any month other
than 01 January Fiscal year A sole proprietor's equity account is written as follows: name of owner,
capital. True The income statement for merchandising businesses usually has the following sections,
namely: revenue, expenses and net profit or loss. False The statement of income describes the revenues
and gains, expenses and losses along with the resulting net income or net loss of the business due to its
operating activities for a given period of time. True The partnership uses the account title
_________________for the equity of the owner. Name of owner, capital (create as many capital
accounts as there are owners) Investing activities are activities related to revenue-producing activities.
False The statement of income of a service business is simpler than merchandising business.
Merchandising business' statement of income is composed of revenue, expense and net profit/net loss.
The 1st statement is false.The 2nd statement is true. There are common account titles between assets
and liabilities.. True Current assets are expected to be used after 12 months. False Income statement is
another term for the Statement of Financial Position. False Liabilities are company's obligations. True
Long-term debts are noncurrent. True C The cost accountant handles Management Accounting. False
GAAP is Generally Applicable Accounting Principles. False Withdrawals are also known as "drawings".
True Entity principle separate business from personal transactions. True Noncurrent assets are assets
that are expected to be used within 12 months. False Bank loans are credited to Loans Payable or
Mortgage Payable. True Cash and cash equivalents are noncurrent assets.. True Also known as Time
Period Concept Periodicity Two or more people join together to contribute money, property or industry
for purposes of dividing the profits (or loss) among themselves. Partnership SFP is an acronym for
Statement of Financial Position, which is also known as the Balance Sheet. True These are deducted in
the purchase price either because of returns or reductions due to defects or damages of goods
purchased. Purchase returns and allowances The owner's equity is usually consists of
___________________. Owner's investment and the earned profit less any withdrawals made during a
given period. If the firm has been operating in the past year, the beginning capital of the current year is
_____________ the ending capital of the previous year. The same The account title used for
corporations: Stockholders' Equity The following consists an income statement for merchandising
businesses except: None of the choices It is a financial Statement that focuses on the residual interest of
the owner in the business. Statement of Changes in Equity It represents the total amount of inventory
on hand. Merchandise Inventory It is the total or gross purchases less any purchase discounts and
purchase returns and allowances. Net cost of goods purchased The following are terms pertaining to
Owner's Equity except: Net Assets /Gross It is the difference arrived at after deducting withdrawals from
the sum of the beginning capital, additional investments, and profit. Ending Capital The heading of a
statement of income usually consists of the following except: None of the choices This shows
relationship between the inflows and outflows of resources within the firm is an indicator of how
successful the business operation was for a given period. Statement of Income Refers to total or gross
sales less any sales discounts, and sales returns and allowances. Sales returns and allowances We use a
multi-step approach in preparing a statement of income for ______________________. Merchandising
business Losses are outflows that result from the main activity of the business. False Manufacturing
business converts raw materials to finished goods. True Noncurrent assets are kept principally for
trading. False Revenue is synonymous to Gains. False The Fiscal year always ends in December. False The
financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific
date is the __________. Statement of Cash Flow This type of business usually does activities that
converts raw materials into finished products, and sells this to other firms or to individuals.
Manfacturing When the owner makes withdrawal from the business for personal use, only the asset
decreases. False Branch of accounting solely for government purposes such as collecting of taxes,
computing of national income, fixing the gross national product target, ascertaining the balance of
payments position, etc.. Government Accounting This principle requires that "those costs and expenses
incurred in earning a revenue should be recorded and reported in the same period". Matching Principle
Residual asset is the result of combining liabilities and equity. False Accrual basis of accounting
recognizes income regardless of when cash is received. True Asset are resources owned and/or
controlled by the enterprise.Asset are acquired by an enterprise as a result of a past transaction or
event. Both statements are true Accounting records and statements are based on the most reliable data
available so that they will be as accurate and as useful as possible. stable monetary unit Income from
the sale of an equipment of a machine business is considered a gain. False This concept states that
assets and services that are acquired should be recorded at their actual cost. cost concept This occurs
whenever the enterprise purchased goods or received services on account issuing a promissory note to
settle the account in a specified future date. Notes Payable Accounting is the system of measuring
business activities of financial character. True Every time a business transaction occurs like purchase of
supplies, payment of receivables, granting credit, payment of utilities, etc., we assume that for every
value received there is an equivalent value parted with. Dual Effect Liabilities are company's obligations.
True The following are current assets, except:: Select one: Long-term liabilities Accounts receivable Cash
Long-term liabilities are noncurrent. True An asset is a present obligation arising out of past events.
False The Income Statement is composed of the revenues and expenses. True Cash and Accounts
Receivable are two examples of accounts that are reported on the classified balance sheet under the
heading __________. Current Asset Withdrawals are also known as "drawings". True The group of
accounts of the entity is called ledger. True Meaning of GAAP General Accepted Accounting Principles :)
Current assets are obligations expected to be settled after a year. False A cash withdrawal was made by
the owner from the business for personal use. Owner's (or Stockholders') Liabilities Increase, Equity
Increase Asset Decrease, Equity Decrease The income statement line gross profit will appear on which
income statement format? Select one: a. none of the choices b. Multiple-step d. Dual-step Going-
concern is a concept where accountants assume that the business will continue to operate for a
foreseeable future. True The financial statement that reports the revenues and expenses for a period of
time such as a year or a month is the ___________. Select one: a. Statement of Cash Flow c. Income
Statement d. Statement of Owner's Equity Also known as Time Period Concept Periodicity Cash,
Accounts receivable and Office supplies are examples of current assets. True All of the following are
general and administrative expenses except Select one: b. Taxes and business licenses c. Advertising &
promotional expenses d. Office salaries The T-account is the simplest form of account. True The
following are examples of non-current assets except Accounts Receivable What type of accounts are
Deferred Revenues and Unearned Revenues? Revenue xxx Wages are considered expenses. True The
business receives cash from a bank loan. Equity Decrease, Equity No Effect xxx Increases in the assets
are recorded on the right side of the account. False AICPA means American Institute of Certified Public
Accountants Salaries are considered income to the business. False The Statement of Financial Position
commonly adopts the Calendar Year. True Merchandising business usually does activities that converts
raw materials into finished products, and sells this to other firms or to individuals. False Which of the
following names is NOT associated with the income statement? Statement of Financial Position We
technically call recording as bookkeeping or journalizing because we use the book we call
_________________. Worksheet This principle has two aspects, the quantifiability and stability of peso.
Stable monetary unit Debit entries with a larger number would always possess a debit balance. True
What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses? Asset This
concept ensures that accounting information is current and is reported at regular intervals. time-period
concept What is the effect on Single Lady's accounting equation when it pays the account to the supplier
P22,500? And which accounts are affected? Asset Decrease, Liability Decrease Capital are claims by
creditors against the company's assets. False Transactions which are financial in nature, such as
payment and purchases in cash. Financial Character A Statement of Financial Position is a formal
statement presenting the three accounting elements which are? Revenue, expense and profit xxx The
statement of financial position is also known as the Profit and Loss Statement. False The following are
current assets, except:: Long-term liabilities Income statement covers a period of time. True The
following are examples of non-current assets except Accounts Receivable Capital are claims by creditors
against the company's assets. False Accounting is defined in part as the art of ____________,
___________, and ____________ in a significant manner and in terms of money, transactions and
events. recording, classifying, summarizing Losses are added to the income statement credit column and
the balance sheet debit column in the worksheet. False Ownership of a cooperative is divided into
shares of stock. False Inflows of resources arising from the sale of goods and services. Revenues
Revenues are also known as income. True In August 2016, ABE Store receives the P4,000 for services
rendered. What is the effect on the accounting equation and which accounts are affected? Asset
Increase, Equity Increase If revenue increases and cost of goods sold remains constant, gross profit also
increases. True What form of the SFP wherein the assets are listed on the left side and the liabilities and
equity are on the right side, and the two sides must equal? Account form Asset are considered current
when it is kept principally for trading. If realization of the asset is expected to be within twelve months
after the date of the SFP, it is current. Both are true Salaries are considered income to the business.
False Gains increase the income of the business. True The business bought furniture for office use on
account. Asset Increase, Liability Increase Net loss indicates that the business is doing well. False Which
of the following will cause owner's equity to decrease? Net Loss Operating expenses and operating
income or operating loss are items which can be found in an income statement prepared in a multi-step
approach. False A debit account in excess of credits would possess a credit balance. True Land is a
current asset.. True SFP is also the Balance sheet. True What is the effect on accounting equation of
Triple A when it records the transaction as a debit to Rent Expense for P8,000 and a credit to Accounts
Payable for P8,000?Owner's (or Stockholders') Owner's (or Stockholders') xxx Ownership of a
cooperative is divided into shares of stock. False The business bought furniture for office use on
account. Equity Decrease, Liability Increase xxx Capital is equal to Asset minus Liability. Asset is equal to
Liability minus Capital. The 1st statement is true It is the difference between net sales and the cost of
goods sold. Gross Profit Examples of real accounts are revenues, expenses, and drawing accounts. False
Accounting is based on the single-entry bookkeeping. False Which of the following is a current liability?
Accounts Payable Cash, Accounts receivable and Office supplies are examples of current assets. True
The owner invests trucksto be used in the business. Liabilities Increase, Equity Increase xxx Capital is
equal to Asset minus Liability. Asset is equal to Liability minus Capital. Both statements are true xxx The
accounts in the report form of SFP are arranged in a single column wherein assets are listed first,
followed by the liabilities and owner's equity.. True The difference between revenues and gains, and
expenses and losses when the expenses and losses are greater than the revenues and gains. Net assets
xxx Net income is a result of expenses higher than revenues. False Prepaid rent is an asset.. True Refers
to the outflows of resources usually paid in cash or incurred on credit resulting from the main operating
activities of the business. Expenses Cash and cash equivalents are current assets. True Businesses usually
have three activities: investing, financing, and recording. False Cash basis accounting only records
transaction when cash is received or paid. True It refers to total or gross sales less any sales discounts,
and sales returns and allowances. Net Sales Which of the following is a current liability? Long-term
deferred revenue This form of business organization has limited liability, meaning creditors cannot go
after their personal property in case of bankruptcy. Single Proprietor Current assets are expected to be
used after 12 months. False As compared to the corporation, single proprietorship is easier to form
because of its simplicity in operation. True Asset is equal to Liability plus Capital. Liability is equal to
Asset minus Capital. Both statements are true Utilities include electric bills and internet fees. True The
difference between net sales and the cost of goods sold. Gross profit This type of business is concerned
with buying and selling of goods for profit. Manufacturing Single proprietorship is concerned with the
manufacture of goods into finished product. False Noncurrent assets are assets that are expected to be
used within 12 months. False Capital is another term for equity. True This is the type of business which
offers services for a fee Service business Cash, building, and office supplies are examples of assets. True
The asset is written first followed by the liabilities and equity in a report form of SFP. The revenue, cost
of goods sold and gross profit is written just like an account in the ledger in the account form of SFP.
Both statements are true xxx Income statement covers a period of time. True Increase in assets is
recorded as a Debit.. True The combination of Selling Expenses and Administrative Expenses is referred
to as Operating Expense Accounts Payable and Notes Payable are two examples of accounts that are
reported in the SFP under the heading. Current Liability Accounting is based on the single-entry
bookkeeping. False Which of the following will cause owner's equity to decrease? Net Loss The business
provided service to customers on account. Asset Increase, Equity Increase In preparing the income
statement for service businesses, expenses are deducted from the revenue to arrive at the net profit or
loss. True These involve changes in the equity and liability accounts in the accounting records. Investing
Activities WRONG Which transaction represents accrual basis of accounting? Interest paid W In the
preparation of cash flow, the following items are considered using accrual basis of accounting except:
increase in trade payables W The income statement for merchandising businesses usually has the
following sections, namely: revenue, expenses and net profit or loss. False Among all the activities, only
____________________ have different ways of being presented. Operating Activities To arrive at the
net cash from operating activities using the direct method we add/deduct the following except:
Decrease in inventory What is the effect of cash paid to supplier of P20,000 to the cash beginning of
P100,000? increase of P20,000 Which one does not form part of cost of goods sold? owner's equity The
heading of a statement of income usually consists of the following except: Business Name If the firm has
been operating in the past year, the beginning capital of the current year is the same as the ending
capital of the previous year Sale of equipment for P500,00 is an example of what activity? Select one: a.
Investing b. Developing d. Financing Capital is the account title used for____________________. Sole
proprietorship and Partnership What item do we deduct from the beginning capital of the statement of
changes in equity to arrive at the ending capital? Withdrawals It is the usual account title used for
corporations. a. Stockholder's Equity C We add the investment of the owner to the beginning capital to
arrive at this. Ending capital The statement of income of a service business is composed of the following
elements except: Cost of goods sold If additional investment of the owner is P650,000 and payment of
long-term loan to the bank is P700,000, how much is the net cash increase or decrease from financing
activities? Decrease of P50,000 The statement of income of a service business does not include this
item. Cost of goods sold Cash basis accounting is not acceptable in the accounting industry though we
need to understand this in order to prepare our cash flow statement. True The owner's equity is also
called capital, net assets, or net worth. True Which is true about Accrual basis of accounting? It states
that companies who sell their goods on credit will record the said transactions as sales even if they have
not paid cash. The partnership uses the account title _________________for the equity of the owner.
Name of owner, capital (create as many capital accounts as there are owners) This form of business
organization uses the account title like; Mr. Cruz, capital, Mr. Sta. Maria, capital and Mr. del Pilar, capital
for the equity of its owners. partnership Investing activities are activities related to revenue-producing
activities. False The following are types of cash flows except: Select one: None of the choices The income
statement for service businesses does not include. cost of goods sold The service business uses the
multi-step approach in preparing the statement of income. The revenues, expenses and net profit/net
loss are part of the multi-step approach. Both statements are true C Which form of business
organization's statement of income has cost of goods sold? merchandising business Stockholder's equity
is the account title used by what form of business organization? corporation Income statement is
another term for the Statement of Financial Position. False The law that manages Corporations
Corporate code Long-term debts are noncurrent. True Long-term liabilities are noncurrent. True The
statement of income describes the revenues and gains, expenses and losses along with the resulting net
income or net loss of the business due to its operating activities for a given period of time. True What
form of business organization which can create many accounts as there are owners for the owner or
owners' equity? partnership Investments made by the owner may represent the original investment
made at the start of business, and any additional investments thereafter. True Cash basis accounting
relies entirely on the payment and receipt of cash. Accrual basis of accounting recognizes expenses
when incurred, whether or not any cash is received or pai~ Both statements are true

3RD QUARTER EXAMS WEEK 10

1.There are common account titles between assets and liabilities.

True False The correct answer is 'True'. MY ANSWER IS FALSE, THERE ARE NONE ☹

2. Losses are outflows that result from the main activity of the business.

True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

3. Owner's equity represents the right of the owner over the resources of the firm.

True False The correct answer is 'True'.

4. Cash withdrawal of an owner for personal use falls in what cash flow category?

a. Financing b. Assessing c. Investing d. Operating The correct answer is: Investing

5. Merchandising business are charging fees for rendered services.

True False The correct answer is 'False'.

6. Accrual basis of accounting is a basic accounting principle that states that income shall only be
recognized when cash is received, and expenses shall only be recorded when cash is paid.

True False The correct answer is 'False'.

7. Cash flows are categorized into three types: operating, investing, and financing activities.
True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

8. The following are cash flow transactions under the direct method except

a. Cash paid to creditors b. Cash receipts from customers c. Income taxes paid d. Depreciation of old
building The correct answer is: Cash paid to creditors

9. The cost accountant handles Management Accounting.

True False The correct answer is 'False'.

10. Account form is more commonly used form of an SFP.

True False The correct answer is 'True'.

11. Cash on hand is a current asset.

True False The correct answer is 'True'.

12. It is a voluntary association of at least 15 persons having a common bond of interest for the purpose
of generating capital from among themselves through a systematic and continuous savings program in
order to grant loans to each other at reasonable rates of interest.

a. partnership b. cooperative c. corporation d. single proprietorship The correct answer is: single
proprietorship

13. GAAP is Generally Applicable Accounting Principles.

True False The correct answer is 'False'.

14. Services businesses offer products.

True False The correct answer is 'False'.

15. Net loss indicates that the business is doing well.

True False The correct answer is 'False'.

16. Cash basis accounting relies entirely on the payment and receipt of cash.

True False The correct answer is 'True'.

17. Sole proprietorships mostly managed by their owners.

True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

18. Stockholders are the owners of a corporation.

True False The correct answer is 'False'.

19. Manufacturing business converts raw materials to finished goods.

True False The correct answer is 'True'.

20. Accrual basis of accounting records income when earned regardless of when cash is received.
True False The correct answer is 'True'.

21. Operating expenses and operating income or operating loss are items which can be found in an
income statement prepared in a multi-step approach.

True False The correct answer is 'False'.

22. SFP is an acronym for Statement of Financial Position, which is also known as the Balance Sheet

True False The correct answer is 'True'.

23. Sole proprietorships mostly managed by their owners.

True False The correct answer is 'False'.

24. The acquisition and disposal of long-term assets, including investments not considered cash
equivalents are parts of an investing activities.

True False The correct answer is 'True'.

25. The Calendar year ends on January 01.

True False The correct answer is 'True'.

26. Residual asset is the result of combining liabilities and equity.

True False The correct answer is 'False'.

27. In cash basis accounting, income shall only be recognized when cash is received, and expenses shall
only be recorded when cash is paid.

True False The correct answer is 'True'.

28. Current assets are expected to be used after 12 months.

True False The correct answer is 'False'.

29. The following are cash flow transactions under the direct method except

a. Depreciation of old building b. Cash receipts from customers c. Income taxes paid d. Cash paid to
creditors The correct answer is: Cash paid to creditors

30. Owner's equity usually consists of the owner's investment and the earned profit less any
withdrawals made during a given period.

True False The correct answer is 'True'.

31. Owner's Equity is to sole proprietorship as Capital is to corporation.

True False The correct answer is 'False'.

32. Property, plant, and equipment are assets.

True False The correct answer is 'True'.

33. The firm can create as many capital accounts as there are owners in a corporation.

True False The correct answer is 'True'.

34. Accounting is defined in part as the art of ____________, ___________, and ____________ in a
significant manner and in terms of money, transactions and events.

a. analyzing, evaluating, assessing b. journalizing, synthesizing, reporting c. processing, computing,

finalizing d. recording, classifying, summarizing

The correct answer is: recording, classifying, summarizing

35. Cash basis accounting is not acceptable in the accounting industry though we need to understand
this in order to prepare our cash flow statement.

True False The correct answer is 'True'.

36. Cash withdrawal of an owner for personal use falls in what cash flow category?

a. Assessing b. Financing c. Operating d. Investing The correct answer is: Investing

37. Cash and cash equivalents are noncurrent assets.

True False The correct answer is 'True'. MY ANSWER IS FALSE- CASH & CASH EQUIVALENTS ARE
CURRENT ASSETS, BUT IN OED IT IS TRUE ☹

38. The following are the advantages of forming a partnership except Minimal regulatory requirements
than corporation.

a. Exempt from paying corporate tax b. more capital from partners c. Can exist for a period of 50 yrs

The correct answer is: Can exist for a period of 50 yrs

39. If the firm has been operating in the past year, the beginning capital of the current year is the same
as the ending capital of the previous year.

True False The correct answer is 'False'. MY ANSWER IS TRUE BUT IN OED FALSE. ☹

40. CPA means Certified Public Accountant.

True False The correct answer is 'True'.

41. Cash receipts from customers is P200,000, cash paid to suppliers is P10,000 and cash paid to
employees is P25,000, how much is the net cash from operating activities.

a. P175,000 b. P190,000 c. Cannot be determined from the data given d. P165,000 Correct

The correct answer is: P165,000

42. Gross profit is P150,000, total selling expenses is P39,000, and total general and administrative
expenses cost P52,000. Compute for the operating income.

a. Cannot be determined from the given data b. P59,000 Correct c. P163,000 d. P241,000
The correct answer is: P59,000

43. It is a voluntary association of at least 15 persons having a common bond of interest for the purpose
of generating capital from among themselves through a systematic and continuous savings program in
order to grant loans to each other at reasonable rates of interest.

a. cooperative b. single proprietorship c. partnership d. corporation

The correct answer is: single proprietorship MY ANSWER IS COOPERATIVE ☹

44. Services businesses offer products.

True False The correct answer is 'False'.

45. Financing activities are the common transactions happening in the organization.

True False The correct answer is 'False'.

46. The following are examples of non-current assets, except-Property, plant and equipment.

a. Accounts Receivable b. Long-term investment c. Intangible asset

The correct answer is: Accounts Receivable MY ANSWER IS LONG TERM INVESTMENT ☹

47. In the statement of changes in equity of a sole proprietor, this is deducted from the beginning capital
to arrive at the ending capital

a. investment b. Net profit c. None of the choices d. withdrawal The correct answer is: withdrawal

48. The cash in a financing activity mostly involve current assets or income and expense accounts

True False The correct answer is 'True'.

49. Withdrawals or drawings are resources of the firm which were taken by the owner for personal use.

True False The correct answer is 'True'.

50. This is derived from the income statement and is also added to the beginning capital and additional
investments done during the year.

a. withdrawal b. investment c. Net profit d. None of the choices The correct answer is: investment

51. Investments made by the owner may represent the original investment made at the start of
business, and any additional investments thereafter.

True False The correct answer is 'True'.

52. Cash flows are categorized into three types; these activities does not determine the purpose for
which the cash has been used.

True False The correct answer is 'True'.

53. In this principle, it is assumed that the business owners or managers are separate from the business
enterprise.
a. Going concern principle b. Dual effect principle c. Business entity principle d. matching principle

The correct answer is: Business entity principle

54. If the beginning capital of Mrs. Castro is P200,000 and she made an additional investment during the
year of P100,000 with a net profit of P52,000, how much is the ending capital?

a. P252,000 b. P300,000 c. P248,000 d. P352,000 The correct answer is: P352,000

55. Operating activities may be presented using either the direct method or indirect method.

True False The correct answer is 'True'.

56.Increase in assets is recorded as a Debit.

True False The correct answer is 'True'.

57. The owner's equity is also called capital, net assets, or net worth.

True False The correct answer is 'True'.

58. Capital is also known as a residual asset.

True False The correct answer is 'False'.

59. A mortgage payable is a noncurrent liability.

True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

60. Merchandising business are charging fees for rendered services.

True False The correct answer is 'False'.

61. Revenues are also known as income.

True False The correct answer is 'True'.

62. Cash basis accounting relies entirely on the payment and receipt of cash.

True False The correct answer is 'True'.

63. Stockholders are the owners of a corporation.

True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

64. Net sales is P450,000, sales discounts is P35,000, and sales returns and allowances is P15,000.
Compute for the gross sales.

a. Cannot be determined from the given data b. 500,000 c. P430,000 d. P400,000

The correct answer is: Cannot be determined from the given data

65. Operating expenses and operating income or operating loss are items which can be found in an
income statement prepared in a multi-step approach.
True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

66. Owner's equity usually consists of the owner's investment and the earned profit less any
withdrawals made during a given period.

True False The correct answer is 'True'.

67. Among all the activities, only financing activities have different ways of being presented.

True False The correct answer is 'True'.

68. Beginning inventory is P50,000, net cost of purchases is P125,000, and ending inventory is P35,000.
Compute for the cost of goods sold.

a. Cannot be determined from the given data b. P210,000 c. P110,000 d. P140,000

The correct answer is: P140,000

69. If additional investment of the owner is P650,000 and payment of long-term loan to the bank is
P700,000, how much is the net cash increase or decrease from financing activities?

a. Increase of P650,000 b. Decrease of P50,000 Correct c. Increase of P50,000 d. Decrease of P700,000

The correct answer is: Decrease of P50,000

70. Land is a current asset.

True False The correct answer is 'True'. My answer is FALSE ☹

71. Cash and cash equivalents are current assets.

True False The correct answer is 'True'.

72. Residual asset is the result of combining liabilities and equity.

True False The correct answer is 'False'.

73. Liabilities are present obligations arising from past events.

True False The correct answer is 'True'.

74. The acquisition and disposal of long-term assets, including investments not considered cash
equivalents are parts of an investing activities.

True False The correct answer is 'True'.

75. Cash flows are categorized into three types; these activities does not determine the purpose for
which the cash has been used.

True False The correct answer is 'True'.