Name: _________________________ Section: ____________________

Student No. ____________________ Date: ______________________

ACTG21c MIDTERM EXAMINATION

Please read the questions carefully. Write your answers on the left side of each number. CAPITAL LETTERS
ONLY. STRICTLY NO ERASURES.

1. In an accrual accounting system,

a. all accounts have normal debit balances.
b. a debit entry is recorded on the left-hand side of an account.
c. liabilities, owner's capital, and dividends all have normal credit balances.
d. revenues are recorded only when cash is received.

2. A chart of accounts is a
a. subsidiary ledger c. general ledger
b. listing of all account titles d. general journal

3. Adjusting entries normally involve

a. real accounts only c. nominal accounts only
b. real and nominal accounts d. liability accounts only

4. Closing entries normally involve

a. real accounts only c. real and nominal accounts
b. nominal accounts only d. liability accounts only
5. The balance in a deferred revenue account represents an amount that is
Earned Collected
a. Yes Yes
b. No Yes
c. Yes No
d. No No

6. The debit and credit analysis of a transaction normally takes place when the
a. entry is posted to a subsidiary ledger c. financial statements are prepared
b. trial balance is prepared d. entry is recorded in a journal

7. A trial balance is useful because it indicates that

a. owners' equity is correct. c. all entries were made correctly.
b. net income is correct. d. total debits equal total credits

8. Which of the following would typically be considered a source document?

a. Chart of accounts c. General journal
b. General ledger d. Invoice received from seller

9. Which of the following is not among the first five steps in the accounting cycle?
a. Record transactions in journals c. Post entries to general ledger accounts
b. Adjust the general ledger accounts d. Record closing entries

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10. The last step in the accounting cycle is to
a. journalize and post-closing entries. c. journalize and post adjusting entries.
b. prepare financial statements. d. prepare a post-closing trial balance.

11. An example of an adjusting entry involving a deferred revenue is

a. Dr. Cash
Cr. Unearned Rental Revenue
b. Dr. Rental Revenue
Cr. Cash
c. Dr. Deferred/Unearned Rental Revenue
Cr. Rental Revenue
d. Dr. Accounts Receivable
Cr. Sales

12. Which of the following is true regarding the accounting process?

a. Preparation of the trial balance ensures that all amounts have been posted to the correct accounts.
b. Preparation of the trial balance is a step in the recording process.
c. Preparation of the trial balance determines that total debits equal total credits.
d. Preparation of the trial balance determines both that total debits equal total credits and that all
amounts have been posted to the correct accounts.

13. An example of a nominal account would be

a. Allowance for Doubtful Accounts c. Cost of Goods Sold
b. Notes Payable d. Prepaid Expense

14. The following statements regarding net profit are correct except one.
a. It appears in the income statement
b. It appears in the statement of owner’s equity.
c. It appears in the statement of financial position.
d. It is the excess of revenues over expenses.

15. Which is the following will you expect to find in a statement of owner’s equity?
a. Cash balance, end of year c. Owner’s contributions and withdrawals
b. Revenues and expenses d. Liabilities due to creditors

16. Principle of recognizing expenses in the same period as the revenues they generate
a. Matching c. Immediate recognition
b. Accrual d. Cost

17. Table of contents listing the titles and numbers of the accounts found in the general ledger.
a. Chart of accounts c. Ledger
b. Journal d. Folio

18. The record processing step in accounting which consists of entering the transaction in a journal.
a. Journalizing c. Trial balance preparation
b. Posting to the ledger d. Transaction analysis

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19. The book of original entry where transactions are entered.
a. Journal c. Trial balance
b. Ledger d. T-account

20. The book of final entry which shows a compilation of all the accounts with the corresponding debit
and credit amounts and balances.
a. Ledger c. Trial balance
b. Journal d. T-account

21. The process of transferring information from the journal to the ledger.
a. Posting c. Recording
b. Journalizing d. Copying

22. A form listing the ledger accounts with their corresponding debit or credit balances.
a. Ledger c. Journal
b. Trial balance d. T-account

23. A simple accounting device showing the increase side and the decrease side of an account.
a. Ledger c. T-account
b. Journal d. Trial balance

24. Length of time it will take for cash to be used and converted back to cash.
a. Accounting cycle c. Business cycle
b. Life cycle d. Operating cycle

25. An agreement to advertise the company next month required

a. No journal entry now c. A credit to advertising expense
b. A debit to advertising expense d. A credit to cash

26. The following balances are normally credited except one.

a. Rent expense c. Supplies used
b. Service income d. Taxes & Licenses

27. The compensation withdrawn by a worker or employee before the payroll date.
a. Salary c. Cash advance
b. Wage d. Withdrawal

28. The agency where the business-employer should remit the taxes withheld from the employees and
workers.
a. Social Security System c. Commission on Audit
b. Securities and Exchange Commission d. Bureau of Internal Revenue

29. The net earnings received by an employee or worker.

a. Gross pay c. Allowances
b. Deductions d. Net pay

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30. A listing of employees or workers with special columns for deductions and the take home pay.
a. Employee listing c. Payroll
b. Master file d. Ledger

31. This is a deduction for all salaried workers and employees payable to the government under the pay
as you earn policy.
a. Salary c. Philhealth
b. Withholding tax d. HDMF

32. Tax reform package for acceleration and inclusion approved in January 2018.
a. TRAIN Act c. Labor law
b. Customs Tariff Act d. Law on obligations and contracts

33. Urang Gurang is a martial arts instructor. He earns a taxable income of P480,000 during the year.
What is Urang Gurang’s income tax expense during the year? (Please see Annex A for the income tax
table)
a. P30,000 c. P50,000
b. P0 d. P40,000
34. Betty La Pera has a monthly gross income of P15,000. Her allowances amounted to P2,000 and
deductions (SSS/PH) amounted to P1,500 per month. Given the scenario, what is Betty’s tax expense
for the year?
a. P5,000 c. P15,000
b. P10,000 d. P0

35. Given the scenario above, how much is Betty’s net pay per month?
a. P10,000 c. P16,500
b. P17,000 d. P15,500

36. A contra asset account used to record decrease in utility value of assets.
a. Allowance c. Rebate
b. Capital Expenditures d. Accumulated depreciation
37. Expenses incurred but not yet paid.
a. Prepaid Expense c. Deferred/Unearned Income
b. Accrued Income d. Accrued Expense

38. Provision for uncollectible accounts.

a. Depreciation c. Accrual
b. Write-off d. Bad debts

39. Income earned but not collected.

a. Prepaid Expense c. Deferred/Unearned Income
b. Accrued Expense d. Accrued Income

40. Pre-collection of services not yet rendered or performed.

a. Prepaid Expense c. Accrued Income
b. Accrued Expense d. Deferred/Unearned Income

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41. Pre-payments of services to be received or assets to be used.
a. Prepaid Expense c. Accrued Income
b. Accrued Expense d. Deferred/Unearned Income

42. Used up or expired portion of a property, plant, and equipment.

a. Depreciation c. Write-off
b. Bad debts d. Accrual

43. Which of the following criteria must be met before an event should be recorded for accounting
purposes?
a. The event must be measurable in financial terms.
b. The event must be an arm's-length transaction.
c. The event must be repeatable in a future period.
d. The event must be disclosed in the reported footnotes.

44. An accrued expense can be described as an amount

a. paid and matched with earnings for the current period.
b. paid and not matched with earnings for the current period.
c. not paid and not matched with earnings for the current period.
d. not paid and matched with earnings for the current period.
45. Which of the following errors will be detected when a trial balance is properly prepared?
a. An amount that was entered in the wrong account
b. A transaction that was entered twice
c. A transaction that had been omitted
d. None of these

46. If an expense has been incurred but not yet recorded, then the end-of-period adjusting entry would
involve
a. a liability account and an asset account.
b. a liability account and a revenue account.
c. a receivable account and a revenue account.
d. liability and an expense account.

47. Beginning and ending Accounts Receivable balances were Php28,000 and Php24,000, respectively. If
collections from clients during the period were Php80,000, then total services rendered on account
were apparently
a. Php76,000. c. Php104,000.
b. Php84,000. d. Php108,000.

48. In November and December 2018, Bee Company, a newly organized newspaper publisher, received
Php72,000 for 1,000 three-year subscriptions at Php24 each per year, starting with the January 2,
2019, issue of the newspaper. How much should Bee report in its 2018 income statement for
subscription revenue?
a. Php0 c. Php24,000
b. Php12,000 d. Php72,000

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49. Lebron received $12,000 from a tenant on December 1 for four months' rent of an office. This rent
was for December, January, February, and March. If Lebron debited Cash and credited Deferred
Rental Income for $12,000 on December 1, what necessary adjustment would be made on December
31?
a. Deferred Rental Income 3,000
Rental Income 3,000
b. Rental Income 3,000
Deferred Rental Income 3,000
c. Deferred Rental Income 9,000
Rental Income 9,000
d. Rental Income 9,000
Deferred Rental Income 9,000

50. What is the correct order of the following events in the accounting process?
I. Financial statements are prepared.
II. Adjusting entries are recorded.
III. Nominal accounts are closed.

a. I, II, III c. III, II, I

b. II, I, III d. II, III, I

Bonus Questions:
1. First Filipina senator to be re-elected: __________________
2. First Senate President in the Philippines: ________________
3. Oldest senator while in office with age of 92 years old when his term ended in 2016:
_______________
4. A Filipino tycoon who owns the JG Summit and Robinsons Retail Holdings who passed away
last November 9, 2019: ________________
5. The #2 Filipino billionaire based on annual assessment of wealth and assets compiled and
published by Forbes magazine in 2019 with net worth of USD6.6 billion: _______________
6. Recently appointed Anti-Drug Czar of the Philippines: _____________
7. Manny Pacquiao’s net worth according to www.celebritynetworth.com.: USD___ million

Annex A: Income Tax Table

Amount of Net Taxable Income Rate

Over But Not Over Tax Expense
- P250,000 0%
P250,000 P400,000 20% of the excess over P250,000
P400,000 P800,000 P30,000 + 25% of the excess over P400,000
P800,000 P2,000,000 P130,000 + 30% of the excess over P800,000
P2,000,000 P8,000,000 P490,000 + 32% of the excess over P2,000,000
P8,000,000 P2,410,000 + 35% of the excess over P8,000,000

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Page 7 of 8
1. Eva Estrada Kalaw
2. Manuel L. Quezon
3. Juan Ponce Enrile
4. John Gokongwei
5. Manuel Villar Jr. (Manny Villar)
6. VP Leni Robredo
7. 220 million dollars

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