Acco Level 1

EASY

1. According to _______, accounting is the process of identifying, measuring, and communicating

economic information to permit informed judgement and decisions by the users of the information.

A. American Accounting Association B. American Institute of Certified Public Accountant

C. Accounting Standards Council D. Financial Accounting Standards Board

Answer: A. American Accounting Association

2. Which of the following activities did not result in a business transaction that is financial in nature?

A. Borrowing money B. Purchase of photocopying machine

C. Hiring a staff D. Receipt of electricity bill

Answer: C. Hiring a staff

3. Financial statements combining the operations of Juan Cruz and J. Cruz Plumbing Services would
violate the _______.

A. Monetary Unit Assumption B. Economic Entity Assumption

C. Cost Principle D. Ownership Assumption

Answer: B. Economic Entity Assumption

AVERAGE

1. Arrange in chronological order the processes done for accounting cycle of a service type of business:

I. Preparing adjusted trial balance II. Preparing post-closing trial balance

III. Preparing trial balance IV. Journalizing business transactions

V. Posting journal entries to the ledger VI. Preparing financial statements

Answer: IV, V, III, I, VI, II

2. As of July 31, 2019, end of the accounting period, JC Photocopying Center rendered Php 1,700 worth
of photocopying services that have not been recorded. The adjusting journal entry would be _______.

Answer: Accounts Receivable Php 1,700

Photocopying Revenue Php 1,700

3. Freight-in...

A. Increases net cost of purchases, increases cost of sales, decreases gross profit, decreases net income

B. Decreases net cost of purchases, increases cost of sales, decreases gross profit, increases net income

C. Increases net cost of purchases, decreases cost of sales, increases gross profit, decreases net income

D. Decreases net cost of purchases, decreases cost of sales, increases gross profit, increases net income

Answer: A. Increases net cost of purchases, increases cost of sales, decreases gross profit, decreases net
income

DIFFICULT

1. JC Vulcanizing Shop received, on July 16, 2019, an interest-bearing note worth Php 17,000 with 25%
interest within 9 days from the date of receipt. Determine the journal entry for the collection of the
note and interest on its maturity date.

Answer: Cash Php 17, 106.25

Notes Receivable Php 17,000.00
Interest Income 106.25

2. Scrutinize the validity of the following statements:

I. To establish uniformity, all businesses use the same chart of accounts format.

II. Account titles in the chart of accounts are usually arranged chronologically.

A. Only the first statement is correct B. Only the second statement is correct

C. Both statements are correct D. Both statements are incorrect

Answer: D. Both statements are incorrect

3. A statement of comprehensive income show the balances of the following: Net Sales of Php 70,565,
Ending Inventory of Php 20,050, Purchases of Php 53,000, Purchase Discount of Php 500, and Operating
Expenses of Php 27,150. What is the amount of Net Income?
Answer: Php 10,965

CLINCHER

1. He is an Italian monk and mathematician who has been regarded at the “Father of Modern
Accounting.” Write his full name.

Answer: Frater Luca Bartolomes Pacioli

2. What is the English translation of Summa de Arithmetica, Geometria, Proportioni et Proportionalita?

Answer: Everything about Arithmetic, Geometry, and Proportion