Assignment 001: Fundamentals of Accounting/Answer Key

Fundamentals of Accounting/Answer Key
Assignment 001
The merchandise inventory ______is the ratio of cost of goods sold to average merchandise
inventory.
Select one:
a. Cost of goods sold or cost of sales
b. Turnover
c. Merchandise Inventory
d. Sales discount
It is the cost of transporting the goods from the merchandiser to the ultimate consumer.
Select one:
a. F.O.B.
b. Freight in
c. Transportation in
d. Delivery expense
______is a business involving buying goods and selling it in its original form.
Select one:
a. Merchandising
b. Freight in or transportation in
c. Merchandiser or trader
d. Cost of goods sold or cost of sales
Check
In the books of seller, ____ is deducted from the invoice price when the buyer pays earlier or on the
date/term stipulated.
Select one:
a. Sales discount
b. Cash
c. Merchandise Inventory
d. Periodic
Purchases of merchandise under the perpetual inventory system will be recorded by debiting
_______.
Select one:
a. Merchandise Inventory
b. Cash
c. Periodic
d. Sales discount
Quiz 001
Following are selected purchase transactions of Mr. Cruz, a merchandiser, during April of the
current year:
April 8 Purchased merchandise from ABC Textile Corporation worth P 100,000, FOB Destination.
Freight reported is P 15,000. Terms of payment: 2/10, n/30.
April 10 Returned defective merchandise purchased on the 8th, P 10,000.
April 17 Paid ABC Textile Corporation.
April 20 Purchased merchandise worth P 50,000 from RST Trading. Cebu City. Transportation- in is
P 5,000. Terms: FOB shipping point; Terms of payment: n/30. The shipment arrived at the Port of
Manila, A
April 25 Merchandise purchased from XYZ Clothing Co., P 80,000, FOB shipping point. Freight
charges, P 6,500, Terms of payment: n/30. Shipment arrived at the Port of Manila on May 2.
The freight that will be paid by the buyer is
Select one:
a. P11,500
b. P5,000
c. P26,500
d. P21,500
Discount received by the merchandiser for paying on time
Select one:
a. Freight-in
b. Periodic Inventory System
c. Trade discount
d. Purchase Discount
On March 1, 2017, Mr. A bought 10 units of cell phones with a listed price of P 10,000 each, less
2%, 4%, for resale. Terms of payment: 2/10, n/30. Assuming Mr. A paid on March 8, 2017, he will be
paying
Select one:
a. P98,000
b. P92,000
c. P92,198
d. P100,000
Excess of net sales over cost of goods sold

Select one:
a. Freight-in
b. Gross Profit
c. Sales
d. Merchandising
Discount not recorded in the seller's books

Select one:
a. Purchase Discount
b. Trade discount
c. Periodic Inventory System
d. Freight-in
On March 1, 2017, Mr. A bought 10 units of cell phones with a listed price of P 10,000 each, less
2%, 4%, for resale. Terms of payment: 2/10, n/30. The total trade discount to Mr. A. is
Select one:
a. P19,616
b. P5,920
c. P2, 000
d. P3, 920
current year:
Manila, A
The net purchases to be reported on April 30 is
Select one:
a. P140,000
b. P 155,000
c. P145, 000
d. P 220,000
current year:

Manila, A
The amount to be included in the merchandise inventory as of April 30 is
Select one:
a. P246,500
b. P170,000
c. P145,000
d. P220,000
current year:
Manila, A
The total purchases inclusive of freight during April is
Select one:
a. P 220,000
b. P265,000
c. P 241,500
d. P231, 500
current year:
Manila, A
Purchase Discount availed by Mr. Cruz is
Select one:
a. P4,500
b. P 2,000
c. P1,800
d. P3,000
Laboratory 001
Assignment 002
The issuance of this document results to a debit to Sales Returns and Allowances and credit
Accounts Receivable.
Select one:
a. General Journal
b. Credit memorandum
c. Accounts Payable Subsidiary Ledger
d. Debit memorandum
Sales Discount is recorded in the

Select one:
a. Sales Journal
b. General Journal
c. Cash Payments Journal
d. Cash Receipts Journal
It is used to summarize the collectibles and payments from every individual or customer.
Select one:
a. Accounts Payable Subsidiary Ledger
b. Accounts Receivable Subsidiary ledger
c. General Journal
d. Sales Journal
All cash outflows are recorded in the

Select one:
a. Cash Receipts Journal
b. Purchases Journal
c. Cash Disbursement Journal
d. General Journal
It is a detailed record of individual customer's accounts.

Select one:
b. Cash Payments Journal
c. Special Journals
d. Accounts Receivable subsidiary ledger
Check
Short Quiz 002
What journal will you use to record the following transaction:Purchases of merchandise on account.
Select one:
b. General Journal
d. Purchases Journal
What journal will you use to record the following transaction:Borrowing money on a long-term note
payable.
Select one:
c. Purchases Journal
d. General Journal
Document supporting the sales return and allowances is called a debit memo.
Select one:
True
False
What journal will you use to record the following transaction:Cash purchases of merchandise
Select one:
a. General Journal
What journal will you use to record the following transaction:Sales of merchandise inventory on
credit.
Select one:
b. Sales Journal
c. Purchases Journal
d. General Journal
What journal will you use to record the following transaction:Collection of dividends earned on an
investment.
Select one:
c. General Journal
What journal will you use to record the following transaction:Expiration of prepaid insurance.
Select one:
c. General Journal
d. Cash Payments Journal
What journal will you use to record the following transaction:Payment of advertising.
Select one:
a. Cash Payments Journal
c. General Journal
What journal will you use to record the following transaction:Cash sale of merchandise inventory.
Select one:
a. General Journal
c. Cash Receipts Journal
d. Cash Payments Journal
What journal will you use to record the following transaction:Payment of account.
Select one:
a. Purchases Journal
c. General Journal
Check
Laboratory 002
Long Quiz 002
The formula for Gross profit ratio is
Select one:
a. Net Sales / Gross Profit
b. Cost of Sales / Gross profit
c. Gross Profit / Net profit
d. Gross Profit / Net Sales
Revenue less expenses.

Select one:
a. Trade discount
b. Owner's Equity
c. Revenue and Expense summary
d. Profit
In adjusting prepaid expenses using asset method, the entry is debit a(n) ____account and credit an
asset account.
Select one:
a. Asset
b. Matching
c. Adjusting
d. Expense
The following selected accounts were taken from the books of Santos Trading on December 31,
2016: Santos, Capital-P150,000; Loss from Operations-P1,500; Net Sales-P120,000; total Goods
Available for Sale-P103,505; Gross Profit-P60,750; Merchandise inventory , Jan 1, 2016-P27,520.
Cost of goods sold is
Select one:
a. P75,985
b. P 42,755
c. P62,250
d. P 59,750
Entries at the end of the accounting period that helps in reporting the correct balances of revenues,
expenses, assets, and liabilities.
Select one:
a. Deferred Revenue
b. Adjusting entries
c. Cash Basis of accounting
d. Depreciation accounting
Payment of freight-in under perpetual inventory system is debited to ____.

Select one:
a. Sales discount
b. Sales Returns and allowances
c. Merchandise inventory or Inventory
d. 30 days or on the 30th day from date of purchase
Cebu Trading sold to Manila Store goods with a listed price of P100, 000. Term of sale: Trade
discount of 3% and 2%. Payment terms: 2/10,n/30.
Cebu Trading will record a sale of
Select one:
a. P95,000
b. P100,000
c. P95,060
d. P97,000
Expenses incurred but not yet paid.

Select one:
a. Closing the accounts.
b. Accrued Expenses
c. Statement of Changes in Owner's Equity
d. Nominal accounts
Purchases of merchandise on account under periodic inventory system requires a credit to

__________.
Select one:
a. Asset or Accrued Income
b. Purchases
c. Income
d. Accounts Payable
Manufacturing firms buy raw materials and convert them to finished goods which they will sell to a
_________.
Select one:
a. Cost of goods sold or cost of sales
b. Freight in or transportation in
c. Merchandising
d. Merchandiser or trader
_____form of balance sheet reports assets on the left side and liabilities and capital on the right side.
Select one:
a. Account
b. Destination
c. Inventory
d. Sales discount
The following selected accounts are taken from the books of RST Trading on April 30 before
adjustment. RST has a monthly accounting period:
Accounts Receivable P5,000 Building P50,000
Sales 75,000 Service Income 10,000
Prepaid Rent 6,000 Salaries Expense 20,000
Adjustment data on April 30:
a) 2 % of sales is estimated to be uncollectible.
b) Rent expired, P2,000.
c) Salaries unpaid, P 1,500.
d) Building will be depreciated at 20% per annum, with useful lie of 10 years.
e) Income unearned , P10,000.
The entry to record depreciation (d) is

Select one:
a. Depreciation Expense P10,000
Accumulated Depreciation P10,000
b. Accumulated Depreciation P833
Depreciation Expense P833
c. Depreciation Expense P833
Accumulated Depreciation P833
d. Depreciation Expense P5,000
Accumulated Depreciation P5,000
Purchases of merchandise during the year amounted to
Select one:
a. P71,275
b. P75,985
c. P103,505
d. P59,750
n/30 means the merchandise purchased on account has to pay in full in ____.
Select one:
a. Sales discount
b. Merchandise inventory or Inventory
c. 30 days or on the 30th day from date of purchase
d. Sales Returns and allowances
Income received but not yet earned.

Select one:
a. Cash Basis of accounting
b. Adjusting entries
c. Depreciation accounting
d. Deferred Revenue
Accounts not closed.

Select one:
a. Post-closing Trial Balance
b. Assets, liabilities, Capital
c. Permanent accounts
d. Decreases Capital
The entry to adjust rent is

Select one:
a. Prepaid Rent P2,000
Rent Expense P2,000
b. Rent Expense P2,000
Prepaid Rent P2,000
c. Prepaid Rent P 2,000
Cash P2,000
d. Rent Expense P4,000

Prepaid Rent P4,000
The total operating expenses is
Select one:
a. P 57,750
b. P 59,750
c. P61,200
d. P62,250
Accrued income is an _____account.

Select one:
a. Matching
b. Asset
c. Expense
d. Adjusting
Merchandise returned by customers are debited to _______ account.

Select one:
a. Sales Returns and allowances
b. Sales discount
c. 30 days or on the 30th day from date of purchase
d. Merchandise inventory or Inventory
Which of the following terms is not used in a purely merchandising firm?

Select one:
a. Sales
b. Overhead
c. Cost of Sales
d. Purchase Discount
The total trade discount is
Select one:
a. P7,000
b. P2,000
c. P 4,940
d. P5,000
Effect of Drawings.
Select one:
a. Assets, liabilities, Capital
b. Decreases Capital
c. Post-closing Trial Balance
d. Permanent accounts
Closing entries and ______entries are done at the end of the accounting period.
Select one:
a. Expense
b. Matching
c. Adjusting
d. Asset
Gross profit/Sales.
Select one:
a. Freight-out
b. Gross profit ratio
c. Cost of goods sold
d. Free On Board
____-turnover indicated how past the merchandise being sold and inventory are replenished.
Select one:
a. Account
b. Inventory
c. Sales discount
d. Destination
Summarizes nominal account and their balances.

Select one:
a. Revenue and Expense summary
b. Owner's Equity
c. Profit
d. Trade discount
Allocation of cost of depreciable non-cash assets over its useful life

Select one:
a. Cash Basis of accounting
b. Depreciation accounting
c. Deferred Revenue
d. Adjusting entries
Records only cash receipts and cash payments.

Select one:
a. Depreciation accounting
b. Cash Basis of accounting
c. Adjusting entries
d. Deferred Revenue
If Manila Store paid within the discount period, it will pay
Select one:
a. P 95,000
b. P93,158.80
c. P 98,000
d. P93,000
Assignment 003
The nature of non-manufacturing costs include the following except

Select one:
a. These are expenses incurred in the stage of bringing the products to the ultimate consumers.
b. These are the costs outside production.
c. These are the costs of the administration and management of the firm.
d. These are the costs other than direct materials and direct labor.
All the expenditures incurred in producing a good or a product is called ___________.

Select one:
a. Non-manufacturing costs
b. Manufacturing costs
c. Factory overhead or manufacturing overhead
d. Manufacturing
____are the costs that are not, in one way or another, associated with the production of finished
goods or products,
Select one:
a. Factory overhead or manufacturing overhead
c. Manufacturing
d. Non-manufacturing costs
The costs of completed or finished goods during the period are shown in the ___________section of
the income statement.
Select one:
a. Raw Materials Purchases
b. Cost of goods manufactured
c. Direct materials
d. Goods in Process or Work in Process
Prime costs consist of direct labor and _______.

Select one:
a. Goods in Process or Work in Process
b. Direct materials
c. Conversion costs
d. Selling expenses or distribution expenses
Check
The inventories of a manufacturing business at the end of the accounting period include the
following except
Select one:
a. Finished goods in the store room
b. Finished goods sold but unpaid
c. Unused raw materials
d. Unfinished products
Following are examples of non-manufacturing costs except;
Select one:
a. Research and development cost
b. Salaries of accounting supervisor
c. Storage cost
d. Depreciation of machineries
The cost that cannot be classified as direct materials or direct labor is called ____________.
Select one:
a. Manufacturing
b. Non-manufacturing costs
d. Manufacturing costs
____pertains to the creation of a finished product either by hand or by machine.
Select one:
a. Non-manufacturing costs
d. Manufacturing
Salaries of the plant supervisor is categorized as

Select one:
a. Direct Labor
b. Factory overhead
c. Selling expenses
d. General expenses
Short quiz 003
Which of the following section titles shown in the income statement is common to both
manufacturing firm and merchandising?
Select one:
a. Total cost in process
b. Cost of Goods Sold
c. Cost of Goods Manufactured during the period
d. Raw Materials Used
Sales less cost of goods manufactured equals gross profit.

Select one:
True
False
The cost that cannot be classified as direct materials or direct labor is called ____________.
Select one:
a. Manufacturing
b. Factory overhead or manufacturing overhead
c. Manufacturing costs
d. Non-manufacturing costs
Water in a water refilling and purifying station.

Select one:
a. Selling, General, and Administrative Expenses
b. Direct Labor
c. Direct Materials
d. Factory Overhead
____are the costs that are not, in one way or another, associated with the production of finished
goods or products,
Select one:
d. Manufacturing
A purchase of raw materials on credit is debited to ______.

Select one:
a. Cost of goods manufactured
b. Goods in Process or Work in Process
c. Raw Materials Purchases
d. Direct materials
Returned defective raw materials purchased on credit is credited to

Select one:
a. None of these
b. Raw Materials Returns and Allowances
c. Raw Materials Purchase Discount
d. Accounts Payable
The expenditures of bringing the product to the ultimate consumers is called __________.
Select one:
a. Direct materials
b. Selling expenses or distribution expenses
c. Goods in Process or Work in Process
d. Conversion costs
Direct materials can be any of the following except

Select one:
a. Steel in cars
b. Fabrics in dresses
c. Wood in furniture
d. Paint in houses
Depreciation of office equipment.

Select one:
a. Factory Overhead
b. Direct Materials
c. Selling, General, and Administrative Expenses
d. Direct Labor
Laboratory 003
Assignment 004
Interpreting the results stage pertains to analysis of financial data to aid in decision making of the
management.
Select one:
True
False
The normal balance of an account is always on its debit side.
Select one:
True
False
Capital refers to the right of the third party over the assets of the business.
Select one:
True
False
Preparing the worksheet is an optional activity in the accounting cycle.

Select one:
True
False
Adjusting and closing entries are always done at the end of the accounting period.
Select one:
True
False
Increases in all accounting elements are always on the left side of a T-account.
Select one:
True
False
Recording business transactions chronologically for the time involves journalizing process.
Select one:
True
False
Assets and liabilities are categorized as temporary accounts.
Select one:
True
False
Assets=Equities is a valid accounting equation.

Select one:
True
False
The expanded accounting equation is Assets=Liabilities + Capital - Revenues + Expenses -

Drawing.
Select one:
True
False
Short Quiz 004
Following are examples of asset accounts except;

Select one:
a. Accounts Receivable
b. Depreciation
c. Supplies
d. Prepaid Insurance
After the closing entries are posted in the ledger, all the nominal accounts will have zero balances.
Select one:
True
False
On the first year of operations of the partnership, an accumulated depreciation for non-current
assets was recorded at P1, 000. At the end of its second year, the amount of depreciation to be
recognized is P1, 000.
Select one:
True
False
Total assets reported in the balance sheet are P800, 000, 40% of which is current. Land costing
P130, 000 was recorded and an accumulated depreciation for other non-current assets of P50, 000
was recorded. The cost of the non-current assets is P350, 000.
Select one:
True
False
Which of the following statements is correct?

Select one:
a. The account number is written on the F column of the ledger to facilitate cross-referencing.
b. Trial balance is the book of final entry.
c. Post-closing trial balance is the last step in the accounting cycle.
d. All real accounts have debit normal balance.
If total assets are P450, 000, total liabilities and equity is also P450, 000.
Select one:
True
False
Rent expense is debited for P20, 000 when payment for four months was made on July 1, 2017. At
the end of the month, an adjusting entry requiring a debit to Prepaid Rent should be made for P15,
000.
Select one:
True
False
Choose the correct accounting equation

Select one:
a. Debit = Credit
b. All of these
c. Assets = Equities
d. Assets = Liabilities + Capital
The journal entry to record the capital of partners A and B of P 20,000 each is debit to Cash of
P40,000 and credit to A and B Capital, P40,000.
Select one:
True
False
All Nominal accounts are presented in the

Select one:
a. Statement of Financial Position
b. Statement of Cash Flows
c. Income Statement
d. Statement of changes in Owners' Equity
Laboratory 004
Question 01
Question 02
Question 03
Assignment 005
The most liquid asset of a company is cash.
Select one:
True
False
Purchase of plant assets is a financing activity.

Select one:
True
False
NSF checks are those issued by the firm as payment and are not yet presented to the banks for
encashment.
Select one:
True
False
The adjusted trial balance is also a financial statement.

Select one:
True
False
The primary objective of financial reporting is to provide information about the firm that will be
beneficial to all stakeholders.
Select one:
True
False
When using the fluctuation fund system in petty cash fund accounting, disbursements out of the fund
are credited to Cash in Bank.
Select one:
True
False
The statement of financial position shows the net worth of a business.

Select one:
True
False
The statement of owner's equity of a partnership includes capital reserves.

Select one:
True
False
The elements of an income statement include revenues and prepaid expenses.

Select one:
True
False
Disclosures can also be presented in the face of a financial statement.

Select one:
True
False
Short Quiz 005
_____are the capsulized reports that show the financial health of a business entity.
Select one:
a. Financial reporting
b. Revenues
c. Financial statements
d. None of the choices
Capital is for sole proprietorship and partnership, _____is for corporation.

Select one:
a. Revenues
b. Retained earnings
c. None of the choices
d. Shareholders' Equity
Share Premium is the term used for the excess of issue price over the ______of shares.
Select one:
a. Revenues
b. None of the choices
c. Financing
d. Par vale
A disclosure on ____ shows the company's recognition policies.
Select one:
a. Revenue recognition
b. Financing
d. Deposit in transit
The positive bottom line figure in the income statement is called ____.
Select one:
a. None of the choices
b. Financial statements
c. Net income
d. Revenues
____are records and documents that are consolidated to determine and review the financial status
of a firm.
Select one:
a. Financial reports
b. Shareholders' Equity
d. Financial statements
The operating section of an income statement consists of ______and expenses.

Select one:
a. Revenues
c. Retained earnings
d. Net loss
If the company incurred____, the capital beginning will be decreased by the same amount.
Select one:
a. Retained earnings
c. Net loss
d. Revenues
Payment of the principal amount of loan is a ___ activity.

Select one:
a. Deposit in transit
b. Financing
c. Net loss
d. None of the choices
Dividends declared and paid decrease ______.

Select one:
a. Retained earnings
c. Shareholders' Equity
d. Reven
Laboratory 005
Assignment 006
The following are liquidity ratios except

Select one:
a. Earnings per share
b. Working capital ratio
c. Receivable turnover
d. Quick ratio
The working capital ratio is

Select one:
a. Current assets/current liabilities
b. Current assets minus current liabilities
c. Quick assets / current liabilities
d. Working capital /current liabilities
Quick assets equals

Select one:
a. Total assets less non-current assets
b. Cash and Accounts receivable only.
c. All current assets
d. Current assets minus inventory
Which of the following belong to the profitability ratios?

Select one:
a. Gross Profit Margin
b. All of the above
c. Rate of return on assets
d. Rate of return on equity
Earnings per share is calculated by

Select one:
a. None of the above.
b. Dividing net income by the total number of ordinary and preferred shares issued.
c. Dividing net income less preferred dividends by number of ordinary shares outstanding.
d. Dividing net income by the authorized ordinary shares.
The formula for Accounts Receivable turnover is
Select one:
a. 360 days / average accounts receivable
b. Net Sales / average merchandise inventory
c. Net Sales / average accounts receivable
d. Cost of goods sold / average accounts receivable
The category of ratios that determine the economic status of publicly-traded companies is
Select one:
a. Liquidity Ratios
b. Profitability ratios
c. Market value ratios
d. Solvency ratios
Operating profit margin equals

Select one:
a. Gross profit / sales
b. Income from operations / sales
c. Profit from operations / cost of sales
d. Net income / sales
The category of ratios that shows the ability of the firm to pay its long-term obligations is
Select one:
a. Solvency ratios
b. Market value ratios
c. Profitability ratios
d. Liquidity Ratios
The following are quick assets except;

Select one:
b. Merchandise Inventory
c. Short-term investments
d. Cash
Short Quiz 006
Net sales less cost of sales will give us

Select one:
a. Gross profit
b. Net profit ratio
c. Gross profit ratio
d. Cost ratio
Which of the following a correct statement?

Select one:
a. Acid test ratio includes merchandise inventory and prepaid expenses.
b. Return on ordinary equity reveals the relationship between net income and equity.
c. Day's sales in receivable is the ratio of average inventory and sales.
d. Gross profit margin is the ratio of gross profit to cost of goods sold.
The following selected accounts are taken from the ledger of XYX Merchandising on June 30,
2017: Sales, P 550,000; Sales Discount, 5%; Gross profit, P209,000; operating expenses,
P150,000; merchandise inventory, Jan 1, 2017 , P75,000; merchandise inventory, June 30, 2017,
P50,000; Accounts Receivable Jan1, P 70,000; Accounts Receivable, June 30, P50,000.
The cost of sales is
Select one:
a. P359,000
b. P313,500
c. P341,000
d. P522,500
The inventory turnover is
Select one:
a. 6.27 times
b. 5.02 times
c. 4.18 times
d. 2.51 times
If income tax rate is 35%, the net income for the period is
Select one:
a. P20,650
b. P153,850
c. P38,350
d. P73,150
Quick ratio is .9, quick assets totaled P22,500, cash is three times the accounts receivable,
Current liabilities is
Select one:
a. P20,250
b. P25,000
c. Answer not given
d. P22,050
(ignore income tax), if the shares outstanding is 25,000, the earnings per share is
Select one:
a. P2.36
b. P6.00
c. P8.36
d. Answer not given
The receivable turnover is
Select one:
a. 10.445 times
b. 7.46 times
c. 8.71 times
d. 9.17 times
If the return on equity is 32%, the average equity is
Select one:
a. P184,375
b. P368,750
c. Answer not given
d. P18,880
(Ignore income tax) if the return on assets is 18%, the average total assets is
Select one:
a. P655,556
b. Answer not given
c. P21,240
d. P327,778
Long quiz 002
Odd-man Out.
Choose the letter that does not belong to the group.
Select one:
a. Return on equity
b. Return on assets
c. Price/earnings ratio
d. Return on sales
The normal balance of which are on the debit side except

Select one:
a. Drawing
b. Rent Expense
c. Accrued Salaries Expense
d. Prepaid Expense
The statement of cash flows showcases the transactions that affect the most liquid asset only.
Select one:
True
False
Financial statements present the financial position and performance of the firm.
Select one:
True
False
Odd-man Out.
Select one:
a. Return on equity
b. Interest coverage ratio
c. Debt ratio
d. Time-interest earned
Odd-man Out.
Select one:
b. Merchandise Inventory
c. Equipment
d. Cash
The total assets and the total liabilities and owner's equity should always be equal.
Select one:
True
False
The shareholders' equity section of the balance is also called the net assets of the firm.
Select one:
True
False
The following are real accounts except

Select one:
b. Accrued Interest Income
c. Laundry Income
d. Accrued Interest Expense
The common element of change in the owners' equity of a partnership and shareholder's equity of a
corporation is net income.
Select one:
True
False
The four components of the financial statements are Statement of Income, statement of financial
position, statement of cash flows and post- closing trial balance.
Select one:
True
False
Odd-man Out.
Select one:
a. Sales
b. Miscellaneous Income
c. Accrued Interest Income
d. Service Income
The statement of owner's equity is a link between the income statement and the balance sheet.
Select one:
True
False
Odd-man Out.
Select one:
a. Purchase of treasury shares
b. Payment to suppliers
c. Payment of principal amount of loan
d. Payment of dividends
The total shareholders' equity is the sum of the share capital, share premium, capital reserves,
retained earnings and treasury shares.
Select one:
True
False
In a multi-step form of income statement, the breakdown of the different key line items is shown in
the notes or footnotes.
Select one:
True
False
The elements of the income statement include revenues, expenses, drawing, and net income.
Select one:
True
False
All the non-current assets are subject to depreciation.

Select one:
True
False
Odd-man Out.
Select one:
a. Freight-out
b. Purchases
c. Merchandise Inventory, beginning
d. Merchandise Inventory, ending
The nature and justification in the change in the accounting principle and its effect should be
disclosed in the financial statements.
Select one:
True
False
Odd-man Out.
Select one:
a. Collection of Receivables
b. Cash Sales
c. Receipts of dividends
d. Sale of plant assets
All are nominal accounts except;
Select one:
a. Sales
b. Service Income
c. Prepaid Insurance Expense
d. Rent Expense
If revenue is less than expenses, the bottom line is profit.

Select one:
True
False
Issuance of shares of stock and sales of treasury shares are investing cash flows.
Select one:
True
False
Disclosures are supplemental explanations and broad descriptions of the financial position and
performance of a firm.
Select one:
True
False
Capital is for sole proprietorship and partnership, _____is for corporation.

Select one:
a. None of the choices
b. Shareholders' Equity
c. Retained earnings
d. Revenues
Odd-man Out.
Select one:
a. Cash
b. Marketable securities
c. Merchandise inventory
d. Accounts Receivable
Operating activities or cash flows are those cash flows affecting the income producing activities of
the company.
Select one:
True
False
Another term for income statement is revenue and expense summary.

Select one:
True
False
Which of the following is correct?
Select one:
a. All of the above
b. A = L +C
c. A = E
d. A +E +D = L +C
Finals Exam
Odd-man Out.
Select one:
a. Depreciation
b. Prepaid Insurance Expense
c. Uncollectible Accounts
d. Rent Expense
In a car factory: what is paint in an automobile?

Select one:
a. Factory Overhead
b. Direct Labor
d. Direct Materials
Odd-man Out.
Select one:
a. Notes Receivable collected by banks in behalf of the depositor
b. NSF check
c. Proceeds of bank loan deposited in the account of the depositor
d. Interest Income
Reversing accrued income needs a credit to an _______ account.

Select one:
a. Accounts Payable
b. Purchases
c. Income
d. Asset or Accrued Income
Salaries of plant supervisor.

Select one:
a. Direct Labor
b. Selling, General, and Administrative Expenses
c. Direct Materials
d. Factory Overhead
In using special journals, purchases of merchandise for cash are recorded in the purchases journal.
Select one:
True
False
Sales on credit is recorded in this special journal.

Select one:
a. Accounts Receivable Subsidiary ledger
b. Sales Journal
c. General Journal
d. Accounts Payable Subsidiary Ledger
Estimated uncollectibles is recorded in this journal.

Select one:
a. Accounts Payable Subsidiary Ledger
b. General Journal
c. Sales Journal
d. Accounts Receivable Subsidiary ledger
The day's sales in receivable is
Select one:
a. 48.26 days
b. 34.45 days
c. 39.26 days
d. 41.33 days
FOB destination means the ownership of merchandise passes to the buyer when it reaches its
______.
Select one:
a. Inventory
b. Destination
c. Account
d. Sales discount
Current assets minus current liabilities is

Select one:
a. Short-term ratio
b. Working capital
c. Current ratio
d. Net current assets
It is where the entries in the Cash Payments Journal are individually posted.
Select one:
a. Accounts Receivable Subsidiary ledger
b. General Journal
c. Accounts Payable Subsidiary Ledger
d. Sales Journal
Woods in a furniture business.

Select one:
a. Direct Labor
b. Direct Materials
d. Factory Overhead
Accounting concepts related to time-period concept are revenue-recognition and

__________principles.
Select one:
a. Asset
b. Expense
c. Matching
d. Adjusting
Meaning of FOB.
Select one:
a. Freight-out
c. Cost of goods sold
d. Free On Board
Purchases plus freight in less purchase returns less inventory end.

Select one:
a. Cost of goods sold
c. Free On Board
d. Freight-out
Adjusting entry for letter(c) is

Select one:
a. Prepaid Rent P 2,000
Cash P2,000
b. Salaries Payable P 1,500

Cash P1,500
c. Salaries Expense P18,500
Cash P18,500
d. Salaries Expense P 18,500
Salaries Payable P 18,500
Zeroing the temporary accounts.

Select one:
a. Accrued Expenses
b. Nominal accounts
c. Statement of Changes in Owner's Equity
d. Closing the accounts.
Odd-man Out.
Select one:
a. Receivable turnover
b. Debt ratio
c. Current ratio
d. Quick Ratio
Cost of transporting goods from seller to the customers.

Select one:
a. Free On Board
c. Freight-out
d. Cost of goods sold
Direct labor and factory overhead are categorized as ______- costs.

Select one:
a. Direct materials
b. Conversion costs
c. Goods in Process or Work in Process
d. Selling expenses or distribution expenses
____pertains to the creation of a finished product either by hand or by machine.

Select one:
d. Manufacturing
What journal will you use to record the following transaction:Purchase of building on account.
Select one:
a. General Journal
b. Cash Receipts Journal
The entries of which are posted individually in the Accounts Receivable Subsidiary Ledger.
Select one:
a. Purchases Journal
b. Sales Journal
Real accounts
Select one:
b. Permanent accounts
Revenues, Expenses.
Select one:
a. Statement of Changes in Owner's Equity
b. Closing the accounts.
c. Accrued Expenses
d. Nominal accounts
If Manila Store failed to pay within the discount period, the amount due is
Select one:
a. P95,000
b. P102,000
c. P100,000
d. P 95,060
Direct reduction in the selling price of a merchandise to encourage customers to pay on time.
Select one:
a. Revenue and Expense summary
b. Trade discount
c. Profit
d. Owner's Equity
The right side of a T-account is used to record

Select one:
a. Decrease in liability
b. Increase in Asset
c. Increase in Liability
d. Decrease in revenue
Purchases of merchandise on account under periodic inventory system requires a debit to
_____account.
Select one:
a. Purchases
b. Asset or Accrued Income
c. Accounts Payable
d. Income
Odd-man Out.
Select one:
a. Retained Earnings
b. Share Premium
c. Share capital
d. Treasury Shares
The net income before tax is
Select one:
a. P209,000
b. P522,500
c. P59,000
d. Answer not given
Advertising expenses is a
Select one:
a. Selling Expense
b. General Expense
c. None of these
d. Factory overhead
Trial balance consisting of all real accounts at the beginning of the next accounting period.
Select one:
b. Permanent accounts
Income will be adjusted by

Select one:
a. Service Income P 1,000
Unearned Service Income P1,000
b. Service Income P 1,000
Cash P1,000
c. Unearned Service Income P1000
Cash P1,000
d. Unearned Service Income P 1,000
Service Income P1,000
Water and electricity in the factory.

Select one:
a. Direct Materials
b. Selling, General, and Administrative Expenses
c. Direct Labor
d. Factory Overhead
Merchandise Inventory, Dec. 31 is
Select one:
a. P75, 985
b. P62,250
c. P 43,755
d. P 29,020
Prime Cost is direct materials plus factory overhead.

Select one:
True
False
Juan earned P200, 000 in rendering services. His total expenses are 40%. His net income is
Select one:
a. P80,000
b. P320,000
c. P 200,000
d. P120,000
Factory overhead is an inventory cost.

Select one:
True
False
Santos, Capital, December 31 is
Select one:
a. P210,750
b. P148,500
c. P151,500
d. P150,000
Salaries of office staff.

Select one:
a. Selling, General, and Administrative Expenses
b. Factory Overhead
c. Direct Materials
d. Direct Labo
The adjusting entry to record ( a) is

Select one:
a. Doubtful Accounts Expense P1, 500
Sales P1,500
b. Sales P1,500
Accounts Receivable P1,500
c. Doubtful Accounts Expense P 1,500
Accounts Receivable P1,500
d. Doubtful Accounts Expense P 1,500
Allowance for Doubtful Accounts P 1, 500
All the expenditures incurred in producing a good or a product is called ___________.

Select one:
a. Manufacturing costs
d. Manufacturing
Which is the nature of a manufacturing type of business?

Select one:
a. All of these.
b. Its finished products are sold to a merchandiser.
c. It converts raw materials to a finished product.
d. The production can be either manually or by machine.
One of the FASB statements of financial reporting objectives is that it should report the accounting
elements and the changes affecting them.
Select one:
True
False
The costs of completed or finished goods during the period are shown in the ___________section of
the income statement.
Select one:
a. Goods in Process or Work in Process
b. Direct materials
c. Raw Materials Purchases
d. Cost of goods manufactured
The nature of non-manufacturing costs include the following except

Select one:
a. These are the costs outside production.
b. These are expenses incurred in the stage of bringing the products to the ultimate consumers.
c. These are the costs of the administration and management of the firm.
d. These are the costs other than direct materials and direct labor.
Credit memo is a document that will serve as a basis for crediting a seller's account for returned
merchandise.
Select one:
True
False
This is the document issued by the buyer for returned merchandise.

Select one:
a. Debit memorandum
b. General Journal
c. Credit memorandum
d. Accounts Payable Subsidiary Ledger

Assignment 001: Fundamentals of Accounting/Answer Key

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Assignment 001: Fundamentals of Accounting/Answer Key

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Fundamentals of Accounting/Answer Key

April 10 Returned defective merchandise purchased on the 8th, P 10,000.

April 17 Paid ABC Textile Corporation.

Excess of net sales over cost of goods sold

Discount not recorded in the seller's books

April 10 Returned defective merchandise purchased on the 8th, P 10,000.

April 17 Paid ABC Textile Corporation.

April 10 Returned defective merchandise purchased on the 8th, P 10,000.

April 10 Returned defective merchandise purchased on the 8th, P 10,000.

April 17 Paid ABC Textile Corporation.

April 10 Returned defective merchandise purchased on the 8th, P 10,000.

April 17 Paid ABC Textile Corporation.

Sales Discount is recorded in the

All cash outflows are recorded in the

It is a detailed record of individual customer's accounts.

Short Quiz 002

Revenue less expenses.

Payment of freight-in under perpetual inventory system is debited to ____.

Expenses incurred but not yet paid.

Purchases of merchandise on account under periodic inventory system requires a credit to

The entry to record depreciation (d) is

Accumulated Depreciation P10,000

b. Accumulated Depreciation P833

Depreciation Expense P833

c. Depreciation Expense P833

Accumulated Depreciation P833

d. Depreciation Expense P5,000

Accumulated Depreciation P5,000

Income received but not yet earned.

Accounts not closed.

The entry to adjust rent is

Rent Expense P2,000

b. Rent Expense P2,000

Prepaid Rent P2,000

c. Prepaid Rent P 2,000

d. Rent Expense P4,000

Accrued income is an _____account.

Merchandise returned by customers are debited to _______ account.

Which of the following terms is not used in a purely merchandising firm?

Summarizes nominal account and their balances.

Allocation of cost of depreciable non-cash assets over its useful life

Records only cash receipts and cash payments.

The nature of non-manufacturing costs include the following except

All the expenditures incurred in producing a good or a product is called ___________.

Prime costs consist of direct labor and _______.

Salaries of the plant supervisor is categorized as

Short quiz 003

Sales less cost of goods manufactured equals gross profit.

Water in a water refilling and purifying station.

A purchase of raw materials on credit is debited to ______.

Returned defective raw materials purchased on credit is credited to

Direct materials can be any of the following except

Depreciation of office equipment.

Preparing the worksheet is an optional activity in the accounting cycle.

Assets=Equities is a valid accounting equation.

The expanded accounting equation is Assets=Liabilities + Capital - Revenues + Expenses -

Short Quiz 004

Following are examples of asset accounts except;

Which of the following statements is correct?

Choose the correct accounting equation

All Nominal accounts are presented in the

Purchase of plant assets is a financing activity.

The adjusted trial balance is also a financial statement.