BAC FINALS

1. BASIC QUESTION
The normal balance of an account is on the
a. side represented by decrease in the account balance.
b. debit side of the account
c. side represented by increases in the account balance.
d. credit side of the account.

2. ADVANCED QUESTION
Immaterial amounts of similar nature and function should be grouped or condensed as one line item
in the financial statements.
Answer: Aggregation

3. INSANE QUESTION
Villanueva Realty Company had the following balance sheet accounts and balances:

Accounts Payable P60,000 Equipment P70,000

Account Receivable 10,000 Arlyn Villanueva, Capital ?
Building ? Land 70,000
Cash 30,000
If the balance of the Villanueva, Capital account was P210,000, what would be the balance of the
Building account?
Answer: 90,000

4. ADVANCED QUESTION
The following pertains to the records of Allen Computer Services for the year 2012:
Capital, January 1 P135,000
Service Revenue P650,000
Salaries Expense P180,000
Miscellaneous expense P30,000
Rent Expense P72,000
Supplies Expense P65,000
Utilities Expense P55,000
Withdrawal for personal use by the owner P10,000/month
The balance of the capital account on December 31,2012 would be?
Answer: P263,000

5. BASIC QUESTION
It presents an indication in conformity with GAAP of the financial status of the enterprise at a
particular point in time.
a. statement of financial position
b. statement of retained earnings
c. statement of earnings
d. cash flow statement
6. INSANE QUESTION
John and Eddie form a partnership on March 1, 2013 with the following investments:
John Eddie
 Cash P10,000 P 35,000
Land 105,000
Furniture and fixtures 35,000

John and Eddie agree to divide profits and losses in the ratio of 70:30, respectively, and to assume the
P20,000 mortgage on the land of Eddie. If John is required to make his share in equity equal to 40%
he must make an additional investment of:
Answer: P35,000

7. INSANE QUESTION

The first step in recording a transaction in a journal is to

a. record the debit.
b. record the date.
c. record the credit.
d. write an explanation.

8. ADVANCED QUESTION
An entry with more than one debit or credit is called a
a. multiple entry.
b. double entry.
c. compound entry.
d. dual entry.

9. INSANE QUESTION
Which of the following is correct?

Assets Liabilities Capital

a. P7,850 P1,250 P6,600
b. P8,200 P2,800 P11,000
c. P9,550 P1,150 P8,200
d. P5,420 P6,540 P1,120

10. INSANE QUESTION

The following have been excerpted from Picachu’s balance sheet:

December 31, 2012 December 31, 2011

Prepaid Insurance 6,000 7,500
Interest Receivable 3,700 14,500
Salaries Payable 61,500 53,000

Picachu Company paid or collected during 2012 the following items:

Insurance premiums 41,500
Interest collected 123,500
Salaries paid 481,000

The salary expense on the income statement for 2012 was

Answer: 489,500
11. ADVANCED QUESTION
If accounts receivable has a debit postings of P580,000, credit postings of P440,000, and a normal
ending balance of p480,000. Which of the following was its beginning balance? INDICATE IF
DEBIT OR CREDIT.
Answer: P340,000 DEBIT

12. BASIC QUESTION

Failure to record depreciation at year-end will result in an
a. overstatement of total liabilities.
b. overstatement of total assets.
c. understatement of profit.
d. understatement of total liabilities.

13. INSANE QUESTION

. Under Opiso Company’s accounting system, all insurance premiums paid are debited to prepaid
insurance. For interim financial reports, Opiso makes monthly estimated charges to insurance
expenses with credits to prepaid insurance. Additional information for the year ended Dec. 31, 2012
is as follows:
Prepaid insurance at Dec. 31, 2011 P110,000
Charges to insurance expense during 2012 (including a year-
end adjustment of P10,500) 437,500
Prepaid insurance at Dec. 31, 2012 120,500
What was the total amount of insurance premiums paid by Opiso during 2012?
Answer: P427,000

14. INSANE QUESTION

The trial balance for Angeles Company appears as follows:
Angeles Company
Trial Balance
Dec. 31, 2012
Cash P20,000
Accounts Receivable 50,000
Prepaid Insurance 5,000
Supplies 15,000
Office Equipment 40,000
Accumulated Dep’n-
Office Equip’t P20,000
Accounts Payable 30,000
Jenny Fernando, Capital 60,000
Service Revenues 50,000
Salaries Expense 10,000
Rent Expense 20,000
P160,000 P160,000

If services totaling P12,500 had been performed but not yet billed, the adjusting entry to record
this would include a
a. debit to Service Revenues for P12,500
b. credit to Unearned revenues for P12,500
 c. credit to Service Revenues for P62,500
d. credit to Service Revenues for P12,500.

15. INSANE QUESTION

An amount deducted from the catalog price for an item of merchandise is called a_____________
Answer: Trade Discount