1. Which of the following statements is/are true?

I. Accounting is a service activity intended to fulfill a useful function in society

II. Accounting involves the art of recording, classifying and summarizing
transaction and events, and interpreting the results thereof.
III. Accounting is an art but not a science
IV. Accounting provides quantitative financial information intended to be useful in
making economic decisions

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

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

2. Accounting is an art because

a. of the existence of a body knowledge governing accounting practice
b. of accounting theory
c. the necessity of applying creative skill and ability
d. None of the above

3. Unless there is specific evidence to the contrary, the firm will continue to be in existence in the
foreseeable future. This postulate is referred to as
a. Matching c. Historical cost
b. Going concern d. Specific-separate-entity

4. The principle of objectivity includes the concept of

a. summarization c. classification
b. verifiability d. conservatism

5. A sale on March 21 with terms of n/10 eom is due to be collected by

a. March 31 c. April 10
b. April 1 d. April 30

6. The concept of the accounting entity is applicable

a. only to the legal aspects of business organizations
b. only to the economic aspects of business organizations
c. only to business organizations
d. whenever accounting is involved

7. Which of the following is incorrect?

a. opening inventory + purchases – closing inventory
b. opening inventory + purchases + carriage outwards – closing inventory
c. sales – return inwards – gross profit
d. opening inventory + purchases + carriage inwards – closing inventory

8. Which of the following are basic inventories for a manufacturer?

a. indirect materials, goods in process, and raw materials
b. finished goods, raw materials, and direct materials
c. raw materials, goods in process, and finished goods
d. raw materials, factory overhead, and direct labor

9. Which of the following would not be an element of factory overhead?

a. salary of a marketing manager
 b. amortization on the maintenance equipment
c. salary of the plant supervisor
d. property taxes on plant buildings

10. Which of the following expenses would you not regard as part of administrative cost?
a. Audit Fees c. Advertising
b. Depreciation of office equipment d. Bank Charges

1. The branch of accounting concerned with the presentation of financial information primarily for
use of third person outside of business enterprise. Financial Accounting

2. An amount deducted from the catalog price for an item of merchandise is called a _________.
Trade discount

3. The first step in analyzing a transaction is to determine what accounts are involved, True or
False

4. They encompass the conventions, rules, and procedures necessary to define what is accepted
accounting practice. Generally accepted accounting principles

5. What function do accounting journals serve in the accounting process. Recording

6. An accounting method in which revenues are reported in the period in which they are earned,
and expenses are reported in the period in which they are incurred. Accrual Basis

7. Cartage-in is considered a cost of purchasing inventory, True or False?

8. He is the father of accounting. Fra Luca Pacioli

9. The entry to record the return of merchandise from a customer would include a debit to
____________. Sales Returns and Allowances.

10. If the title to merchandise purchases passes to the buyer when the goods are received by the
buyer, the terms are ______________. FOB Destination

1. Three-day’s salaries are unpaid as at Dec. 31. Salaries are P75,000 for five-day work week.
Salaries Expense 45,000
Salaries Payable 45,000

2. Which situation indicates a loss on the income statement

a. total debits equal total credits
b. total credits exceed total debits
c. total debits exceed total credits
d. none of the above
3. Which of the following is a cash outflow from operating activities?
a. payment for interest expense
b. payment to acquire property and equipment
c. payment to settle notes payable
d. payment to owners in the form of withdrawals

4. Under the perpetual inventory system, which of the following accounts would not be used?
a. Cost of Goods Sold
b. Merchandising Inventory
c. Purchases
d. Sales

5. On June 1, 2019, Alyssa Guyod sold merchandise with P150,000 list price credit terms of 20%,
10%, 2/10, n/30. What is the amount to be recorded as a sale? P108,000
6. Which of the following statement is correct?
a. A trial balance reports the financial position of a business
b. A trial balance reports the profit or loss made by a business
c. A trial balance will always balance
d. A trial balance reveals whether double entry principle has been complied with.

7. At the beginning of the year, the assets of Tricia services were P360,000 and its owner’s equity
was P200,000. During the year, assets increased by P120,000 and liabilities increased by P20,000.
What was the owner’s equity at the end of the year? P300,000

8. An invoice in the amount of P916 is subject to a trade discount of 10% and credit terms on 3/10,
n/30. If the invoice is not paid within the discount period, the amount that would be paid is to
satisfy the invoice would be? P916.00

9. Cash receipts from issuing shares and other equity instruments are
a. Cash inflows for financing activities c. Cash outflows for investing activities
b. Cash inflows for investing activities d. Cash outflows for financing activities

10. A trader reports opening inventory at P122,800, purchases for the year at P824,700, and
closing inventory at P154,200. During the year goods costing P24,800 were lost, others costing
P12,500 had been removed for own use by the proprietor and some costing P10,000 were gifted to
charity. What is the cost of sales? P746,000