Quiz 3 on Prelim Term Period: The Accounting Equation

ADAPTED: Zeus Vernon B. Millan, Financial Accounting and Reporting – Fundamentals, 2018, 1 st Edition

Multiple Choice – Computation:

1. A business had total expenses of P29,000 and reported a profit of P30,000. How much is the
total income?
a. 1,000
b. 59,000
c. 130,000
d. None of these
2. A business had total income of P53,000 and reported a profit of P38,000. How much is the total
expenses?
a. 91,000
b. 15,000
c. 130,000
d. None of these
3. A business had ending total assets of P67,000, ending total liabilities of P15,000 and beginning
equity is P8,000. If the total expenses for the period amount to P29,000, how much is the total
income?
a. 37,000
b. 73,000
c. 103,000
d. None of these
4. A business had ending total assets of P89,000, ending total liabilities of P36,000 and beginning
equity of P18,000. If total income for the period amounts to P57,000, how much is the total
expenses?
a. 30,000
b. 31,000
c. 22,000
d. None of these
5. A business had a beginning equity of P52,000. If the total income for the period is P87,000 while
the total expenses are P63,000, how much is the ending balance of equity?
a. 67,000
b. 71,000
c. 76,000
d. None of these
6. A business had a beginning equity of P123,000. If the total income for the period is P59,000
while the total expenses are P81,000, how much is the ending balance of equity?
a. 130,000
b. 110,000
c. 101,000
 d. None of these
7. A business had a beginning equity of P62,000 and ending equity of P87,000. If the total income
for the period is P98,000, how much is the total expenses?
a. 67,000
b. 73,000
c. 76,000
d. None of these
8. A business had a beginning equity of P62,000 and ending equity of P87,000. If the total
expenses for the period is P73,000, how much is the total income?
a. 67,000
b. 73,000
c. 76,000
d. None of these
9. In accounting, a negative amount is normally presented
a. Beginning with a minus sign
b. In parentheses
c. As a squeezed amount
d. Negatively
10. Manong Magba Balut sells balut. At the beginning of the day, Manong Balut had P1,000 cash.
Manong used that amount to buy “balut” (uncooked), cook the “balut” and sell the “balut”
online. At the end of the day, Manong Balut had P1,700 cash. Which of the following is most
likely to be a valid statement?
a. Manong Balut earned profit of P1,700, representing the increase in Manong’s assets (i.e.,
cash) resulting to an increase in equity.
b. Manong Balut earned profit of P700, representing the increase in Manong’s assets (i.e.
cash) resulting to an increase in his equity.
c. Sorry I can’t solve this because I don’t know what a “balut” is.
d. I don’t know. I think I’d better ask Manong Balut to teach me accounting.

Use the following information for the next eight questions:

Papa gives you a weekly allowance of P20. In the next questions, we will treat your weekly
allowance as your weekly income. The amount you spend out of the allowance represents your
expenses. Any unspent amount (i.e., savings) represents your profit.
11. You spent P18. Which of the following statements is correct?
a. Your profit for the week is P20.
b. Your profit for the week is P2.
c. You incurred a loss of P18.
d. Papa is kuripot.
12. To earn a profit of P10 in a month, your weekly spending should be (use 4 weeks per month)
a. P71.50
b. P70
c. P17.50
 d. That is impossible! I would starve myself first before I can earn that profit.
13. You spent all your allowance for the week. In addition, you purchased 1 “balut” woth P16 from
Manong Balut, on credit. You told Manong Balut you will pay him next week. Under the accrual
basis of accounting, your profit (loss) for the week is
a. P16
b. 0
c. (P16)
d. 1 balut
14. If your total spending for the year was P936, your profit (loss) would be (use 52 weeks per year)
a. P104
b. P 0
c. P1,040
d. I don’t know. Accounting is so complicated!
15. On Day 1 of the first week of the year, your accounting equation will show which of the
following?

ASSETS = LIABILITIES + EQUITY

a. P20 0 P20

b. P20 P20 0

c. P20 P20 P20

d. 0 0 0

16. You spent all your allowance for the first week. Your accounting equation at the end of Week 1
will show which of the following?

ASSETS = LIABILITIES + EQUITY

a. P20 0 P20

b. P20 P20 0

c. P20 P20 P20

d. 0 0 0
17. You spent only P18 of your allowance for the first week. Your accounting equation at the end of
Week 1 will show which of the following?

ASSETS = LIABILITIES + EQUITY

a. P20 0 P20

b. P18 P0 P18

c. P2 0 P2

d. 0 0 0

18. Your accounting equation at the end of the week for #13 above (“balut”) will show which of the
following? (Note: You already ate the “balut” and now it’s gone.)

ASSETS = LIABILITIES + EQUITY

a. P16 P16 P0

b. P16 0 P16

c. P0 P16 (P16)

d. 0 0 0

19. Entity A had total assets, liabilities, and equity of P160,000, P73,000 and P87,000,
respectively, at the beginning of the period. During the period, Entity A’s total liabilities
increased to P84,000. Entity A reported a profit of P52,000. How much is Entity A’s ending
total assets?
a. 227,000
b. 220,000
c. 223,000
d. None of these
20. Entity A had total assets, liabilities, and equity of P140,000, P49,000, and P91,000
respectively, at the beginning of the period. During the period, Entity A’s total liabilities
increased by P15,000. Entity A reported a profit of P52,000. How much is Entity A’s ending
total assets?
a. 207,000
b. 270,000
c. 276,000
d. None of these