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Accounting Theory Reviewer
Accounting Theory Reviewer
6. Another way of stating the accounting 13. When an entity receives cash for services
equation is perfomed,
7. In the accounting equation, an increase in 14. The issuance of a note by an entity for
asset can be associated with * services received should be recorded as *
A. an increase in a liability
B. a decrease in owner's equity A. an unearned revenue
C. a decrease in a liability B. a notes payable
D. an increase in another asset C. a prepaid expense
D. an accounts receivable
Mhartina Lorenzo BABA 1A
Solution:
17. Expenses can be defined as L = A – OE
A. increased in owner's equity
B. decreases in economic benefits during the L = P180,000 – P100,000 = P80,000
accounting period in the form of outflows or
A= P180,000 + P60,000 L= P80,000 + P20,000
depletions assets or incurrences of liabilities
that result in decreases in equity A= P240,000 L= P100,000
C. decreases in owner's equity
D. inflows of assets from delivering or OE= A – L
producing goods or rendering services. OE= P240,000 – P100,000
A. P250,000
B. P190,000
C. P140,000
D. P50,000
Given:
3. If the balance of the Monterola, withdrawals Dr. P170,000, Cr. P140,000, and NEB= P60,000
account were P120,000 and the balance of the
Salaries Expense account were P50,000, what Solution:
would be the amount of B?
P170,000 – P140,000 = P30,000
A. P180,000
P60,000 + P30,000 = P90,000
B. P580,000
C. P370,000
D. 380,000
4. If the trial balance showed a balance of 9. The net profit for the period is P60,000. The
P70,000 in the Monterola, withdrawals account beginning owner's equity balance is P110,000.
and a balance of P50,000 in the salaries
Then ending balance of owner's equity has
Expense account, what would be the amount of
Advertising Revenues for the period? increased by P20,000. How much is the
owner's withdrawal for the period?
A. P330,000 A. P30,00
B. P480,000 B. P40,000
C. P180,000 C. P50,000
D. P430,000 D. P60,000
A. P330,000 Given:
B. P230,000
C. P430,000 NP = P60,000
D. P410,000
BOE bal = P110,000
Ending OE = ↑P20,000
6. If the trial balance shoed a balance of
P80,000 in the Salaries Expense account and a
Solution:
10. A small accounting firm has income of 5. Paid a service station for gasoline for a
P350,000, prepaid expense P30,000, unearned business service vehicle *
A. OI
revenue P20,000, accrued expense P80,000
B. OW
and expenses of P250,000. What is the C. I
D. E
profit/loss?
E. NO
A. (P10,000) loss
B. P20,000
C. P40,000 6. Performed a service and received a promise
D. P100,000 of payment *
A. OI
B. OW
C. I
Given: D. E
E. NO
Profit = P350,000
PE P30,000, UR P20,000
7. Paid cash to acquire equipment *
AE P80,000
A. OI
E of P250,000 B. OW
C. I
Solution: D. E
E. NO
P350,000 – P80,000 – P250,000 = P20,000
8. Paid cash to an employee for services
rendered *
A. OI
B. OW
III. C. I
1. Received cash for rendering services D. E
E. NO
A. Owner's investment (OI)
B. Owner's withdrawal (OW)
C. Income (I) 9. Accrued interest expense has been
D. Expense (E) incurred *
E. Not an owner's equity transaction (NO) A. OI
B. OW
C. I
D. E
2. Withdrew cash for personal expenses * E. NO
A. OI
B. OW
C. I 10. Provision of depreciation *
D. E
E. NO A. OI
B. OW
3. Received cash from a customer who have C. I
D. E
been rendered services on account * E. NO
A. OI
B. OW
C. I
D. E
E. NO