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a. If an entity uses special journals, its sales on account are recorded in the sales journal, while its sales on cash
basis are recorded in the cash receipts journal.
b. If an entity uses special journals, it will record only purchases on account in the purchases journal. It will not
record cash purchases and purchases in exchange for notes payable in the purchases journal.
c. If an entity uses special journals, all transactions that cannot be recorded in the special journals are recorded
in the general journal.
d. All the accounts in the general ledger have supporting accounts in the subsidiary ledger.
7. The minimum balance of an account is zero. In accounting, a negative balance in an account is referred to as
a. abnormal balance.
b. crazy balance.
c. psychotic balance.
d. LOL balance.
8. At the beginning of the period, a business has a cash balance of ₱20,000. During the period, total cash collections
and total cash payments amounted to ₱100,000 and ₱70,000, respectively. How much is the ending balance of
cash?
a. 10,000
b. 30,000
c. 50,000
d. 70,000
9. You opened up a business and invested ₱5M cash as the business’ initial capital. Which of the following
accounts is increased and therefore debited?
a. Cash
b. Owner’s equity
c. Accounts payable
d. Accounts receivable
10. In conjunction with the transaction in #9 above, which of the following accounts is also increased and therefore
credited?
a. Cash
b. Owner’s equity
c. Accounts payable
d. Accounts receivable
11. You purchased goods to be held for sale in the ordinary course of business activities, on cash basis. Which of the
following accounts is increased and therefore debited?
a. Cash
b. Owner’s equity
c. Accounts payable
d. Inventory
12. In conjunction with the transaction in #11 above, which of the following accounts is decreased and therefore
credited?
a. Cash
b. Owner’s equity
c. Accounts payable
d. Inventory
13. If the transaction in #11 above was made on account, which of the following accounts is also increased and
therefore credited?
a. Cash
b. Accounts receivable
c. Accounts payable
d. Inventory
14. A customer bought goods from your business, on credit. The customer orally promised to pay the sale price
next week. Which of the following accounts is increased and therefore debited?
a. Cash
b. Accounts receivable
c. Notes receivable
d. Sales
15. In conjunction with the transaction in #14 above, which of the following accounts is also increased and therefore
credited?
a. Cash
b. Accounts receivable
c. Notes receivable
d. Sales
16. When the customer in #14 above pays the sale price, which of the following accounts is decreased and therefore
credited?
a. Cash
b. Accounts receivable
c. Inventory
d. Sales
17. Your business obtained a ₱1M loan from a financing company. The financing company made you sign a
contract promising to repay the loan after a year. Which of the following accounts is increased and therefore
credited?
a. Accounts payable
b. Accounts receivable
c. Notes payable
d. Notes receivable
18. To record the transaction in #17 above, which of the following accounts will you debit?
a. Cash
b. Accounts payable
c. Owner’s equity
d. Inventory
19. The financing company who lent you the loan in #17 above will record the transaction by debiting which of the
following accounts?
a. Accounts payable
b. Accounts receivable
c. Notes payable
d. Notes receivable
20. The financing company in #17 above will credit which of the following accounts?
a. Cash
b. Accounts receivable
c. Notes payable
d. Notes receivable
21. You purchased a computer for ₱50,000 cash. To record this transaction, which of the following accounts will you
credit?
a. Cash
b. Computer equipment
c. Owner’s capital
d. Inventory
22. You expect to use the computer in #21 above over the next 5 years. At the end of Year 1, you will debit which of
the following accounts?
a. Depreciation expense for ₱50,000
b. Depreciation expense for ₱10,000
c. Accumulated depreciation – Equipment for ₱50,000
d. Accumulated depreciation – Equipment for ₱10,000
25. Entity A’s accounts receivable has a balance of ₱10,000. If the related allowance for bad debts account has a
balance of ₱4,000, the carrying amount of accounts receivable in Entity A’s financial statements is
a. ₱14,000.
b. ₱6,000.
c. ₱4,000.
d. 0.