ABM1: FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 1

PRELIM EXAM

I. Modified True or False. Write the word TRUE if the statement is correct and if not, underline
the word or statement that sentence incorrect and write the correct word on the space
provided.

Capital 1. Mr. Clean deposited an amount of P50,000.00 in the bank account for his business
Surf Enterprise. The Fifty Thousand Pesos will be treated as payable.

Corporation 2. Cooperative is form of business ownership that has the most complicated business
operation.

the original or acquisition 3. Cost principle requires the asset to be recorded at historical cost.

TRUE 4. Proprietor is a simplest form of business organization where capital is owned and
managed by single person.

TRUE. 5. Equity represents the claim of the creditor over the assets of the business.

TRUE. 6. A business is an Activity carried out with the intention of earning the profit.

Financial _7. Accounting is an art of recording, classifying and summarizing in significant manner.

TRUE 8. Profitability statement indicated the amount of assets, liabilities and equity.

Balance sheet 9. Accounting refers to the process of analyzing and interpreting the information
already recorded in the books of accounts.

TRUE 10. Balance Sheet indicates the financial status of the business at the given period.

II. Identification:

1. Books of Original Entry. = Journal

2. It involves sorting or groupings of similar transactions and events into their respective kind
and classes. = Classifying
3. Based on a double entry system which means that the dual effects of a business transaction
are recorded. = Accounting
4. Original evidences that contain information about the nature and amount of the
transactions. = Source document
5. Books of Final Entry. = Ledger
6. A list of accounts with their respective debit or credit balances. = Trial balance
7. Is applied to component of property, plant and equipment (PPE). These are assets held by
an entity and expected to benefit more than one accounting period. In other words, these
are assets held for long-term purposes. = Depreciation
8. Are journal entries usually made at the end of an accounting period to allocate income and
expenditure to the period in which they actually occurred. = Adjusting entries
 9. The value of an asset according to its balance sheet account balance. For assets, the value is
based on the original cost of the asset less any depreciation, amortization or impairment
costs made against the asset. = Book Value
10. The cash amount that a company expects to receive. Hence, net realizable value is
sometimes referred to as cash realizable value. = Net realizable value

III. Problem Solving.

March 1 Mr. Severo Santos opens a current account with Allied Banking Corporation in the amount
of
P850,000 to start with his Laundry Business under the trade name “Santos Laundry
Services”
March 2 Purchased laundry supplies on account, from the following suppliers: Gmall – P35,000;
Citimall – P25,000 and Nccc Mall – P30,000.
March 3 Purchased laundry machine for cash, P150,000.
March 4 Rendered laundry service on account, P80,000.
March 10 Paid taxes and licenses due to the government, P4,000.
March 12 Mr. Severo Santos w ithdrew P10,000 cash from the business for his personal use.
March 17 The business borrowed money from Allied Bank Corporation, P100,000 by issuing a 15-day
note. It was deposited to the account of Tagum Laundry Services by way of a Credit Advice
issued by the Bank.
March 17 Bank debited memo, P1,000 for interest and bank charged.
March 21 Cash received of P45,000 representing collection from the clients.
March 25 Partial payment of accounts, P60,000.
March 30 Mr. Severo hired an accountant for his business as he has plenty of things to attain to at
P10,000 per month effective April 1.
March 30 Paid the following expenses: Rental – P5,000; Light and water – P12,000 and Salaries –
P10,000.

Chart of Accounts: Cash-101, Accounts Receivable-102, Prepaid Supplies-103,Laundry Machine104,

Accouts Payable-201, Notes Payable-202, Laundry Service Revenue-301, Utilities Expense-401, Rent
Expense-402, Salaries Expense-403, Interest Expense-404, Permits and License-405, Mr. Severo, Capital-
501, Mr. Severo, Drawings-502.

Requirements:
a. Journalized transactions.
b. Posting
c. Prepare a Trial Balance as of March 30, 2021

A. Journalized transaction
B. Posting
 C.
Trial Balance