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Accounting 1 2 Reviewer FOR Qualifying EXAM

Bs accountancy (Rizal Technological University)

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I. THEORIES

1. Mr. Abrasada, owner of Core Company, uses his personal cash to pay the accounts
payable of his business. What account should be credited in the books of Core Company?

a. Cash c. Abrasada, Capital

b. Accounts Payable d. Abrasada, Drawing

2. Ms. Ajas, owner of ZIP Company, uses company’s check to pay her personal accounts
payable. What account should be debited in the books of ZIP Company?

a. Cash c. Ajas, Capital

b. Accounts Payable d. Ajas, Drawing

3. It is the cost of a noncurrent asset after deducting salvage value to it’s historical cost.

a. Net Realizable Value c. Book Value

b. Depreciable Cost d. Net Historical Cost

4. Under perpetual inventory system, a return of defective merchandise to supplier is

recorded by crediting

a. Merchandise Inventory c. Purchase Returns and Allowances

b. Accounts Payable d. Sales Returns and Allowances

5. Refers to expenses that are already incurred but have not yet been paid.

a. Deferred Expense c. Deferred Income

b. Accrued Income d. Accrued Expense

6. It represents the amount of money that is borrowed from other entity to finance business’
operations.

a. Assets c. Income

b. Liabilities d. Expenses

7. An entity to whom a certain amount is owed, payable at a future date.

a. Accounts Payable c. Accounts Receivable

b. Creditor d. Debtor

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8. A method which is used in adjusting entry in which an asset is debited, and an expense
account is credited.

a. Asset Method c. Liability Method

b. Expense Method d. Income Method

9. What do you call an account that is added to its related account?

a. Added Account c. Adjunct Account

b. Advance Account d. Adjacent Account

10. Purchase account is a type of _________ account.

a. Asset c. Equity

b. Liability d. Hybrid

11. It is a nominal account in which income and expenses were closed.

a. Closing Account c. Income and Expense Summary Account

b. Real Account d. Temporary Account

12. A withdrawal of cash for personal use of P98,000 was recorded as P89,000 and deducted
directly to capital account. What account should be credited to correct the entry and by
how much?

a. Capital P9,000 c. Drawing P9,000

b. Cash P9,000 d. Neither A, B, C

13. It is a type of journal entry which is use to update deferrals, accruals, bad debts and
depreciation of fixed assets.

a. Compound Journal Entry c. Correcting Journal Entry

b. Adjusting Journal Entry d. Reversing Journal Entry

14. Checks received from customers are debited under this account

a. Cash on Hand c. Cash in Bank

b. Petty Cash Fund d. Payroll Cash Fund

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15. This is a portion of Accounts Receivable which is estimated to be uncollected

a. Bad Debts Expense c. Allowance for Bad Debts

b. Net Realizable Portion d. Carrying Amount

16. Fixed assets are measured at historical cost unless there is an evidence of liquidation
because of this principle

a. Cost Principle c. Matching Principle

b. Conservatism d. Going Concern

17. P15,000 worth of personal accounts payable of the owner was assumed by the business
but was recorded as debit to accounts receivable and credit to capital. Correcting entry
should include what?

a. Debit to Capital P30,000 c. Credit to Accounts Payable P30,000

b. Debit to Accounts Payable P15,000 d. Credit to Accounts Receivable P30,000

18. Two formats of balance sheet are:

a. Natural and Functional c. Single Step and Multi Step

b. Report and Account d. Neither A, B, C

19. Ms. Alim, a licensed accountant and one of the partners of ABCompany – an accounting
firm, rendered services to her personal clients. The bookkeeper of their partnership
recorded an income in ABCompany’s book because of this transaction. What accounting
principle/s did the bookkeeper violated?

a. Accounting Entity Principle c. Matching Principle

b. Accounting Entity and Matching d. Bookkeeper did not violate any principle

20. What entries are reversed at the beginning of an accounting year?

a. Adjusting Entry of Deferrals using Asset and Liability Method

b. Adjusting Entry of Accruals

c. All Adjusting Entries

d. All of the above

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21. The account format that displays debits, credits, balances, and headings.

a. General Journal b. General Ledger c. T-account d. Ledger Account

22. Which of the following is a method of bank reconciliation?

a. Adjusting Method c. Book to Bank Method

b. Bank to Bank Method d. All of the above

23. It is a check that is issued but is not been encashed yet.

a. Stale Check c. Postdated Check

b. Outstanding Check d. NSF Check

24. It is a check that is issued but can only be encash in a future date.

a. Stale Check c. Postdated Check

b. Outstanding Check d. NSF Check

25. It is a method of bank reconciliation wherein the bank balance is the basis of
reconciliation.

a. Adjusted Method c. Book to Bank Method

b. Bank to Book Method d. Neither A, B, C

26. Under the cash basis of accounting,

a. Accounts Receivable would appear on the balance sheet.

b. The matching principle is ignored.

c. Revenues are recorded when they are earned.

d. Depreciation of assets having an economic life of more than one year is recognized.

27. Which of the accounts below would appear on an adjusted trial balance but probably
would not appear on the trial balance?

a. Accumulated Depreciation c. Unearned Fees

b. Depreciation Expense d. Allowance for Bad Debts

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28. Recording the purchase price of a paper shredder (with an estimated useful life of 10
years) as an expense of the current period is justified by the

a. Materiality c. Going Concern

b. Comparability d. Matching Principle

29. Financial statements issued for the use of parties external to the enterprise are the primary
responsibility of the

a. Independent auditors of the enterprise

b. Creditors of the enterprise

c. Management of the enterprise

d. Stockholders of the enterprise

30. The income statement is prepared from the

a. Adjusted trial balance

b. Income statement columns of the worksheet

c. Either A or B

d. Both A and B

II. PROBLEM SOLVING

31. The current ratio of Goldman Company is 3:1. Assuming that all assets and liabilities are
current and the equity is P120,000, how much is the total assets?

a. P320,000 b. P240,000 c. P180,000 d. P120,000

32. 1000W Company computed its profits for the year 2019 as P156,800. Upon inspection of
the entity’s worksheet, you found out that column 8 totals P350,250. The total of column
5 amounts to P545,680. How much is the total of column 9?

a. P195,430 b. P212,435 c. P352,230 d. P388,880

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33. Crown Company purchases merchandise and equipment amounting P120,000 and
P240,000 on account, respectively. The merchandise and equipment are subject to 5%
cash discount. After a week, Crown Co. paid the full amount and availed the cash
discount. After three days, Crown Co. returned P24,000 (undiscounted amount) worth of
merchandise and P48,000 (undiscounted amount) worth of equipment. How much must
be debited to Purchase Discount account upon return of the merchandise and equipment?

a. P1,200 b. P2,400 c. P3,600 d. P4,800

34. The gross profit ratio of Star Company is 48%. The total operating expenses amount to
P255,250. The applicable tax rate is 30%. If the cost of goods sold is amounting to
P430,755, how much is the net profit before tax?

a. P99,659 b. P142,370 c. P185,081 d. P227,792

35. Using the problem #4, how much is the net profit after tax?

a. P99,659 b. P142,370 c. P185,081 d. P227,792

36. On October 31, 2019, our entity received P24,000 worth of subscription for the supply of
newspaper to RTU Pasig Campus good for 1 year. Our accountant used real account on
the initial entry of this transaction, what is the amount of Subscription Revenue to be
carry forward next accounting period?

a. P0 b. P6,000 c. P18,000 d. P24,000

37. Using problem #6, what is the amount of Unearned Subscription Revenue to be carry
forward next accounting period?

a. P0 b. P6,000 c. P18,000 d. P24,000

38. Using problem #6, what is the amount of adjusting entry on December 31, 2019?

a. P0 b. P6,000 c. P18,000 d. P24,000

39. The cost of sales ratio of Jade Company is 32.5%. The gross profit is amounted to
P168,750. The ending inventory of the company is P355,650. Assuming that there is no
beginning inventory, how much is the net purchases?

a. P436,900 b. P250,000 c. P81,250 d. Neither A, B, C

40. Using problem #9, what is the amount of cost of sales?

a. P436,900 b. P250,000 c. P81,250 d. Neither A, B, C

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41. Using problem #9, what is the amount of net sales?

a. P436,900 b. P250,000 c. P81,250 d. Neither A, B, C

42. On December 31, 2019, the net realizable value of accounts receivable was P55,000 and
the allowance for bad debts was P5,000. On the same date, the bookkeeper was tasked to
recognize 2% uncollectible accounts based on net realizable value of accounts receivable,
but the bookkeeper erroneously recorded 2% uncollectible accounts based on gross value
of accounts receivable. What is the amount of correcting entry to be made to make the
entry correct?

a. P1,200 b. P1,100 c. P1,000 d. P100

43. The debt to equity ratio of Oscar Company is 1:5 and the total assets is amounted to
P960,000. How much is the total liabilities?

a. P160,000 b. P240,000 c. P640,000 d. P800,000

44. Using problem #13, how much is the total equity?

a. P160,000 b. P240,000 c. P800,000 d. P1,200,000

45. The debt to asset ratio of Big Time Corp. is 1:5 and the total equity is amounted to
P960,000. How much is the total assets?

a. P160,000 b. P240,000 c. P800,000 d. P1,200,000

46. Using problem # 15, how much is the total liabilities?

a. P160,000 b. P240,000 c. P800,000 d. P1,200,000

47. How much is the cash disbursed for the payment of the utilities in 2020 if utilities
payable in 2018, 2019 and 2020 is P8,000, P6,000 and P15,000 respectively and utilities
expense is P13,000?

a. P13,000 b. P15,000 c. P4,000 d. P42,000

48. At the beginning of the current year, KSK Company purchased P120,000 worth of
supplies. The company’s bookkeeper recorded the transaction using nominal account.
What is the amount of adjusting entry if the supplies on hand at the end of accounting
period is P20,000?

a. P20,000 b. P100,000 c. P120,000 d. Neither A, B, C

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49. Using problem #19, what is the amount of adjusting entry if the bookkeeper used real
account in recording the initial entry?

a. P20,000 b. P100,000 c. P120,000 d. Neither A, B, C

For number 20 – 24. Answer the following questions using the given below:

Net Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P100,665

Net increase in Furniture and Fixtures . . . . . . . . . . . . . . . . . . . . . . . . P31,250

Owner’s Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P5,000

Non-cash Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P1,090

Net increase in Trade Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . P6,860

Net decrease in Merchandise Inventory . . . . . . . . . . . . . . . . . . . . . . . P121,250

Net decrease in Trade Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P35,750

Net increase in Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P60,000

Net increase in Office Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . P88,700

Net increase in Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P15,050

Owner’s additional investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P50,000

Net increase in Mortgage Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . P370,000

Beginning Cash Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P100,000

50. What is the amount to be reported as “Cash Flow Used in / Generated by Operating
Activities”?

a. (P176,843) b. P24,015 c. (P24,015) d. P176,843

51. What is the amount to be reported as “Cash Flow Used in / Generated by Financing
Activities”?

a. P415,000 b. (P420,000) c. (P415,000) d. P420,000

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52. What is the amount to be reported as “Cash Flow Used in / Generated by Investing
Activities”?

a. (P57,450) b. P119,950 c. P57,450 d. (P119,950)

53. How much is the Net Increase (Decrease) in cash for the year?

a. (P118,207) b. P319,065 c. (P501,465) d. P300,607

54. What is the Ending Cash Balance?

a. (P18,207) b. P419,065 c. (P401,465) d. P400,607

For number 25 – 30. The vertical analysis of income statement of Sphero Corporation, showed
the following:

Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%

Sales Returns and Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .P6,000

Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P200,000

Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75%

Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20%

55. How much is the gross sales?

a. P800,000 b. P806,000 c. P600,000 d. P606,000

56. How much is the gross profit?

a. P800,000 b. P806,000 c. P600,000 d. P606,000

57. What is the vertical analysis percentage of gross sales?

a. 101% b. 100.25% c. 100.50% d. 100.75%

58. How much is the operating expenses?

a. P160,000 b. P200,000 c. P240,000 d. P280,000

59. How much is the net profit for the year?

a. P440,000 b. P480,000 c. P520,000 d. P560,000

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60. If the applicable tax rate during the current year is 20%, what is the net profit?

a. P352,000 b. P384,000 c. P416,000 d. P448,000

“FAILURE IS THE OPPORTUNITY TO BEGIN AGAIN MORE INTELLIGENTLY”

- Henry Ford

Prepared by:

Justine Arnold A. Amano

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