The Accounting Equation

NAME: Angelo R. Miranda Date: October 3, 2020

Professor: Ma’am Ritz Tumbaga-Castro Section: ACC 101 Score:

QUIZ: MULTIPLE CHOICE

1. It is an economic resource controlled by the entity that has resulted from past
events and has a potential to produce economic benefits.
a. Asset c. Equity
b. Liability d. Income

2. The term ‘economic resource’ connotes

a. an asset. c. an equity.
b. a liability. d. all of these

3. The term ‘present obligation’ connotes

a. an asset. c. an equity.
b. a liability. d. all of these

4. The claim of the owner(s) on the total assets of an entity is also called
a. assets. c. equity.
b. liabilities. d. profit.

5. It is a present obligation that has resulted from past events and has the
potential to cause a transfer of an economic resource in its settlement.
a. asset. c. expense.
b. liability. d. income.

6. A business owner’s contribution to the business results in

a. an increase in assets and an increase in income.
b. a decrease in assets and an increase in owner’s equity.
c. an increase in assets and an increase in liabilities.
d. an increase in assets and an increase in owner’s equity.

7. Indicating to others, through your past action, that you will accept and
discharge certain responsibilities, thereby creating an expectation on them that
you will do so, creates an obligation called
a. legal obligation.
b. construction obligation.
c. indicative obligation.
d. constructive obligation.

8. A decrease in the economic benefits of a resource would be treated as

a. asset. c. expense.
b. liability. d. income.

9. Which of the following would not give rise to income?

a. enhancement in the value of an asset
b. decrease in liabilities
c. investment by the business owner to the business
d. all of these
10. In which of the following did a loss occur?
ASSETS = LIABILITIES + EQUITY + INCOME -
EXPENSES
a. ₱920,00 ₱710,0 ₱290,0 ₱440,00 ₱520,00
0 00 00 0 0
b. ₱870,00 ₱310,0 ₱240,0 ₱470,00 ₱150,00
0 00 00 0 0
c. ₱890,00 ₱240,0 ₱240,0 ₱600,00 ₱190,00
0 00 00 0 0
d. ₱740,00 ₱530,0 ₱170,0 ₱1,900,0 ₱1,860,0
0 00 00 00 00

11. In accounting, a negative amount is normally presented

a. beginning with a minus sign.
b. as a squeezed amount.
c. in parentheses.
d. negatively.

12. Assets and liabilities result from

a. past events.
b. future events.
c. income and expenses.
d. life events.

13. Which of the following is incorrect regarding profit?

a. Profit is measured only indirectly as an arithmetical difference.
b. Profit is the excess of total income over total expenses.
c. Profit increases equity.
d. Profit is earned if total income is less than total expenses.

14. A business incurs total expenses of ₱630,000 and reports loss of ₱270,000. How
much is the total income?
a. 900,000
b. 320,000
c. 380,000
d. 360,000

15. Which of the following would result to total expenses of ₱480,000?

a. Total income of ₱360,000 and profit ₱120,000
b. Total income of ₱580,000 and loss of ₱100,000
c. Total income of ₱630,000 and profit of ₱150,000
d. Total income of ₱630,000 and loss of ₱150,000

16. Which of the following is a correct accounting equation?

LIABILITIE
ASSETS EQUITY
S
a. ₱460,0 ₱170,0
₱190,000
00 00
b. ₱230,0 ₱150,000 ₱70,00
 00 0
c. ₱1,120 ₱130,0
₱990,000
,000 00
d. ₱1,020 ₱410,0
₱510,000
,000 00

17. Which of the following is a correct accounting equation?

ASSETS LIABILITI EQUIT INCOM EXPENS

ES Y E ES
a. ₱920,0 ₱710,000 ₱290,0 ₱440,00 ₱420,000
00 00 0
b. ₱870,0 ₱310,000 ₱240,0 ₱570,00 ₱150,000
00 00 0
c. ₱890,0 ₱240,000 ₱340,0 ₱600,00 ₱190,000
00 00 0
d. ₱740,0 ₱530,000 ₱170,0 ₱1,900,0 ₱1,860,0
00 00 00 00

18. Entity A had total assets, liabilities, and equity of ₱130M, ₱80M and ₱50M,
respectively, at the beginning of the period. During the period, Entity A’s total
liabilities decreased by ₱20M, while its profit was ₱25M. There were no other
transactions or events that affected equity during the period. How much is
Entity A’s ending total assets?
a. ₱95M
b. ₱135M
c. ₱85M
d. ₱125M

19. Entity A had total assets, liabilities, and equity of ₱150M, ₱90M and ₱60M,
respectively, at the beginning of the period. During the period, Entity A’s total
liabilities decreased to ₱40M, while its profit was ₱25M. There were no other
transactions or events that affected equity during the period. How much is
Entity A’s ending total assets?
a. ₱75M
b. ₱115M
c. ₱95M
d. ₱125M

20. Entity A had total assets of ₱120M and total liabilities of ₱80M at the beginning
of the period. If at the end of the period, total assets increased by ₱30M, while
total liabilities remained the same, Entity A’s total equity at the end of the
period would be
a. ₱70M
b. ₱90M
c. ₱60M
d. ₱80M

21. Entity A had total assets and total liabilities of ₱120M and ₱85M, respectively, at
the beginning of the period. During the period, Entity A earned total income of
 ₱60 and incurred total expenses of ₱45. How much is Entity A’s ending total
equity?
a. ₱60M
b. ₱90M
c. ₱50M
d. ₱120M

22. Entity A had total assets and total liabilities of ₱150M and ₱80M, respectively, at
the beginning of the period. During the period, Entity A earned total income of
₱60 and incurred total expenses of ₱40. Entity A’s total assets decreased to
₱130M by year-end. There were no additional contributions by, or distributions
to, the owner during the period. How much is Entity A’s ending total liabilities?
a. ₱60M
b. ₱80M
c. ₱70M
d. ₱40M

23. Entity A has ending total assets of ₱90M and ending total liabilities of ₱60M.
Entity A had a beginning equity of ₱10M. If Entity A earned total income of
₱45M during the year, how much were the total expenses?
a. ₱0
b. ₱20M
c. ₱15M
d. ₱25M

24. Entity A has ending total assets of ₱150M and ending total liabilities of ₱90M.
Entity A had a beginning equity of ₱30M. If Entity A incurred total expenses of
₱50M during the year, how much was the total income?
a. ₱90M
b. ₱40M
c. ₱50M
d. ₱80M

25. At year-end, Entity A’s total assets and total liabilities are ₱190M and ₱70M,
respectively. If Entity A had a beginning equity of ₱145M and there were no
contributions from, or distributions to, the owner during the period, how much
profit (loss) did Entity A earn (incur) during the year?
a. ₱35M
b. ₱25M
c. (₱35M)
d. (₱25M)
Answers:

1. a 14. d

2. a 15. c

3. b 16. c

4. c 17. d

5. b 18. b

6. d 19. d

7. d 20. a

8. c 21. c

9. a 22. d

10. a 23. d

11. c 24. d

12. a 25. d

13. a

Solutions:

18. A=L+E+I-E

₱130M= ₱80M+ ₱50M

A=80-20+50+25

A=60+75

A= ₱135M

19. A=L+E+I-E

₱150M=₱90M+₱60M

A=90-50+60+25

A=40+85
A=₱125M

20. A=L+E+I-E

₱120M=₱80M+E

120+30=80+E

150=80+E

E=70

21. A=L+E+I-E

₱120M=₱85M+BE

120=85+35

EE=BE+I-E

EE=35+60-45

EE=35+15

EE=50

BE=Beginning Equity

EE=Ending Equity

22. A=L+E+I-E

₱150=₱80M+₱70M+₱60M-₱40M

150-20=EL+70+20

130=EL+90

EL=40

EL= Ending Liability

23. A=L+E+I-E
₱90M=₱60M+BE+EE

90=60+10+EE

EE=20

EE=I-TE

20=45-TE

TE=25

BE=Beginning Equity

EE=Ending Equity

TE=Total Expenses

24. A=L+E+I-E

₱150M=₱90M+BE+EE

150=90+30+EE

EE=30

EE=I-E

30=I-50

I=80

25. A=L+E+I-E

₱190M=₱70M+EE

EE=120

EE=BE-P/L

120=145-P/L

L=-25

EE=Ending Equity

P/L= Profit/Loss
L=Loss