Mabini Colleges

College of Business Administration & Accountancy

Daet, Camarines Norte

Financial Accounting and Reporting 1 (AE13A)

Final Examination

Name: ___________________________ Year & Course: ______________________

Instructor: ________________________ Score: _____________________________

Test I: Multiple Choice: Choose the letter of your answer and write it in on the space provided before
the number.

_______1. In accounting reports, a “double rule” means

a. The amount is very, very important
b. The end of the accounting period
c. The end of the computation, for example, a double ruled amount represents a total
d. The accountant used his or her ruler twice

_______2. Adding and subtracting amounts vertically in accounting reports is called

a. Cross-footing
b. footing
c. vertical ling
d. yellow columns

_______3. When preparing a worksheet, real accounts in the adjusted trial balance are extended to the
a. Balance sheet columns
b. Income Statement columns
c. Real columns
d. Nominal columns
_______4. Your business uses the perpetual inventory system. Yesterday, you ordered 1,000 units of
Product X, on account. Today, when you received the goods, you found out that 10 units were broken.
You notified the supplier and the supplier agreed that you can return the broken units. To record the
purchase return, you will credit which of the following accounts?
a. Purchase returns
 b. Inventory
c. Sales return
d. Loss

_______5. Your business uses the periodic inventory system. You purchased goods worth P100,000 and
paid P6,000 shipping costs. To record the P6,000 amount, you will debit which of the following
accounts?
a. Purchase returns
b. Freight Out
c. Freight - In
d. Transportation Expense
_______6. When preparing the worksheet of a merchandising business that uses the periodic inventory
system, the account “Inventory, beginning” or “Merchandising inventory, beg. “is extended from the
Adjusted trial balance columns to the
a. Balance sheet columns
b. Income Statement columns
c. Post – closing trial balance
d. Financial Statements
_______7. Which of the following is a disadvantage of the corporate form of business?
a. Corporations lack mutual agency
b. There is a greater degree of government control and supervision
c. Ownership shares can be easily granted
d. Owner`s liability is limited
_______8. What is the primary disadvantage of both a sole proprietorship and a partnership that a
corporation overcomes?
a. No access of capital
b. Taxing complications
c. Unlimited Liability
d. Ease of start -up
e. Lack of secrecy
_______9. Which of the following accounts is closed by debiting the account?
a. Purchases
b. Purchase return and allowances
c. Sales return and allowances
d. Transportation in

_______10. Suppose Tessa Catering`s Inventory account showed a balance of P100,000.00 before the
year-end adjustments. The physical count of goods on hand totalled P97,000.00. To adjust the accounts,
Tessa would make this entry:
 a. Debit Inventory and Credit Account Receivables of P3,000.00
b. Debit Cost of Goods Sold and Inventory of P3,000.00
c. Debit Inventory and Credit Cost of Goods Sold of P3,000.00
d. Debit Accounts Payables and Credit Inventory of P3,000.00

Test II: Problem Solving: Prepare the requirements of the problem.

Problem 1: Comprehensive Problem
Read the comprehensive problem carefully and use the following information to complete the
requirements below.

Listed below are the February 1, 2021 account balances of the Teresita Garzon Shoes:
110 Cash P 33,000.00
120 Account Receivables 192,000.00
130 Merchandise Inventory 413,000.00
140 Supplies 51,000.00
150 Prepaid Insurance 48,000.00
160 Land 460,000.00
170 Building 1,750,000.00
175 Accumulated Depreciation-Building P 350,000.00
180 Equipment 2,310,000.00
185 Accumulated Depreciation-Equipment 630,000.00
210 Accounts Payable 108,000.00
220 Salaries Payable
230 Mortgage Payable 2,600,000.00
310 Garzon, Capital 1,569,000.00
320 Garzon, Withdrawals
330 Income Summary
410 Sales
420 Sales Return and Allowances
430 Sales Discounts
510 Purchases
520 Purchase Return and Allowances
530 Purchase Discounts
540 Transportation In
610 Salaries Expense
620 Supplies Expense
630 Insurance Expense
640 Depreciation Expense- Building
650 Depreciation Expense- Equipment
660 Transportation Out
670 Advertising Expense
680 Interest Expense
690 Miscellaneous Expense
 P 5,257,000.00 P 5,257,000.00
During the month of February 2021, the following transaction occurred:
Feb 1 Collected P113,000.00 from customers on account
2 Paid P64,000.00 of accounts due less discounts of 3%
4 Purchased merchandise, P170,000.00. Terms: FOB sipping point; 3/10, n/30
5 Sold merchandise on account to Gonzales Inc., P270,000.00. Terms: FOB
shipping point; 2/10, n/30
7 Paid for advertising for the month of February, P6,000.00
7 Sold merchandise for cash, P250,000.00
8 Paid the amount due from the Feb. 4 transaction
9 Paid Iloilo Freight P4,000.00 for delivering merchandise last Feb 4
10 Received returns from the Gonzales Inc., P70,000.00
12 Received payment from the Gonzales Inc. less return and discounts
14 Paid P26,000.00 interest on the mortgage payable
15 Paid salaries, P51,000.00
16 Sold merchandise on account to Ronzales Corp., P392,000.00. Terms: FOB
destination; 2/10, n/30
18 Paid P4,000.00 freight charges on the sale of Feb 16
19 Acquired supplies for cash, P21,000.00
20 Purchase P125,000.00 of merchandise from Lozada Imports on account. Terms:
FOB Destination; 3/10, n/30
22 Paid P7,000.00 miscellaneous expense
23 Received payment from Ronzales Corp. less discounts
24 Purchase P373,000.00 of merchandise on account from Augustin Enterprises.
Terms: FOB shipping point; 3/10, n/30
24 Paid La Paz Express P9,000.00 freight for delivering merchandise acquired from
Agustin
25 Sold merchandise to Ronzales Corp. on account, P420,000.00. Terms : FOB
shipping point; 2/10, n/30
26 Received returns from Ronzales Corp., P71,000.00
28 Garzon withdrew P400,000.00 from the business
28 Return merchandise purchased from Agustin on June 24, P25,000.00

Additional Information on Feb.29

a. Salaries in the amount of P51,000.00 have accrued on Feb 29.

b. Insurance coverage with premiums of P2,000.00 has expired at month end
c. Depreciation on the building and on the equipment for the month amounted to P9,000 and
P12,000, respectively
d. Supplies on hand at month-end amounted to P14,000.00
e. A count of the merchandise inventory on Feb 29, 2021 amounted to P397,000.00

Requirements. Provide the following:

1. Prepare the Worksheet
2. Prepare the Adjusted Trial Balance
3. Prepare an Income Statement, Statement of Changes in Equity and Balance Sheet
4. Prepare the Adjusting and Closing Entries for the month

GOODLUCK!!!!! 😊