MIDTERM EXAMINATION IN ACCOUNTING

First Semester 2021-2022

December 9-14, 2021

Reminder Follow the instructions. Give the Answer only.

Example: Test I – (A) 1. True (B) 1. Asset
Test II - Use Tabulation Only
Test III – Trial Balance
TEST - I

A - TRUE OR FALSE (1-20 Items)

1. Journalizing is the process of transferring information from the journal to the ledger.
2. Expenses decreases owner’s equity and are recorded by a credit.
3. The balance sheet is prepared before the income statement.
4. Financial statements not disclosing relevant information are not acceptable.
5. The basic summary device of accounting is the account.
6. The itemized statement of assets, liabilities and capital of the business is an income statement.
7. Another variation of accounting equation is Capital – Liabilities = Assets.
8. A cash acquisition of land will cause total asset to increase.
9. The heading of any statements is composed of two lines of information.
10. The account use to journalize events determines the account to be included in the general ledger.
11. Accounting is essentially a process of accounting for valuation.
12. Accounting is another term for bookkeeping.
13. All businesses are carried on for profit.
14. The income statement is dated as of a given period of time.
15. PICPA is the national organization of certified public accountants which regulates the accounting practice.
16. Accounting is not only an art, but it is also a science.
17. A corporation is a business owned by its stockholders.
18. A partnership is owned by at least two persons.
19. A trading firm is the same as merchandising firm.
20. A business is considered as an entity separate and distinct from the personality of the owner.

B – IDENTIFICATION – (1-20 Items)

1. A journal entry that has more than one debit/credit entry.

2. The right side of an account.
3. The book or file that contains all or groups of the Company’s accounts.
4. The process of transferring information from the journal to the ledger.
5. A chronological record of all transactions, place where transactions are first recorded.
6. Any twelve-month accounting period used by a company.
7. The account used to record the distributions of assets to the owner for personal use.
8. Financial reporting is only concerned with information that is significant enough to affect evaluations and
decisions.
9. An artificial being created by the operation of law having the right of succession and the powers, attributes
and properties expressly authorized by law or incident to its existence.
10. A Statement that shows the challenges in capital of the business.
11. This principles state that acquired assets should be recorded at their actual cost and not at what they are
worth on the reporting date.
 12. Revenue is to be recognized in the accounting period when goods are delivered or services are rendered or
performed.
13. Requires that all relevant information that would affect the user’s understandings and assessment of the
accounting entity be disclosed in the financial statements.
14. The business should use the same accounting method from period to period to achieved comparability over
time within a single Co.
15. Accountant generally chooses a method that yielded the lesser amount of income and asset value.
16. Debts or obligations evidenced by promissory notes.
17. Equity of the owner in the asset of the business.
18. Cost incurred in the process of producing revenue.
19. Real estate owned by the business or the site of the business.
20. Is any medium of exchange that the bank will accept at face value.

TEST II:
REQUIRED: For each of the transactions below fill in the Tabulation given below:

TRANSACTIONS:
a. Investment by Mr. Santos, P500,000.
b. Purchased supplies on account, P8,000.
c. Received cash P86,000 from clients on account.
d. Paid rent for 3 months in advance, P60,000.
e. Paid creditors on account, P8,000.
f. Billed customers for services rendered, P20,000.
g. Purchased equipment for P50,000, and issued a notes.
h. Received cash from clients on account, P20,000.
i. Paid taxes for the quarter, P18,000.
j. Paid utilities expenses for the month, P22,500.

NOS. ACCOUNTS AFFECTED TYPE OF INCREASE/ DEBIT/ INCOME

ACCOUNT DECREASE CREDIT STATEMENT/
BALANCE SHEET
a. 1.
2.
b. 1.
2.
c. 1.
2.
d. 1.
2.
e. 1.
2.
f. 1.
2.
g. 1.
2.
h. 1.
2.
i. 1.
2.
j. 1.
2.
TEST III – Required: Prepare Trial Balance in Good Form.

The Trial balances of MARIO PORTEM LAUNDRY SHOP at December 31, 2021 are as follows:

ACCOUNT TITLES DEBIT/CREDIT

Cash P118,500
Accounts Receivable 12,700
Laundry Supplies 10,000
Equipment 22,000
Accumulated Depreciation – Equipment 6,800
Laundry Equipment 80,000
Accumulated Depreciation – Laundry Equipment 14,000
Prepaid Insurance 5,000
Furniture and Fixture 95,000
Notes Payable 20,000
Mortgage Payable 88,000
Accounts Payable 15,000
Laundry Revenue 100,000
Wages Expense 38,000
Rent Expense 60,000
Commission Revenue 28,000
Interest Payable 4,400
Interest Revenue 3,200
Utilities Expense 12,800
Portem, Drawing 20,000
Portem, Capital 200,000
Miscellaneous Expense 4,000
Taxes Expense 1,400

“A DAY WITHOUT THE LORD IS A DAY WASTED”

END OF EXAMINATION