Republic of the Philippines

Department of Education
Region II – Cagayan Valley
SCHOOLS DIVISION OF TUGUEGARAO CITY
Cagayan National High School – Senior High

FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 1

DIAGNOSTIC TEST

MULTIPLE CHOICE. Direction: Read the following questions carefully and select the best
answer. Write the letter of your choice before the item number. USE CAPITAL LETTER ONLY.
1. Which of the following options is the fundamental accounting equation?
A. Assets = Liabilities – Equity C. Assets – Liabilities = Equity
B. Assets + Equity = Liabilities D. Assets= Liabilities + Equity
2. Which of the following items is a liability of a firm?
A. A building owned by a firm C. Cash in the firm’s safe
B. Money owed to the firm by debtors D. Money the firm borrowed and not yet repaid
3. Which of the following situations is the effect of purchasing an asset for cash?
A. Increase total assets and decrease total liabilities
B. Have no effect on total assets and total liabilities
C. Increase in total assets and increase in total liabilities
D. Increase in total assets and increase in total equity
4. Gio Gas Station has liabilities equal to one- third of its total assets, and the owner’s equity is
P240, 000. What is the amount of liabilities?
A. P360, 000 B. P120, 000 C. P240, 000 D. P80, 000
5. At the beginning of the year, the assets of Jonard Corporation totaled to P340, 000, while its
equity totaled to P250,000. At the end of the year, the assets increased to P480, 000 while
liabilities increased to P250, 000. What is the total decrease in equity during the year?
A. P480, 000 B. P230, 000 C. P20, 000 D. 0
6. What do we call the expectation of a future payment from a customer for goods sold?
A. Prepaid asset C. Notes receivable
B. Accounts receivable D. Accounts payable
7. Which current asset includes coins, currencies, and bank deposits and considered as most
liquid?
A. Cash equivalents C. Notes Receivables
B. Short term investments D. Cash
8. Which of the following accounts is not subjected to depreciation?
A. Building B. Land C. Equipment D. Machinery
9. Which of the following statements is not an application of the double entry system?
A. Total debits must always equal to total credits
B. For every debit, there is a corresponding credit.
C. At least two accounts are involved in every business transaction.
D. There must be at least one entry for debit and at least two entries for credit
10. Which of the following situations is an effect of purchase of an asset on account?
A. Increase total assets and increase total equity
B. Increase total liabilities and decrease total assets
C. Have no effect on total assets or total liabilities
D. Increase total assets and increase total liabilities
11. What happens when a company collected an account receivable in full?
A. Equity will increase C. Total assets will increase
B. Total assets will decrease D. Total assets will remain the same

Grade 11 ABM 1st Semester, SY 2022- 2023 Page 1 of 2

 12. Which of the following best describes general journal?
A. Book of final entries C. Book of original entries
B. Book of secondary entries D. Book of special entries
13. What do we call the listing of all accounts used in a business?
A. General Ledger C. Chart of Account
B. General Journal D. Subsidiary Ledger
14. Which of the following is a contra asset account of Allowance for Bad Debts?
A. Notes Receivable C. Accounts Receivable
B. Accumulated Depreciation D. Depreciation Expense
15. Which type of accounting process do we use ledgers?
A. Summarizing B. Measuring C. Journalizing D. Posting

FOR ITEMS 16-20. Refer to the following transactions that happened in the accounting firm of
AngPoJhayCo Inc. for the month of August 2018.
August 1 PoJhay transferred cash from a personal account to an account to be used for
the business, P243, 000.
3 Bought Office equipment on account from Ganda Electronics, P34, 000
6 Purchased a used car for P93, 000, paying P45, 000 down with the balance due
in thirty days
10 Performed accounting services to SM Tuguegarao and received P30, 000 cash
15 Received an invoice for a radio advertising from Bombo Radyo, P20, 000
21 Billed Robinsons Tuguegarao for services rendered, P30, 000
28 Owner got P10, 000 supplies from the business to be used in his residence

16. Which special journal is appropriate to use in transaction on August 3?

A. Sales Journal C. Cash Receipts Journal
B. Purchase Journal D. Cash Disbursement Journal
17. What account/s should be credited in August 6 transaction?
A. Cash and Accounts Payable C. Accounts payable
B. Cash D. Car
18. What account should be debited in August 10 transaction?
A. Service Fees B. Accounts Receivable C. Cash D. Sales
19. What is the correct journal entry for transaction on August 10?
A. Cash P30, 000 C. Service Fee P30, 000
Service Fee P30, 000 Cash P30, 000
B. Accounts Receivable P30, 000 D. Cash P30, 000
Service Fee P30, 000 Sales P30, 000
20. What is the correct journal entry for August 15 transaction?
A. Cash P30, 000 C. Advertising Expense P30, 000
Advertising Expense P30, 000 Cash P30, 000
B. Accounts Payable P30, 000 D. Advertising Expense P30, 000
Advertising Expense P30, 000 Accounts Payable P30, 000

Prepared by: Checked and Reviewed by: Approved:

AR-JAY C. ROMERO RICHARD N. ROMERO GRACE T. MACABABBAD

Subject Teacher Assistant Principal- Designate, Secondary School Principal II
ABM and Math

Grade 11 ABM 1st Semester, SY 2022- 2023 Page 2 of 2