INTERMEDIATE ACCOUNTING 3

1. One of the basic principles which states that expenses should be recognized in the
accounting period in which goods and services are used up to produce revenue and not
when the entity pays for those goods and services.
Select one:
Expense Recognition Principle
2. Date purchased - August 5; List price - 3,500,000; Trade discount rate - 25%; credit terms
- 2/10, n/30; Date paid - August 18. How much is the cash paid?
Select one:
2,625,000
3. Under the perpetual inventory system, which of the following accounts would not be used?
Select one:
Purchases
4. It is the postponement of the recognition of "an expense already paid but not yet
incurred," or of "revenue already collected but not yet earned.
Select one:
Deferral
5. Increase in Equity is to
Select one:
Credit
6. Gross Margin equals the difference between net sales and
Select one:
cost of goods sold
7. It is a statement showing the performance of the enterprise for a given period of time.
Select one:
Income Statement
8. List Price - 1,500,000; Trade Discount Rates - 35%, 10%, . How much is the invoice price?
Select one:
877,500
9. This is an authorization made by the buyer to the seller to deliver the merchandise as
detailed in the form.
Select one:
Purchase Order
10. It is a business owned and operated by two or more persons who bind themselves to
contribute money, property, or industry to a common fund, with the intention of dividing
the profits among themselves.
Select one:
Partnership
11. Income - ?; Expense - 3,500,000; Profit (Loss) - (1,250,000)
Select one:
 2,250,000
12. Ibay received cash from billed customers, P50,000. What is the effect of transaction?
Select one:
Increase in one form of asset = Decrease in another form of asset
13. Decrease in Liabilities is to
Select one:
Debit
14. List Price - 3,000,000; Trade Discount Rates - 25%, 15%, 5%. How much is the trade
discount?
Select one:
1,816,875
15. Date sold - August 5; List price - 1,575,000; Trade discount rates - 20%, 15%; credit
terms - 2/10, n/30; Date paid - August 18. How much is the trade discounts? Select one:
504,000
16. Assets - 626,600; Liabilities - 376,240; Equity - ? Select one:
250,360
17. This is the process of transferring information from a journal to a ledger. Select one:
Posting
18. It is the amount an entity paid to acquire the depreciable asset. Select one:
Cost
19. It is the amount that the asset can probably be sold for at the end of its estimated useful
life. Select one:
Salvage value
20. Date sold - August 12; List price - 4,250,000; Trade discount rate - 55%; credit terms -
5/15, n/30; Date paid - August 24. How much is the sales discount? Select one:
95,625
21. Date purchased - August 5; List price - 3,500,000; Trade discount rate - 45%; credit terms
- 3/15, n/30; Date paid - August 18. How much is the invoice price? Select one:
1,925,000
22. The equality of debits and credits in the ledger should be verified at the end of each
accounting period by preparing Select one:
a trial balance.
23. Income - 995,000; Expense - 1,250,000; Profit (Loss) - ? Select one:
(255,000)
24. Increase in Assets is to
Select one:
Debit
25. Pabillona purchased inventory amounting to P260,000 cash. What is the correct journal
entry? Select one:
Debit - Inventory; Credit - Cash
26. Patawaran bought medical equipment on account from Drequito Equipment, P57,500.
What is the effect of transaction? Select one:
Increase in assets = Increase in liabilities
27. It is an accounting period that runs for any 12 consecutive months. Select one:
Fiscal Year
28. Income - 2,750,000; Expense - 3,925,000; Profit (Loss) - ? Select one:
(1,175,000)
29. Renonos bought land on account P950,000. What is the effect of transaction? Select one:
Increase in assets = Increase in liabilities
30. These accounts are temporary accounts that accumulate information related to a specific
accounting period. Select one:
Income, Expense and Withdrawals
31. One of the basic principles which requires that all relevant information that would affect
the user's understanding and assessment of the accounting entity be disclosed in the
financial statements. Select one:
Adequate Disclosure
32. Which of the following refers to the meaning of transportation out? Select one:
it refers to the expense needed to transport the goods sold to the customers.
33. Umipig withdrew cash for personal use, P15,000. What is the effect of transaction? Select
one:
Decrease in assets = Decrease in equity
34. This account is used to record the original and additional investments of the owner of the
business entity. Select one:
Capital
35. In preparing a ten-column worksheet for a merchandising firm that uses the periodic
inventory system
Select one:
the ending inventory is shown as a credit in the income statement columns and as a debit
in the balance sheet columns.
36. The purpose of the ledger is to
Select one:
maintain a separate account for each balance sheet and income statement accounts.
37. The transportation arrangement passes ownership of the goods to the buyer only when
the buyer receives the merchandise. Select one:
FOB Destination
38. This summarizes the changes that occurred in owner's equity. Select one:
Statement of Changes in Equity
39. It is a revenue earned as a result of sale of merchandise. Select one:
Sales
40. These are expenses paid for by the business in advance. Select one:
Prepaid Expenses
41. Assets - 626,600; Liabilities - ?; Equity - (376,240) Select one:
 1,002,840
42. Which of the following accounts would appear on a worksheet for a merchandising entity
that uses the perpetual inventory system? Select one:
Cost of Goods Sold
43. Which of the following is an example of financing activity? Select one:
Paying off a loan
44. A journal entry that requires three or more accounts. Select one:
Compound journal entry
45. One of the basic principles which states that acquired assets should be recorded at their
actual cost and not at what management thinks they are worth as at reporting date. Select
one:
Historical Cost
46. Nardo partially settled accounts with Drequito Equipment, P25,000. What is the effect of
transaction? Select one:
Decrease in assets = Decrease in liabilities
47. Assets - ?; Liabilities - 108,000; Equity - 760,000 Select one:
868,000
48. A trade discount is
Select one:
not shown anywhere.
49. It is the art of recording, classifying and summarizing in a significant manner, and in terms
of money, transactions and events, which are, in part at least, of a financial character,
and interpreting the results thereof. Select one:
Accounting
50. Date sold - August 9; List price - 1,275,000; Trade discount rate - 30%; credit terms -
2/15, n/30; Date paid - August 25. How much is the cash received? Select one:
892,500
51. List Price - 600,000; Trade Discount Percentage - 35%. How much is the invoice price?
Select one:
390,000
52. The document issued by the seller authorizing the return of merchandise or the grant of
allowance. Select one:
Credit Memo
53. These are identifiable, nonmonetary assets without physical substance held for use in the
production or supply of goods or services, for rental to others, or for administrative
purposes. Select one:
Intangible Assets
54. Income - 3,500,000; Expense - ?; Profit (Loss) - 1,250,000 Select one:
2,250,000
55. Date sold - August 5; List price - 1,575,000; Trade discount rates - 20%, 15%; credit
terms - 2/10, n/30; Date paid - August 18. How much is the invoice price? Select one:
1,071,000
56. Income - 2,750,000; Expense - 1,175,000; Profit (Loss) - ? Select one:
1,575,000
57. Assets - 860,000; Liabilities - 960,000; Equity - ? Select one:
(100,000)
58. This is the final trial balance prepared to test the equality of the accounts after posting
the adjusting and closing entries. Select one:
Post-closing Trial Balance
59. Entries are journalized in a __________. Select one:
General Journal
60. Date purchased - August 5; List price - 3,500,000; Trade discount rate - 25%; credit terms
- 3/10, n/30; Date paid - August 18. How much is the purchase discounts? Select one:
0
61. These are tangible assets that are held by an enterprise for use in the production or supply
of goods or services, or for rental to others, or for administrative purposes and which are
expected to be used during more than one period. Select one:
Property, Plant and Equipment
62. The two main inventory accounting systems are the following
Select one:
perpetual and periodic.
63. Which of the following equations correctly shows the meaning of net sales? Select one:
Net Sales = Gross Sales - Sales Returns
64. Under this inventory system, revenues from sales are recorded when sales are made, but
no attempt is made on the sales date to record the cost of goods sold. Select one:
Periodic Inventory System
65. Assets - 760,000; Liabilities - 360,000; Equity - ? Select one:
400,000
66. It is an expense in using supplies in the conduct of daily business. Select one:
Supplies Expense
67. Mindaros bought land for future building site, P890,000 cash. What is the correct journal
entry? Select one:
Debit - Land; Credit – Cash
68. Which of the following accounts is closed by debiting the account? Select one:
Purchases Returns and Allowances
69. Book of original entry. Select one:
Journal
70. Pablo bought waiting room chairs and tables, paying cash, P12,300. What is the effect of
transaction? Select one:
Increase in one form of asset = Decrease in another form of asset
71. This document evidences the receipt of cash by the seller. Select one:
Official Receipt
72. Drequito collected P75,000 sales on account. What is the correct journal entry? Select
one:
 Debit - Cash; Credit - Accounts Receivable

73List Price - 1,500,000; Trade Discount Rates - 35%, 10%, . How much is the trade discount?

Select one:

622,500

List Price - 600,000; Trade Discount Rate - 35%. How much is the trade discount?

Select one:

210,000

Date sold - August 12; List price - 4,250,000; Trade discount rate - 55%; credit terms - 5/15,
n/30; Date paid - August 28. How much is the cash received?

Select one:

1,912,500

Inventory costing P190,000 was sold. What is the correct journal entry?

Select one:

Debit - Cost of Sales; Credit - Inventory

This account records long-term debt of the business entity for which the business entity has
pledged certain assets as security to the creditor.

Select one:

Mortgage Payable

Date sold - August 10; List price - 3,500,000; Trade discount rate - 0%; credit terms - 5/10, n/30;
Date paid - August 18. How much is the cash received?

Select one:

3,325,000

It is the recognition of "an expense already incurred but unpaid", or "revenue earned but
uncollected.

Select one:

Accrual
Nonong performed professional services on account, P22,500. What is the effect of transaction?

Select one:

Increase in assets = Increase in equity

Rayray purchased cabinets on account, P280,000. What is the correct journal entry?

Select one:

Debit - Furniture and Fixtures; Credit - Accounts Payable

List Price - 3,000,000; Trade Discount Rates - 25%, 15%, 5%. How much is the trade discount?

Select one:

1,183,125

These are properties of the business.

Select one:

Assets

Gervacio collected P105,000 sales on account. What is the correct journal entry?

Select one:

Debit - Cash; Credit - Accounts Receivable

Ober received P50,000 cash from customers. What is the effect of transaction?

Select one:

Increase in assets = Increase in equity

It is an informal report that lists accounts and their balances.

Select one:

Trial Balance

The portion of the cost of a tangible asset allocated or charged as expense during an accounting
period.

Select one:
Depreciation Expense

This discount encourages the buyers to purchase goods because of markdowns from the list price.

Select one:

Trade discounts

Operating income will result if gross margin exceeds

Select one:

operating expenses.

It provides information about the cash receipts and cash payments of an entity during a period.

Select one:

Statement of Cash Flows

Navelgas withdraw P175,000 cash for personal use. What is the correct journal entry?

Select one:

Debit - Navelgas, Withdrawals; Credit - Cash

It is the discount taken by the buyer for the early payment of an invoice.

Select one:

Purchases discounts

It is used to close the income and expense accounts.

Select one:

Income Summary

Which of the following is an example of investing activity?

Select one:

Purchasing a building

Romano paid salaries from Sept. 16 - 30, P75,000. What is the correct journal entry?

Select one:
Debit - Salaries Expense; Credit - Cash

Balcita paid in full purchases made on account. What is the correct journal entry?

Select one:

Debit - Accounts Payable; Credit - Cash

Javier paid rent for the month, 7,500. What is the effect of transaction?

Select one:

Decrease in assets = Decrease in equity

It is a group of accounts.

Select one:

General Ledger

Boado billed customers, P75,000. What is the effect of transaction?

Select one:

Increase in assets = Increase in equity

Prangan purchased oven and stove, P325,000 cash. What is the correct journal entry?

Select one:

Debit - Equipment; Credit - Cash

Date sold - August 9; List price - 1,275,000; Trade discount rate - 0%; credit terms - 2/15, n/30;
Date paid - August 25. How much is the invoice price (sales)?

Select one:

1,275,000