FABM 2ND SEM – Long quizzes

These are resources of the firm which were taken by the owner for personal use.
Withdrawals
Income statement for merchandising businesses usually have how many sections?
7
The heading of a statement of income usually consists of the following except:
None of the choices
It represents the right of the owner over the resources of the firm.
Stocks
How many sections do income statement for merchandising businesses usually
have?
7
The story of the success, or failure, of operations is shown in the
_______________________.
Statement of Income
Incorrect
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It represents the total amount of inventory on hand.
Merchandise Inventory

It is the usual account title used for corporations.

Stockholder’s Equity
These are deducted in the purchase price either because of returns or reductions
due to defects
b. Purchase discounts
Total is synonymous to ___________.
Gross
If the firm has been operating in the past year, the beginning capital of the current
year is _____________ the ending capital of the previous year. Select one:
Equal to
This could be deducted to the beginning capital and additional investments done
during the year.
Net Loss C
We could find the period covered by the statement at the ________________ of
the statement
of the account.
Heading
These are added to the capital beginning to arrive at the total investments used
during the year
Investments C
These are reductions in the total sales price given to the customer if the account
will be paid within a short period of time.
Sales discounts
It is consists of the owner’s investment and the earned profit less any withdrawals
made during a given period. Select one:
Capital
An income statement for _________________ could be written using a single-step
approach.
Service Business
It is the difference arrived at after deducting withdrawals from the sum of the
beginning capital, additional investments, and profit.
Ending Capital C
These are added to the capital beginning to arrive at the total investments used
during the year.
Investments
The single-step approach could be used in writing the income statement for
_______________.
Service Business
The following are included in the income statement for merchandising businesses
except:
Business name
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Net Profit is derived from
Statement of Income (Not sure)
There are common account titles between assets and liabilities.
True
Property, plant, and equipment are assets.
True

Assets minus Liabilities is equal to Equity is also considered an Accounting

Equation.
True
This is the type of business which offers services for a fee
Service business
Services businesses offer products.
False
Long-term liabilities are noncurrent.
True
Cash and cash equivalents are current assets.
True C
False
The Calendar year ends on January 01.
False
A liability is a present obligation arising out of past events.
True
Liabilities are present obligations arising from past events..
True
Operating expenses and operating income or operating loss are items which can be
found in an income statement prepared in a multi-step approach.
True
These are reductions in the total sales price given to the customer if the account
will be paid within a short period of time.
Sales discounts

Mr. Alvarez, capital is an example of account title used for the equity of the owner
in what form of business organization?
Sole proprietorship
This is the common transaction happening in the organization.
Operating
What item do we deduct from the beginning capital of the statement of changes in
equity to arrive at the ending capital?
Withdrawals C
It is a basic accounting principle that states that income is earned regardless of
when cash is received, and expenses are incurred regardless of when cash is pai~
Select one:
Accrual basis
The equation for cost of goods sold is:
Beginning inventory + Net cost of goods purchased - Ending inventory
Accrual basis of accounting is a basic accounting principle that states that income
is earned regardless of when cash is received, and expenses are incurred regardless
of when cash is paid
True
Cash receipts from customers is P200,000, cash paid to suppliers is P10,000 and
cash paid to employees is P25,000, how much is the net cash from operating
activities.
P165,000
The following consists an income statement for merchandising businesses except:
Gross Profit
The firm can create as many capital accounts as there are owners in a corporation.
False

Cash flows are categorized as follows except:

Developing activities C
An income statement for _________________ could be written using a single-step
approach.
Service Business
It relies entirely on the payment and receipt of cash.
Cash basis accounting
Its use varies depending on the form of business organization.
Capital (Not sure)
The following are terms pertaining to Owner’s Equity except:
Net Gross
It is the common account title in the financial statement.
Cash
These are deducted in the purchase price either because of returns or reductions
due to defects
Purchase returns and allowances
Activities related to the acquisition and disposal of long-term assets, including
investments not considered cash equivalents is called financing activities.
False
Merchandising business are charging fees for rendered services.
False
A promissory note issued by the customer is an evidence of the notes receivable
account.
True
Noncurrent assets are kept principally for trading.
False
Manufacturing business converts raw materials to finished goods.
True
What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid
Expenses?
Asset
ABC Store records the transaction by a debit to Accounts Receivable for P1,000
and a credit to Service Revenues for P1,000. What is the effect of this entry upon
the accounting equation for ABC Store?
Asset Increase, Equity Increase
Increase in assets is recorded as a Debit.
True
Cash and cash equivalents are current assets.
True
Revenues are commonly called the “cost of doing business”
True
Property, plant, and equipment are not assets.
False
This principle has two aspects, the quantifiability and stability of peso.
Stable monetary unit
A liability is a present obligation arising out of past events.
True
If Revenue is greater expenses, there is a Gain.
False
Manufacturing business changes the basic inputs into products that are sold to
individual customers
True

Capital is another term for equity.

True
When the owner makes withdrawal from the business for personal use, only the
asset decreases.
False
The Income Statement is composed of the revenues and expenses.
True
Which of the following will cause owner’s equity to increase?
a. Revenue