SAMPLE QUESTIONS:

Time allotment and computation of the points will be as follows:

Easy Average Difficult Clincher

Time Allotment (in seconds)
Level 1: Theories 15 30 45 30
Level 2: Computations 20 40 60 40
Points per Correct Answer 1 3 5 1

COLOR GREEN FOR EASY

COLOR YELLOW FOR AVERAGE

COLOR RED FOR DIFFICULT

LEVEL 1: SORCERER OF KNOWLEDGE

1. It encompasses the process of analyzing, classifying, summarizing and communicating all transactions involving the receipt
and disposition of government funds and property and interpreting the results thereof
A. Private accounting
B. Public Accounting
C. Government accounting
D. Managerial accounting
ANSWER: C

2. Which of the following is to be credited?

A. The income account when there is rendering of service
B. The income account when there is a decrease in income
C. The expense account when there is used supplies
D. The liability account when there is a decrease in liability
ANSWER: A

3. Which of the following transactions will give rise to a revenue

A. Collection of an accounts receivable to a customer
B. Cash received as proceeds from a bank loan
C. Rendition of services to a customer on account
D. Payment of a liability
ANSWER: C

12. A transaction that debits or credits more than two accounts at the same time requires a
A. Single entry
B. Compound entry
C. Posting entry
D. Adjusting entry
ANSWER: B

14. Which of the following would be reported on the statement of Owner’s equity for the current year?
A. Sales
B. Additional investment for the current year
C. Cost of goods sold
D. Inventory
ANSWER: B

3. An accountant, should treat an entity as continuing in operation indefinitely in the absence of evidence to the contrary. This
accounting assumption is
A. Monetary unit
B. Time period
C. Accounting entity
D. Going concern
ANSWER: D
6. Withdrawals by owners are treated as
A. Expenses
B. Decreases in equity, but not as expenses
C. Increase in liabilities
D. Increases in equity, but not as income
ANSWER: B
4. Which of the following best represents accounting entity assumption?
A. The company should not be named after the owner’s name
B. The owner cannot invest in the business to avoid merging assets of the company and the owner
C. The personal transactions of the owners should not be allowed to distort the financial statements of the entity
D. The owner’s withdrawal should be reflected as expense of the company so as to reflect the decrease in company’s resources
ANSWER: C

5. Which of the following is the correct sequence for the accounting cycle?
A. Analyzing, posting, journalizing, preparing unadjusted trial balance and determining adjusting entries.
B. Journalizing, posting, analyzing, preparing unadjusted trial balance and determining adjusting entries.
C. Analyzing, journalizing, posting, determining adjusting entries and preparing unadjusted trial balance
D. Analyzing, journalizing, posting, preparing unadjusted trial balance and determining adjusting entries.
ANSWER: D

8. If a value of P52, 300 was received from customer for services rendered by employees, the entry would
A. Increase assets amounting to P52, 300, and increase liability for half the amount.
B. Increase assets amounting to P52, 300, and increase equity for half the amount.
C. Increase assets amounting to P52, 300, and increase liability for the same amount.
D. Increase assets amounting to P52, 300, and increase equity for the same amount.
ANSWER: D

11. This is a device used periodically to test the equality of debits and credits
A. Chart of accounts
B. Accounts
C. Trial Balance
D. Financial Statement
ANSWER: C

13. Accrual principle states that

A. Expenses should be recognized at the time of purchase regardless when the items purchased were already used or not.
B. Expenses should be recognized at the time they are incurred and not at the time when entity pays for those goods.
C. Expenses should always be recorded whenever there is an outflow of cash
D. Expenses should only be recorded when there is purchase of supplies.
ANSWER: B

15. Which is false concerning the rules of debit and credit?

A. The left side of an account is always the debit side and the right side is always the credit side.
B. Increases in assets and expenses are debit entries, and increases in liabilities, equity and revenue are credit entries
C. The normal balance of any account appears on the side for recording increases
D. The word “debit” means to increase and the word “credit” means to decrease.
ANSWER: D

16. Which of the following application of the rules of debit and credit is true?
A. Decrease equipment with a credit and the normal balance is a credit
B. Increase accounts payable with a credit and the normal balance is a debit
C. Increase expense with a debit and the normal balance is debit
D. Decrease cash with a debit and the normal balance is credit
ANSWER: C

17. Which of the following is an essential characteristic of an asset?

A. The claims to an asset’s benefits are legally enforceable
B. An asset is tangible
C. An asset is obtained at a cost
D. An asset provides future benefits
ANSWER: D

21. Financial information exhibits consistency when

A. Accounting procedures are adopted which smooth net income and make results consistent between years
B. Gains and losses are shown separately in the income statement
C. Accounting entities give similar events the same accounting treatment each period
D. Expenditures are reported as expenses and netted against revenue in the period in which they are paid.
ANSWER: C

19. An income is recognized when

A. It is probable that future economic benefit will flow to the entity and the economic benefit can be measured reliably
B. It is possible that future economic benefit will flow to the entity and the economic benefit can be measured reliably
C. The entity obtains control of the future economic benefit
D. The future economic benefit can be measured reliably
ANSWER: A

20. An item would be considered material and therefore would be disclosed in the financial statements if
A. The expected benefits of disclosure exceed the additional costs
B. The impact on earnings is greater than 10%
C. The standard definition of materiality is met
D. The omission or misstatement of the amount would make a difference to the users.
ANSWER: D

7. Which of the following is incorrect?

A. Financial reporting is the provision of financial information about an entity to external users that is useful to them in making
economic decisions.
B. Financial reports also include non-financial information such as description of major products and a listing of corporate
officers and directors
C. The overall objective of financial reporting is to provide financial information about the reporting entity that is useful for
primary users in making economic decisions
D. Financial reports only include financial statements. Other means of communicating information that relates directly or
indirectly to the financial accounting process does not fall under financial reporting
ANSWER: D

22. Double entry system means

A. Only two accounts are affected by each transaction recording
B. A transaction is recorded twice, once in the journal and the other in the ledger
C. For every asset increased, a revenue or liability must also be increased
D. At least two accounts are affected by each transaction recording
ANSWER: D

23. Which of the following is not a possible combination of a journal entry?

A. increase in asset and increase in liability
B. Decrease in equity and increase in liability
C. Decrease in liability and decrease in asset
D. Increase in asset and decrease in equity
ANSWER: D

4. Transposition is an
A. Error of interchanging the figures
B. Error of placing the decimal point
C. Error of not recording the transaction
D. Error, which if not detected, is automatically compensated or corrected in the next accounting period
ANSWER: A

5. When Leonardo Bucaycay started a business, he invested P15, 000 cash plus some land that had a fair market value of P23,
000. Also the business assumed responsibility for note payable for P18, 000 that was issued to finance the purchase of the land.
In recording Bucaycay’s investment, the entry will consist of
A. One debit and one credit
B. Two debits and one credit
C. Two debits and two credits
D. Debits that total P38, 000 and credits that total P33, 000
ANSWER: C

24. First statement: If total assets decreased by P40, 000 during a specific period and owner’s equity decreased by P45, 000
during the same period the period’s change in total liabilities was an P85, 000 increase.
Second statement: If net income for a business was P175, 000, withdrawals were P40, 000 in cash, and the owner made no
investment, and the owner’s equity increased P215, 000
A. First statement is true, second is false
B. First statement is false, second is true
C. Both statements are true
D. Both statements are false
ANSWER: D
COMPUTATIONS
15. The information below is taken from the records of the Lanister Enterprise:
Salary Expense P175, 000 Lanister, Drawings P45, 000
Rent Expense P50, 000 Utilities Expense P85, 000
Consulting fees P505, 000 Prepaid Supplies P55, 000
What is the correct amount of the net income?
A. P195, 000
B. P140, 000
C. P95, 000
D. P280, 000
ANSWER: A

16. If the residual interest of Grand Service Company is P180, 000 which is 2/3 of the total economic resources, what would be
the amount of its economic obligation?
A. P270, 000
B. P90, 000
C. P450, 000
D. P180, 000
ANSWER: B

2. The following are accounts taken from the books of Tiger Advertising Agency.
Cash P725, 000
Accounts receivable P40, 000
Notes receivable P10, 000
Prepaid rent P24, 000
Office Equipment P44, 000
Furniture and Fixtures P34, 000
Supplies P4, 200
Accounts Payable P263, 000
Notes payable P17, 000

How much is the current asset of the company?

A. P779, 200
B. P793, 200
C. P799, 000
D. P803, 200
ANSWER: D

6. Sexy Services pays a monthly fixed salary expense of P25, 000. Its supplies expense is P5 for every P100 of services rendered.
Total supplies expense for the period is P2, 000. Sexy’s operating income is
A. P15, 000
B. P13, 000
C. P38, 000
D. P40, 000
ANSWER: B

10. The cost of service is 60% of service income. If the service income is P750, 000, what is the gross profit?
A. P300, 000
B. P450, 000
C. P150, 000
D. None of the choices
ANSWER: A

12. The statement of financial position of Humps Company shows a capital balance of P360, 000 which is equal to 1/3 of its total
assets. How much is the total liabilities?
A. P720, 000
B. P120, 000
C. P480, 000
D. P1, 080, 000
ANSWER: A

13. Mars, owner of the Pint Company, rendered professional service to a client at a total fee of P75, 000. He received cash of
P25, 000 and a 45-day promissory note for the balance. What would be the effect of this transaction in the owner’s capital and
liability account?
A. Increase capital by P75, 000; increase liability by P50, 000
B. Increase capital by P25, 000; increase liability by P50, 000
C. Increase capital by P25, 000; no effect in liability
D. Increase capital by P75, 000; no effect in liability
ANSWER: D

21. If total liabilities increased by P4,000, then

A. assets must have decreased by P4,000.
B. owner's equity must have increased by P4,000.
C. assets must have increased by P4,000, or owner's equity must have decreased by P4,000.
D. assets and owner's equity each increased by P2,000.
ANSWER: C

22. If capital is 4 times as much as total liabilities which is in turn assets totaling P520, 000, how much is capital?
A. P416, 000
B. P420, 000
C. P140, 000
D. P520, 000
ANSWER: A

11. If the debit and credit totals of a trial balance were P95, 000 and an additional entry for the purchase of office supplies for
cash worth P4, 000 was recorded and posted, what would be the new debit and credit totals of the trial balance after this entry is
made?
A. P91, 000
B. P99, 000
C. P87, 000
D. P95, 000
ANSWER: D

7. The net asset of Y was P125, 000. An account receivable of P11, 700 was paid by the customer. What is the new balance of
Y’s net assets?
A. P136, 700
B. P113, 300
C. P125, 000
D. P101, 600
ANSWER: C

8. The total assets of X firm is P350, 000 of which P50, 000 is accounts receivable. Subsequently, P22, 500 of accounts
receivable was collected. What is the new balance of its total assets?
A. P337, 500
B. P322, 500
C. P350, 000
D. P400, 000
ANSWER: C

9. Available data pertaining to single step income statement

Net operating income P180, 000
Other income P5, 000
Operating expenses P300, 000
What is the service income of this servicing business?
A. P485, 000
B. P480, 000
C. P475, 000
D. P185, 000
ANSWER: B

1. The ledger account shows the following

Accounts receivable P250, 000
Accounts Payable P200, 000
Capital P100, 000
Cash ?
Expenses P350, 000
Revenues P500, 000
What is the balance of cash?
A. P150, 000
B. P250, 000
C. P200, 000
D. P450, 000
ANSWER: C
14. Sercsi Company rendered service to a customer on April 5, 2014 for a total amount of P75, 000. On April 28, 2014, a
customer inquired and ask if Sercsi Company can render another service on April 29, 2014 for a total amount of P60, 000. What
would be the entry for April 28 transaction?
A. Accounts Receivable P60, 000
Cash P60, 000
B. Accounts Receivable P60, 000
Service Income P60, 000
C. Accounts Receivable P75, 000
Service income P75, 000
d. No entry
ANSWER: D

19. The following are accounts taken from the books of Tiger Advertising Agency.
Cash P725, 000
Accounts receivable P40, 000
Notes receivable P10, 000
Prepaid rent P24, 000
Office Equipment P44, 000
Furniture and Fixtures P34, 000
Supplies P4, 200
Accounts Payable P263, 000
Notes payable P17, 000

How much is the owner's equity of the company?

A. P577, 200
B. P1, 161, 200
C. P501, 200
D. P601, 200
ANSWER: D

17. The information below is taken from the books of Mr. Joey Lao for the year ended December 31, 2015.
January 1 December 31
Assets P200, 000 P300, 000
Liabilities P80, 000 P120, 000
Joey Lao made an additional investment of P40, 000 during the year. Net income and expenses during the year amounted to
P180, 000 and P80, 000 respectively. Determine the amount of withdrawals during the year.
A. P180, 000
B. P120, 000
C. P80, 000
D. P160, 000
ANSWER: D

3. First statement: If total assets decreased by P40, 000 during a specific period and owner’s equity decreased by P45, 000 during
the same period the period’s change in total liabilities was an P85, 000 increase.
Second statement: If net income for a business was P175, 000, withdrawals were P40, 000 in cash, and the owner made no
investment, and the owner’s equity increased P215, 000
A. First statement is true, second is false
B. First statement is false, second is true
C. Both statements are true
D. Both statements are false
ANSWER: D

20. Jimmy's Car Repair Shop started the year with total assets of P90, 000 and total liabilities of P60, 000. During the year, the
business recorded P150, 000 in car repair revenue, P85, 000 in expenses, and Jimmy withdrew P15, 000. Jimmy's capital balance
at the end of the year was
A. P80, 000
B. P75, 000
C. P95, 000
D. P65, 000
ANSWER: A

23. Assets at the beginning of the year amounted to P72, 000 while liabilities were on 1/3 of this figure. By the end of the year,
assets increased to 150% while liabilities decreased by 25%. If the owner made withdrawals of P9, 000, additional investments of
P20, 000 while revenues generated totaled P75, 000. What was the amount of total expenses incurred by the business during the
year?
A. P54, 000
B. P64, 000
C. P44, 000
D. P34, 000
ANSWER: C

25. Aloe Vera Company has P5, 000, 000 in total assets as of the beginning of the year. At the time, creditors have a 70% claim
on the total assets of the company. By the end of the year, liabilities have increased by P100, 000 and creditors only had a 60%
claim on total assets. Assuming that there were no additional investments and withdrawals made by the owners, how much was
Aloe Vera’s net income / (net loss) for the year?
A. P(350, 000)
B. P900, 000
C. P500, 000
D. P1, 000, 000
ANSWER: B

18. The following are accounts taken from the books of Tiger Advertising Agency.
Cash P725, 000
Accounts receivable P40, 000
Notes receivable P10, 000
Prepaid rent P24, 000
Office Equipment P44, 000
Furniture and Fixtures P34, 000
Supplies P4, 200
Accounts Payable P263, 000
Notes payable P17, 000
How much is the current asset of the company?
A. P779, 200
B. P793, 200
C. P799, 000
D. P803, 200
ANSWER: D

18. Which accounting principle is being observed when an accountant charges to expense a cost that contributed to revenue
during a period?
A. Revenue realization
B. Matching
C. Monetary unit
D. Conservatism
ANSWER: B

2. It is the area of accounting that emphasizes developing accounting information for use within an entity
A. Managerial accounting
B. Financial accounting
C. Public accounting
D. Private accounting
ANSWER: A