LEVEL 1: SORCERER OF KNOWLEDGE (EASY ROUND)

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

4. 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

5. 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

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6. 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

7. 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

8. Which of the following is an asset of a firm?

A. The capital of the firm
B. Money owed by the firm to one of its suppliers in respect of goods purchased on credit.
C. Computer equipment owned by the firm.
D. An overdrawn balance on the firms of bank accounts

Answer: C

9. The process of transferring journal entry information from the journal to the ledger called.
A. Footing
B. Journalizing
C. Posting
D. Analyzing

Answer: C

10. Which of the following is the financing activity?

A. Paying of a loan
B. Employing workers
C. Selling equipment
D. Acquiring land

Answer: A

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 LEVEL 1: SORCERER OF KNOWLEDGE (AVERAGE ROUND)

1. 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

2. 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

3. 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

4. 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

5. 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.

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ANSWER: B
6. 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

7. 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

8. 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

9. 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

10. 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

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 LEVEL 1: SORCERER OF KNOWLEDGE (DIFFICULT ROUND)

1. 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

2. 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

3. 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

4. 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

5. 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

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6. 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

7. 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

8. What do you call an amount deducted from catalog price?

A. Trade discount
B. Sales discount
C. Customer discount
D. Purchase discount

Answer: A

9. which statement best defines an accrual?

A. Adjusting entries where cash flow precedes revenue or expense recognition.
B. Adjusting entries where revenue or expense recognition precedes cash flow.
C. Adjusting entries where cash flow and revenue or expense recognition are simultaneous.
D. Adjusting entries where revenues or expenses are recognized in the absence of cash flow
evidence.

Answer: B

10. Salaries expense is an expense account, prepaid expense is an asset account, Accrued
expenses is liability account. What kind of account is accumulated depreciation?
Ans. Contra Asset account

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 LEVEL 2: MASTER OF CALCULATIONS (EASY ROUND)

1. 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

2. 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

3. 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

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4. 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

5. 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

6. 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

7. 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

8. 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

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9. 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

10. Flash has beginning balance equity of 257, 000, net income of 51,000, withdrawals of 40,
000 and investment by owner of 6,000. Its ending equity is?
A. 223,000
B. 240,000
C. 268,000
D. 274,00

Answer : D

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 LEVEL 2: MASTER OF CALCULATIONS (AVERAGE ROUND)

1. 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

2. 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

3. 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

4. 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

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5. 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

6. 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

7. 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

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8. The entry to record a payment on a 15,000 account within 2% discount period would include
a_____
a. debit cash for 15,000 c. debit account payable for 15,000
b. credit purchase discount For 300 d. credit to accounts payable for 14, 700

Answer C

9. The balance in tee tax services office supplies account on February 1 and February 28 was 1,
200 and 375 respectively. If the office supplies expense for the month is 1,900 what amount of
office supplies was purchased during February?
Ans. 1, 075

10. An entity purchased office supplies worth Php 45,000. Php 2,500 was immediately returned
to the supplier due to defects. Php 26,700 worth of supplies were used during the year and
additional Php 10,350 worth of supplies were purchased. How much is the balance of office
supplies at the end of the year?
Answer: Php 26,150

Office supplies beginning

Add: purchases 45,000
Less: returned -2,500
Less: expense portion -26, 700
Add: Additional purchases 10, 350
Office supplies, ending 26,150

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 LEVEL 2: MASTER OF CALCULATIONS (DIFFICULT ROUND)

1. 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

2. 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

3. 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

4. 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

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5. 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

6. If the debit and credit totals of a trial balance were 1,650,000 and additional entries were
recorded and posted for the purchase of 25,000 of office supplies for cash and purchase of
inventory worth 34,000 on account, what would be the new debit and credit totals for the trial
balance after this entry is made?

Answer: 1,684,000

7. In the beginning of the year, owner’s equity is twice the amount of liabilities, liabilities
amounted to 105,000. Assets increased by 10,000 while liabilities decreased to 85,000. What
would be the amount of owner’s equity in the end of the year?
Correct answer: 240,000
Solution: 315,000 = 105,000 + 210,000
10,000
325,000 = 85,000 + 240,000

8. Owner’s equity and total assets were ₽32,000 and ₽79,000 at the beginning of the period.
Asset increased 50% and liabilities decreased 60% during the period. What is the amount of
owner’s equity at the end of the period.
Correct answer: 99,700

Solution: 79,000 = 47,000 +32,000

X 50% 60%
+ 39,000 (28,200)
118, 000 = 18,800 + 99, 700

9. A company purchased a truck at cost of 75,000 on August 1, the truck is estimated to have a
useful life of 6 years and a salvage value of 3,000. The company uses a straight-line method of
depreciation. How much depreciation expense will be recorded during the last year ended
December 31?

Ans. 7,000

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10. Lisa Company has assets of 1,468, 790 and liabilities of 592, 800. During the years assets
increased by 224,700 and liabilities increased to 677,400. Revenues during the year is 140,000
and expenses were 40,000. Withdrawals made by the owner is 10,000. How much is the
additional cash investment made by the owner during the year to increase the capital account?

Answer: 70,100

Beginning Assets liabilities Beginning capital 875, 990

1,468,790 592,800 +additional investment ?
+ 244, 700 +revenue 140,000
-expenses 40,000
Withdrawals 10,000
Ending Assets liabilities Ending capitals 1,036,090
1,713,490 677,400
Additional investment= Ending capital+ withdrawal+ expenses- revenue- beginning
capital
Additional investment = 1,036,090 + 10,000 +40,000 – 875,990
Additional Investment= 70,100

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