EXERCISE #5

Books of Accounts and Double-entry System

NAME: CHIU, ATHALIA LOUISE M. Date: 03-13-2023
Professor: Section: TM06A Score:

QUIZ: MULTIPLE CHOICE

1. Which of the following statements is incorrect regarding the use of the books of accounts?
a. If an entity uses special journals, its sales on account are recorded in the sales journal, while
its sales on cash basis are recorded in the cash receipts journal.
b. If an entity uses special journals, it will record only purchases on account in the purchases
journal. It will not record cash purchases and purchases in exchange for notes payable in the
purchases journal.
c. If an entity uses special journals, all transactions that cannot be recorded in the special
journals are recorded in the general journal.
d. All the accounts in the general ledger have supporting accounts in the subsidiary ledger.

2. Journals are used in a recording process called

a. posting.
b. journalizing.
c. journalizationing.
d. postinging.

3. Which of the following is not a special journal?

a. Sales journal
b. Cash receipts journal
c. Purchases journal
d. Subsidiary ledger

4. An increase to an account is recorded

a. in the debit side of that account.
b. in the credit side of that account.
c. in the side of that account that represents its normal balance.
d. beside the account.

5. When two debits get together, the result is

a. addition.
b. deduction.
c. multiplication.
d. love and happiness.

6. Cash is increased through

a. a debit.
b. a credit.
c. ask Mama to make padala.

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 d. a and c

7. The minimum balance of an account is zero. In accounting, a negative balance in an account is

referred to as
a. abnormal balance.
b. crazy balance.
c. psychotic balance.
d. LOL balance.

8. At the beginning of the period, a business has a cash balance of ₱20,000. During the period, total
cash collections and total cash payments amounted to ₱100,000 and ₱70,000, respectively. How
much is the ending balance of cash?
a. 10,000
b. 30,000
c. 50,000
d. 70,000

9. You opened up a business and invested ₱5M cash as the business’ initial capital. Which of the
following accounts is increased and therefore debited?
a. Cash
b. Owner’s equity
c. Accounts payable
d. Accounts receivable

10. In conjunction with the transaction in #9 above, which of the following accounts is also increased
and therefore credited?
a. Cash
b. Owner’s equity
c. Accounts payable
d. Accounts receivable

11. You purchased goods to be held for sale in the ordinary course of business activities, on cash
basis. Which of the following accounts is increased and therefore debited?
a. Cash
b. Owner’s equity
c. Accounts payable
d. Inventory

12. In conjunction with the transaction in #11 above, which of the following accounts is decreased
and therefore credited?
a. Cash
b. Owner’s equity
c. Accounts payable
d. Inventory

13. If the transaction in #11 above was made on account, which of the following accounts is also
increased and therefore credited?
a. Cash
b. Accounts receivable

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 c. Accounts payable
d. Inventory

14. A customer bought goods from your business, on credit. The customer orally promised to pay
the sale price next week. Which of the following accounts is increased and therefore debited?
a. Cash
b. Accounts receivable
c. Notes receivable
d. Sales

15. In conjunction with the transaction in #14 above, which of the following accounts is also
increased and therefore credited?
a. Cash
b. Accounts receivable
c. Notes receivable
d. Sales

16. When the customer in #14 above pays the sale price, which of the following accounts is
decreased and therefore credited?
a. Cash
b. Accounts receivable
c. Inventory
d. Sales

17. Your business obtained a ₱1M loan from a financing company. The financing company made
you sign a contract promising to repay the loan after a year. Which of the following accounts is
increased and therefore credited?
a. Accounts payable
b. Accounts receivable
c. Notes payable
d. Notes receivable

18. To record the transaction in #17 above, which of the following accounts will you debit?
a. Cash
b. Accounts payable
c. Owner’s equity
d. Inventory

19. The financing company who lent you the loan in #17 above will record the transaction by
debiting which of the following accounts?
a. Accounts payable
b. Accounts receivable
c. Notes payable
d. Notes receivable

20. The financing company in #17 above will credit which of the following accounts?
a. Cash
b. Accounts receivable
c. Notes payable

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 d. Notes receivable

21. You purchased a computer for ₱50,000 cash. To record this transaction, which of the following
accounts will you credit?
a. Cash
b. Computer equipment
c. Owner’s capital
d. Inventory

22. You expect to use the computer in #21 above over the next 5 years. At the end of Year 1, you will
debit which of the following accounts?
a. Depreciation expense for ₱50,000
b. Depreciation expense for ₱10,000
c. Accumulated depreciation – Equipment for ₱50,000
d. Accumulated depreciation – Equipment for ₱10,000

23. Which of the following statements is correct?

a. A contra-asset account is increased through credit.
b. Accounts receivable is increased through credit.
c. Owner’s equity is increased through debit.
d. Accounts payable is decreased through credit.

24. The “Allowance for bad debts” account is a contra account of

a. Cash.
b. Building.
c. Accounts receivable.
d. Equipment.

25. Entity A’s accounts receivable has a balance of ₱10,000. If the related allowance for bad debts
account has a balance of ₱4,000, the carrying amount of accounts receivable in Entity A’s
financial statements is
a. ₱14,000.
b. ₱6,000.
c. ₱4,000.
d. 0.

“Call upon me in the day of trouble; I will deliver you, and you shall glorify me.”
(Psalms 50:15)

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