FABM

Fill in the blanks :

1. Which of the following is not correct variation of the basic accounting equation:
a. Asset = Liability +Equity
b. Asset – Liability = Equity
c. Asset – Equity = Liability
d. Asset = Liability – Equity
2. A business has a total assets of P100,000 and total equity of P80,000. How much is the
total liabilities?
3. Which of the following is not a correct expanded accounting equation:
a. Assets= Liability + Equity + Income -Expense
b. Assets + Expense =Liability + Equity +Income
c. Assets -Liability = Equity+ Income – Expense
d. Assets = Liability + Equity + Income + Expense
4. At the start of the business period a business has a total assets of P500,000 and a total
liabilities of P300,000 . During the period the business earned total income of
P1,000,000 and incurred expenses of P640,00. No additional investment or withdrawals
were made by the owner. How much is the total equity at the end of the period .
5. A business has total assets, total liabilities and total equity of P100,000, P70,000 and
P30,000 respectively at the beginning of the period. During the period total liabilities
decrease to P40,000. The business reported profit of P50,000 for the period . How much
is the ending total assets ?
6. At the start of the period, a business has a total assets of P500,000 and total liabilities of
P300,000. During the period, the business earned total income of P1,000,000 and
incurred total expenses of P646,000. No additional investment or withdrawal were
made by the owner. Total liabilities at the end of the period were P380,000. How much
is the total assets at the end of the period.
TYPES OF BUSINESS ACCORDING TO ACTIVITY
7. This business engages in the “buying and selling” of goods. Its earnings are primarily
derived from the mark-up it adds to the cost of the goods it sells to the customer.
8. The type of business engages in buying raw materials and processing them into final
products.
9. This type of business offers services such as, professional skills, expertise, advice,
lending and similar services as its main product rather than physical goods.
BOOKS OF ACCOUNTS
10. It is also called “ the books of original entry”
11. It is also called “the book of secondary entry”
12. The type of special journal used in recording all transaction involving payment of cash.
 13. This type of ledger does not contain all accounts appearing in the trial balance
TYPES OF MAJOR ACCOUNTS
14. This represents the cost of business and local taxes required by government for the
conduct of business.
15. For a sole proprietorship, this represents the residual amount after deducting total
liabilities to total assets.
16. Revenues earned from rendering of services are recorded in this account.
17. The business purchase inventory on account . What account is credited?
18. The business sells goods o a customer who orally promise to pay for the purchase price
after 30 days. What account is debited ?
19. The customer subsequently found to be in financial distress. The business estimates that
only half of the purchase price will be collected from the customer. What account is
credited?
20. Revenues earned from sales of goods are recorded on this account.