OUR LADY OF FATIMA UNIVERSITY – VALENZUELA CAMPUS

2023 MANDATORY QUALIFYING EXAMINATIONS

BASIC ACCOUNTING REVIEWER

1. When a company receives a WIFI bill, but will not be paying it right away, it should
a. Debit utilities expense and credit Accounts receivable
b. Debit Utilities expense and credit Utilities payable
c. Debit Accounts payable and credit Utilities expense
d. Make no entry until the bill is paid.

2. Which of the following sequence of actions describes the proper sequence in the
accounting cycle?
a. Entry, post, close, prepare, adjust, analyze
b. Prepare enter, post, adjust, analyze, close
c. Analyze, record, post, adjust, prepare, close
d. Post, close, prepare, adjust, analyze, entry

3. In the accounting cycle, which of the following steps is considered the output document
or record?
a. Financial statements
b. The ledger
c. The journal
d. The worksheet

4. The accounting equation must remain in balance

a. throughout each step in the accounting cycle.

b. only when journal entries are recorded.
c. only at the time the trial balance is prepared.
d. only when formal financial statements are prepared.

5. Making the financial information available when a decision is to be made achieves the
characteristic of
a. Timeliness
b. Neutrality
c. Completeness
d. Comparability

6. Continuation of an enterprise in the absence of evidence to the contrary is an example

of the concept of
a. Accounting entity
b. Consistency
c. Going concern
 d. Substance over form

7. Adequate disclosure in financial statements to meet the needs and purposes of their
users is a means of attaining the quality of
a. Verifiability
b. Faithful representation
c. Understandability
d. Neutrality

8. Accountants do not recognize that the value of the peso changes over the time. This
concept is called the
a. Stable money unit concept
b. Going concern concept
c. Cost principle
d. Entity concept

9. The communication phase of accounting is accomplished by

a. Storing data
b. Reporting to decision makers
c. Recording data
d. Processing data

10. Which of the following accounts will not affect owner’s equity?
a. Owner’s withdrawal
b. Land
c. Advertising expense
d. Revenues

11. Which of the following statements best describes the purpose of closing entries?
a. To facilitate posting and taking a trial balance.
b. To determine the amount of net income or net loss for the period.
c. To reduce the balances of temporary accounts to zero so that they may be used to
accumulate the revenues, expenses and dividends of the next period.
d. To complete the record of various transactions that were started in a prior period.

12. An adjusted trial balance

a. is prepared after the financial statements are completed.
b. proves the equality of the total debit balances and total credit balances of ledger
accounts after all adjustments have been made.
c. is a required financial statement under international financial reporting standards.
d. cannot be used to prepare financial statements.
13. An accrued revenue can best be described as an amount
a. collected and reported on the income statement.
b. collected and not reported on the income statement.
c. not collected and reported on the income statement.
d. not collected and not reported on the income statement.

14. If, during an accounting period, an expense item has been incurred and consumed but
not yet paid for or recorded, then the end-of-period adjusting entry would involve
a. a liability account and an asset account.
b. an asset or contra asset account and an expense account.
c. a liability account and an expense account.
d. a receivable account and a revenue account.

15. The omission of the adjusting entry to record depreciation expense will result in an:

a. overstatement of assets and an overstatement of capital.

b. understatement of assets and an understatement of equity.
c. overstatement of assets and an overstatement of liabilities.
d. overstatement of liabilities and an understatement of equity.

16. You just posted a debit to Cash in the general ledger. Which special journal did it come
from?
a. Sales journal
b. Cash receipts journal
c. Cash disbursement journal
d. General journal

17. Reversing entries

a. Impact the income statement only.
b. Impact the statement of financial position and the income statement.
c. Are not allowed under International Financial Reporting Standards(IFRS).
d. Change amounts reported in the financial statements of the preceding period.

18. What is the body authorized by law to promulgate rules and regulations affecting the
practice of Accountancy in the Philippines?
a. Accounting Standard Council
b. Philippine Institute of Certified Public Accountants
c. Board of Accountancy
d. Auditing Standards and Practice Council
19. Which of the following is a characteristic of a perpetual inventory system?

a. Inventory purchases are debited to a Purchases account.

b. Inventory records are not kept for every item.
c. Cost of goods sold is recorded with each sale.
d. Cost of goods sold is determined as the amount of purchases less the change in
inventory.

20. What is the normal journal entry for recording bad debt expense under the allowance
method?
a. Debit Allowance for Doubtful Accounts, credit Accounts Receivable
b. Debit Allowance for Doubtful Accounts, credit Bad Debt Expense
c. Debit Bad Debt Expense, credit Allowance for Doubtful Accounts
d. Debit Accounts Receivable, credit Allowance for Doubtful Accounts

21. Fury Company's account balances at December 31, 2023 for Accounts Receivable and the
Allowance for Doubtful Accounts are P320,000 debit and P600 credit. Sales during 2023
were P800,000. It is estimated that 1% of sales will be uncollectible. The adjusting entry
would include a credit to the allowance account for
a. P8,600.
b. P8,000.
c. P7,400.
d. P3,200.

22. Talos Enterprise loaned P90,000 to another entity on December 1, 2023 and received a
3-month, 6% interest-bearing note with a face value of P90,000. What adjusting entry
should Talos make on December 31, 2023?
a. Debit Interest Receivable and credit Interest Revenue, P1,350.
b. Debit Cash and credit Interest Revenue, P450.
c. Debit Interest Receivable and credit Interest Revenue, P450.
d. Debit Cash and credit Interest Receivable, P1,350.

23. Gravik Enterprise paid cash of P12,000 on June 1, 2023 for one year’s rent in advance
and recorded the transaction with a debit to Prepaid Rent. The December 31, 2023
adjusting entry is
a. debit Prepaid Rent and credit Rent Expense, P5,000.
b. debit Prepaid Rent and credit Rent Expense, P7,000.
c. debit Rent Expense and credit Prepaid Rent, P7,000.
d. debit Prepaid Rent and credit Cash, P5,000.

24. G’iah Enterprise purchased equipment on November 1, 2023 and gave a 3-month, 6%
note with a face value of P20,000. The December 31, 2023 adjusting entry is
a. debit Interest Expense and credit Interest Payable, P1,200.
 b. debit Interest Expense and credit Interest Payable, P300.
c. debit Interest Expense and credit Cash, P200.
d. debit Interest Expense and credit Interest Payable, P200.

25. If Accounts receivable has debit postings of P580,000, credit postings of P440,000, and a
normal ending balance of P480,000, which of the following was its beginning.
a. P620,000 Cr.
b. P620,000 Dr.
c. P340,000 Cr.
d. P340,000 Dr.

26. Wade Inn is a resort located in Miami. Wade Inn collects cash when guest make a
reservation. During December 2023, Wade Inn collected P90,000 of cash and recorded
the receipt by recognizing unearned revenue. By the end of the month Wade Inn had
earned one third of this amount, the other two thirds will be earned during January 2024.
The adjusting entry required at December 31, 2023 would impact the statement of
financial position by
a. Increasing Capital P60,000.
b. Decreasing Liabilities P30,000.
c. Increasing Assets P90,000.
d. Decreasing Equity P30,000.

27. The Supplies account had a balance at the beginning of year 3 of P4,000 (before the
reversing entry). Payments for purchases of supplies during year 3 amounted to P25,000
and were recorded as expense. A physical count at the end of year 3 revealed supplies
costing P5,750 were on hand. Reversing entries are used by this company. The required
adjusting entry at the end of year 3 will include a debit to:
a. Supplies Expense for P1,750.
b. Supplies for P1,750.
c. Supplies Expense for P23,250.
d. Supplies for P5,750.

28. At the beginning of the year, Bryant Station had liabilities of P100,000 and owner’s equity
of P96,000. If assets increased by P40,000 and liabilities decreased by P30,000. What was
the owner’s equity at the end of the year?
a. P236,000
b. P166,000
c. P70,000
d. P196,000

29. James Enterprise purchased a building on January 1, 2023 for P700,000. The useful life
of the building is 10 years. The asset is reported on the December 31, 2023 statement of
 financial position at P630,000. What was the impact of the adjusting entry recorded by
James?
a. Decrease Capital P70,000.
b. Increase Liabilities P70,000.
c. Increase Assets P70,000.
d. All of the choices are correct

30. Doncic Inc. took a physical inventory at the end of the year and determined that P650,000
of goods were on hand. In addition, Doncic, Inc. determined that P50,000 of goods that
were in transit that were shipped FOB shipping were actually received two days after the
inventory count and that the company had P75,000 of goods out on consignment. What
amount should Curry report as inventory at the end of the year?

a. P650,000.
b. P700,000.
c. P725,000.
d. P775,000.

31. The following information applied to Tatum, Inc. for 2023:

Merchandise purchased for resale P300,000
Freight-in 8,000
Freight-out 5,000
Purchase returns 2,000

Tatum’s 2023 inventoriable cost was

a. P300,000.
b. P303,000.
c. P306,000.
d. P311,000.

32. Olivia Retailers purchased merchandise with a list price of P50,000, subject to trade
discounts of 20% and 10%, with no cash discounts allowable. Olivia should record the
cost of this merchandise as

a. P35,000.
b. P36,000.
c. P39,000.
d. P50,000.

33. On June 1, 2022, Cloud Corp. sold merchandise with a list price of P20,000 to Aerith on
account. Cloud allowed trade discounts of 30% and 20%. Credit terms were 2/15, n/40
and the sale was made FOB shipping point. Cloud prepaid P400 of delivery costs for Aerith
 as an accommodation. On June 12, 2022, Cloud received from Aerith a remittance in full
payment amounting to

a. P10,976.
b. P11,368.
c. P11,376.
d. P11,196.

34. Republic of Gamers Inc. estimates the cost of its physical inventory at March 31 for use
in an interim financial statement. The rate of markup on cost is 25%. The following
account balances are available:
Inventory, March 1 P220,000
Purchases 172,000
Purchase returns 8,000
Sales during March 300,000
The estimate of the cost of inventory at March 31 would be

a. P84,000.
b. P144,000.
c. P159,000.
d. P112,000.

35. Emberleigh Inc. made a P10,000 sale on account with the following terms: 1/15, n/30. If
the company uses the gross method to record sales made on credit, what is/are the
debit(s) in the journal entry to record the sale?

a. Debit Accounts Receivable for P9,900

b. Debit Accounts Receivable for P9,900 and Sales Discounts for P100
c. Debit Accounts Receivable for P10,000
d. Debit Accounts Receivable for P10,000 and Sales Discounts for P100