Professional Documents
Culture Documents
Prelim Departmental Exam Reviewer With Answer Key PDF
Prelim Departmental Exam Reviewer With Answer Key PDF
THEORIES
1. Unearned Rent
2. Prepaid Insurance
3. Fees Earned
4. Prepaid Rent Expense
5. Drawings
6. I – Posting a transaction twice will cause the trial balance totals to be equal
II – Journalizing a transaction with transposition error for both the debit and credit of P69 instead
of P96 will cause the trial balance to be out of balance
7. I – When an owner invests assets in the business, the capital account increases due to
revenue being earned
II – Debits will increase Unearned Revenues and Revenues
10. I - Financing activities include borrowings from a bank for the business
II - Investing activities include personal investment by the owner of a business
11. Which of the following group of accounts increase with a credit
a. Assets, capital, revenue c. Capital, revenue, expenses
b. Liabilities, capital, revenue d. None of these
16. Which of the following statements about users of accounting information is incorrect?
a. Management is an internal user.
b. Taxing authorities are external users.
c. Present creditors are external users.
d. Regulatory authorities are internal users.
18. Performing services on account will have the following effects on the components of the basic
accounting equation:
a. increase assets and decrease owner’s equity.
b. increase assets and increase owner’s equity.
c. increase assets and increase liabilities.
d. increase liabilities and increase owner’s equity
19. Which of the following events is not recorded in the accounting records?
a. Equipment is purchased on account.
b. An employee is terminated.
c. A cash investment is made into the business.
d. The owner withdraws cash for personal use.
22. A branch of accounting that is concerned primarily with providing information to internal users
a. Tax Accounting c. Financial Accounting
b. Management Accounting d. None of these
25. Cash investments made by the owner to the business are reported on the statement of cash flows in the:
a. Financing activities section c. Operating activities section
b. Investing activities section d. Supplemental statement
26. Accounts
a. Do not reflect money amounts
b. Are not used by entities that manufacture products
c. Are records of increases and decreases in individual financial statement items
d. Are only used by large entities with many transactions
28. How does the purchase of equipment by signing a note affect the accounting equation?
a. Assets increase; assets decrease
b. Assets increase; liabilities decrease
c. Assets increase; liabilities increase
d. Assets increase; owner’s equity increases
29. Financial information that is presented after a decision is made is considered of no value
a. Timeliness c. Neutrality
b. Verifiability d. None of these
PROBLEMS
1. The assets and liabilities of the company are P175,000 and P40,000. Owner’s equity should be:
a. P215,000 c. P175,000
b. P135,000 d. P40,000
2. If total liabilities decreased by P55,000 during a period of time and owner’s equity increased by P60,000
during the same period, the amount and direction (increase or decrease) of the period’s change in total assets
s:
a. P115,000 increase c. P5,000 decrease
b. P5,000 increase d. P115,000 decrease
3. A summary of selected ledger accounts appear below for Alberto’s Plumbing Services for the
current calendar year end.
ALBERTO, CAPITAL ALBERTO, DRAWING INCOME SUMMARY
12/31 8,500 1/1 6,500 12/31 3,500 12/31 8,500 12/31 15,000 12/31 33,500
4. After all the account balances have been extended to the Income Statement columns of the worksheet,
the totals of the debit and credit columns are P77,500 and P85,300, respectively. What is the amount of the net
income or net loss for the period?
a. P7,800 Net Income c. P85,300 Net Income
b. P7,800 Net Loss d. P77,500 Net Loss
5. Aging of a company’s accounts receivable indicates the estimate of uncollectible receivables totals
P2,000. If allowance for Doubtful Accounts has a P200 credit balance, the adjustment to record the bad debts
expense for the period will require a
a. Debit to bad debts expense for P2,200
b. Debit to bad debts expense for P2,000
c. Debit to bad debts expense for P1,800
d. Credit to allowance for doubtful accounts for P3,000
6. On June 8, Alton Co. issued an P80,000, 6%, 120-day note payable to Seller Co. Assume that the fiscal
year of Seller Co. ends June 30. Using the 360-day year in your calculations, what is the amount of interest
revenue recognized by Seller in the following year?
a. P1,200.00 c. P1,306.67
b. P1,208.89 d. P1,600.00
9. At the beginning of the year, the assets of Solis Services were P360,000 and its owner’s equity was
P200,000. During the year, the assets increased by P120,000 and liabilities increased by P20,000. What was
the Owner’s Equity at the end of the year?
a. P320,000 c. P300,000
b. P160,000 d. P200,000
10. Total Liabilities is P825,000, which is 66% of total assets. How much is the equity?
a. P425,000 c. P280,500
b. P1,250,000 d. P544,50
12. Krammer has liabilities equal to one fourth of the total assets. Krammer’s owner equity is P30,000.
Using the accounting equation, what is the amount of liabilities for Krammer?
a. P10,000 c. P20,000
b. P15,000 d. P25,000
13. Rose Soriano Company received cash of P13,500 on September 1, 2018 for one year’s rent in
advance and recorded the transaction with a credit to Unearned Rent. The December 31, 2013 adjusting entry
is
a. Debit Rent Revenue and credit Unearned Revenue P4,500
b. Debit Rent Revenue and credit Unearned Rent P9,000
c. Debit Unearned Rent and credit Rent Revenue P4,500
d. Debit Cash and credit Unearned Rent P9,000
14. Pedro Company purchased equipment on November 1, 2018 and gave a 3 month, 9% notes with
face value of P20,000. The December 31, 2018 adjusting entry is:
a. Debit interest expense and credit interest payable P1,800
b. Debit interest expense and credit interest payable P450
c. Debit interest expense and credit cash P300
d. Debit interest expense and credit interest payable P300
15. Before any year-end adjustments, the profit of Heart Co. was P1,870,000. However the following
adjustment are necessary: office supplies use, P30,000; services performed for clients but not yet
collected, P65,000; interest accrued on notes payable, P15,000. After recording these adjustment, the profit
would be
a. P 1,890,000 c. P 2,020,000
b. P 1,920,000 d. P 2,050,000
GERBO COMPANY
Trial Balance
Cash 20,000
Supplies 15,000
16. If on December 31, 2018 supplies on hand were P1,000, the adjusting entry would contain a
a. Debit to supplies expense for P1,000
b. Credit to supplies expense for P1,000
c. Debit to supplies expense for P14,000
d. Credit to supplies expense for P14,000
17. If on December 31, 2018 the trial balance showed insurance still unexpired amounting to P8,000,
the adjusting entry would contain
a. Debit to prepaid insurance for P12,000
b. Credit to prepaid insurance for P12,000
c. Debit to prepaid insurance for P8,000
d. Credit to prepaid insurance for P8,000
18. If the estimated depreciation for office equipment were P10,000, the adjusting entry would contain
a. Credit to accumulated depreciation for P10,000
b. Credit to depreciation expense for P10,000
c. Debit to accumulated depreciation for P10,000
d. Credit to office equipment for P10,000
19. If as of December 31, the rent of P5,500 for December had not been recorded or paid the adjusting
entry would include
a. Credit to accumulated rent for P5,500
b. Debit to rent payable for P5,500
c. Debit to rent expense for 5,500
d. Credit to cash for P5,500
20. If services totaling P10,000 had been performed but not billed, the adjusting entry to record this
would include
a. Debit to service revenue earned for P10,000
b. Credit to unearned service revenue for P10,000
c. Credit to service revenue earned for P70,000
d. Credit to service revenue earned for P10,000
Suggested Answers:
Theories
1. B
2. A
3. D
4. A
5. C
6. C
7. B
8. C
9. A
10. C
11. B
12. D
13. B
14. B
15. D
16. D
17. B
18. B
19. B
20. D
21. D
22. B
23. B
24. D
25. A
26. C
27. B
28. C
29. A
30. C
14. D
Interest Expense P 300
Interest Payable P 300
15. A
Adjustments:
Supplies Expense 30,000
Supplies 30,000
16. C
Supplies expense 14,000
Office supplies 14,000
17. B
Insurance expense 12,000
Prepaid insurance 12,000
18. A
Depreciation expense 10,000
Accumulated depreciation 10,000
19. C
Rent expense 5,500
Rent payable 5,500
20. D
Accounts receivable 10,000
Service revenue earned 10,000