FDNACCT

AY 2022-24 Term 1
Quiz #1
SET B
TEST I. TRUE OR FALSE

1. Luca Pacioli, a mathematician, is considered as the Father of Accounting.

TRUE

2. Owners of business firms are the only people who need accounting information.
FALSE
Owners are not the only users who need accounting information.

3. Free from error states that information in financial statements cannot be selected or presented in a
way to favor one set of interested parties over another.
FALSE
Neutrality

4. The cost-benefit test dictates that, in certain circumstances, it is permissible to avoid full
compliance with an accounting principle when the cost of doing so exceeds the benefits.
TRUE

5. Accrual assumes that revenue is reported when it’s earned, regardless of when collection is
actually received while expense is reported when it’s incurred, regardless of when payment is
actually made.
TRUE

6. The modifying constraint concerning the monetary or financial significance of an item in relation to
the particular monetary or financial situation of which it is a part is called Transparency.
FALSE
Materiality instead of transparency

7. When a business is organized as a sole proprietorship, the owner may combine his personal
financial information with the business financial information given that he is the same person who
owns the business.
FALSE
Entity - Should not combine personal financial information with business financial information

8. The Statement of Financial Position will arrange current assets according to magnitude, with the
highest amount presented first.
FALSE
Liquidity

9. The ability of a company to generate profits for a given period is known as its financial position.
FALSE
Financial performance.

10. The Statement of Owner's Equity is prepared before the Statement of Financial Position so that
the ending capital balance is available.
TRUE

TEST II. MULTIPLE CHOICE THEORY

1. According to this organization, accounting is defined as the art of recording, classifying and
summarizing in a significant manner and in terms of money, transactions and events that are, in
part at least, of a financial character, and interpreting the results thereof.
A. Accounting Standards Council (ASC)
B. Philippine Institute of Certified Public Accountants (PICPA)
C. American Accounting Association (AAA)
D. American Institute of Certified Public Accountants (AICPA)
2. Deals with the review of financial statements to assess its compliance to accounting rules and
principles.
A. Auditing
B. Financial accounting
C. Management accounting
D. Tax accounting

3. This type of business provides services to customers and charges fees in exchange.
A. Sole Proprietorship
B. Manufacturing
C. Merchandising
D. Service

4. A qualitative characteristic that states that information should be dependable, free from error, and
free from bias.
A. Faithful representation
B. Trustworthiness
C. Reliability
D. Verifiability

5. Which principle requires important facts that would have an effect on an investor's decisions be
included in the financial statements?
A. Full disclosure principle
B. Historical cost basis principle
C. Matching principle
D. Revenue recognition principle

6. Which of the following assumes that a firm will continue to operate indefinitely without any
evidence to the contrary?
A. Going concern assumption
B. Monetary unit assumption
C. Periodicity of income assumption
D. Separate economic entity assumption

7. Revenue should not be recorded until it is

A. Matched
B. Material
C. Measured
D. Realized

8. The stable monetary unit assumption states that in times of currency appreciation or depreciation,
A. all fluctuations in currency value should be reflected in the books of accounts of the company.
B. any fluctuations in currency value will not be reflected in the books of the company.
C. only fluctuations in currency value that are disadvantageous to the company should be reflected.
D. only fluctuations in currency value that are advantageous to the company should be reflected.

9. The Statement of Financial Position is said to be in the “account format”

A. When total assets are equal with the sum of total liabilities and equity.
B. When assets are shown on top of liabilities and equity section of the report.
C. When assets are listed on the right side and liabilities and equity on the left side of the report.
D. When assets are listed on the left side and liabilities and equity on the right side of the report.

10. A present economic resource controlled by the entity as a result of past events, and are expected
to be realized to cash within one year or the normal operating cycle of the business, whichever is
longer.
A. Assets
B. Liabilities
C. Current Assets
D. Current Liabilities
TEST III. PROBLEM SOLVING

1. FDN Accounting Services reports the following income and expenses accounts in its business records for
the year ending December 31, 2022:
Accounting Revenues, ₱900,000
Transportation Expense, ₱130,000
Supplies Expense, ₱70,000
Interest Income, ₱5,000
Salaries Expense, ₱305,000
Rent Expense, ₱117,000
Utilities Expense ₱165,000

How much is the net income or loss of FDNACCT during the year 2022?
₱118,000

2. During the first year of operation of FDNACCT, the following information were made available for the
preparation of the Statement of Changes in Owner’s Equity for the year ending December 31, 2022:
Beginning Capital, ₱230,000
Owner’s Drawing, ₱102,000
Net Income during the year, ₱510,000
Additional Investment, ₱223,000

How much is the amount of ending capital to be presented in the Statement of Changes in Owner’s
Equity for the year ending December 31, 2022?
₱861,000

3. As of September 30, 2022, FDNACCT shows the following account balances:

Accounts payable, ₱25,000
Accounts receivable, ₱50,000
Cash, ₱66,000
Furniture and fixtures, ₱97,000
Office equipment, ₱101,000
Office supplies, ₱14,000
Prepaid expense, ₱23,000

How much is the current assets as of September 30, 2022?

₱153,000

4. FDNACCT started operating in 2022. Below is the alphabetical partial list of the company’s adjusted
balances as of year-end December 31, 2022:

Accounts Payable ₱ 25,230

Accounts Receivable 223,200
Accrued Interest Income 12,110
Mortgage Payable 200,000
Prepaid Insurance Expense 34,900
Salaries and Wages Payable 25,140
Unearned Service Income 85,150

How much is the total current liabilities of the company?

₱135,520

5. On September 1, 2022, Faith D. Nakpil began FDN Accounting Services (FDNACCT) with an initial
investment of ₱60,725, and on September 30, her records showed the following account balances:

Accounts payable, ₱8,000

Accounts receivable, ₱14,500
Cash, ₱27,000
Accounting Fees Income, ₱86,000
Notes payable, ₱26,000
Office furniture, ₱42,250
Rent expense, ₱12,000
Salaries expense, ₱15,000
Telephone expense, ₱10,500

How much is the total assets as of September 30, 2022?

₱83,750
6. The following selected statement of financial statement items are shown for FDNACCT.

Current assets ₱200,000

Noncurrent assets ₱700,000
Current liabilities ₱100,000
Noncurrent liabilities ?
Equity, end ₱300,000

How much is the non-current liabilities?

₱500,000
7. At the end of year 2022, Faith D. Nakpil's capital account increased by ₱168,000. During 2022, she
made an additional investment of ₱57,000 but took from the business an equipment with a fair
market value of ₱30,000 but purchased at a cost amounting to ₱43,000. Expenses for 2022 totalled
₱490,000. How much is the net income or net loss for 2022? Write if it’s a net income or net
loss on the answer sheet and worksheet.
Net Income ₱154,000

8. During the year, FDNACCT reported net income of ₱38,000 while the owner made additional
investments in the form cash of ₱50,000 and an old laptop which was previously purchased for
₱55,000. The laptop, at the time of investment, had a fair market value of ₱20,000. If the ending
equity balance is ₱430,000, how much was the equity balance at the start of the year?
₱ 322,000

9. Faith D. Nakpil opened her accounting business with ₱80,000 cash and ₱40,000 worth of office
equipment and supplies. During the first year of operations, the business generated revenues of
₱60,000 from clients and expenses totaled ₱44,000. Faith also took back some of the office
supplies she initially brought worth ₱2,000, because her daughter needed it for a school project.
How much should be recorded as equity at the end of the year?
₱ 134,000

10. If assets increased by ₱60,000, and liabilities decreased by ₱40,000, then how much is the
change in equity? Write if it’s an increase or decrease on the answer sheet and worksheet.
₱100,000 increase

11. FDNACCT received the following in the month of August 2023:

₱30,000 for accounting services provided in July 2023.
₱80,000 for accounting services provided in August 2023.
₱50,000 for accounting services to be provided in September 2023.

It also provided accounting services amounting to ₱70,000 in August 2023, the collection of which
will be in October 2023.

How much is the revenue for the month of August 2023?

₱150,000

12. Faith D. Nakpil Accounting Services provided the following information at the end of its first six
months of operation:

Accounting Services rendered ₱1,600,000

Interest income earned from client’s promissory note 25,000
Payment for the office space rental for six months 110,000
Payment for the salaries of employees for six months 196,000
Payment of the office electricity bill for six months 124,500
Payment of the internet bill in the resident of Faith Nakpil, the owner 56,000

How much expenses should be recorded by the company for the six-month period?
₱430,500

--END OF EXAMINATION--