Practice quiz 1 in ACCCOB1

Timothy Aguinaldo ft. Deryll

Sanguir
 Quiz Competencies
Hi Accobers! Hala, may accounting nanaman ulit kayo. Yeah, all
non-bsa business courses and economics degrees have to take this
subject as prescribed by ched. But don’t worry, your accounting
would be easier this time than those at BSA.

This practice quiz aims to tackle the accounting process as well as

a review in FDNACCT. Do not be intimidated by the number of
questions that would be put because some might actually come at
the test (we’re no soothsayer on the questions). Please take time to
appreciate accounting even in the littlest bit.

The first part will be your typical true or false, then come the
multiple choice theories. Lastly, the problem solving portion
which I think most of you have seen already before in the fdnacct
reviewers that I have made.

Enjoy studying and if you have any questions, don’t hesitate to talk
to Lxu Timoboi for any clarifications on the error.
 True or False
Equity is the residual value when
liabilities are added to assets.
 True or False
Adjusting entries are only prepared at
the end of the accounting period.
 True or False
All temporary accounts are closed to the
capital account after preparing the post-
closing trial balance.
 True or False
The statement of changes in equity
reports the changes in the share of the
owner at a certain point in time.
 True or False
Interest income and commissions
income is reported as other income in
the statement of profit or loss
 True or False
Debits and Credits refer to increases and
decreases in an account
 True or False
The double-entry accounting system
states that for every debit, there is a
corresponding credit
 True or False
The summarizing process of accounting
is by footing the ledger amounts in an
account
 True or False
Failure to record an adjusting entry
when a company is using the asset
method would overstate both assets and
expenses.
 True or False
Accrued income is a liability while
prepaid expense is an asset.
 True or False
Depreciation less salvage value equals
depreciable cost
 True or False
Promissory notes should always bear an
interest rate
 True or False
The statement of financial position
reports assets, liabilities, and equity at a
point in time
 True or False
The transfer of ownership in FOB
shipping point is when the goods are
already delivered to the buyer.
 True or False
Nominal accounts include profit and loss
accounts and withdrawals which are
forwarded every period.
 True or False
In the trial balance, when debit and
credit balance has the same balance,
there are no errors made on the
accounting cycle.
 True or False
Mortgage payable is an example of a
non-current liability
 True or False
To find the net cost of purchase, you
must add the beginning inventory, net
purchase, and freight-in, and deduct the
purchase discounts and purchase returns
and allowances
 True or False
The purpose of adjusting for doubtful
accounts or bad debts is because of the
conservatism constraint
 True or False
When the debit totals equal the credit
totals in the statement of profit or loss
worksheet columns, then the business
has break-even
 True or False

Most adjusting entries are recorded in

the general journal
 True or False
A purchases journal records all entries
involving a debit to purchases
 True or False
The terms FOB Shipping point, freight
prepaid will record freight in to the
buyer
 True or False
A partial payment of merchandise on
account is recorded in the cash receipts
journal
 True or False
The trade discount will not be
considered unless the merchandise
purchased or sold will be paid in full
 True or False
Current assets are reported in the
statement of financial position based on
its highest amount
 True or False
Utilities expense can either be selling
costs or administrative expenses,
depending on what is its usage for
 True or False
A business entity cannot do both service
and merchandising activities
 True or False
General purpose financial statements are
only intended for managers,
stockholders, and employees
 Multiple Choice Theory
Which of the following is true about a service
entity?

A. A service entity makes use of converting raw

materials into finished goods
B. The income statement of a service and trading
business is the same
C. A service business undergoes the same
accounting cycle as to a trading type
D.Income summary is not relevant in the books
of a service business
 Multiple Choice Theory
When the buyer debits freight in and credits
accounts cash, the corresponding freight entry
would be:

A. FOB Shipping point, Freight Collect

B. FOB Shipping point, Freight Prepaid
C. FOB Destination, Freight Collect
D.FOB Destination Freight Prepaid
 Multiple Choice Theory
This accounting assumption states that the life
cycle of a business is divided into time periods

A. Accrual Basis
B. Historical Cost
C. Time period or periodicity
D.Going concern
 Multiple Choice Theory
A debit would increase the following accounts,
except:

A. Deferred Insurance Expense

B. Sales Returns and Allowances
C. Freight-Out
D.Deferred Cleaning Revenue
 Multiple Choice Theory
Which of the following accounts are NOT
located in the cost of goods sold statement?

A. Purchase returns and allowances

B. Freight-In
C. Merchandise inventory, Beginning
D.None of these
 Multiple Choice Theory
Which of the following is false?

A. Accounts that are debited must be journalized first

before the Credit accounts
B. When a posting reference is put in the ledger entry,
then the transaction has been recorded and classified
C. The first account reported in the trial balance is cash
while the last account reported is withdrawals
D. A debit memorandum is issued by the buyer to the
seller in order to decrease their due on account
 Multiple Choice Theory
Statement 1: Three trial balances are made in the accounting
cycle
Statement 2: The worksheet and the reversing entries are
mandatory steps in the accounting cycle
Statement 3: Cost of goods sold in a merchandising business
is added to net sales in order to get gross profit

A. Two statements are true

B. Two statements are false
C. Three statements are false
D. One statement is false
 Multiple Choice Theory
Which of the following is false regarding
adjusted entries?

A. Adjusting entries involve one permanent and

temporary account
B. The account title “Cash” can be seen in the
adjusting journal entries
C. The account title “Deferred Revenue” can be
seen in the adjusting journal entries
D.Adjusting entries fulfill the periodicity of
income and accrual basis principles
 Multiple Choice Theory
The seller gives the buyer this business
document stating that their account to pay has
decreased due to defects

A. Invoice
B. Official Receipt
C. Receiving Order
D.Credit Memorandum
 Multiple Choice Theory
Which of the following is false regarding the
accounting cycle?

A. The equity account in the adjusted trial

balance is the ending balance of equity
B. The trial balance is not necessarily correct
even if the debit equals credit
C. Reversing entries are done at the start of the
new accounting period
D.The third and fourth columns of the
worksheet are the adjustments
 Multiple Choice Theory
Which of the following is true?

A. A trade discount encourages customers to pay

on time
B. When the seller incurs FOB shipping point,
Freight Prepaid, he will debit accounts
receivable and credit cash
C. Trade discounts are recorded at the books
D.A periodic inventory system does not use
purchases, purchase returns and allowances,
and purchase discounts
 Multiple Choice Theory
Which of the following statements is true?

A. The owner and its business’s accounts can be

combined together
B. Accrued expenses are increased by a credit
account
C. A footing is when you add all the ledger
balances into one balance
D.An unadjusted trial balance would have a
greater debit-credit balance than an adjusted
trial balance
 Multiple Choice Theory
The buyer is supposed to pay the freight, but the
seller actually paid the freight in order to ship
the goods. What freight term is it?

A. FOB Shipping point, Freight Collect

B. FOB Destination, Freight Prepaid
C. FOB Destination, Freight Collect
D.FOB Shipping Point, Freight Prepaid
 Multiple Choice Theory
Which of the following is false regarding accruals?

A. Accruals recognize payables and receivables

B. Accruals are examples of adjusting entries
C. Accruals are not reversed at the start of the new
accounting period
D. Accrued expenses are credited in the closing
entries
 Multiple Choice Theory
This user of accounting information would use
general purpose financial statements in order for
them to plan, organize, and run the business

A. Stockholders
B. Managers
C. Employees
D. Suppliers
 Multiple Choice Theory
Payment of rent in advance would give rise to an
I. An asset if the company is using the asset method
II. An expense if the company is using the expense
method
III.A liability if the company is using the liability
method
IV.An income if the company is using the income
method

A. I only
B. II, III
C. I, II, IV
D.I, II
 Multiple Choice Theory
Which of the following trial balances would total
the least amount of debits and credits?

A. Unadjusted Trial Balance

B. Adjusted Trial Balance
C. Post-Closing Trial Balance
D.None of these
 Multiple Choice Theory
Which of the following is not reversed to the
next accounting period?

A. Depreciation
B. Expense incurred but not yet paid
C. Revenue earned but not yet received
D.Expenses used up but initially recorded as an
expense
 Multiple Choice Theory
Which of the following accounts are not reported
as an operating expense?

A. Freight-Out
B. Interest Expense
C. Purchase Returns and Allowances
D.Bad debts Expense
 Multiple Choice Theory
If doubtful accounts are omitted or not recorded
in the books, what will happen to the accounting
equation?

A. Equity understated, Assets overstated

B. Equity overstated, Assets overstated
C. Liabilities understated, Equity overstated
D.Equity understated, Liabilities overstated
 Multiple Choice Theory
Statement 1: One component in determining the cost of
goods sold is freight-out
Statement 2: The drawing account is zeroed out at the closing
entries
Statement 3: Accruals involve revenue earned but not yet
received and expenses incurred but not yet paid

A. All statements are wrong

B. Two statements are wrong
C. One statement is correct
D. Two statements are correct
 Multiple Choice Theory
To find the carrying value of a fixed asset, you
must

a. Acquisition cost - Accumulated Depreciation

b. Acquisition cost - Fair Value
c. Acquisition cost - Depreciation Expense
d. Purchase cost - Salvage Value
 Multiple Choice Theory
Statement 1: When the owner invests property, the fair
market value is recorded rather than the historical cost

Statement 2: A memorandum journal entry can be written

when the owner hires a new employee in the business and
their corresponding salary

Statement 3: The face value of the note plus the interest

accrued equals the maturity value

A. Three statements are false

B. Two statements are true
C. Three statements are true
D. One statement is true
 Multiple Choice Theory
An erroneous cash purchase was recorded in the
books of the company. What will happen to the
accounting equation?

A. Liabilities understated, equity overstated

B. Assets overstated, equity overstated
C. No change in assets, liabilities, or equity
D.Assets overstated, liabilities overstated
 Multiple Choice Theory
Billy has received cash from his client previous month.
He initially recorded the past entry. This month, he
rendered the services. To record the adjusted entry, he
must

a. Debit Cash, Credit Unearned Revenue

b. Debit Accounts Receivable, Credit Cash
c. Credit Revenue, Debit Accounts Receivable
d. Credit Revenue, Debit Unearned Revenue
 Multiple Choice Theory
Which of the following is false regarding income
summary?

A. The income summary is an adjunct account that is only

recorded in the closing entries
B. All expenses are closed when income summary is
debited
C. The account to close income summary is the
recognition of net income or loss
D. Income summary can be seen both in the adjusting and
closing entries
 Multiple Choice Theory
Statement 1: When income summary is closed by debiting it,
then that means that the business has incurred a net income

Statement 2: When businesses receive cash to render service,

they can credit their revenue account

Statement 3: The owner is permitted to withdraw any assets

in the business

A. Two statements are false

B. One statement is correct
C. Two statements are correct
D. Three statements are false
 Multiple Choice Theory
I. Posting to the Ledger
II. Preparing the worksheet
III.Financial Statements
IV.Identifying business transactions through source
documents
V. Recording in the journal
VI.Preparing closing entries
VII.Preparing the post closing trial balance
VIII.Journalizing adjusting entries
IX.Trial balance

A. 4-5-1-9-2-3-8-6-7
B. 4-5-1-9-2-8-3-6-7
C. 4-5-1-3-2-9-7-6-8
D. 4-2-5-1-9-3-8-6-7
 Multiple Choice Theory
This one account in the choices are not supposed to be
there when adjusting entries are concerned

A. Bad debts expense

B. Interest Expense
C. Accumulated depreciation- building
D. Merchandise Inventory, Ending
E. Sales Discount
F. Unearned Revenue
G. Office supplies
 Multiple Choice Theory
When do you record revenue?

A. When you receive cash for doing it

B. When you do it even they tell you that they will pay
later
C. When they give you cash to render it
D. When the job has been done
E. A, B, C
F. A, D
G. All of the above
 Multiple Choice Theory
Which of the following is false regarding depreciation?

A. Land cannot be depreciated because its fair value

continuously changes
B. One method of recording depreciation is by using the
straight line method or double declining method
C. The rate of depreciation can vary depending on the
method used
D. Accumulated depreciation will be less than depreciation
expense in the succeeding years
 Problem Solving
On March 31, Sophia bought products on a local
store worth 32,000 less 10 on credit with terms
3/10, 2/15, n/30. She paid half on the day the
products were purchased as a downpayment
and 5,000 on April 14. How much will the seller
receive on April 25?
 Problem Solving
At the beginning of the year, Vince had a balance of
150,000 on his capital account. He then invested
1,260,000 cash and 5,000 worth of office supplies on
his business. At the end of the year, his assets
increased by twice, his liabilities increased to
450,000 and recorded a net income of 325,000.
What is the ending balance of his liabilities?
 Problem Solving
Chesca is a landlord who owns two types of
apartelles. The costs of the apartelles are of follows:

3 br. Apartment costing 34,000/ month

2 br. Apartment costing 23,000/month

5 out of 10 of 3br. tenants paid their rent for the

month of october while 3 out of 4 2br. tenants paid
theirs

How much is the revenue of Chesca

 Problem Solving
Tereso incurred the following expenses:

Utilities expense 43,010

Salaries expense 567,800
Insurance expense 65,250
Rent expense 78,340
Depreciation expense 61,230

30% of these expenses are incurred by the store

while the rest are incurred by the office

Determine the total amount of administrative

expenses
 Problem Solving
On January 1, 2023, ABC company has a beginning
inventory balance of 140,000. In March, the company
decided to buy goods from XYZ company worth of 345, 000
on credit with 4000 freight charges. The freight charges are
obligated to the buyer. At the end of the year, it is
determined that the ending inventory increase by 90% from
the beginning inventory. What is the Cost of Goods Sold at
the end of the year?
 Problem Solving

On December 31, 2023, Demetria trading reported a

debit of 345,000 and credit of 412,000 in the income
statement column of the worksheet. However, he
did not record an accrued interest revenue worth
500. On December 31, 2024, he reported at the
income statement column a debit of 453,000 and a
credit of 427,600. What will be the reported net
income (loss) for the year 2024?
 Problem Solving

On Jan 1, 2023, Polo recorded a balance of 45,000 in

his supplies. On Feb 4, he bought supplies on
account costing 23,000 with freight charges of 500.
On March 2, he bought prepaid insurance of 50,000
to be used for 5 months. On June 4, he withdrew
2,000 of the supplies for personal use. What will be
the adjusting entry to be recorded at June 30 when
he realized that his supplies on hand were only
amounting left to 23,400?
 Problem Solving

Alyssa creates a policy that every accounting period, 3% of

the accounts receivable are to be reported as
uncollectible. She also sets a credit balance of allowance
for bad debts for 3,000. At the end of 2022, Sales for the
year are reported to be 5,400,000 where 2,465,400 are
cash sales and the rest are on account. What will be the
bad debts expense that she will report for that year?
 Problem Solving
Maya and Brian arranged a contract wherein Maya
would build a house to Brian costing 4,300,000
(including other expenses) on June 3 1994. On June 6
1994, the contract has been approved and has started
its groundbreaking activities. However, Brian told
Maya that he would pay her in monthly installments
after the house has been built on June 3 1995. On
what date would Maya record revenue?
 Problem Solving
On June 1 2020, Suzuka bought an equipment
costing 36000 yen with an estimated useful life of 6
years before it can be sold for 30,000 yen. What will
be the amount of depreciation expense that she will
record at December 31, 2024?
 Problem Solving
Donald’s beginning assets were 3,400,000 where 55%
are owed by the bank and the rest is his share.
Within the year, he was able to pay off 200,000 of
his liabilities. He also invested an additional 300,000
and incurred revenues of 450,000 and losses of
417,000. Before the end of the year he withdrew
213,000 for this personal use. What is the total
amount of property in Donald’s business at the end
of the year?
 Problem Solving
On the 23rd of May 2023, Justin was given a 15,000
pesos, 5%, 180-day bearing note by one of his
customers because he rendered service. What will be
the interest receivable that he will record assuming
he adjusts his books every June 30?
 Problem Solving
Beginning inventory is 294,000 and net purchases
incurred is 492,000. The ending inventory is 75% of
the beginning inventory leading to a cost of sales of
571500. Determine the cost of freight in and the total
goods available for sale
 Problem Solving
The statement of profit or loss column in the
worksheet reported a debit of 4,341,000 and a credit
of 4,175,670. However the accountant omitted an
accrued interest revenue of 450 and erroneously
recorded accrued salaries expense by 40,000. What
will be the reported net income or loss incurred for
the period?
 Problem Solving
Here is the partial income statement of Faye’s
mini mart

Net Sales a
Merchandise Inventory, Jan 1 b
Net Cost of Purchases 64000
Total Goods Available For sale 245000
Merchandise Inventory, Dec 31 62500
Cost of Goods Sold c
Gross Profit 70000

Find A, B and C
 Problem Solving
Suzuran’s Pet store reported the following information in their consolidated income statements:

Year 1 Year 2 Year 3

Beginning Inventory 344000 578000 482500

Add: Net Purchases 566000 674000 551000

Add: Freight-In 4000 5700 6000

Total Goods Available for 914000 1257700 1039500

Sale

Less: Ending Inventory 336000 775200 634400

Cost of Goods Sold 578000 482500 405100

Sussuro, the auditor found the following information based from the company’s records:
- In year 1, Net purchases is understated by 20,000
- Ending Inventory for year 1 is overstated by 4,300
- In year 2, the company omitted a purchase of merchandise worth 34,000, with freight
costs of 2,000. Ending inventory is also understated by 13,000
- In year 3, the company erroneously recorded 400 pesos worth of freight due to wrong
freight terms
- Additionally, a physical count at the end of year 3 estimated that it is 90% of the
beginning inventory of the same year

Compute for the cost of goods sold at the end of Year 3

 Comprehensive Problem
Instructions: The next slides will be a
practice/hard exercise for you to
appreciate financial statements.

A list of accounts in the adjusted trial

balance will be given below
Comprehensive Problem
Comprehensive Problem
 Comprehensive Problem

The following information was given:

- The name of the business is Tablangs Sweets
store and the accounting cycle ended at
November 30, 2023
- Beginning merchandise inventory is 150,000
- Insurance, rent, utilities expenses are allocated
to be 55% store, 45% office
 Comprehensive Problem
Requirement: Determine the following:

1. ) Net Sales
2. ) Cost of goods sold
3. ) Gross Profit
4. ) Distribution Costs
5. ) Administrative expenses
6. ) Net income
7. ) Ending owner’s equity
8. ) Total current assets
9. ) Net realizable value
10. ) Carrying amount
11. ) Total liabilities and equity

Bonus: If you are able to find these, then

create the 3 financial statements :) Godbless.