Name:

Grade & Section:

Date:

Instructions: Encircle the correct answer for each multiple-choice question.

I. Multiple Choice Questions: Major Accounts in Accounting

1. Which of the following is not one of the five major accounts in accounting?

A. Assets
B. Liabilities
C. Owner's Equity
D. Income

2. Which of the following terms refers to valuable resources or items owned

by an individual, organization, or entity that have economic value?

A. Liabilities
B. Owner's Equity
C. Assets
D. Expenses

3. Which of the following is not a description of a liability?

A. Current obligations due to previous transactions

B. Debts or obligations owed to external parties
C. Amounts payable to suppliers for goods or services
D. Valuable resources or items owned by an individual

4. What is the meaning of owner's equity?

A. Total assets minus total liabilities

B. The amount of money received after rendering a service
C. Earnings generated from business operations
D. The owner's investment in the business

5. Which of the following is an example of a revenue account?

A. Salaries Expense
 B. Accounts Payable
C. Rent Revenue
D. Supplies

6. Which of the following is an example of an expense account?

A. Accounts Receivable
B. Service Revenue
C. Utilities Expense
D. Notes Payable

7. Which of the following is an example of a transaction that would increase

both an asset and a liability account?

A. The business paid rent expense for the month.

B. The business purchased inventory on account.
C. The business received cash from customers for services provided.
D. The business obtained a loan from a bank.

8. Which of the following is an example of a transaction that would decrease

both an asset and an equity account?

A. The business paid salaries to employees for the month.

B. The business sold inventory for cash.
C. The business received cash from customers for services provided.
D. The business obtained a loan from a bank.

9. Which of the following is an example of a transaction that would increase

both a revenue and an equity account?

A. The business paid rent expense for the month.

B. The business sold inventory on account.
C. The business received cash from customers for services provided.
D. The business obtained a loan from a bank.

10. Which of the following is an example of a transaction that would decrease

both an expense and an equity account?

A. The business paid salaries to employees for the month.

B. The business sold inventory for cash.
 C. The business received cash from customers for services provided.
D. The business obtained a loan from a bank.

II. Instructions: Select the correct option for each transaction and classify them
into the major account titles. Indicate how each transaction affects the
accounting equation. Circle the correct letter corresponding to the chosen
answer.

ABC Corporation engaged in the following transactions for the month of April.
Classify each transaction into the major account titles and indicate how each
transaction affects the accounting equation.

11. The business purchased inventory on account for $10,000.

A. Asset and Liability; Increase in Inventory and Increase in Accounts Payable

B. Asset and Equity; Increase in Inventory and Increase in Retained Earnings
C. Liability and Equity; Increase in Accounts Payable and Increase in Retained
Earnings
D. Asset and Revenue; Increase in Inventory and Increase in Service Revenue

12. The business paid $3,000 in rent expense for the month.

A. Asset and Liability; Decrease in Cash and Decrease in Accounts Payable

B. Asset and Equity; Decrease in Cash and Decrease in Retained Earnings
C. Expense and Asset; Decrease in Cash and Decrease in Retained Earnings
D. Expense and Liability; Decrease in Cash and Decrease in Accounts Payable

13. The business received $5,000 in cash from customers for services provided.

A. Asset and Revenue; Increase in Cash and Increase in Service Revenue

B. Asset and Liability; Increase in Cash and Increase in Accounts Payable
C. Asset and Equity; Increase in Cash and Increase in Retained Earnings
D. Expense and Asset; Increase in Cash and Increase in Rent Expense

14. The business obtained a loan of $20,000 from a bank.

A. Asset and Liability; Increase in Cash and Increase in Notes Payable

B. Asset and Equity; Increase in Cash and Increase in Retained Earnings
 C. Liability and Equity; Increase in Notes Payable and Increase in Retained Earnings
D. Asset and Revenue; Increase in Cash and Increase in Service Revenue

XYZ Corporation engaged in the following transactions for the month of May.
Classify each transaction into the major account titles and indicate how each
transaction affects the accounting equation.

15. The business purchased equipment for $15,000 in cash.

A. Asset; Increase in Equipment and Decrease in Cash

B. Asset; Increase in Equipment and Increase in Cash
C. Liability; Increase in Accounts Payable and Decrease in Cash
D. Equity; Increase in Retained Earnings and Decrease in Cash

16. The business received $8,000 in cash from customers for services provided.

A. Asset; Increase in Cash and Increase in Revenue

B. Asset; Increase in Cash and Decrease in Revenue
C. Liability; Increase in Accounts Payable and Increase in Cash
D. Equity; Increase in Retained Earnings and Increase in Cash

17. The business paid $2,500 in salaries to employees for the month.

A. Asset; Decrease in Cash and Decrease in Equity

B. Asset; Decrease in Cash and Decrease in Liabilities
C. Expense; Increase in Salaries Expense and Decrease in Cash
D. Revenue; Increase in Revenue and Decrease in Cash

18. The business paid $1,200 in rent expense for the month.

A. Asset; Decrease in Cash and Decrease in Equity

B. Asset; Decrease in Cash and Decrease in Liabilities
C. Expense; Increase in Rent Expense and Decrease in Cash
D. Revenue; Increase in Revenue and Decrease in Cash

III. Instructions: For each set of transactions involving John's small business and
Maria's restaurant, create journal entries in the provided format. Indicate the date,
account title and description, reference number (Ref), debit amount, and credit
amount.
19-24. John, the owner of a small business, recently made several transactions. On July
27, 2023, he purchased ₱2,000 worth of office supplies on credit. Following this, on
August 5, 2023, he successfully sold ₱1,500 worth of products, receiving cash payment.
To maintain operations, on August 10, 2023, he paid a ₱300 utility bill and on August
15, 2023, invested ₱2,500 in new equipment using his credit card. Additionally, on
August 20, 2023, John paid his employee a monthly salary of ₱1,200 and on August 25,
2023, made a ₱1,000 repayment on a business loan. These transactions showcase the
diverse financial activities involved in managing a small business, encompassing
purchases, sales, operational expenses, asset investments, employee salaries, and
loan repayments.

Date Account Title and Ref Debit Credit

Description

25-30. Maria, a restaurateur, recently engaged in various financial transactions. On

August 10, 2023, she procured ₱3,500 worth of fresh ingredients for her restaurant on
credit. Soon after, on August 15, 2023, she successfully sold ₱2,800 worth of dishes,
receiving cash from satisfied customers. In order to keep her establishment running
smoothly, on August 20, 2023, she settled a ₱500 electricity bill and on August 25,
2023, upgraded kitchen equipment by making a ₱4,000 purchase using her credit card.
Furthermore, on September 1, 2023, Maria disbursed ₱1,800 as the monthly salary for
her chef and on September 5, 2023, dedicated ₱1,200 to repay a portion of a business
loan. These transactions highlight the dynamic financial activities inherent in the
management of a small business, encompassing procurement, sales, operational
expenditures, capital investments, employee compensation, and debt servicing.

Date Account Title and Ref Debit Credit

Description
ANSWERS:
I.
1. D. Income
2. C.
3. D.
4. A.
5. C. Rent Revenue
6. C. Utilities Expense
7. B. The business purchased inventory on account.
8. A. The business paid salaries to employees for the month.
9. C. The business received cash from customers for services provided.
10. A. The business paid salaries to employees for the month
II.
11. A. Asset and Liability; Increase in Inventory and Increase in Accounts Payable
12. B. Asset and Equity; Decrease in Cash and Decrease in Retained Earnings
13. A. Asset and Revenue; Increase in Cash and Increase in Service Revenue
14. A. Asset and Liability; Increase in Cash and Increase in Notes Payable
 15.
16. A. Asset; Increase in Equipment and Decrease in Cash
17. A. Asset; Increase in Cash and Increase in Revenue
18. C. Expense; Increase in Salaries Expense and Decrease in Cash
19. C. Expense; Increase in Rent Expense and Decrease in Cash
III.