The Accounting Equation

NAME: Date:
Professor: Section: Score:

1. In which of the following did a loss occur?

ASSETS = LIABILITIES + EQUITY + INCOME -
EXPENSES
a. ₱920,000 ₱710,000 ₱290,000 ₱440,000 ₱520,000
b. ₱870,000 ₱310,000 ₱240,000 ₱470,000 ₱150,000
c. ₱890,000 ₱240,000 ₱240,000 ₱600,000 ₱190,000
d. ₱740,000 ₱530,000 ₱170,000 ₱1,900,000 ₱1,860,000

2. In accounting, a negative amount is normally presented

a. beginning with a minus sign.
b. as a squeezed amount.
c. in parentheses.
d. negatively.

3. Which of the following is incorrect regarding profit?

a. Profit is measured only indirectly as an arithmetical difference.
b. Profit is the excess of total income over total expenses.
c. Profit increases equity.
d. Profit is earned if total income is less than total expenses.

4. A business incurs total expenses of ₱630,000 and reports loss of ₱270,000. How much is the total
income?
a. 900,000
b. 320,000
c. 380,000
d. 360,000

5. Which of the following would result to total expenses of ₱480,000?

a. Total income of ₱360,000 and profit ₱120,000
b. Total income of ₱580,000 and loss of ₱100,000
c. Total income of ₱630,000 and profit of ₱150,000
d. Total income of ₱630,000 and loss of ₱150,000

6. Which of the following is a correct accounting equation?

ASSETS LIABILITIES EQUITY

a. ₱460,000 ₱190,000 ₱170,000
b. ₱230,000 ₱150,000 ₱70,000
c. ₱1,120,000 ₱990,000 ₱130,000
d. ₱1,020,000 ₱510,000 ₱410,000

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7. Which of the following is a correct accounting equation?

ASSETS LIABILITIES EQUITY INCOME EXPENSES

a. ₱920,000 ₱710,000 ₱290,000 ₱440,000 ₱420,000
b. ₱870,000 ₱310,000 ₱240,000 ₱570,000 ₱150,000
c. ₱890,000 ₱240,000 ₱340,000 ₱600,000 ₱190,000
d. ₱740,000 ₱530,000 ₱170,000 ₱1,900,000 ₱1,860,000

8. Entity A had total assets, liabilities, and equity of ₱130M, ₱80M and ₱50M, respectively, at the
beginning of the period. During the period, Entity A’s total liabilities decreased by ₱20M, while
its profit was ₱25M. There were no other transactions or events that affected equity during the
period. How much is Entity A’s ending total assets?
a. ₱95M
b. ₱135M
c. ₱85M
d. ₱125M

9. Entity A had total assets, liabilities, and equity of ₱150M, ₱90M and ₱60M, respectively, at the
beginning of the period. During the period, Entity A’s total liabilities decreased to ₱40M, while
its profit was ₱25M. There were no other transactions or events that affected equity during the
period. How much is Entity A’s ending total assets?
a. ₱75M
b. ₱115M
c. ₱95M
d. ₱125M

10. Entity A had total assets of ₱120M and total liabilities of ₱80M at the beginning of the period. If
at the end of the period, total assets increased by ₱30M, while total liabilities remained the same,
Entity A’s total equity at the end of the period would be
a. ₱70M
b. ₱90M
c. ₱60M
d. ₱80M

11. Entity A had total assets and total liabilities of ₱120M and ₱85M, respectively, at the beginning
of the period. During the period, Entity A earned total income of ₱60 and incurred total expenses
of ₱45. How much is Entity A’s ending total equity?
a. ₱60M
b. ₱90M
c. ₱50M
d. ₱120M

12. Entity A had total assets and total liabilities of ₱150M and ₱80M, respectively, at the beginning
of the period. During the period, Entity A earned total income of ₱60 and incurred total expenses
of ₱40. Entity A’s total assets decreased to ₱130M by year-end. There were no additional
contributions by, or distributions to, the owner during the period. How much is Entity A’s
ending total liabilities?
a. ₱60M

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 b. ₱80M
c. ₱70M
d. ₱40M

13. Entity A has ending total assets of ₱90M and ending total liabilities of ₱60M. Entity A had a
beginning equity of ₱10M. If Entity A earned total income of ₱45M during the year, how much
were the total expenses?
a. ₱0
b. ₱20M
c. ₱15M
d. ₱25M

14. Entity A has ending total assets of ₱150M and ending total liabilities of ₱90M. Entity A had a
beginning equity of ₱30M. If Entity A incurred total expenses of ₱50M during the year, how
much was the total income?
a. ₱90M
b. ₱40M
c. ₱50M
d. ₱80M

15. At year-end, Entity A’s total assets and total liabilities are ₱190M and ₱70M, respectively. If
Entity A had a beginning equity of ₱145M and there were no contributions from, or distributions
to, the owner during the period, how much profit (loss) did Entity A earn (incur) during the
year?
a. ₱35M
b. ₱25M
c. (₱35M)
d. (₱25M)

“Education is the passport to the future, for tomorrow belongs to those who prepare for it today.”
- Malcolm X

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