CHAPTER 1

1. Which may not be a function of a bookkeeper?

a. Prepare unadjusted trial balance
b. Record transactions
c. Post adjusting entries
d. Finalize financial statements

2. Which may not be a function of a bookkeeper?

a. Record employee attendances
b. Record purchase invoices
c. Record sales invoices
d. Record cash receipts and payments

3. It is a type of business that buys goods and commodities then sells the same for profit without
changing its form
a.Manufacturing business
b.Service business
c.Merchandising business
d.Sole Proprietorship

4. A business of two or more persons who bind themselves to contribute money, property or
industry to a common fund, with the intention of dividing the profits among themselves
a.Corporation
b.Partnership
c.Sole proprietorship
d.Cooperative

5. Business must register in the following except

a.Department of Finance
b.Securities and Exchange Commission
c.Department of Trade and Industry
d.Cooperative Development Authority

6. Another way of writing the accounting equation is

a.Assets – Liabilities = Owner’s Equity
b.Assets + Liabilities = Owner’s Equity
c.Assets = Owner’s Equity – Liabilities
d.Assets = Liabilities – Owner’s Equity

7. The following are examples of manufacturing businesses, except

a.Toyota Motors, Inc.
b.Rolex Watch Repair Shop
c.Red Ribbon Bakeshop
d.Sony Philippines

8. The following are examples of service businesses, except

a.Cagayan River Hotel and Resorts
b.Spendmore Supermarket
c.Philippine Airlines
d.Azina Water Refilling Station

9. The form of business organization owned by stockholders

a.Sole proprietorship
b.Partnership
c.Corporation
d.Non-profit organization

10. The bookkeeper is

a.the person who keeps and maintains the books of accounts of the business organization.
The bookkeeper is responsible for recording the transactions of the business.
b.the recording of financial transactions and is part of the process of accounting in business
c.the process of recording, classifying and summarizing business transactions for the proper
determination of correct tax declarations and payments.
d.the artist of recording, classifying, and summarizing in a significant manner and in terms of money,
transactions and events which are, in part at least of financial character, and interpreting the results
thereof

11. Which is not a basic characteristic of a business?

a.Conducted for profit
b.A regular activity
c.Social marketing
d.Involves commercial activities

12. Which is not a type of business?

a.Merchandising or trading
b.Manufacturing
c.Servicing
d.Philanthropy

13. Bookkeeping is
a.the process of recording, classifying and summarizing business transactions for the proper
determination of correct tax declarations and payments.
b.the art of recording, classifying, and summarizing in a significant manner and in terms of money,
transactions and events which are, in part at least of financial character, and interpreting the results
thereof
c.the person who keeps and maintains the books of accounts of the business organization. The
bookkeeper is responsible for recording the transactions of the business.
d.the recording of financial transactions and is part of the process of accounting in business

14. Which is not one of the legal requirements of a business?

a.Withhold taxes on certain payments
b.Pay business permits and licenses
c.Maintain profitable activities
d.File and pay taxes

15. Which is not one of the legal requirements of a business?

a.Secure business registration certificates and permits
b.Issue receipts and invoices
c.Conduct profitable activities
d.Maintain accounting records
QUIZ 2
1. It is called the books of original entry
a. General Ledger
b.Chart of Accounts
c.General Journal
d.Trial Balance

2. Which of the following entries record the receipt of an electric bill which will paid next month?
a.Debit utilities expense and credit notes payable
b.Debit utilities expense and credit utilities payable
c.Debit utilities payable and credit cash
d.Debit utilities expense and credit cash

3. Posting is the process of

a.Transferring entries from the general ledger to the general journal
b.Reconciling entries from the general ledger to the general journal
c.Transferring entries from the general journal to the general ledger
d.Reconciling entries from the general journal to the general ledger

4. Which transaction decreased both total assets and total liabilities by P10,000?
a.Purchase of equipment for cash, P10,000
b.Payment of accounts payable, P10,000
c.Payment of salaries, P10,000
d.Collection of accounts receivable, P10,000

5. Which of the following is not an accountable transaction?

a.Purchase of merchandise inventory in cash
b.Spending of cash of the proprietor for his wedding
c.Cash investment into the business by the proprietor
d.Purchase of equipment on account

6. The term footing refers to

a.The process of obtaining the top number in an account
b.The process of posting
c.The process of taking the total
d.The process of obtaining the bottom number in an account

7.The recording phase of financial accounting covers the following except

a.Source documents are gathered and analyzed
b.Transactions are recorded in the journal
c.Posting to the ledger
d.Financial statements are prepared

8.Which of the following is a simple journal entry?

a.An entry with one debit and two or more credits
b.An entry with two or more debits and one credit
c.An entry of one debit only
d.An entry with one debit and one credit

9. A trial balance will not disclose that an error has been made in
a.Posting amount to the wrong ledger account
b.Computing the balance of an account
c.Transferring an account balance from the ledger to the trial balance
d.Entering an amount on the wrong side of an account

10. A transaction or event is accountable when it meets the following criteria, except:
a.It can be measured in terms of money
b.If affects the assets, liabilities or equity of the business
c.It affects the business entity
d.It is a personal transaction of the owner
e.It is supported by a document

11. Which of the following cannot be recorded into the company’s books of accounts?
a.One month telephone services have been utilized but the bill has not yet arrived.
b.The proprietor withdrew a certain amount of cash from the business.
c.Invoices for supplies purchased have been received but not yet paid.
d.Repair services have been rendered to a customer but not yet collected.

12. In terms of debits and credits, which accounts have the same normal balances?
a.Rental expense, Professional fees, Drawing
b.Account payable, Rental revenue, Unearned rental revenue
c.Accounts receivable, Accounts payable, Capital
d.Prepaid expenses, Insurance expense, Capital

13.An event that affects the financial position of an organization and requires recording is called
a.Operating activities
b.Business documents
c.Transaction
d.Account

14.Which document is issued to acknowledge receipt of cash?

a.Official receipt
b.Purchase invoice
c.Sales invoice
d.Delivery receipt

15. Journalizing involves

a.Preparation of various source documents before recording the transactions in the general journal
b.Transferring the amounts from the source documents to the general journal in the form of
journal entry
c.Transferring the amount from the general journal to the general ledger
d.Transferring the amounts from the general ledger to the trial balance

16. Which one of the following statements is correct?

a.Assets and liabilities normally have credit balances
b.Liabilities and revenues normally have debit balances
c.Assets and revenues normally have credit balances
d.Assets and expenses normally have debit balances

17. Posting is the process of

a.Reconciling entries from the general journal to the general ledger
b.Transferring entries from the general journal to the general ledger
c.Transferring entries from the general ledger to the general journal
d.Reconciling entries from the general ledger to the general journal
18. Which of the following entries record the purchase of an equipment by issuing a promissory note?
a.Debit notes payable and credit equipment
b.Debit notes receivable and credit equipment
c.Debit equipment and credit notes receivable
d.Debit equipment and credit notes payable

19. Transactions are recorded chronologically in the

a.General Ledger
b.General Journal
c.Chart of Accounts
d.Trial Balance

20. Which document is issued by a vendor or supplier for items or goods rendered the company? It is
called Sales Invoice from the point of view of the supplier.
a.Disbursement voucher
b.Purchase invoice
c.Order slip
d.Official receipt

QUIZ 3
Your company is closing its books on December 31, 2019. Analyze the following items and prepare
the necessary adjusting journal entries:

1. On December 30, 2020, your company performed P27,000 worth of service but did not bill the
client until January 5, 2021.

2. On November 1, 2020, your company purchased office supplies for P5,000 but did not make an
adjusting entry to reflect the P1,500 unused at December 31, 2020.

3. You did not record the MERALCO electricity bill received on December 28, 2020 for P6,500. You
have scheduled the payment on January 6, 2021.

4. Your company purchased a new set of computer on August 1, 2020 for P30,000. The computer
has an estimated useful life of 5 years with no salvage value. No depreciation was recorded on
this equipment.

5. On October 1, 2020, your company agreed to work on a new project and is paid P50,000 in
advance for 6 months contract starting December 1, 2020. Service Revenue was credited when
the advance payment was received.

6. Your company’s weekly five-day payroll is paid every Friday. But December 31, falls on a
Tuesday. The employees will not be paid until the following Friday. The weekly wages amount to
P25,000
DEBIT CREDIT
1)Accounts Receivable 27,000
Service Revenue 27,000
2)Supplies Expense 3,500
Supplies 3,500
3) Utilities Expense 6,500
Accounts Payable 6,500
4) Depreciation Expense 2,500
Accumulated Depreciation 2,500
5) Service Revenue 41,667
Unearned Service Revenue 41,667
6) Salaries Expense 10,000
Salaries Payable 10,000

QUIZ 3B
Question 1
The allowance for doubtful accounts has a normal credit balance and is presented in the financial
statement as
a. Expenses in the income statement
b. Deduction to accounts receivable
c. Liability in the balance sheet
d. Addition to accounts receivable

Question 2
Failure to journalize an adjusting entry related to depreciation of a property will
a. Overstate the net income
b. Not affect the asset
c. Understate the asset
d. Understate the net income

Question 3
The depreciation of an equipment has been recorded twice, which of the following financial statement
error will occur?
a. Assets will be understated
b. Equity will be understated
c. Income will be understated
d. Expenses will be overstated

Question 4
The Accumulated Depreciation – Building is reported in the
a. Balances Sheet as part of the current assets
b. Balance Sheet as a subtraction to the Building account to arrive at the book value of the
asset
c. Income Statement as part of the operating expenses
d. Balance Sheet as an addition to Building account to arrive at the book value of the asset

Question 5
RPL Company recorded accrued service revenue of P25,000 for services already rendered. What is
the effect of this adjusting entry to the Cash and Service Revenue accounts of RPL Company?
a. No change in both the Cash and Service Revenue accounts
b. No change in Cash and increase in Service Revenue
c. Increase in Cash and increase in Service Revenue
d. Increase in Cash and no change in Service Revenue
Question 6
Accrued revenues
a. Decrease assets
b. Decrease capital
c. Increase liabilities
d. Increase capital

Question 7
Under the accrual basis of accounting, the effects of transactions and other events are
a. Recorded in the books and reported in the financial statements when cash is received or paid
b. Recorded in the books when they occur but reported in the financial statements when cash is
received or paid
c. Recorded in the books when they occur but reported in the financial statements when revenues are
earned
d. Recorded in the books and reported in the financial statements when they occur

Question 8
A prepaid expense is not an
a. Expense
b. Economic resource
c. Unexpired cost
d. Asset

Question 9
Failure to recognize the used portion of prepaid expenses will
a. Overstate capital and understate liabilities
b. Understate capital and overstate assets
c. Overstate expenses
d. Overstate net income and assets

Question 10
Adjusting entries are necessary in order to
a. Correctly state the balance of the accounts
b. Detect and correct errors in the recording of transactions
c. Verify the balance of the cash accounts
d. Prove the equality of the debits and credits of the trial balance

CHAPTER 4
Question 1
Which may not be a function of a bookkeeper?
a. Record cash receipts and payments
b. Record employee attendances
c. Record purchase invoices
d. Record sales invoices

Question 2
What is the accounting equation?
a. Assets = Owner’s Equity – Liabilities
b. Assets = Liabilities + Owner’s Equity
c. Assets = Liabilities – Owner’s Equity
d. Assets + Liabilities = Owner’s Equity
Question 3
Accounting is
a. the process of recording, classifying and summarizing business transactions for the proper
determination of correct tax declarations and payments.
b. the person who keeps and maintains the books of accounts of the business organization. The
bookkeeper is responsible for recording the transactions of the business.
c. the art of recording, classifying, and summarizing in a significant manner and in terms of
money, transactions and events which are, in part at least of financial character, and
interpreting the results thereof
d. the recording of financial transactions

Question 4
It is called the books of original entry
a. General Ledger
b. General Journal
c. Chart of Accounts
d. Trial Balance

Question 5
A trial balance will not disclose that an error has been made in
a. Computing the balance of an account
b. Transferring an account balance from the ledger to the trial balance
c. Posting amount to the wrong ledger account
d. Entering an amount on the wrong side of an account

Question 6
Which of the following is a simple journal entry?
a. An entry of one debit only
b. An entry with one debit and two or more credits
c. An entry with two or more debits and one credit
d. An entry with one debit and one credit

Question 7
Accrued revenues
a. Increase capital
b. Increase liabilities
c. Decrease assets
d. Decrease capital

Question 8
The allowance for doubtful accounts has a normal credit balance and is presented in the financial
statement as
a. Deduction to accounts receivable
b. Expenses in the income statement
c. Addition to accounts receivable
d. Liability in the balance sheet

Question 9
RPL Company recorded accrued service revenue of P25,000 for services already rendered. What is
the effect of this adjusting entry to the Cash and Service Revenue accounts of RPL Company?
a. No change in Cash and increase in Service Revenue
b. Increase in Cash and no change in Service Revenue
c. Increase in Cash and increase in Service Revenue
d. No change in both the Cash and Service Revenue accounts

Question 10
Under the accrual basis of accounting, the effects of transactions and other events are
a. Recorded in the books when they occur but reported in the financial statements when cash is
received or paid
b. Recorded in the books and reported in the financial statements when cash is received or paid
c. Recorded in the books and reported in the financial statements when they occur
d. Recorded in the books when they occur but reported in the financial statements when revenues are
earned

Question 11
Which is not a classification of business activities in the Statement of Cash Flows?
a. Administrative Activities
b. Operating Activities
c. Investing Activities
d. Financing Activities

Question 12
All of the following are sources of cash from operating activities, except
a. Cash receipts from rendering services
b. Cash collection from customers
c. Cash receipts from sale of goods
d. Cash proceeds from bank borrowings

Question 13
Which of the following would appear in an income statement?
a. Expenses not yet paid
b. Expenses whether paid or not
c. Expenses that are paid
d. Cash payments for expenses

Question 14
Which of the following is an operating cash flow?
a. Payments to suppliers
b. Withdrawals of cash by owners
c. Payment for purchased equipment
d. Payments to banks for loan borrowings

Question 15
The Statement of Financial Position is another term for the
a. Balance sheet
b. Statement of cash flows
c. Statement of changes in equity
d. Income statement

Question 16
Which of the following would appear in an income statement?
a. Cash receipts from revenues
b. Revenue whether collected or not
c. Revenues that are not yet collected
d. Revenues that are collected

Question 17
The obligations of an enterprise to non-owners
a. Revenues
b. Assets
c. Liabilities
d. Expenses

Question 18
Gross profit is calculated as
a. Net sales less cost of goods sold
b. Net sales less goods available for sale
c. Gross sales less sales returns and discounts less merchandise inventory at the end of the period
d. Net sales less merchandise inventory purchased

Question 19
The balance sheet reports
a. The financial position of the business entity as of a given date
b. The sources and uses of cash
c. The profits earned by the business entity
d. The cost of sold merchandise inventory

Question 20
A statement that shows the listings of assets, liabilities and equity of an entity
a. Statement of cash flows
b. Notes to the financial statements
c. Income statement
d. Balance sheet

QUIZ 5
Which of the following are real or permanent accounts?
a. Notes payable, notes receivable and cash
b. Accounts receivable, commission income and salaries
c. Prepaid rent, accumulated depreciation and sales
d. Rent expense, capital and prepaid insurance

Question 2
Which situation indicates a net loss in the income statement accounts?
a. Total credits exceed total debits
b. Total debits and total credits have zero balances
c. Total debits exceed total credits
d. Total debits equals total credits

Question 3
Which of the following accounts are not closed at the end of the accounting period?
a. Purchases accounts
b. Capital accounts
c. Revenue accounts
d. Expense accounts
Question 4
After posting the closing entries
a. Income summary, revenue accounts and equity accounts have zero balances
b. The balance of all accounts will become zero
c. Revenue accounts, expense accounts and income summary accounts have zero balances
d. Expense accounts, revenue accounts and equity accounts have zero balances

Question 5
After posting all the closing entries
a. All the accounts have zero balances.
b. The capital and drawing accounts have zero balances
c. The assets, liabilities and equity accounts have zero balances.
d. The revenues, expenses and income summary accounts have zero balances.

Question 6
Which of the following steps may be omitted in the completion of the accounting cycle?
a. Adjusting entries are journalized and then posted to the general ledger
b. Financial statements are prepared
c. Reversal of some adjustments are made
d. Entries are posted to the general ledger

Question 7
Which of the following accounts would not appear in the post-closing trial balance?
a. Unearned Service Revenue
b. Doubtful Accounts Expense
c. Accrued Interest Payable
d. Accumulated Depreciation

Question 8
To which account is the Drawing account closed to?
a. Expense account
b. Capital account
c. Liability account
d. Income and expense summary account

Question 9
Which accounts are closed at the end of the accounting period?
a. Permanent or real accounts
b. Equity accounts
c. Nominal or temporary accounts
d. Balance Sheet accounts

Question 10
Which of the following accounts are closed at the end of the accounting period?
a. Asset accounts
b. Equity accounts
c. Liability accounts
d. Revenue accounts