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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

College of Accountancy and Finance
Mock Examination
November 11, 2023
Name: _____________________________________ Section: ______________________ Date:
______________
General Instructions:
- Write your answers clearly. Yung malinaw, hindi katulad ng feelings niyang hindi mo maintindihan!
- No erasures. Pag isipan muna bago isulat. Hindi lahat ng pwedeng pagkakamali pwede pa itama!
- Do not cheat, be honest. Wag tumulad sa ex mong lumilingon pa sa iba!
- Finish the exam in two hours. Alam mo dapat kung kalian na dapat sumuko. Pag tapos na, tapos na!

THEORIES (1pt. each)

1. Journalizing adjusting entries is the process of

A. recording transactions as they occur during the period.
B. zeroing out balances to prepare for the next period.
C. subtracting the expenses from revenues to measure net income.
D. updating the accounts at the end of the period.

2. All adjusting entries involve

A. an asset account and another asset account. C. an asset account and a capital account.
B an asset account and a liability account. D. a balance sheet and an income statement account.

3. An item that represents advance payment received by a company for services rendered in the future is
A. accrued expense B. accrued revenue C. unearned revenue D. prepaid expenses

4. It is the allocation of asset depreciable cost over its estimated useful life is called
A. consumption B. depletion C. depreciation D. deterioration

5. Failure to record adjusting entries at the end of the accounting period would affect the company’s
A. Income Statement C. Balance Sheet
B. Capital Statement D. All of the financial statements are affected

6. Adjustments for accrued revenues involves

A. decrease assets and revenue C. increases liability and assets
B. decrease in liability and increase revenue D. increases assets and revenue

7. Accrual of interest on notes payable is an example of

A. accrued expense B. accrued revenue C. unearned revenue D. prepaid expenses

8. Which of the following is incorrect regarding adjusted trial balance?

A. An adjusted trial balance proves the equality of the total debit and credit balances in the ledger after all
adjustments are made.
B. The adjusted trial balance lists the account balances segregated by assets and liabilities.
C. The adjusted trial balance is prepared after the adjusting entries have been journalized and posted.
D. The adjusted trial balance provides the primary basis for preparation of financial statements.

9. Which of the following statements is incorrect?

A. The worksheet is distributed to management and other interested parties.
B. The worksheet is essentially a working tool of an accountant.
C. The worksheet cannot be used as basis for posting in the ledger.
D. Financial statements cannot be prepared directly from the worksheet.

10. In what column of the worksheet does net loss appear?

A. Income statement (DR) and Balance sheet (CR)
B. Income statement (DR) and Balance sheet (DR)
C. Income statement (CR) and Balance sheet (CR)
D. Income statement (CR) and Balance sheet (DR)

11. The post-closing trial balance includes which of the following accounts?
A. Real accounts C. Nominal accounts
B. Income statement accounts D. All of the items mentioned are included.
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12. Which of the following combination is correct related to the closing process?
I. Close the expense account III. Close the revenue accounts
II. Close the drawing accounts IV. Close the income summary account
A. IV, III, II, I B. I, II, III, IV C. III, I, IV, II D. III, II, I, IV

13. It is a series of steps an accountant performed during an accounting period related to analyzing, recording,
classifying, summarizing and reporting related financial information.
A. Operating cycle B. Accounting cycle C. Manufacturing cycle D. Revenue cycle

14. It is a note issued by the seller to the buyer indicating the amount and the reason for which the customer’s
account is to be credited.
A. Sales invoice B. Debit Memo C. Credit Memo D. Purchase Invoice

15. Which of the following best describes a periodic inventory system?

A. It uses stock cards. C. It is use for high value products.
B. Physical count is done as necessary. D. Physical count is done periodically.

16. This is a discount given for certain classes of buyer for maybe buying large number of products.
A. Cash discount B. Trade discount C. Purchase discount D. Sales discount

17. In a FOB shipping point, freight prepaid, who bears pay the freight?
A. Buyer B. Seller C. Shipping company D. No one is required to pay.

18. What is the major expense of a merchandising business?

A. Salaries expense B. Utilities expense C. Freight out D. Cost of goods sold

19. Who owns the goods in transit under an FOB destination arrangement?
A. Buyer B. Seller C. Shipping company D. No one owns the goods

20. Which of the following is a correct formula for a merchandising business?

A. List price less purchase discount is equal to gross invoice price.
B. Sales less Cost of goods available for sale is equal to gross profit.
C. Sales less sales returns and allowances less sales discounts is equal to net sales.
D. Gross margin less cost of goods sold is equal to net income.

21. Which is correct related to 2/10, n/60?

A. 10% discount will be given if the customer pays within the discount period.
B. 2% discount is given if paid within 60 days.
C. The customer is given 60 days to pay its account.
D. There is no due date for payment.

22. When a special journal is used

A. A general journal is not used
B. All cash payments are recorded at cash disbursements.
C. All purchase transactions are recorded in a purchase journal.
D. All sales transactions are recorded in a sales journal.

23. An account in the general ledger that shows the total balance of all subsidiary accounts related to it?
A. Control account B. Nominal account C. Real account D. Bank account

24. Which is not an advantage of using special journals?

A. It saves time in journalizing and posting C. It saves time in the preparation of worksheet.
B. It provides division of labor. D. It aids in management analysis.

25. It is prepared to ensure that the total receivable balances in the subsidiary ledger agrees with its control
accounts.
A. Schedule of Accounts payable C. Schedule of Sales accounts
B. Schedule of Accounts receivable D. Schedule of Uncollectible accounts

26. When a customer returns merchandise for a cash refund, the seller records the transaction in the:
A. Sales returns journal B. General journal C. Sales journal D. Cash disbursement journal

27. Accounts payable is a debit column in

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A. Cash receipt journal B. Sales journal C. Purchase journal D. Cash disbursement journal

28. The end-of-the month balance in Knowie’s cash receipt journal “Sundry Account” column is P19,870. How will
the column be posted and what is the posting reference will be entered?
A. The total will be posted to cash as a debit, and the cash general ledger account number is the posting
reference.
B. The individual items are posted rather than the total an account number is entered as a posting reference.
C. The total will not be posted and there will be no posting reference.
D. None of these.

29. These are expenses other than cost of goods sold incurred in the normal course of business.
A. Purchases B. Cost of goods sold C. Operating expenses D. Other operating expenses

30. It is a failure to collect a receivable

A. Net realizable value B. Bad debts expense C. Accounts payable D. Allowance for bad debts

31. Which of the following is not a required step in the accounting process?
A. Journalizing transactions C. Financial statements preparation
B. Worksheet preparation D. Journalizing and posting closing entries

32. When a net income occurred, Income summary is

A. credited and owner’s drawing is debited. C. credited and owner’s capital is debited.
B. debited and owner’s drawing is credited. D. debited and owner’s capital is credited.

33. The closing entry for Sales Discount is

A. Dr. Sales Discount, Cr. Income Summary C. Dr. Income Summary, Cr. Sales Discount
B. Dr. Sales Discount, Cr. Sales Revenue D. Not to be closed since it is a real account

34. Which of the following reports the financial position as of a given period of time?
A. Income Statement B. Capital Statement C. Balance Sheet D. Statement of Goods Sold

35. A business whose main goal is to earn profit through buying and selling goods.
A. Service B. Merchandising C. Manufacturing D. All are correct.

PROBLEMS (1.5 points each)

36. At the beginning of 2016, Pizza Company’s assets amount to P 11,000,000 and the owner’s equity amounting to
P5,000,000. During the year, assets increased by P3,000,000, while the liabilities decreased by P500,000. How
much is the owner’s equity at the end of the year?
A. P 1,500,000 B. P 2,500,000 C. P 8,000,000 D. P 8,500,000

37. The Prepaid Rent account had a balance of P30,000, representing five months’ rent beginning December 1,
2016. The adjusting entry on December 31, 2016 will include
A. Dr. Prepaid Rent for P24,000 C. Dr. Rent Expense for P6,000
B. Cr. Prepaid Rent for P24,000 D. Cr. Rent Expense for P6,000

38. Carbonara Printing distributes a monthly sports magazine. On July 1, 2016, the entity sold 1,000 2-year
subscriptions for P100 each. On December 31, 2016, the amount reported as liability on the balance sheet and
the amount reported as revenue on the income statement are, respectively:
A. P-0-; P100,000 B. P25,000; P75,000 C. P50,000; P50,000 D. P75,000; P25,000

39. Tocino Organizers purchased an equipment costing P100,000 on July 1, 2016. The equipment has an estimated
useful life of 10 years with an estimated residual value of P10,000. How much is the depreciation expense on
December 31, 2016?
A. P4,500 B. P9,000 C. P18,000 D. P90,000

40. On December 31, 2016, the end of Sisig Company’s accounting period, the company has outstanding Accounts
Receivable of P400,000. The company estimates that 5% of these receivables might not be collected. Assuming that
there is P12,000 (credit) balance for Allowance for Uncollectible Accounts, how much is the debited Uncollectible
Accounts Expense for the December 31, 2016 adjusting entry?
A. P8,000 B. P12,000 C. P20,000 D. P32,000

41. Meatballs Company incurs salaries at a rate of P4,200 per day. The last payday in January is Friday, January 27
and no work for Saturday and Sunday. How much is the Salaries Payable on January 31?
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A. P4,200 B. P8,400 C. P16,800 D. P21,000

42. CheeseStick Company has a P180,000, 10%, 90-day note receivable outstanding on December 31. The note is
dated December 1, 2016. What is the adjusting entry on December 31, 2016?
A. Debit Interest Revenue and credit Interest Receivable, P1,500
B. Debit Interest Receivable and credit Interest Revenue, P1,500
C. Debit Interest Revenue and credit Interest Receivable, P4,500
D. Debit Interest Receivable and credit Interest Revenue, P4,500

43. The cost of goods available for sale is P1,300,000. The gross profit is P300,000, net sales amounted to
P1,000,000, net purchases are P1,100,000 and operating expenses are P220,000. How much is the profit or loss of
the company?
A. P80,000 profit B. P80,000 loss C. P300,000 profit D. P300,000 loss

44. The balances of the following accounts were closed to the Income Summary account: Salary Expense, P50,000
debit; Cost of Goods Sold, P80,000 debit; Utilities Expense, P25,000 debit; Sales, P200,000 credit. The amount of
the entry to close Income Summary to the capital account would be
A. P45,000 cr to the Income Summary account C. P155,000 dr to the Income Summary account
B. P45,000 dr to the Income Summary account D. P200,000 cr to the Income Summary account

45. Fewa Company purchased merchandise, the invoice for P84,500 includes P4,500 for freight and terms 3/15,
n/30. Merchandise in the amount of P12,000 was returned, and the balance of the invoice was paid within the
discount period. How much cash was disbursed by Fewa in full settlement of the account?
A. P84,500 B. P70,460 C. P72,500 D. P7,000

46. On January 5, 2017, Ephesians Trading Company purchased merchandise with a list price of P85,000. The
merchandise is subject to a trade discount of 15%, 10%, 5%, with credit terms of 2/10, n/30. The entry to record
the purchases on January 5, 2017 includes:
A. debit to Purchases, P85,000 and credit to Cash, P85,000
B. debit to Purchase Discounts, P23,226.25 and credit to Accounts Payable, P85,000
C. debit to Purchases, P61,773.75 and credit to Accounts Payable, P61,773.75
D. debit to Purchases, P85,000 and credit to Accounts Payable, P85,000

47. On March 30, Kikiam Hardware received a check from a customer for payment of an invoice. The P6,000
invoice was dated March 22, and included credit terms of 1/10, n/45. On March 25, the customer returned P600 of
the merchandise because it was defective. How would this transaction be recorded in Kikiam’s cash receipt
journals?
A. Cash P5,400; Sales returns P600; Accounts receivable, P6,000.
B. Cash P5,940; Sales Discounts, P60; Accounts receivable P6,000.
C. Cash P5,346; Sales discounts, P54; Accounts receivable, P5,400.
D. Cash P6,000; Accounts receivable P6,000.

48. Below are selected items from Gulaman Merchandising for the year ended December 31, 2016.
Account Title Debit Credit
Sales P 974,250
Sales returns and allowances P 12,750
Sales discount 8,050
Purchases 528,700
Purchase returns and allowances 7,450
Purchase discount 3,550
Freight in 7,400
Selling expense 120,125
General and administrative expense 95,300
Beginning and ending merchandise inventories are P56,500 and P45,500, respectively. How much is the Net
Income to be closed to the Gulaman, capital?
A. P952,450 B. P417,350 C. P201,925 D. P-0-

49. At the beginning of 2016, the balance of Accounts Receivable and the Allowance for Doubtful Accounts were
P430,000 and P3,400, respectively. During 2016, credit sales were P3,500,000 and collections were P2,400,000. In
addition, P38,000 in uncollectible accounts was written off as worthless. Management estimates the end-of-year
uncollectible accounts receivable to be P45,000 based on the aging of Accounts Receivable. What is the net
realizable value of Accounts Receivable on December 31, 2016?
A. P1,447,000 B. P1,492,000 C.P1,530,000 D. P-0-
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51. Salad Merchandising sold products to Pie Co. amounting to P50,000 in cash. Two days after, Pie returned
defective products amounting to P5,000 and Salad refunded the amount. Based on the facts, how much is the net
sales that could be presented in Salad Merchandising’s Income Statement?
A. P55,000 B. P50,000 C. P45,000 D. P5,000

52. Tiramisu Merchandising sold products to Leche Plan Co. amounting to P50,000, 2/10, n/60. Two days after,
Leche Plan returned defective products amounting to P8,000. If Leche Plan pays within the discount period, how
much is the net sales that could be presented in Tiramisu Merchandising’s Income Statement?
A. P50,000 B. P49,000 C. P42,000 D. P41,160

53. Adobo Merchandising buy products from Sinigang Co. amounting to P90,000, 3/15, n/60. Two days after,
Adobo returned defective products amounting to P15,500. If Adobo pays within the discount period, how much is
the net purchases that could be presented in Adobo Merchandising’s Income Statement?
A. P90,000 B. P87,300 C. P74,500 D. P72,265

54. The list price of goods sold is P57,000 and the buyer is given a series of trade discounts: 3% and 5%. How
much is the invoice price of the goods sold?
A. P52,525.50 B. P54,150 C. P55,290 D. P57,000

55. If the gross sales is P150,000, net sales is P145,000, cost of goods sold is P92,000 and the other expenses are
amounting to P15,000. How much is the net income during the period?
A. P135,000 B. P53,000 C. P43,000 D. P38,000

56. If the merchandise inventory beginning is P20,000; purchases is P55,000; freight out is P12,000; freight in is
P10,000; purchase discount is P2,000; and the ending count of merchandise inventory is P15,000. How much is the
goods available for sale?
A. P68,000 B. P70,000 C. P83,000 D. P85,000

57. Based on the data in no. 56, how much is the cost of goods sold?
A. P68,000 B. P70,000 C. P83,000 D. P85,000

58. If the net income is P50,000, net sales is P120,000 and the gross profit is P60,000, how much is the cost of
goods sold?
A. P10,000 B. P50,000 C. P60,000 D. P70,000

59. Lechon Company purchased inventory from Dinuguan Company, and received the credit memo from Dinuguan
Company. Dinuguan had charged Lechon P27.50 rather than P25.70 for each of the 1,000 items ordered. What
entry will Lechon Company make?
A. Accounts payable 1,800
Purchase returns and allowances 1,800

B. Sales returns and allowances 1,800

Accounts receivable 1,800

C. Purchase returns and allowances 1.800

Accounts payable 1,800

D. No entry is required since Lechon did not make the memo.

60. On December 31, 2016, the end of Spaghetti Company’s accounting period, the company has outstanding
Accounts Receivable of P400,000. The company estimates that 5% of these receivables might not be collected.
Assuming that there is P12,000 (debit) balance for Allowance for Uncollectible Accounts, how much is the debited
Uncollectible Accounts Expense for the December 31, 2016 adjusting entry?
A. P8,000 B. P12,000 C. P20,000 D. P32,000

- End of Examination -