PATEROS CATHOLIC SCHOOL

FUNDAMENTALS OF ACCOUNTING PART 1

PERIODIC EXAMINATIONS

NAME: _____________________________________________ DATE: ______________

INSTRUCTION: Encircle the letter that corresponds to your answer.

1. The company purchased inventories from its suppliers. Assuming the purchases were on account,
the entry would include

A. Debit Cash B. Debit Purchases

C. Debit Accounts Payable D. Debit Sales

2. The sold inventories to its customers. Assuming the sales was made thru cash payment, the entry
to record the transaction would include,:

A. Debit Accounts Receivable B. Credit Cash

C. Debit Sales D. Debit Cash

For numbers 3-5, consider the following details. Celestial Company rented its office building to
Heongyum Manufacturing Inc. The rent agreement calls for a monthly payment of P10,000 to be paid
to Celestial every last day of the month and will start on January 1, 2017.

3. Assuming Heongyum paid P30,000 as an advance rental on Jan. 1, 2017, the journal entry to
record this transaction under Celestials books would include

A. Debit Unearned Rent, P30,000 B. Credit Unearned Rent, P30,000

C. Debit Prepaid Rent, P30,000 D. Credit Prepaid Rent, P30,000

4. Assuming Heongyum paid P30,000 as an advance rental on Jan. 1, 2017, the adjusting journal
entry to record the rent as of January 31, 2017 under Celestials books would include

A. Debit Unearned Rent, P10,000 B. Credit Unearned Rent, P10,000

C. Debit Prepaid Rent, P10,000 D. Credit Prepaid Rent, P10,000

5. Assuming Heongyum paid P10,000 on January 31, 2017, the journal entry to record the rent as of
January 31, 2017 under Celestials books would include

A. Debit Rent Income, P10,000 B. Credit Rent Income, P10,000

C. Debit Rent Expense, P10,000 D. Credit Rent Expense, P10,000

6. What is the normal balance of rent income?

A. Debit B. Credit
C. Both Debit and Credit D. None of the above
7. What is the normal balance of rent expense?

A. Debit B. Credit
C. Both Debit and Credit D. None of the above

8. What is the formula for the depreciation expense?

A. (Cost - Salvage Value)/Useful Life

B. (Cost + Salvage Value)/Useful Life
C. Beginning Inventory - Purchases + Ending Inventory
D. Beginning Inventory + Purchases - Ending Inventory

For numbers 9-11, consider the following details. Taehwa Company purchased a machinery worth
P24,000,000 with a useful life of 15 years. The machinery has a salvage value of 10% of cost.

9. Assuming the machinery was bought January 1, 2017, what is the entry to record the purchase of
machinery on account?

A. Debit Purchases, Credit Cash - 24,000,000

B. Debit Machinery, Credit Cash - 24,000,000
C. Debit Purchases, Credit Accounts Payable - 24,000,000
D. Debit Machinery, Credit Accounts Payable - 24,000,000

10. Assuming Taehwa purchased the machinery on January 1, 2017, what is the depreciation expense
as of December 31, 2017?

A. P1,440,000 B. P1,540,000
C. P1,640,000 D. P1,740,000

11. Assuming Taehwa purchased the machinery on May 1, 2017, what is the depreciation expense as
of December 31, 2017?

A. P840,000 B. P600,000
C. P1,080,000 D. P960,000

12. What is the normal balance of depreciation expense?

A. Debit B. Credit
C. Both Debit and Credit D. None of the above

13. What is the normal balance of accumulated depreciation?

A. Debit B. Credit
C. Both Debit and Credit D. None of the above

For Numbers 14-16, consider the following details. Carrot Company purchased a printing machine
worth P7,500,000 with a useful life of 10 years. The machinery has a salvage value of 15% of cost.

14. Assuming the machinery was purchased on October 1, 2017, the entry to record the depreciation
on January 1, 2017 includes,

A. Debit Depreciation Expense, P159,375 B. Credit Depreciation Expense, P159,375

C. Debit Depreciation Expense, P106,250 D. Credit Depreciation Expense, P106,250
15. Assuming the machinery was purchased on July 1, 2017, what is the balance of accumulated
depreciation as of December 31, 2017?

A. 425,000 B. 265,625
C. 318,750 D. 371,875

16. Assuming the machinery was purchased on July 31, 2017, what is the balance of accumulated
depreciation as of December 31, 2018?

A. 637,500 B. 743,750
C. 956,250 D. 903,125

17. What is the normal balance of sales?

A. Debit B. Credit
C. Both Debit and Credit D. None of the above

18. What is the normal balance of sales discount?

A. Debit B. Credit
C. Both Debit and Credit D. None of the above

19. The entry to record sales on account would include

A. Debit Accounts Receivable B. Credit Cash

C. Debit Sales D. Debit Cash

For numbers 20-23, consider the following information. Tesla Corporation sold an automatic car to
Yieldwing Company for P3,000,000 on January 1, 2017 thru credit.

20. The entry to record this transaction would include

A. Debit Cash, P3,000,000 B. Credit Cash, P3,000,000

C. Debit Accounts Receivable, P3,000,000 D. Credit Accounts Receivable, P3,000,000

21. Assuming Yieldwings account has 5/10, n/30 credit term, the entry to record the collection on
January 6, 2017 would include

A. Debit Cash, P3,000,000 B. Debit Cash, P3,150,000

C. Debit Sales Discount, P250,000 D. Debit Sales Discount, P150,000

22. Assuming Yieldwings account has 5/10, n/30 credit term, the entry to record the collection on
January 14, 2017 would include

A. Debit Cash, P3,000,000 B. Debit Cash, P3,150,000

C. Debit Sales Discount, P250,000 D. Debit Sales Discount, P150,000

23. Assuming Yieldwings account has 5/10, n/30 credit term, the entry to record the collection on
February 13, 2017 would include

A. Debit Cash, P3,000,000 B. Debit Cash, P3,150,000

C. Debit Sales Discount, P250,000 D. None of the Above
24. What is the formula for cost of goods sold?

A. (Cost - Salvage Value)/Useful Life

B. (Cost + Salvage Value)/Useful Life
C. Beginning Inventory - Purchases + Ending Inventory
D. Beginning Inventory + Purchases - Ending Inventory

25. What is the normal balance of cost of goods sold?

A. Debit B. Credit
C. Both Debit and Credit D. None of the Above

For numbers 26-29, consider the following information. Tesla Corporation purchased inventories
from Hyperion Company amounting to P5,000,000 on January 1, 2017 thru credit. Use periodic
inventory accounting.

26. The entry to record this transaction includes

A. Debit Cost of Goods Sold B. Credit Cash

C. Debit Purchases D. Credit Accounts Receivable

27. Assuming Hyperion gave a credit term of 5/10, n/30 to Tesla Corporation, the entry to record the
payment on January 6, 2017 would include

A. Credit Cash, P5,250,000 B. Credit Cash, P5,000,000

C. Credit Purchase Discount, P250,000 D. Debit Purchase Discount, P150,000

28. Assuming Hyperion gave a credit term of 5/10, n/30 to Tesla Corporation, the entry to record the
payment on January 11, 2017 would include

A. Credit Cash, P5,250,000 B. Credit Cash, P5,000,000

C. Credit Purchase Discount, P250,000 D. Debit Purchase Discount, P150,000

29. Assuming Hyperion gave a credit term of 5/10, n/30 to Tesla Corporation, the entry to record the
payment on February 28, 2017 would include

A. Credit Cash, P5,250,000 B. Credit Cash, P5,000,000

C. Credit Purchase Discount, P250,000 D. None of the Above

30. What is the normal balance of Purchases?

A. Debit B. Credit
C. Both Debit and Credit D. None of the Above

31. Tesla Corporation sold an automatic car to Jupiter Corporation amounting P5,000,000. Jupiter
paid Tesla, P500,000 and the balance on before 60 days from the date of sale. The entry to
record this transaction includes

A. Credit Cash, P500,000 B. Credit Sales, P4,500,000

C. Debit Accounts Receivable, 4,500,000 D. Debit Purchase Discount, P150,000
32. Company A borrowed P100,000,000 from Banco De Oro. The loan agreement calls for an
interest payment of 1.5% per month every 15th of the month. The loan was granted January 15,
2017. How much is the total interest expense as of December 31, 2017?

A. 18,000,000 B. 17,250,000
C. 16,500,000 D. 15,000,000

33. Company A borrowed P100,000,000 from Banco De Oro. The loan agreement calls for an
interest payment of 1.5% per month every 15th of the month. The loan was granted January 15,
2017. How much is the total interest payment for the loan as of December 31, 2017?

A. 18,000,000 B. 17,000,000
C. 16,500,000 D. 15,000,000

34. What is the normal balance of interest expense?

A. Debit B. Credit
C. Both Debit and Credit D. None of the Above

For numbers 35-37, consider the following information. Company A rented a building for as its
principal office. Under the rent agreement, he is required to pay the rent for a monthly rate of
P40,000. The rent shall start on January 1, 2017.

35. Assuming Company A paid its lessor P120,000 on January 1, 2017, what is the entry to record
the payment in Company As books?

A. Debit Rent Expense, Credit Rent Payable, P120,000

B. Debit Prepaid Rent, Credit Rent Payable, P120,000
C. Debit Prepaid Rent, Credit Cash, P120,000
D. Debit Rent Expense, Credit Cash, P120,000

36. Assuming Company A paid its lessor P120,000 on January 1, 2017, what is the adjusting journal
entry to record the adjustment on rent as of January 31, 2017?

A. Debit Rent Expense, Credit Rent Payable, P40,000

B. Debit Prepaid Rent, Credit Rent Payable, P40,000
C. Debit Prepaid Rent, Credit Rent Expense, P40,000
D. Debit Rent Expense, Credit Prepaid Rent, P40,000

37. Assuming Company A paid its lessor P120,000 on January 1, 2017, how much is the prepaid rent
balance as of February 28, 2017?

A. 120,000 B. 80,000
C. 60,000 D. 40,000