1. Which of the following statements regarding accounting is incorrect?

a. All business transactions and events are recorded in the accounting books.
b. Although bookkeeping and accounting are interrelated, they are not the same.
c. The purpose of accounting is to provide information that is useful in making economic
decisions.
d. A transaction or event is recorded in the accounting records only if it has an effect on the assets,
liabilities, equity, income or expenses of the business.
2. Which of the following statements is correct?
a. Financial accounting is the branch of accounting that deals with the specific needs of an
entity’s management.
b. The internal users of accounting information include management, owners and creditors.
c. The external users of accounting information include potential and existing investors and
lenders and other creditors.
d. Government accounting is the branch of accounting that deals with the analysis of the costs of
products and services.

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

Mr. A opened a management consulting firm called “Alpha Consulting” on October 1, 20x1. The
following were the transactions during the first week of operations:

Oct. Transactions
1 Provided ₱300,000 cash as initial investment to the business.
2 Acquired furniture and fixture for ₱200,000 cash.
4 Purchased supplies for ₱30,000 cash.
5 Rendered services worth ₱20,000 on cash basis.
7 Paid ₱10,000 salaries of employees.

Requirements:
a. Provide the journal entries.
b. Post the entries to the ledger (use T-accounts).
c. Prepare the unadjusted trial balance on October 7, 20x1.

The ledger accounts of Entity A have the following balances on December 31, 20x1:

Account titles Balances

Accounts payable 480,000
Accounts receivable 210,000
Accumulated depreciation - Bldg. 1,250,000
 Accumulated depreciation - Equipt. 1,800,000
Advertising expense 70,000
Allowance for bad debts 30,000
Bad debt expense 20,000
Building 5,000,000
Cash 770,000
Depreciation expense 200,000
Equipment 3,600,000
Land 2,000,000
Miscellaneous expense 4,000
Notes receivable 420,000
Owner’s drawings 80,000
Owner’s equity 4,200,000
Prepaid supplies 40,000
Salaries expense 1,140,000
Salaries payable 120,000
Service fees 6,000,000
Supplies expense 60,000
Taxes and licenses 120,000
Transportation and travel expense 140,000
Utilities expense 46,000
Utilities payable 40,000

Requirement: Prepare the unadjusted trial balance. Be sure to provide a proper heading for the report
and arrange the accounts in the correct sequence.

Purchased from Holly merchandise worth P22, 100 , on terms 50% down payment, and the balance by
promising to pay it after 30 days

1. Which of the following statements is incorrect regarding the use of the books of accounts?
a. If an entity uses special journals, its sales on account are recorded in the sales journal, while
its sales on cash basis are recorded in the cash receipts journal.
b. If an entity uses special journals, it will record only purchases on account in the purchases
journal. It will not record cash purchases and purchases in exchange for notes payable in the
purchases journal.
c. If an entity uses special journals, all transactions that cannot be recorded in the special journals
are recorded in the general journal.
d. All the accounts in the general ledger have supporting accounts in the subsidiary ledger.
2. At the beginning of the period, a business has a cash balance of ₱20,000. During the period, total
cash collections and total cash payments amounted to ₱100,000 and ₱70,000, respectively. How
much is the ending balance of cash?

3. You purchased a computer for ₱50,000 cash. You expect to use the computer over the next 5 years.
At the end of Year 1, you will debit which of the following accounts?
a. Depreciation expense for ₱50,000
b. Depreciation expense for ₱10,000
c. Accumulated depreciation – Equipment for ₱50,000
d. Accumulated depreciation – Equipment for ₱10,000

4. Entity A’s accounts receivable has a balance of ₱10,000. If the related allowance for bad debts
account has a balance of ₱4,000, the carrying amount of accounts receivable in Entity A’s financial
statements is
a. ₱14,000.
b. ₱6,000.
c. ₱4,000.
d. 0.

5. At the beginning of the period, a business has a cash balance of ₱20,000. During the period, total
cash collections and total cash payments amounted to ₱100,000 and ₱70,000, respectively. How
much is the ending balance of cash?
a. 10,000
b. 30,000
c. 50,000
d. 70,000

1. Entity A had a cash balance of ₱310,000 at the beginning of the period. During the period Entity
A had the following transactions:
 Rendered services worth ₱420,000, on account.
 Obtained a ₱500,000 loan.
 Collected ₱270,000 accounts receivable.
 Paid total expenses of ₱680,000.
 Paid half of the loan.

How much is the ending balance of cash?

a. 150,000
b. 90,000
c. 160,000
d. 140,000

The total Assets of the business amounts to P210, 000. The claim of the owner is
1/3 of the total assets. Thse working capital during the year is P40, 000. The
liabilities falling due within 12 months is P70, 000. the amount of owner’s capital
is