1

The normal balances accounts are: Asset Accounts – Debit Balance; however the normal balance of a contra asset account is
credit;Liability Accounts – Credit Balance Equity Accounts – Owner’s, Capital account has a normal balance on the credit side while
the Owner’s Withdrawal account has a normal balance on the debit side; Income – Credit Balance; Expense – Debit Balance

It is also known as book of original entry-journal

The Accounting Cycle

I. Business transactions occurred and generated source documents.
II. Business transactions were analyzed and recorded in a journal.
III. Information was posted or transferred from journal to ledger.
IV. A trial balance was prepared.
V. A worksheet was completed.
VI. Financial statements were prepared.
VII. Journalizing and posting adjusting entries
VIII. Journalizing and posting closing entries
IX. Preparing a post-closing trial balance

Which of the steps above entails the preparation of business documents. No. I

Which is an optional? --No. V

When an account that normally has a credit balance actually has a debit balance, it may mean that an error have occurred or that an unusual
situation may exist. The accounts receivable account normally have a debit balance, and if at the end of the period the actual balance is on the
credit side, it may mean that: There was overpayment of the customer; Double posting of payment; Adjusting entry in NSF check was not
made.

Money held under this account can be withdrawn through issuance of a check. Banks usually allows numerous withdrawals and unlimited
deposit under this type of account. The interest rate for this account is usually lower as compared to a savings account. The account holder or
depositor is normally provided at the end of the month a bank statement showing all the deposits made, checks paid by the bank, and the
balance of the account. The depositor is given easy access to the funds. - Checking or Current Accounts

December 1- Sold merchandise on credit for P120,000, terms 3/10, N/30. The items sold had a cost of P97,000. Use the perpetual inventory
method
o 2016
 December 1 Accounts Receivable P120,000.00
 Sales P120,000.00
 To record credit sales

 1 Cost of Goods Sold 97,000.00

 Merchandise Inventory 97,000.00
 To charge the cost of inventories sold as expense

Prepare journal entries on the following business transactions. Consider the perpetual inventory method
 December 4- Purchased merchandise on credit for P50,800, terms 2/10, n/30.
 December 6- Received a credit memorandum for the return of faulty merchandise purchased on December 4 for P1,600. On the
same day, Paid for the merchandise purchased December 4 less the portion that was returned.

 On December 4, the entry would be:

o 2016  
 December 4 Merchandise Inventory  50,800 
 Accounts Payable   50,800.00
 To record purchases on account  

 In order to record the credit memo and the payment of purchases goods would be:
 December 6 Accounts Payable  1,600 
 Merchandise Inventory   1,600.00
  
 Accounts Payable  49,200.00 
 Merchandise Inventory   984.00
 Cash   48,216.00
 To record payment within the discount period  

Supposing the merchandise inventory has beginning balance of 250,000. Determine its ending balance as of December 31, 2016. Consider
the transactions from December 1-6 that is from item 7-10.- P201,216.00

Savings account is intended to provide an incentive for the depositor to save money. These accounts is normally- evidenced by passbook
2

Banks usually allows numerous withdrawals and unlimited deposit under this type of account. The account holder or depositor is normally
provided at the end of the month a bank statement showing all the deposits made, checks paid by the bank, and the balance of the account.
What type of bank account is this?- Checking or Current Accounts
 It refer to the amounts already received and recorded by the company, but are not yet recorded by the bank. -Deposits in transit

It refer to the checks that have been written and recorded in the company's Cash account but have not yet cleared the bank account or presented
to the bank by the payee. Checks written during the last few days of the month plus a few older checks are likely to be among these checks. -
outstanding checks

Individual income tax is computed on the basis of income received. It is usually classified as a direct tax because the burden is presumably on
the individuals who pay it.- individual

The bank teller deducted Check 1023 for P3,520 from the account of Nielsen Merchandising. The said check was issued by Nelsin Company
a different depositor of the bank. What is the affected record, by how much and what will you do with that in order to correct?- Bank. P3,520
will be added to bank records The teller is amenable about this error.

The bookkeeper of Nielsen Merchandising recorded Check No. 345 in the Cash Disbursement Journal as P5,502. The correct amount of the
check was P5,250.--- Book. P252 will be deducted in the book records. The expenses is overstated

The deposits of Nielsen Merchandising earned interest of P300 for the month. Nielsen does not have knowledge of interest earned until it
receives the bank statement. - Book. P300 is added to the book records. Interest Income will increase the cash in bank of Nielsen
Merchandising. Adjusting entry is therefore required

What do you mean by equitable distribution of wealth?-- higher taxes are imposed on those who earn more.

Mr. A, single with no dependent, earns compensation income of P400,000.

 How much is the taxable income?- P350,000
 How much is the tax due?-- P80,000
 Suppose Mr. B a father of 3 children: 12 y/o; 4 y/o and 1 y/o., earns compensation income of P600,000. 2016. How much is the taxable
income of Mr. B?-- P475,000

It is a tax on a person’s income derived from employment, business, trade, practice of of profession, or from property, after excluding the
deductions allowed under the law.-- Income tax

It is a tax on production, sale, or consumption of goods and services, leasing of property, or other business entities.-- Business tax

What do you call to the difference between Gross Compensation Income and Personal exemption and additional exemption, if any?--Taxable
Income

The BIR form 1700 shall be filed and the tax shall be paid- on or before April 15, of the year following the taxable year.

The first step in preparing BIR form 1700 is - indicate the taxable yea covered by the return

RDO code of Batangas is 058

The primary purpose of taxation to achieve social and is: to raise revenue that will be used in defraying government expenses/

Who are the parties in a check? Drawee, Drawee bank, Payee `

What is the purpose of adjusting entries in accounting as illustrated in accounting cycle above?-- To ensure that all accounts conform with the
accrual concept. According to the accrual concept, at the end of an accounting period, all income and expenses must be updated in order for
the books to balance.

It is imposed on net profits, computed as the excess of receipts over allowable costs.-- Corporate income tax

What is the device used by an accountant in place of a ledger?-- T- account

On preparing bank reconciliation, a debit memorandum indicating DAIF check is:--deducted to the book balance of cash

The tax due is determined using the table . The taxable income is 80,000. How much is the tax due? --- P10,500
3

TAXABLE INCOME COMPUTATION OF TAX DUE

OVER BUT NOT OVER RATE

0 10,000.00 5%

10,000.00 30,000.00 500.00 + 10% of the excess over 10,000.00

30,000.00 70,000.00 2,500.00 + 15% of the excess over 30,000.00

70,000.00 140,000.00 8,500.00 + 20% of the excess over 70,000.00

140,000.00 250,000.00 22,500.00 + 25% of the excess over 140,000.00

250,000.00 500,000.00 50,000.00 + 30% of the excess over 250,000.00

500,000.00 125,000.00 + 32% of the excess over 500,000.00

Preparing bank reconciliation statement

 Reconciliation is an important process to ensure company's balances are stated correctly.
 Reconciliations should be prepared timely, by knowledgeable employees, and include detailed analysis of reconciling
items.
 Reconciling items should be adjusted in the ledger when deemed necessary.
 Proper segregation of duties should be put in place for the reconciliation process.
 Items on the bank statement but not in cash accounts need not be posted to accounting records.

You have received your July 2016 bank statement. The July 31, 2016 cash balance in your accounting books is P234,000 while the cash
balance shown on the bank statement is P430,000.00. You determined the following reconciling items. Credit Memo P190,000 Debit Memo
P30,000 Deposit in Transit P50,000 Outstanding Check 86,000

What is the adjusted book balance?-- 394,000

What is the adjusted bank balance?-- 394,000
How much is the total additions based on the bank statement-- P190,000
The bank statement shows: the beginning balance, additions, deductions, balance at the end of the period

The bank statement is issued by the bank to all its depositors and is usually done on a- monthly basis

The credit memos are additions (bank credits made by the bank to the depositor’s bank account but not yet recorded by the depositor
 collections made by the bank on behalf of the depositor
 Interest Income earned by the depositor
 Proceeds from loan directly credited or added by the bank to the depositor’s account

It can be defined as an accounting book of final entry where transactions are listed in separate accounts. Ledger contains many accounts
(normally known as T- accounts) because of its resemblance to the letter T. The transactions, which are recorded in the journals, are grouped
accordingly and transformed to the corresponding correct accounts in the ledger. This process of recording data is known as posting- ledger

These are intended to provide an incentive for the depositor to save money. The depositor can make deposits and withdrawals using the form
provided by the bank, have a passbook, in which transactions are logged in a small booklet that the depositor keep. The bank charges a fee if
the balance falls below a specified minimum.- Savings Accounts

Today , you are going to withdraw P1,000,000.00 from your BDO savings account with bank account number 0123456789. When you should
sign the space provided under “Payment Received by”--upon receiving the money in the presence of the bank teller

Which of the following are the nature of bank reconciliation statement?

 It is normal for a company's bank balance as per accounting records to differ from the balance as per bank statement.
 The difference between these figures is the reasons why companies prepare a bank reconciliation statement.
 Bank reconciliation statement is a report which compares the bank balance as per company's accounting records with the balance
stated in the bank statement.

A check that has not been encashed for a period of 6 months or longer from its date is called:-- stale check

Per NIRC 1997 Chapter 6 Section 32 A List of sources of gross income, Interests is generally subject to:- 20% final withholding tax

What are the deduction from Gross Income- Basic personal exemption and premium payments for Health/Hospitalization Insurance

What is the maximum allowable number of qualified dependents for additional exemption of 25,000? --- 4