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1. On December 1, 2018, the accounts receivable has a balance of P62,000.

During the month, collection

amounting to P150,000 was recorded. If the amount of Accounts Receivable is P 24,000, how much was
debited to accounts receivable during December?

a. P188,000

b. P88,000

c. P112,000.

d. P126,000

2. At the beginning of the year, Calix Janitorial Services has a cash balance of P50,000. During the year,
the company received the following:

A. Cash customers for services rendered, P420,000

B. Payment from customers, P100,000, although total services rendered on account during the
year is P230,000.

C. Proceeds of loan from Banco De Oro, principal, P50,000, service charge and interest of P5,000
was deducted in advance.

Total payments for the year are as follows:

A. Operating expenses, P250,000

B. Payment to suppliers of cleaning materials all on cash basis, P75,000, of which only P5,000 left
unconsumed at the end of the year.

C. Payment to Westinghouse for laundry equipments bought, P50,000.

The activities of the year resulted to:

Net increase in cash Net increase in capital

a. P240,000 P375,000

b. P190,000 P325,000.

c. P235,000 P380,000

d. P185,000 P330,000

3. I. The accounting equation Assets = Liabilities + Owner's Equity is not the same as Assets = Net Assets
II. Payment of a liability will not affect total assets but will cause total liabilities to decrease.

a. True, False.

b. False, True

c. Both True

d. Both False

4.Which of the following affects only the right side of the accounting equation?

a. The owner withdrew cash for personal use

b. The owner purchase office supplies on account

c. The owner borrowed cash from the bank and issued promissory note

d. The owner recorded an expense that is payable in the next accounting period.

e. None of the above choices

5. The accounting equation can be rewritten as:

a. Assets plus profit less drawing less liabilities equals closing capital

b. Assets less liabilities less opening capital plus drawings equals profit.

c. Assets less liabilities less drawings equals opening capital plus profit

d. Opening capital plus profit less drawings less liabilities equals assets

6. At the beginning of the year, the total assets of ABC Computer Shop is P200,000 and total Capital of
P140,000. During the year, ABC Computer shop recorded total revenues of P350,000 and expenses of
P130,000, purchased additional computers for cash, P25,000, paid accounts to suppliers, P20,000 but
purchased additional set of computer on account before year ends for P40,000.

What are the balances of Assets, Liabilities and Capital at the end of the year?

a. P350,000, P10,000, P340,000

b. P440,000, P80,000, P360,000.

c. P400,000, P20,000, P380,000

d. P350,000, P50,000, P300,000

7. A company recorded accrued service revenue of P25,000 for services already rendered. What is the
effect of this adjusting entry to Cash and Service Revenue of A Company?

a. Cash will increase and Service Revenue will increase

b. Cash will not change and Service Revenue will not change

c. Cash will increase and Service Revenue will not change

d. Cash will not change and Service Revenue will increase.

8. If a P25,000 adjustment for depreciation is recorded twice, which of the following financial statement
error will occur?

a. Assets will be overstated

b. Expenses will be understated

c. Profit will be understated.

d. Equity will be overstated

9. Failure to recognize the consumption of prepaid expenses will

a. Overstates net income and assets.

b. Overstates capital and understates liability

c. Understates net income and overstates asset

d. No effect in liability but overstates expenses

10. Costales Company received a bill for the period from PLDT. The bookkeeper recorded it as an
expense but no payment is made yet. What would be the effect of this transaction in the company's
financial record?

a. Decrease in assets and decrease in liability

b. Decrease in assets and increase in liability

c. Increase in liability and decrease in capital.

d. None of the above

11. The depreciation reported on the Heavy Equipment of Payala Land is P71,500 per year. The heavy
equipment had an original cost of P785,250 and its expected economic life is 10 years. What is the
estimated salvage value of the heavy equipment?

a. P71,500

b. P70,250.

c. P78,525

d. None of the above

12. On September 1, 2018, Michael Anjelo Learning Center paid rent of P48,000 for five year advance
rental starting on the same date. The bookkeeper recorded the payment debiting Prepaid Rent and
crediting cash for P48,000. If the fiscal accounting period of Michael Anjelo Learning Center ends March
31 and all adjusting entries are prepared on this date, the appropriate adjusting entry would be:

a. Debit to Prepaid Rent and credit to Rent Expense of P5,600

b. Debit to Rent Expense and credit to Prepaid Rent of P5,600.

c. Debit Prepaid Rent and credit Rent Expense of P4,000

d. Debit Rent Expense and credit Prepaid Rent of P4,000

13. An error wherein there is a correct amount but wrong title.

a. Errors of omission

b. Errors of commission

c. Errors of original entry.

d. Error of principle

14. I. Closing entry is the process of bringing the balances of all accounts to zero.
II. Post closing trial balance includes temporary accounts only.

a. True, False.

b. False, True

c. Both True

d. Both False

15. Arrange the following accounting cycle in proper order.

1. Journalizing business transactions

2. Preparing post closing trial balance

3. Preparing unadjusted trial balance

4. Preparing worksheet

5. Journalizing and posting adjusting entries

a. 1, 5, 4,3, 2

b. 1, 3, 5, 4, 2.

c. 1, 5, 3, 4, 2

d. 1, 3, 4, 5, 2

16. National Company presented the following information about its operation:

Cash P105,000

Accounts Receivable P85,000

Equipment P150,000

Accounts Payable P66,000

Fees Earned P220,000

Other income P5,000

Drawing P12,500
Rent Expense P25,000

Salaries Expense P50,000

Interest Expense P5,500

Advertising Expense. P32,700

Any difference between the total debits and the total credits pertains to the owner's capital (all
accounts are in normal balances).

After closing the revenue and expense accounts, the balance of the income summary is:

a. P113,800 - credit

b. P111,800 - debit

c. P111,800 - credit.

d. P113,800 - debit

17. After posting all the closing entries, the balance of the owner's capital account would be:

a. P271,200

b. P283,700

c. P274,000.

d. P113,800

18. Reality Company records collections of cash received for services scheduled to be performed the
following calendar year as debit to Cash and credit to Unearned Service Revenue. The pro-forma entry
to adjust the unearned revenue account at year end should be:

a. Debit to Unearned Service Revenue and credit to cash

b. Debit to Earned Service Revenue and credit to Unearned Service Revenue for the amount received

c. Debit to Unearned Service Revenue and credit Earned Service Revenue for the amount received.

d. No adjusting entry required

19. At the beginning of the year, a company had Accounts Receivable of P220,000 with Allowance for
uncollectible accounts of P2,500. At the end of the year, the accounts receivable has a balance of
P300,000. It is the company's policy to provide allowance for uncollectible accounts equal to 5% of
accounts receivable.

The doubtful account expense for the period is?

a. P15,000

b. P12,500.

c. P17,500

d. P11,000

20. The following balances appeared in the general ledger of David Del Rosario Law Office at the
beginning of the year:

Office equipment, P150,000

Accumulated depreciation, P30,000

New equipment was installed on April 1 of the current year with a total costs of P80,000. All equipments
are depreciated at 20% per year. The depreciation expense for the year is?

a. P158,000

b. P42,000

c. P12,000.

d. None of the above

21. Santa Maria Hotel purchased two fire insurance policies for its newly constructed building, details of
which follows:

Policy Date of purchase Coverage Premium paid

1 April 1, 2013 24 months P60,000

2 October 1, 2013 36 months P108,000

The bookkeeper debited Insurance expense for the premiun paid. What is the adjusting entry
required on December 31, 2013?
a. Debit pepaid insurance of P31,500

b. Credit to Insurance expense of P136,500.

c. Debit to insurance expense of P31,500

d. Credit to Insurance expense of P99,000

22. Anjelo Michael, the accountant of Bautista Tutoring Services failed to record the following:

 Accrued utilities of P2,500

 Service fee earned but not yet received, P5,100
 Supplies consumption of P1,550
 Payment of fire insurance for the next accounting period, P1,200
 Owner's additional investment of P3,000

What would be the effect of the above omissions in the net income of the company?

a. Overstated by P150

b. Overstated by P2,850

c. Understated by P150

d. Understated by P1,050.

23. The adjusted balance of Service Revenue on December 31, 2018 is P624,000. Two adjusting entries
were made on December 31, 2018, one for unearned service revenue of P124,000 and another for
accrued service revenue of P234,000. How much is the balance of Service Revenue account before

a. P734,000

b. P858,000

c. P514,000

d. P500,000

24. On June 1, 2018, Jerome Ganda Dental Clinic recorded payment of P120,000 for 10-months
advanced rental on its clinic starting July 1, 2018. What would be the adjusting entry on December 31,
2018 if the company reported the payment as: Debit - Rent expense and Credit - Cash for P120,000?
a. Debit Rent expense and credit prepaid rent of P84,000

b. Debit preapid rent and credit rent expense of P36,000

c. Debit prepaid rent and credit rent expense of P72,000.

d. Debit rent expense and credit prepaid rent of P72,000

25. On December 31, 2018, an adjusting entry was made for three year prepayment of rental paid last
August 1, 2018. How much is the payment made by the company if the year-end adjusting entry made
was: Debit - Rent expense and Credit - Prepaid rent for P47,500?

a. P342,000.

b. P294,500

c. P142,500

d. P228,000

26. Ending Accounts Receivable - P8,000,000

Cash Sales - P4,200,000

Credit Sales - P 5,800,000

Beginning ADA (cr) - P15,000

Write-off - P2,800

Recovery - P6,000

What is the beginning accounts receivable?

a. P6,402,800

b. P8,002,800

c. P4,202,800

d. P2,202,800.

27. Beginning accounts receivable - P1,240,000

Credit Sales - P300,000

% of accounts receivable - 2%

Beginning allowance (cr) - P80,000

Doubtful accounts expense - P12,000

Recovery - P6,500

ADA end - P22,500

Compute for the ending accounts receivable.

a. P1,464,000.

b. P1,466,300

c. P1,472,800

d. 1,470,500

28. The ledger balance of Office Equipment and Accumulated Depreciation on January 1, 2018 is
P165,000 and P38,000 respectively. On October 1, 2018, another acquisition was recorded in the
amount of P30,000. All Office Equipment are depreciated at 10% annually.

What is the book value of the Office Equipment on December 31, 2018?

a. P139,750.

b. P156,250

c. P177,750

d. None of the above.

29. The Service Revenue reported by a Service Company is P480,000. This amount includes P38,000 for
services not yet rendered and P42,000 accrued revenue for services already rendered.

What is the correct balance of the Service Revenue account and Unearned Revenue account?

a. Service Revenue, P442,000 and Unearned Service Revenue, P38,000.

b. Service Revenue, P438,000 and Unearned Service Revenue, P42,000

c. Service Revenue, P400,000 and Unearned Service Revenue, P80,000

d. Service Revenue, P480,000 and Unearned Service Revenue, P38,000

30. The adjusted balance of Service Revenue on December 31, 2018 is P50,000. Two adjusting entries
were made on December 31, 2018. One for unearned service revenue of P12,000 and another for
accrued service revenue of P25,000. What is the balance of the Service Revenue account before the

a. P37,000.

b. P63,000

c. P25,000

d. P87,000