nt : 7 6 UNIVERSITY OF THE PHILIPPINES mh ete mt T COLLEGE OF ASCOUNTAHCY “R660 2010 = Basle Princlpjos of Financial Accounting, Pet oN, SS RIOTERM DEPARTMENTAL EXAMINATION - - wee . . " : . ql roctlois Choose" st afgwe! and shade the lotier-of your cholce In tha, answor sheet owed. eaitiae' tat alowed ‘Show aii supporting computations In the workahast provided, Always obset @ she human's bost polley during tie exarnination, : ? . TESTE: ‘basis of accounting, thw offacts of raasactlons 1nd other evants are: Stded In the book whon curit is recetved or pald but reported In the financial nants when thay occur . reso ja the book nd raportad ft the financial slelements when they occur, Wacordad in the, bock whan liey occur but reperiad in tse financial statentents: janarenth le rocalvedor pd = *, GBPRecoited in the veok enw ropevted in the tnanell statements whan cash 1s “afecalved or pald : cen 2; Acdording (te rutow of Uobtt ured eewit; wine of tho following Is eorroct? 1.one Habllity account hus! bsvis cobitsd another Nabillly account meybe credited rovenue and expenses are recorded by dobit and credit respectively ned on account fo fuccrded hy dabl to. accounts payable und credit to count * . ‘An asset acquired by Issuing’e hole requires a debi to drawing secount and. credit to notes payaie xecount 7 Intha post closing tl balenae?: : med rental Income ful agcount expense ‘prepares revorsing untios al the Luginniag et the wecuuntin te, ‘adjusting enuies-propared by Talim’ Polnt Company whould entry to take up the eomad nortan uf ront collgctod in advance ‘Stilty to.teke up the oxpiiod portion of du Insurance promium paid In odvenca ry to,take up the unused supptios ut the end of ‘agcounting perlod: " intry to record depraciation cf a fixed essot weeks 5. Upon reviewing the werkshea! ct Makanibong Conipuny, you found out that : column.of. the; Income’ Statement fs P515,000 and the tolat ¢redit column. 9 Pe81000, Whi tha following stataments is cotrsct? . ° . Tlior s'a tenspoakton error that should be cerrectou' "+ The Eompany’s oporetion rosuiiud (9-2 nut Income ‘The Comparty’s operalion rosultes! tc anutloss — * : ined er ate 2 nai incoma which Is extend to the deblt eclumn of ag DERM : Feta igri fiize the. coneumplion of preauid yxpenwon wit : oO hat lacome ond asso! Copllal seid understules llabhity . . ‘(Undgtstatss net income and overstatus asset 5 8 a, foc! fablity but overstuies expanses, feyoniies 49 the accounting period. In, whlch tae services ere parformed and fhe eccounting period in which they ware usod Ie known ae the itinutty Concept : : : Matching Principle, ‘Aeedulating Period | lod Concsipt i steps may 9 omitted in tha complation of ihe aecounting cyclo? Proparalion of Financial Slatemants . ? Cortaln adjustments are revoraed * “Posting of entrlas 10 the lovgor ‘Adjusting entries are journslized z “Assign coxpanses, iing the bal belance . her 19 wand posting the closing entles <7 comglesng the worksheet : 33. The crogit column total is greater than the debit column total In the Income statement column of the 5 that " ee ee ofthe aojusted tral balance 2, mistakes were made In the prepar poe company had 2 net income Z the Income Summary account wil have a debit d, the company had a net toss : ‘accrued expense is required when orate Sen se Is recorded as cash Is peld bolance ofter the nominaé accounts are closed 4. An adusting % ‘2. cast is paid betoré the expense Is incurred Gy, expen: «GBA Dad alr the expense s evred “BP none oF ese 15, An adjusting enby for accrued revenue is required when aor received before the revenue is eamed , revenue Is recorded as cas is received G7 cass recelved after the revenue Is earned one of these = J 16, Acjusting entries are netessary In order to . '2. meszare property the income forthe perd_¢. update the balances of Fablity accounts i. update the balances of alset acccunt a of trese 17. The entrles necessary to eilminate the balances ef the nomMnat accounts In ofder to prepa re them for the next aecounting period. du, adjusting entries , <) c réversing entries Edtiosng erties 2 ¢. journal entries mn a tersnt, for rent of office The tenant will occupy the 18, During 2010, @ company collected P60,000 as advance payment fron de at the end of 2010.00 space. The accountant credited Rent Revenue as the cash was received. space starting the Second week of January 2011, No adjusting ery Was vance payment. The fallure to adivet the bodis would couse a. Assets to be overstated on December 31, 2910 b._ Llebitties to be overstated on December 31, 2010 ‘Qviner’s equity to be overstated on December 31, 2010 ‘Owner's equity to be understated on Decembar 32, 2010 J _ 19. Rich Company uses the income statement 2 Sct ones ue approach to record prepaid Insurance, Accordingly, which a Rich will never need to prepare adjusting entries for Unese iteras b. Rich will initially record a one-year Insurance polcy as a debit to Prepaid Insurance . Rich wif probably have an adjustment that debits Insurance Expense “A; Rich will probably have an acjustment tat debts Prepld Tnsurencea* 20. Which of the following Is incorrect concerning a worksheet? 2. Aworkstieet is a working paper used by acccuntant to facitate preparation of ficancial statements. b. Adjusting entries must be fournalized and posted, even though the Adjustments columns are woperly completed, the smount of net income appedrs as @ sredit in the Income Statement coluraa weien revenue exceeds total expenses.. yThe completed worksheet Is used to prepare formal financial statements, 21, Determine whether true or false T.1 Transactions not reorded In Ure journal can be detected by the preparation of tal balance. 2:1 The bal balance will balance 3.1 The primary purpose of the trial balance Is to credits after posting In the ledger. 4.1 The tial balance tests the accuracy of om even eae ye respectively a. false, false, tue and true respective c,. true, false, b fie’tue, false and false respectively Or true, true and false respecte ‘even If wrong accounts were used. . prove the mathematical equality of the debits and 2 term ther true or false at sat acauntng reongnizes revenues when they are eartied 2nd expanses when incurred regardless of sh flow,32. The following are all revenue accounts: _ G Proiessional Fees, Commissions Revenue, Interest Income, Tuition Fees ‘b._ Sales, Concessionalre Income, Advances to Employees, Earned Management Fees, c. Commissions Recelvable, Sales, Professional Fees, Management Fees di. Service Revenue; Professional Fees, Laundry Income, Unearned Repair Revenue 33. The basis why only Balance sheet accounts have Oe balances Business entity concept Going concern B. Matching mince (. Stable monetary measurement concept 34 Acompany whose ending capital equals P100,000, assets totalling P350,000 and expenses —— ‘summing up to P78,000 should have a revenue of how much to have a Break-Even? a P250,000 78,000 c P178,000 d_ P350,000 135. Which of the following company transactionswould affect the capital balance of the owner? A. The owner purchased office equipment and various supplies using the money he inherited tobe used in the business tary * B, ‘The owner purchased gasoline for his personal vehicle when he met with various elients to Wigavoane promote the company z JwiestY Che owner paid half of the company’s promissory note using the money he has invested in Fad thefiemsioes papite, becom : é__ D. The company received various bill rom varlous service company, fike MERALCO & SMART (es! down) "allot theabove (By 48,0 € OnyB = d Onlyc e. OnlyD. cen 36 Which ofthe following are all source documents x 4 a Official receipts, invoices, stationeriesn _¢ _—Promissory note, cash register, checks } @ Bills, cash register tapes, invoices d. Allof the above 37_ When an erroneous Journal entry has been committed, the bookkeeper - 2 Should journatize and post a correcting entry if the erroneous entry has already been posted Could draw a line across the wrong entry and write the correct title or amount if the erroneous entry has not yet been pasted Could do Aor B @ = Cannot do A nor B 38 Acredit to the Account Receivables could mean + @by 4 a AnInvoice or a Billing statement was sent to the client for services rendered 'b Promissory Note is issued to cancel the uncollected account © Collections from credit customers Band @ Allofthe above ye! at 39° ifthe: sepseef parton ofthe Supplies has not beso : esfatet a Ending Capital will be understated Assets will b 5 e overstated X ~ 'b tiabilities will be overstated KX ne d= Net income will be nlerpoted 40 The entry to record the payment of Un; iti paid Utlities has been account anda credit to cash. if no correcting entry is made srroneows lere will be no effect on Capital. ly debited to the expense ‘the partial payment. The net effect on the i it 2 0,0,0 b OU,U Cr 42 The Buenavista Corporation has received a check for the use of the Eve nights at P2\595 per night However the bookkeeper recorded It as a collecne nn ed for 3 collection of an old account/ a4: Marcotio, ownar of PGT Company, reiwhived pvlunsichol neview 10 a client a {ulal lwo of J Btp000. Ho tecelved Gash pl 26,000 ond uw AS-ery pronianury ruta fox the balance, Wha would Fa the nitert‘al thig Wansoetion in the owner's cellu! wie itty uecour? | ‘Increase enplt by P75,000; Incraase Iliiity by PEC.GOC SP cape (ncrnase capital by P28,000; Incroone Lablllty by’ 60,006, Wve aby P25,000, no atloct ia labilty . al by P78,000; no offas! i nblty ‘4 ber oe aS An veeuutig tina on Far, +4, 2014 vet offeo aippllos of P10,000. During the ‘pont, Wo tim purcheyn aupplee wor (20,0 Cn Faurycry 28, supplies on hand totalag to 24,000, Suppllas axpana for tha period is 24,49 . 124,000 145 000 °29,000- uv 24,000 . ‘ on “8 On Junuory {, 2011, PEYUP] Company purchased @ one-yoor insurance polly for Pho, (On that dale, the bookkeeper deblied the prepaid Insurence account fer P18,000. If the co: pany Sesires fo propor financial abpternonts’ ai the ed of January 2011, the Stateme't of Comarehensiva tnconte would show ingurancr axnenss cf 300 . P18,009. 0m 0. : PH,890 yo 47. Tha batince pf wccumulaled daprecivtion account Helure adjustirig antrios ware prepared i& P426,000, The dapreciation expanss:fer Yio yoor is 25,000, Hove much 18 (Ko book valus ef the company’s lixed-asdat If ts cost Ig P626,0007 sa . 7 400,000 425,000 }P975,000, : 56,00 48° Tallm Island Business Soiviens, a newly urgshi wan a nay urginizo coneulting finn, listed the folly Yorn regarding Is newly acqurod fred ashes i e Conroe paulement. costing 1°250,000 with eullnwled awolul Iie of B years, _ ZayzTe value oF'P22.000. The comauier equipment wow: purchaeed on Apr 1, i + OR, Fobuary 28, 2011, thy comps 5 eutinatad useful ita a's yen neni _fuctawadturvio ond Aisles wth "Thiesoamnaa eal ‘valuy of P5,000, Renn iamreciaala eos 9F P13§,009 end extimatod statements for ha yen ended Doccmer 32011 ace naga swan Sth depreciation bor 31,2071 ‘The ompany Uvee te Seelgh Line Makiod ot How much is tho, dapréetation uridine tha ‘ fon anual is tne Gproctaon oye tal Ur cuiay wil apo om yar FM hid Ho '3 26,000 ape . b. P16,760 : geomss vei Fad imuca pe teenaten Jn #48, the depreciction uxpurse on Deconber 3, 2011 kc 2. 21,000". oe ¢.20,000 b.pigee7 MerGed ‘pang . : 50 On December 31, 2011, an adjusting erty was hiado for ti tant August 1, 2011, How uch ie be payran mode he Sobparg ae youtand jeeing entty nadia was: Debit Rent Expense ~ P47,500; Cradit “repaid Rent = P47,600 : 3. 7114,000 : 3, P142,600 P.95,050 3. 228,000 .2'@F the commissions income account Ino'uder Pas ton sr ions tacolved in 10, tafrigerstors. AS of Deceraber-31, 2011, ofly.4 refrigsraiors ware sold. Of iS ws T RG shown as hapity ay of December 21, 20117 : may 15.900" (ion 2 3 PAS a, for furniture ond «52, Tha. prepaid’ edvertsing account haw 1 delat Ualuncy of 1449.04, hich roprosanis tha advange paymant of o your ‘contruct for a autor anount af sipaco by ot inecullve lssuos of wookly publiculjon. As ‘of December 31, udveilisinonts had -appoumod ty 18 tsoues of the puibhontion:Tha 1 X ‘on Decamber 34 will metsdis: " : g. A dab to prapald advertising tor P.19,060 ° 44k * ‘advertiaing (or 248,600 ‘4 ea “A ctodit ly prey x dani vo udveriaing expense for PO4190 * 44,16 Arad to advertising exnenvo for POAC Gy, fhrovided. Jolem Solving. (2 points each) Show al supporting computations in he worksheet pi i 6. Pr : i dof the year appear Jness at the beginning and at the en x srpeae 4. ‘The total assets and the total Habilties of @ bus! ning and a a edo a , * cease buring the yea, the owner had witndrawn P 24,000 for oa : be ahi Utara 34, The net income reported on the income statement is P 20,000. However, ad} hee Bret Gece t, 202 De man fae AGAR omount of net income during 2013, assuming that as of Se eT Fe eaan0 the business. _ Taveninet ol TSUDA THEBES. By. M4: ge) Pa, Beginning of year 385,000 P 190,008 ane Bg a End of year Spe000, 390000. Age a ae me 000 re Yor net income ot? 54,000 e Dyed (patente mae Siediossces rk i |As of the end of kts accounting Gstan Deri tesle ear and eer fDi Perma CamBET: AS Oe 00 During ‘withdraw P 30,(00 from the business. What is the Te or 3 28, aoe ware PS50000 ar $018, the ower invested an additonal P 80,000 and 0007 ees oo cP 165,600 d, P725,000 8 ir me Celies Company hes P 40,000 in revenues, P 88,000 In expenses, P 24,000 in owner investment, G05 in guna wtidrowal, and P 30,020 In lables paid oF. Oumar acuity changes by P SOO00 desteone bP 48,000 decrease ¢. P.24,000 decrease dP EO decrease yyw — Ga ,on fend = GO & Cro.) sting entries have not ‘been made et the end of the period for spplias expense of P 2,500 and accrued safeties of P 3,400. Net 109 oomected. Pek t09 ». P9560 «P5900 @ P97.600 Porm ~Bi¥9) — 9.900 = Gedy | 35. Lakers Company reclved a 12% 90 day note from Knicks Company amouring to 300,000 In seteent ofan acceunt. The ncte fe dated Nov 11, 2013. Lakers Company's adjusting enty fo record ecerued intrest on Dacember 31,2045 Tiarestexpense 5,000 @ intrest aceivadla 5,000 inforestpayabie 5,000 interest revenue 5.000 b Inferestenperse 9,000 4. interest receivacic, 2,000 Interest payable 000 Inferestrevonue 8.000 i | Freie .e 36. _ Blazers Company reported total révanues of P 262,000 for 2013; total Kabiltes as of December 31, 38, 39. 2013, P 420,000; net loss for 2013, P 64,000 and 2013 total cash payments of P 222,000. The ieee ncoa ens ty. Gi 306000 4. 372,000 . i mya Line adie gdm n imurant oe 0 covenants dh F 0) ca P2400 faa from a bank. After these transactions were completed, tHe total assets, total labilties, and tolel owrer’s e2uiy of busines ra 4: Lee 2, 126,000; 70,000; $6,000 respectively . 86,000; 64,000; 32.000 respect = CE? .000; 420006, c00 respecwely” —°—<.65,000 4,000; 56,000 respond Vm: ‘The Cash account ledgar of Heat Company showed the following datz: ato, 2a! aah, December 31,2013 P7600 one pie Baha PG ‘oat colectons Fae | Here SET AEE G0) 08 te ‘Total payments ‘80,000 L prymtnde Pe FS Taro Ton ‘The company's January 4, 204g cash balance (orfial was haze! pot are Tey a. P 100,000 credit 100,000 debit € B40,080erecit P 49,000 debit, Nos. 36 to-41 are based on the folowing date: i {Te sccovnts nthe eager of Pacers Company ate sted in spiel der, All accounts have rermal r ‘Accounts payable 3007 ~% Owner's equity 2,800< ° ‘Accounts receivable 400 Prepaid Rent 400 . Accrued utilities 100%. % Rent expense 180. Cash 41,500. Uneamned feos 200 & : Drawings 200 Uslties expense 50K - Fees earned 4,800. Wages expense 350 : insurance exgense 250 on ted Land 2.000 Ck pe vi ’ Ov Yom © Te. up FUR eee ley Qt nah (> GW oop © o bane lep Ye aPOLYTECHNIC UNIVERSITY OF THE PHILIPPINES COLLEGE OF ACCOUNTANCY AND FINANCE ‘ACO 2016 Basle Principles of Financial Accounting P-1 MIDTERM DEPARTMENTAL EXAMINATION AUGUST 10, 2014 A. Shade Af the statement is correct and shade B ifthe statement is incorrect, (1 pt, each). F 1+ Theterms of bookkeeping and accountng ae synonymous. ‘Under the business entity principle, the owner and the business that he formed are considered as one F2 inseparable entty. FF 3 Receiving payments on an account receivable increases both equity and assets. 4, An equipment purchased at the beginning of the year 10 years ago costing P $00,000 with an annual FA Gorcstion dia of o% vill bo shown onthe baunce shoe} fie fo of Ws year as "Equipment-P 500,000 and Accumulated Depreciation-P 250,000". P20) P 5 tenet income for a business was P 175,000 for a period of time, withdrawals were P 40,000 in cash during. the same period, and the owner made no investment during the period, the owner’ equity increased P 215,000 during that same period, P/31°R TJ & Revorting tne expiration of a prepaid asset results in the reduction of the asset account and an increase in the related expense account, GPP7T brcreases in asset and decreases in revenue accounts should be entered on the fet side of a T account, T 8 Theuse of an asset which is depreciated over time is en example of an internal Iransaction. T 8 All adjusting entries invoive one entry to an income statement account and another entry to a balance ‘sheet account F 10. In the tal balance, the equality ofthe debit and crect totals provides a complete prcof that no error has been committed F 11. Revenue is accrued upon the receipt of cash from the customer, T 12. Anexample of deferred revenue is Unearned Rent, T 13. , Deferais are récorded transactions that dey te recognition of an expense or revenue.” F 14. Tho firm should use different accounting method from period to period to achieve comparabil Regi within a single enterprise. m iy oebine F 15. if the adjustment for accrued utilities at the end of the period Is inadvertently omitted, both llabil ‘owner's equity will be overstated for the period. = ¥ vba lapis and B. Choose your best.inswer and shade the letter of your choice. (1 pt. each). 16. The revenue recognition concept: ‘2, isin not in confit with the cash method of accounting @ > = ®. Debit Prepald Advertsing, 3, 2p Seliyd 6. Debi ~ Advertsing Expense, 2,796 Grech Prepaid aneene 279 799 © PMO. xeebe 25) Dent= Progeny Aeegang 2Gmh Grech Asvetsng bet, BOeT © Rey Eee a SS 59. The Ikot Transpo received @ check for the rental of 3 SUV's for the Prep School's series of fielitrips amouning fo Pte4 800. Ao of Decener 31 2019 aut of bw 8 sotded fee Sees ae es yehlles, hey were cnly abi to service he schol for was, The ating entry on December 34, 2013 = ‘ok gee . Debit Accounts Receivable, 95,750; Credit ~ Rent Revenue, $6,750 Rut Rony 1h. 2 © CB dabt~Unesmca Rem Revenue, BA 7S0" Grade Ret ere ae yan, MaMed Bee (Oh : "Pipe & Pept Uneamed Rent Revenue, 38050, Code Rene Revene, 58.065 i ral is: '— Accounts Receivable, 68,050; Credit- Rent Revenue, 58,050 4 La 37 m pots EON Poipu 47} deus) {MT rne company purshésed an equipment on November 4, 2013 aneuntng P2:0000 GuRi = Teun MOTEL Payment of P50,000 and the balance on account Issuing a 12% 180-day eomiseery Note dated Rovemter 16,2013. The adlustng enty on December 31, S013 woul be Sypreee VV = flg me, Debit interest Expense, 6,300 ; Crecit= interest Payable, 6 3C0 xr hy | Debit Interest Expense, 2,400 ; Crecit~ Interest Payeble, 24¢0 iat Debit ~ interest Expense, 9,600 | Credit— intrest Payable, 816¢0 I d. Debit - interest Expense, 750 ; Oredit~ interest Payable, 750 ee 61. The Gilingglling Company used the asset method in recording the payment of Rent amounting to 'P42,732.00 applicable for the period October 1, 2013 up to April 30, 2014. How much would be the difference between the adjusted balances of the Prepaid Rent account using the Asset method against that using the Expense method for the year enceg December 31, 2013? a. P7,122.00 b. P 28,488.00 P.0.00 4. P.24,386.00 un