IFA T1

I. Multiple Choice
1.
II. True or False

IFA T2
I. True or False
1. Increasing expenses ultimately cause the equity to increase.
2. Withdrawals record personal expenses that are not related to the business. It is
a subdivision of owner's equity.
3. A credit will increase an asset and a debit will increase expense.
4. In the accounting equation, an increase in asset can be associated with an
increase in liability.
5. Land is subject to depreciation.
6. When an entity pays its employees for their services, the effect is an increase in
owner's equity.
7. An expectation of a future payment from a client for services rendered is a
prepayments.
8. Withdrawals by the proprietor is a reduction of the profit for the period.
9. Cash includes coins, currencies and bank deposits.
10. To record an increase in any given asset account, that account must be debited.

II. Multiple Choice

1. Hannah Angels bought supplies from SM. This is known as a _______ transaction.
a. Business
b. Economic
c. Cash
d. Financial
2. The double-entry recording rule states that every transaction, total debits must ___ total
credits. In addition, every transaction affects at least ___ ledger accounts.
a. Minus, two
b. Additions, one
c. Deductions, one
d. Equal, two
3. The basic unit to record all business transactions.
a. T-account
b. Account
c. Journal
d. Ledger
4. It creates an outward or potential outward flow of assets.
a. Income
b. Expense
c. Liability
d. Prepaid Expenses
5. The transaction description 'on account' means a reduction of the asset ____ and reduction
of liability ___.
a. Cash, accounts payable
b. Accounts receivable, unearned income
c. cash , unearned income
d. Prepaid rent, accounts payable
6. An income accounts normally have __ balances. These accounts increase on the ___ side
and decrease on the ___ side.
a. Debit, credit, credit
b. Credit, credit, debit
c. Debit, credit, debit
d. Credit, debit, credit
7. Financial events that occur in a business are termed ____
a. Economic activity
b. Past events
c. Transactions
d. Business activity
8. In applying the rules of debits and credits, which of the following statements is true?
a. Liability, revenue, and capital accounts are debit for increases
b. Asset, expense and withdrawals are debit for increases
c. The word debit means to increase and the word credit means to decrease
d. Asset, expense and capital accounts are debited for increases.
9. When a business entity receives payment before rendering services or delivering goods, the
account is credited to
a. Income
b. Owner’s equity
c. Prepayments
d. unearned revenue
10. The future benefits embodied in an asset may flow to the enterprise in a number of ways.
Which is the exception?
a. An asset may used singly or in combination with other assets in the production of goods
or services to be sold by the enterprise.
b. An asset may be used to convert an obligation to equity.
c. An asset may exchanged for other assets.
d. An asset may be distributed to the owners of the enterprise.
11. Settlement of a present obligation may occur in a number of ways, for example, by:
a. Payment of cash
b. Transfer of other assets
c. Provision of services
d. Replacement of an obligation with another obligation
e. Conversion of the obligation to equity
f. All of the above
12. The accounting equation
a. points
b. is used to determine the amount of liabilities owed.
c. is used to determine the amount of income earned during the period
d. shows the claims on the entity's assets by both the creditors and owner
e. shows the claims on the owner's equity by the creditors

13. Expenses can be defined as

a. increases in owner's equity

b. decreases in economic benefits during the accounting period in the form of outflows or
depletions of assets or incurrences of liabilities that result in the decreases in equity.
c. decreases in owner's equity
d. inflows of assets from delivering or producing goods or rendering services.

14. Which is false concerning the rules of debit and credit?

a. The left side of an account is always the debit side and the right side is always the credit
side.
b. The normal balance of any account appears on the side for recording increases.
c. Increases in assets and expenses are debit entries, and the increases in liabilities, equity and
revenue are credit entries.
d. The word 'debit' means to increase and the word 'credit' means to decrease.

15. Recording a single transaction in the double-entry accounting records may

a. Increase the balance on an asset account by a given amount and decrease the balance
on a liability account by the same amount.
b. Decrease the balance on a liability account by a given amount and decrease the balance
on an asset account by the same amount.
c. Increase the balance on one asset by a given amount and increase the balance on
another asset by the same amount.
d. Decrease the balance on an asset account by a given amount and increase the balance
on a liability account by the same amount.

III. Transaction Effects on the Basic Accounting Model

For each transaction indicate whether the A, L & OE increased or decreased.
(Example: Paid rent. ANSWER: Assets (-) decreased, Owner's Equity (-) decreased.

1. Permanently reduced investment in the business by taking out cash.

2. Acquired office equipment paying 30% downpayment, the balance due in 30 days
3. Paid gas and oil.
4. Billed customer for services rendered.
5. Partial payment on the promissory note issued.
6. Made additional investment.
7. Received cash from various customers.
8. Paid salaries and wages.
9. Returned supplies purchased on account.Toggle as correct answer for Returned supplies
purchased on account.
10. Charged customers for services provided on account.

IV. CLASSIFICATION OF EVENTS & ITS EFFECT

Identify the following transactions as to its effects in the Elements of Financial

Statements. (Source of Assets, Use of Asset, Exchange of Asset, Exhange of Claim)

1. Decrease in asset and decrease in liability.

2. Incurred operating expenses on account.
3. Increase in asset and decrease in another asset.
4. Performed services on account.
5. Purchased new set of furnitures for cash.
6. Decrease in liability and increase in owner's equity.
7. Invested land for a new business.
8. Collected cash from the clients for services rendered.
9. Paid for a two-year insurance policy. (use prepaid insurance)
10. Paid the Ads Graphics billing statement. (the bill was previously recorded).

V. Financial Transaction Analysis

Below are transactions taken from books of Divine Grace Nursing Homes in defense of
COVID 19. (Example: Paid insurance. ANSWER: Asset - credit, Expenses - debit)

1. Made an initial investments: Cash P500,000 and Land P500,000

2. Acquired nursing supplies for P 30,000. Paying 20% cash and the balance on
account.
3. Purchased nursing equipment for P250,000 by issuing a promissory note.
4. Paid rental of nursing home, P30,000
5. Billed clients P167,000 for nursing fees.
6. Hired 3 new nurses, 5 medical assistants and 1 doctor..
7. Received cash from various patients, P 150,000.
8. Paid the PLDT installation & 1 month subscription, P 2,299
9. Made an initial payment of P50,000 on the promissory note.
10. Received a promissory note from Patient A, P50,000.
11. Paid the salaries of employees, P180,000
12. The owner withdrew P25,000 from the business.
13. Received and recorded the billing statements from Davao Light, P15,000 and Davao
Water District P 6,800.
14. Received a bill from Wow Advertising for P12,500 for the advertising incurred during
the month.
15. Received P45,800 from various patients.

VI. Short Problems

1. 1. Beginning assets of Pussycat Dolls Services were P420,000 & its capital
investment was P280,000. During the year the liabilities decreased by P 40,000 and
the assets increased by P 80,000. How much is the capital at the end? Indicate
whether it is an increase or decrease. Example: 50,000:INCREASE
2. 2. High Five Services started with a capital investment of P 470,000 and an assumed
liability of P 160,000. During the year the owner's equity decreased by P 25,000 and
 the assets increased by P70,000. How much is the ending balance of Liabilities?
Indicate whether it is an increase or decrease. Example - 50,000:DECREASE
3. 3. Banana Logistics started with a total assets of P820,000 of which 75% was the
original investment of the owner. During the year, the liabilities decreased by 20% of
its original amount whereas the total assets increased by the same percentage.
What was the amount of change in owner's equity? Indicate whether it is an increase
or decrease. Example - 50,000:DECREASE

VII. Comprehensive Problems

COMPUTE FIRST BEFORE YOU ANSWER EACH ITEM.

Example for your answer: 10,000 (discard PESO sign)

On June 1, 2019, Teofila Albay, Optometrist, establishe the Albay Eye Clinic. Transactions
completed during the month are as follows:

a. Albay deposied P200,000 in a banck account in the name of the business.

b. Paid office rent for the month, P8,400
c. Bought supplies for cash P7,750
d. Bought office equipment on account from Dagupan Equipment, P91,800
e. Bought a computer from Del Rosario Office Outfitters, P18,400, paying P6,000 in
cash and the balance on account.
f. Performed professional services for cash P24,210
g. Paid accounts to Del Rosario Office Outfitter, P9,000
h. Received and paid the bill for utilities, P2,430
i. Paid salaries of the part-time assistants, P9,900
j. Performed professional services for cash, P25,150
k. Albay withdrew cash for personal use, P12,500.

1. Compute the balance of the Cash account at the end of June 30, 2019.
2. What is the balance of the Accounts Receivable at the end of June 30, 2019?

3. What is the balance of the Office Equipment at the end of June 30, 2019?

4. What is the balance of the Accounts Payable at the end of June 30, 2019?

5. What is the total assets at the end of June 30, 2019?

6. What is the total owner's equity at the end of June 30, 2019?

7. What is the total revenue for the month ended June 30, 2019?

8. What is the total expenses for the month ended June 30, 2019?

9. What is the profit or loss for the month ended June 30, 2019?

10.What is the amount of drawing as of June 30, 2019?

IFA T3
I. True or False
1. A simple journal entry consists of two debits and one credit.
2. Dates of transactions are included in the trial balance.
3. Posting refers to the process of transferring the debit and the credit amounts from the
journals to the ledger accounts.
4. A business bought a photocopier for office use. The payment was recorded in the
photocopying expense
5. A credit entry to an expense account will increase it
6. The chart of accounts is a system of organizing and numbering the accounts in the
general ledger
7. The process of recording a transaction in a journal is called journalizing.
8. The transposition error means a posting of a journal entry to the wrong ledger account
 9. The accounting cycle begins with the recording of the transactions and ends with the
preparation of the financial statements
10. Notes receivable are claims against debtors evidence by a written promise to pay a
certain sum of money at a definite time to the order of a specified person or the bearer.
11. Double posting of a transaction causes the debits and credit not to be balanced
12. A trial balance may balance but may not be correct
13. The sequence of the account titles in a trial balance depends upon the size of the
account balances.
14. Amounts entered on the left side of an account regardless of the account titles are called
credit or charges to the account.
15. The journal entry may include debits to more than once account and credits to more than
one account but the total of the debits must always equal to the total of the credits.

II. Multiple choice

1. Which of the following account probably would be listed in other type of classification in
the chart of accounts?
a. Unearned Art Fees
b. Prepaid Rent
c. Owner’s Capital
d. Art Revenues
2. Transactions are recorded chronologically in the _______________.
a. Ledger
b. T-account
c. Daybook
d. Journal
3. Which of the following statements regarding a trial balance is incorrect?
a. A trial balance helps to localize errors within an identifiable time period.
b. A trial balance proves that no errors of any kind have been made in the accounts
during the accounting period.
c. A trial balance is a test of the equality of debit and credit balances in the ledger.
d. A trial balance is a list of all of the open account in the ledger with their balances
as of a given date.
4. Of the following errors, which one will cause an inequality in the trial balance?
a. Failure to record a transaction
b. Recording the same transaction more than once
c. Posting a transaction to the wrong account
d. Incorrectly computing an account balance
5. A ledger is defined as a collection of _______.
a. Account Titles
b. All income accounts
c. All statement of financial position accounts
d. Transactions
6. The primary function of n account in the accounting system is to _______.
a. Store accounting transactions until they are classified
b. Identify the type of organization
c. Accumulate account information
d. Determine at what point a transaction should be recorded
7. The term of footing refers to the _____________.
a. Process of obtaining the top number in an account
b. Process of obtaining the bottom number in an account
c. Process of posting
d. Addition of a column of figures
8. Accounts in the statement of financial position are_________________.
a. Permanent or real accounts
b. Temporary or nominal accounts
c. Accounts with debit balances and credit balances only
d. Adjusting accounts
9. Which of the following business event is also considered a recordable transaction?
a. An entity hires an employee
b. A customer purchases supplies
c. An entity orders a product from a supplier
d. An employee sends a purchase requisition to the purchasing department
10. Which if the following does not directly or indirectly affect the owner’s equity?
a. Withdrawals of the owner
b. Revenues earned
c. Payment of liabilities
d. Incurring of expenses
11. Arrange the following items in the logical order of the accounting cycle. (1) record
transactions into the books of original entry. (2) prepare the financial statements. (3)
make-period end adjustments. (4) post transactions to the ledger. (5) prepare the trial
balance.
a. 1-3-4-5-2
b. 1-4-5-3-2
c. 2-1-5-3-4
d. 3-5-4-2-1
12. The amount of cash received or paid during a period is not an adequate measure of the
economic consequences of an organization’s activities because____________.
a. Many activities may not involve the use of cash
b. Cash inflows may represent the result of activities completed in a previous period
c. Cash outflows may precede or follow the activities with which they are associated
d. All of the above reasons are correct
13. Which of the following steps in the accounting cycle are listed in a logical order?
a. Prepare the income statement, statement of financial position and worksheet
b. Post the journal entries to the ledger account, prepare a worksheet and then take
a trial balance
 c. Journalize the closing entries, post the closing entries and take a post-closing
trial balance
d. Post the closing entries, take a post-closing trial balance then journalize the
closing entries.
14. At the end of an accounting period, the equation A= L + OE does not necessarily
balance. Which of the following actions balances the equation?
a. Subtract revenues nd add expenses to the owner’s equity
b. Subtract revenues from owner’s equity and add expenses to assets
c. Add the difference between revenues and expenses to the owner’s equity
d. Add revenues and subtract expenses from assets.
15. Without the use of a trial balance___________________.
a. Double-entry system will not be applied in accounting
b. Inequality between debit and credit balances cannot be easily found
c. Accounting ratios cannot be calculated
d. There are no other ways to identify whether there are any problems
16. Which of the following combinations of a trial balance totals suggest the present of either
a transposition error or a number slide?
a. 65,470 debit and 68,170 credit
b. 33,220 debit and 35,420 credit
c. 25,670 debit and 26,670 credit
d. 14,517 debit and 15,477 credit
17. If furniture is overvalued by 1,000 in the trial balance…
a. The total debit balance is smaller that the total credit balance in the trial balance
b. The total debit balance is greater than the actual credit balance in the trial
balance
c. The total debit balance is the same as the total credit balance in the trial balance.
d. The value of assets on the credit side of the trial balance should be reduced.
18. The first financial statement that is prepared from the trial balance is the
a. Statement of cash flows
b. Statement of the changes in equity
c. Financial performance
d. Financial Position

Journal Entries and Types of Transactions

1. Suppose an entity buys office equipment for 80,000. Terms 20% cash, 50% promissory
notes and the balance on credit. What should be the credit entry?
a. Cash 24,000, Notes Payable 40,000, Accounts Payable 16,000
b. Cash 16,000, Notes Payable 64,000
c. Cash 24,000, Account Payable 16,000, Notes Payable 24,000
d. Cash 16,000, Notes Payable 40,000,, Accounts Payable 24,000
2. Suppose an entity buys office equipment for 80,000. Terms 20% cash, 50% promissory
notes and the balance on credit. Identify the type of transactions.
3. Dy Pamela borrows cash from RCBC for 500,000 for the purchase of a piece of land. He
offered his building as collateral. What should be the credit entry?
 a. Accounts Payable 500,000
b. Loans Payable 500,000
c. Mortgage Payable 500,000
d. Notes Payable 500,000
4. Dy Pamela borrows cash from RCBC for 500,000 for the purchase of a piece of land. He
offered his building as collateral. Identify the type of transaction.
5. Shynet Majestrado made additional investment of 600,000 to her new HR Consultancy
Firm. At the same time, HCF used part of the money to repay the amount owed to a
credito and held the remaining amount of 400,000 in the bank account. What should be
the debit entry?
a. Cash in Bank 400,000, Accounts Payable 200,000
b. Cash 400,000, Accounts Payable 200,000
c. Cash in Bank 600,000
d. Cash in Bank 200,000, Account Payable 400,000
6. Shynet Majestrado made additional investment of 600,000 to her new HR Consultancy
Firm. At the same time, HCF used part of the money to repay the amount owed to a
credito and held the remaining amount of 400,000 in the bank account. Identify the type
of Transaction
7. Mar Macasayon, a sole proprietor, withdraws 5,000 cash from the business. At the same
time, he brings his computer with a value of 25,000 into the business. The debit henry
should be.
a. Macasayon, Withdrawals 5,000, Cash 25,000
b. Office Equipment 25,000, Cash 5,000
c. Macasayon, Withdrawals 5,000, Office Equipment 25,000
d. Computer 25,000, Cash 5,000
8. Mar Macasayon, a sole proprietor, withdraws 5,000 cash from the business. At the same
time, he brings his computer with a value of 25,000 into the business. Identify the type of
transaction.
9. Grace Lao had a contract with Centro Scholar for services to be rendered the following
year. She received in advance 50% of the total contract of P50,000. What should be the
journal entry?
a. Cash 50,000, Service Income 50,000
b. Cash 25,000, Service Income 25,000
c. Cash 25,000, Unearned Income 25,000
d. Cash 50,000, Unearned Income 50,000
10. Grace Lao had a contract with Centro Scholar for services to be rendered the following
year. She received in advance 50% of the total contract of P50,000. Identify the type of
transaction.

SUPPLY THE MISSING AMOUNTS

Beyonce(B) Swift(P) Ariana(D) Perry(S)
Dec. 31, 2018:
Assets P 900,000 P430,000 P450,000 P600,000
Liabilities 460,000 280,000 175,000 295,000
Dec. 31, 2019:
Assets 1,340,000 ? 560,000 685,000
Liabilities 775,000 225,000 267,000 ?

During 2019:
Additional investment ? 124,000 25,000 165,000
Profit 94,000 115,000 ? 72.000
Withdrawals 0 95,000 62,000 38,000

1. What is the additional investment of Beyonce as at Dec. 31, 2019?

2. What is the amount of assets of Swift ast at Dec. 31, 2019?
3. What is the owner’s equity of Ariana as at Dec. 31, 2018?
4. What is the owner’s equity of Ariana as at Dec. 31, 2019?
5. What is the profit of Ariana for 2019?
6. What is the owner's equity of Perry as at Dec. 31. 2018?
7. What is the owner's equity of Perry as at Dec. 31, 2019?
8. What is the amount of liabilities of Perry as at Dec. 31, 2019?
9. How much is the increase in the assets of Swift?
10. How much is the decrease in the liabilities of Perry?
11. How much is the net increase in the Capital of Beyonce as at December 31, 2019?
12. Who enjoyed the highest net profit for the year ended, December 31, 2019?
13. Who had the lowest net profit for the year ended, December 31, 2019?

Trial Balance - Supply the Missing Amounts

JC Ads Services
Trial Balance
December 31, 2019

Cash P 45,000
Accounts receivable 30,000
Art supplies 42,000
Office supplies 22,000
Prepaid rent (1 year) 36,000
Art Equipment 150,000
Office equipment 125,000
Notes payable P 50,000
Accounts payable 62,000
Constantino, capital 150,000
 Constantino, withdrawals ?
Advertising revenues ?
Salaries & wages ?
Utilities expense 26,000
Telephone expense 9,000
Miscellaneous expenses 12,000
-------------- -------------
======== =======

1. If the balance the drawing account was P10,000 and the payroll was P141,000. How
much is the total debits?
2. If the balance the drawing account was P5,000 and the payroll was P 98,000. How much
is the Advertising Revenues?
3. Consider that the Art Equipment is increased by P20,000 and cash decreased by
P5,000, how much should be the total assets?
4. How much should be the Advertising Revenues considering numbers 1 and 3?
5. How much should be the Profit considering the data in number 4?
6. If the trial balance showed a balance of P80,000 in the Salaries & wages, Capital is
increased by P25,000 and there were no withdrawals, how much should be the
Advertising Revenues?
7. If the trial balance showed a balance of P80,000 in the Salaries & wages, and
withdrawals of P10,000, how much should be the ending CAPITAL balance of Jenny
Constantino?

Short Independent Problems

1. An entity pays rental quarterly every January 3, April 3, July 3 and October 3 each year.
The rent was increased from P900,000 per year to P1,200,000 per year starting October
1, 2019. What rent expense and rent payable amounts should be included in the entity's
financial statements for the year ended December 31, 2019?
2. Telephone payment of P 7,800 was recorded in both the Telephone expense account
and Cash on hand account as P 8,700. What is the journal entry to correct the error?
a. Debit: Cash on Hand 8,700, Credit: Telephone Expense 8,700
b. Debit: Telephone Expense 8,700, Credit: Cash on Hand 8,700
c. Debit: Cash on Hand 900, Credit: Telephone expense 900
d. Debit: Utilities Expense 900, Credit: Cash on Hand 900

COMPREHENSIVE PROBLEM

Joana Lozada opened a plumbing service, Lozada Plumbing. Operations began on April. l, 2019, and the following
transactions were completed during the month:

April 1 - Withdrew P67,000 from a personal savings account and used it to open a new account in the name of
 LOZADA Plumbing.
2 - Acquired a service vehicle costing P81,000. A payment of P l7,500 in cash was made and a note
payable given for the remainder P63,500.
3 - Paid rent for the month, P7,150.
6 - Acquired plumbing supplies on account for P l5,700 from Glory Supplies Center (GSC)
7 - Paid for three months of advertising and recorded Prepaid Advertising in the amount of P 6,000.
8 - Cash in the amount of P l8,350 was received for plumbing services rendered.
9 - Acquired additional plumbing supplies for cash, P8,050 from GSC.
11- Paid salaries, P ll,600.
15 - Rendered plumbing services and billed Kyle Monte, P42,200.
16 - Paid P 5,700 of the amount owed to GSC from the transaction of Apr. ·6.
19 -Paid miscellaneous expenses, P4,300.
20 -Collected P21,000 from Kyle Monte on April 15 transaction.
21-Withdrew P14,500 from the business.
22 -Paid salaries, P14,100.
24 -Paid the first installment of the notes payable, P3,850.
25 -Paid telephone expense, P l,250.
27 -Billed the Clement Resort for plumbing services rendered, P14,150.

REQUIRED:

1. Establish the following accounts: Cash; Accounts Receivable; Plumbing Supplies; Prepaid Advertising;
Service Vehicle; Notes Payable; Accounts Payable; LOZADA, Capital;LOZADA, Withdrawals;
Plumbing Revenues; Salaries Expense; Rent Expense; Telephone Expense; and Miscellaneous Expense.
2. Journalize the transactions (omit explanation)
3. Record the transactions directly into the T-accounts using the dates of the transactions to identify each
transaction. (omit explanation)
3. Prepare a trial balance.with proper heading.

1. How much is the total credits to Cash?

2. How much is the total debits to Cash?
3. What is the ending balance of cash?
4. How much is the total Plumbing Revenues?
5. What is the ending balance of Accounts Receivable?
6. What is the final balance of Miscellaneous expense?
7. How much was spent for the Telephone?
8. How much is the total debits to Accounts Receivable?
9. What is the ending balance of Plumbing Supplies?
10. How much is the total debits for the Trial Balance?
11. How much is the Total Liabilities?
12. How much is the net profit or loss as a result of the first month of operations?
13. How much should be the ending capital balance of Lozada as a result of the first month
of operations?
14. What is the ending balance of Accounts Payable?
15. How much is the plumbing supplies
16. What should be the total credits in the trial balance?
 17. How much is the total expenses incurred during the month?
18. What is the total current assets at April 30, 2019?

IFA T4

MULTIPLE CHOICE

1. A summary device used by the bookkeeper for his/her convenience.

a. T-account
b. Chart of Accounts
c. Worksheet
d. Trial Balance
2. If the total service income is greater than the total expenses, there is____
a. Net value
b. Net income
c. Net loss
d. Net book value
3. Which statement are the assets extended in the worksheet?
a. Statement of changes in Equity
b. Financial Position
c. Trial Balance
d. Financial Performance
4. One of the activities reflected in the Cash Flows which include obtaining resources from
owners and creditors.
a. Financing activities
b. Operating activities
c. Investing activities
d. Business activities
5. The focal point of the accounting cycle is
a. Adjustments
b. Worksheet
c. Trial balance
d. Financial Statements
6. It is the statement that reports the amounts of cash provided and used during the period.
a. Trial Balance
b. Financial Position
c. Financial Performance
d. Statement of Cash Flows
7. Allowance for Doubtful Accounts appears on the
a. Trial balance
b. Financial position
c. Financial Performance
d. Statement of Cash Flows
 8. PAS No. 7 states that enterprises are encouraged to report cash flows from operating
activities using the direct method but the indirect method is acceptable. Which of the
item below is the exception:
a. Payments to employees
b. Receipts from performance of services
c. Payments to supplier for goods and services
d. Receipts from collections of long-term notes receivable
9. Which account is not considered the most liquid?
a. Cash on hand
b. Cash in bank
c. Marketable Securities
d. Accounts Receivable
10. It refers to the availability of cash over the long term to meet the financial commitments
as they fall due.
a. Liquidity
b. Stability
c. Solvency
d. Financial Flexibility
11. The presentation of the Statement of Financial Position has two types of format. The
most common one is Report Form, what is the other one?
a. Account form
b. Direct method
c. Indirect method
d. Classified Format
12. The presentation of the Statement of Financial Performance has two types of format. For
sole proprietorship is the Single Step, what is the other one?
a. Classified Step
b. Direct Method
c. Indirect Method
d. Multiple-step
13. The Statement of Cash Flows has two types of format. The most common one is Direct
Method, what is the other one?
a. Report Form
b. Account Form
c. Indirect method
d. Direct method

TRUE OR FALSE

1. The revised PAS No. 1 does not prescribe the order or format in which an entity
presents items in the financial position, what is required is the classification of current
and non-current for assets and liabilities.
2. The account code, titles and balance end in the trial balance are lifted from the general
journal.
 3. The profit or loss should always be the amount by which the debit columns for financial
performance, and the debit and credit columns for financial position differ.
4. The profit or loss should always be the amount by which the debit columns for financial
performance, and the debit and credit columns for financial position differ.
5. Per revised Philippine Accounting Standards (PAS) no. 1, the objective of financial
statements is to provide information on the financial condition, results of operations and
cash flows of an entity that is useful in a wide range of users for economic decisions.
6. Profit must be added and withdrawals subtracted to arrive at the ending capital balance.
7. Notes to financial statements provide narrative descriptions of items presented in the
financial statements and information about items that do not qualify for recognition in the
statements
8. The worksheet is part of the ledger or the journal and it is a financial statement.
9. Information about the performance of an entity is useful in predicting the capacity of the
business to generate cash flows from its existing resources.
10. Cash flows from operating activities include making and collecting loans or obtaining &
selling of property & equipment and other productive assets.
11. Liabilities are generally classified and presented based on time of maturity such that
obligations which are currently due are listed first.
12. Assets that are least likely to be converted to cash are listed last.
13. Income statement shows the result of business performance as at a given period
14. Users of financial statements analyze the financial position to evaluate the entity's
liquidity, financial flexibility, ability to generate profits and its solvency.
15. The worksheet can also reveal errors and simplifies the preparation of the financial
statements, adjusting and closing entries.

FINANCIAL STATEMENTS: PROPER CLASSIFICATION

1. Loans received from Rural Bank
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
2. Additional investment made by the owner
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
3. Net value or book value of the service vehicle
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
4. The cost of supplies used during the year
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
5. Unearned portion of the revenues earned
a. Financial Position
 b. Changes in Owner’s Equity
c. Financial Performance
6. Beginning Capital Balance
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
7. Total water incurred during the year
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
8. Total revenues earned during the year
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
9. Profit for the year
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
10. Total insurance expired during the year
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
11. Supplies on hand at the end of the year
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
12. Unexpired portion of the advertising and promotions
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
13. Total promissory notes issued to the suppliers
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
14. The amount of depreciation taken during the year.
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance
15. Total withdrawals by the owner
a. Financial Position
b. Changes in Owner’s Equity
c. Financial Performance

CORRECTION OF ERRORS
At the end of January 31, 2020, the first month of operations, the following selected data from the financial statement
of Abrea, CPA and Services:
Profit Total Assets Total Liabilities Abrea, Capital
January 31, 2020
Balances P 79,500 P379,400 P 40,400 P339,000

1. Office Supplies purchased on account for P 2,540 was incorrectly debited for P5,240.
What are the accounts affected?
2. How much is the difference? Is it overstated or understated?
3. What should be the ending balances of total assets and total liabilities after the
correction?
4. Electric bill for the month of January for P3,200 was recorded by a debit to Electricity
Expense and Utilities Payable for P2,300. What is the implication of this error?
a. Understated: Total Liabilities
b. Understated: Profit and Total Liabilities
c. Understated Total Liabilities, Overstated profit and abrea capital
d. Overstated total liabilities and abrea Capital
5. What should be the ending balance of Total Liabilities after the corrections in numbers 1
and 2?
6. What are the ending balances of profit and owner's equity after the corrections in
numbers 1 and 2?
7. Official Receipt#345 for cash collected on the account of Customer ABC for P4,500 was
recorded as debit to Cash P 4,500 and credit to Service Income P4,500. What are the
accounts directly affected by this erroneous entry?
a. Cash and service income
b. Service income and accounts receivable
c. Cash, Service income and accounts receivable
d. Cash and accounts receivable
Considering the effects of the above entry (no. 3), identify which account is overstated
and understated.
8. Profit
9. Total Assets
10. Total liabilities
11. Owner’s equity

12. How much should be the ending balance of Total Assets after the corrections
from 1 to 3?
A promissory note for P25,000 was originally issued to the Supplier for the Furnitures
purchased. This was debited to Equipment and credited to Accounts Payable. What
should be the correcting entries?
 13. Accounts Payable
14. Equipment
15. Notes Payable
16. Furnitures and Fixtures

17. Considering the corrections from nos. 1 to 4, which ending balance has
increased?
18. What is the final ending balance of Abrea, Capital?

Based on the final ending balances after the corrections done from numbers 1 to 4,
determine whether it has increased, decreased or no change.
19. Total Assets
20. Abrea, Capital
21. Total Liabilities
22. Profit

COMPREHENSIVE PROBLEMS
1. In the December 31, 2018 trial balance, what was the total debits?
2. What was the total Cleaners Income for the year ended, December 31, 2018?
3. How well did Simon Cleaning Services perform for the period 2018? (answer: Net
Profit:10,000)
4. What should be the 2018 ending capital balance of Simon Rodriguez?
5. How much was the Depreciation Expense for the year ended, December 31,
2019?
6. What should be extended to Rodriguez,Capital on December 31, 2019 credit
column of the Financial Position?
7. From the Worksheet, what should be the December 31, 2019 total credits in the
Trial Balance?
8. From the Worksheet, how much is the 2019 total debits in the Financial
Performance?
9. What is the result of operations for the year ended, December 31, 2019?
10. What should be the 2019 total credits in the Financial Performance?
11. What is the 2019 total debits in the Financial Position?
12. What is the 2019 total credits in the Financial Position?
13. What should be the balancing figure in 2019 Financial Position?
 14. How much is the 2018 total current assets?
15. How much is the 2019 total current assets?
16. The 2019 current assets increase or decrease by________.
17. What is the 2018 total property and equipment?
18. The 2019 book value of Property and Equipment increase or decrease by
___________.
19. What was the 2018 total assets?
20. The 2019 Total Assets increase or decrease by ___________.
21. The 2019 Current Liabilities increase or decrease by ___________.
22. What is the 2019 amount extended to the Financial Position for Rodriguez,
Capital?
Using the data of Simon Rodriguez and some additional accounts, where do you extend
the following accounts in the worksheet? Statement of Financial (SF) Position, SF
Performance
23. Rodriguez, Drawing
24. Net Profit in the Financial Performance
25. Unearned Income
26. Interest income
27. Representation expense
28. Net loss in the Financial Position
29. Cleaners income
30. Accumulated depreciation
31. Taxes and Licenses
IFA T5

MULTIPLE CHOICE
1. Accumulated depreciation and allowance for uncollectible accounts are
a. Expense account
b. Asset account
c. Contra accounts
d. Nominal accounts
2. The method used to compute the depreciation is ___>
a. Expense method
b. Ageing method
c. Income method
d. Straight line method
3. When there is positive evidence that a specific accounts receivable is definitely
uncollectible the appropriate amount is ____
 a. Adjusted to correct amount
b. Written off
c. Debit to a loss
d. Debit: cost of doing business
4. The depreciable cost less accumulated depreciation is called
a. Net asset
b. Net value
c. Net book value
d. Net price
5. It is not a depreciable asset.
a. Cash in bank
b. Accounts receivable
c. Building
d. Land

MODIFIED TRUE OR FALSE

Choices: 1 (S1 and S2 are True)
2 (S1 and S2 are False)
3 (S1 True and S2 False)
4 (S1 False and S2 True)

1. S1: The accounting period concept requires that revenues and expenses must be used
to produce assets.
S2: Timing issues consider the revenue recognition principle.
2. S1: The purpose of adjusting entries are to bring balances of accounts updated.
S2: Mixed accounts are accounts that have components of asset and expense, or
liability and income at the end of the accounting period.
3. S1: Adjusting process means the analysis and checking of accounts at the end of the
accounting period.
S2: Adjusting entries means to integrate the mixed accounts at the end of the accounting
period.
4. S1: Real accounts refer to permanent accounts and are not closed at the end of the
accounting period.
S2: Income statement accounts are forwarded to the next accounting period.
5. S1: Asset method is applied to deferred income.
S2: Accrued income refers to income accounts.
6. S1: Whatever method is used in the deferrals, the ending balances must be the same.
S2: The only way to know how successfully a business has operated is to do the
process of liquidation.
7. S1: Calendar year is a 12 month period that starts in any date of the year.
S2: The concept of adjusting entries relate to matching principle.
8. S1: Under the cash basis of accounting, revenues & expenses are reported on the
income statement in the period which cash is received or paid.
S2: Under the accrual basis, expenses are recognized when paid.
 9. S1: The purpose of the adjusting entry is to record the income earned and recognize the
corresponding asset account.
S2: The impact of omitting the accrued income will overstate the liabilities.
10. S1: Precollections means advanced collections of business revenues from customers.
S2: Depreciation means the decrease in the usefulness of property and equipment due
to wear and tear.

EFFECTS OF UNRECORDED OR OMITTED ADJUSTMENTS

CHOICES:
AA = means OVERSTATED ASSETS, OVERSTATED OWNER'S EQUITY.
BB = means UNDERSTATED ASSETS, UNDERSTATED OWNER'S EQUITY.
CC = means UNDERSTATED ASSETS, UNDERSTATED LIABILITIES.
DD = means OVERSTATED LIABILITIES, UNDERSTATED OWNER'S EQUITY
EE= means UNDERSTATED LIABILITIES, OVERSTATED OWNER'S EQUITY

1. Omitted accrued interest on promissory note received from the client.

2. Failure to adjust the bad debts for the period.
3. Unrecorded deferred expense (original entry: expense method)
4. Failure to convert Unearned Service Income to Service Income
5. Failure to record the depreciation of Building
6. Unrecorded billing received from Davao Light & Power Corporation.
7. Failure to record revenues earned but not collected.
8. Failure to recognize the deferred revenue (original entry: Income Method)
9. Omitted to record the cash received in advance for services to be rendered next year.

10. Recorded twice the accrued Salaries of Employees.

11. Unrecorded expired insurance.(Asset method)
12. Failure to record utilities incurred but not yet paid.
13. Unrecorded accrued interest on the promissory note issued to the client for Equipment
acquired.
14. Omitted the recognition of income (original entry: liability method)
15. Debited twice the uncollectible accounts.

COMPREHENSIVE PROBLEMS
1. The estimated uncollectible accounts is 5% of Accounts Receivable. How much should
be credited to Allowance for Uncollectible Accounts?
2. In case the uncollectible accounts is not recorded, what is the effect to assets and
expense?
a. Understated and overstated
b. Overstated and overstated
c. Overstated and understated
d. Overstated and no effect
e. Understated and understated
3. How much should be the net balance of Accounts Receivable after deducting the
Allowance for Uncollectible Accounts?
4. The Notes Receivable has a 12% annual interest which was not taken up in the books.
What account must be debited?
5. How much should be recorded as interest?
6. If the accrued interest income was not adjusted, what is the effect to Owner's equity and
Net profit?
a. Understated and understated
b. Overstated and understated
c. No effect and understated
d. Overstated and overstated
e. Understated and overstated
7. What type of adjustment the above interest must fall?
a. Prepayments
b. Deferrals
c. Accrual income
d. Accrual expense
8. As the Purchasing Department made an inventory of Salon Materials, it showed that
there were only a total P 15,500 of unused salon materials. \What account must be
credited?
9. How much should be the ending balance of Salon Materials Expense?
10. If the inventory of Salon Materials is not adjusted at the end, what should be the effect
to assets and expenses?
a. Overstated and overstated
b. Overstated and understated
c. Understated and overstated
d. Understated and understated
e. Understated and no effect
11. What method is applied for Salon Materials?
12. The expired portion of insurance at year end is P8,000. How much should be recognized
as the deferred expense?
13. What account should be debited?
14. If the unexpired portion of insurance is not recognized what is the effect to liabilities and
expense?
a. Understated and overstated
b. Understated and understated
c. No effect and overstated
d. Overstated and overstated
e. No effect and understated
15. Identify the method used in recognizing the insurance? (omit the word method)
16. The annual depreciation rate for Salon Equipment is 10%. How much should be taken
up as depreciation expense?
17. What account will be credited to recognize the depreciation of Salon Equipment?
18. What is the effect if the depreciation for Salon Equipment will not be taken up at the end
of the accounting period to expense and net profit?
a. Understated and understated
 b. Understated and overstated
c. Understated and no effect
d. Overstated and overstated
e. Overstated and understated
19. How much is the net book value of Salon Equipment after the depreciation is recorded?
20. The furniture and fixtures has an estimated scrap value of P5,000 and the depreciation
rate per annum is 20%. How much depreciation has to be recorded at the end of the
year?
21. What should be debited to recognize the depreciation?
22. What is the effect of failure to record the depreciation for Furniture & Fixtures to assets
and net profit?
a. Understated and understated
b. Understated and overstated
c. Overstated and overstated
d. Overstated and understated
23. How much should be the book value of Furniture and Fixtures after the depreciation is
recognized?
24. The Unearned Income from Salon Service Income is P15,200. By how much should the
Salon Service Income be decreased?
25. What is the effect to assets and liabilities, if Salon Service Income is not adjusted?
a. Overstated and understated
b. No effect and understated
c. Understated and overstated
d. Overstated and no effect
e. Overstated and overstated
26. What should be the ending balance of Unearned Salon Income?
27. What method was applied in the original journal entry? (omit the word method)
28. Interest on Notes Payable must be taken up at 10% rate per year. How much should be
considered as interest expense?
29. What is the effect to expense and liabilities, interest is not taken up?
a. Understated and overstated
b. Understated and understated
c. Overstated and overstated
d. No effect
30. What type of adjustment the recording of interest on notes payable is classified?
a. Prepayments
b. Deferred expenses
c. Deferred income
d. Accrued income
e. Accrued expense
31. How much is the total debits in the 'adjustment' column after posting all the adjustments
from 1 to 8?
a. 72,725
b. 62,225
 c. 77,725
d. 70,725
32. How much is the footed total credits of the Adjusted trial balance?
a. 837,025
b. 822,025
c. 873,025
d. Can’t be determined
33. What is the total credits in the Statement of Financial Performance?
a. 400,000
b. 407,200
c. 429,825
d. Not given
34. Is it a bet income or a net loss
35. How much is the result of Grandeur’s operations for the year ended. December 31, 2018
36. What is the total debits in the Statement of Financial Position?
37. How much is the total current assets?
38. How much is the net book value of Property and Equipment?
39. How much is the total assets
40. How much is the total liabilities
41. What is the ending owner’s equity balance?
42. How much is the total liabilities and owner’s equity?

IFA T6
a. S1 & S2 =TRUE
b. S1 & S2 =FALSE
c. S1 =T S2=F
d. S1 =F S2=T

1. S1 - Reversing entries should be made for any adjusting entry that increased an
asset.
S2 - When payment is made without prior reversing entry, the accountant must
look into the original records.
2. S1- Post-closing trial balance verifies that all the debits equal the credits in the
trial balance.
S2 - A temporary account or clearing account is used to close the permanent
accounts.
3. S1 - In closing entries, the expenses have debit balance after the closing entries
are posted.
S2 - A profit is indicated by a credit balance and a loss by a debit balance.
 4. S1 - Reversing process is a key element of accrual basis accounting.
S2 - Most accountants prepare the financial statements immediately after
completing the journal entries.
5. S1 - Adjustments are the result of internal transactions. S2 - A debit will increase
accumulated depreciation.
6. S1 - A worksheet is a formal report.
S2 - Depreciation expense is found on the financial condition.
7. S1- The statement of financial position reports the ending owner's equity, taken
directly from the statement of changes in equity.
S2 - Philippine Accounting Standards No. 7, entities are encouraged to report
cash flows from operating activities using the direct method.
8. S1 - When adjusting entries are entered in a worksheet, it is not necessary to
record them in the general journal.
S2 - The purchase of equipment is an example of operating activity.
9. S1 - The worksheet is a type of accountant's working paper.
S2 - Post-closing trial balance includes the permanent accounts only.
10. S1 - Revenue is closed to income summary by credit.
S2 -At the end of the closing process, all temporary accounts in the ledger will
have a zero balance.
11. S1 - A reversing entry is the exact opposite of a related adjusting entry.
S2 - Temporary accounts are also known as real accounts.
12. S1 - All nominal accounts must be closed before the Income Summary account
can be closed.
S2 = The final trial balance is called a post-closing trial balance.
13. S1 - The adjusting entries involving Accrued Income and Accrued Expense could
be reversed.
S2 - To simplify the recording of regular transactions in the next accounting
period, all adjusting journal entries are reversed.
14. S1 - Closing entries result in the transfer of profit or loss into the owner's capital
account.
S2 - Adjusting entries are all dated as at the first day of the new accounting
period.
15. S1 - Reversing entries are never required.
S2 - A reversing entry will include either a debit to revenue account or a credit to
an expense account.
16. S1 - The adjusting entries involving Depreciation Expense and Supplies Expense
could be reversed.
S2 - Rent expense is a temporary account.
17. S1 - Journalizing adjustments can be done from the worksheet.
S2 - Income summary is closed by the end of the period.
MULTIPLE CHOICE
1. What is the correct order of the closing entries?
a. Income Summary , Income, expense, withdrawals
b. Income, income summary, expenses and withdrawals
 c. Withdrawals, Expenses, Income and Income Summary
d. Income, Expenses, Income Summary and Withdrawals.
2. Which type of balances is the basis of the preparation of the financial statements?
a. Ledger balances
b. Trial balances
c. Adjusted trial balances
d. Corrected trial balances
3. Which adjusting entries are reversed?
a. Deferred income (income method), Accrued Income, Accrued Expense, Deferred
Income (expense method)
b. Accrued income, deferred income (liability method), accrued expense, deferred
expense (asset method)
c. Accrued expense, deferred income (income method) accrued income, deferred
expense (expense method)
d. Accrued income, accrued expense, deferred income (income method), deferred
expense (asset method)
4. If no reversing entry is applied, upon payment or collection which entry is correct? (Let
xx = amount)
a. Debit: Prepaid Insurance xx, Credit: Insurance Expense xx
b. Debit: Insurance Expense xx Credit: Cash xx
c. Debit: Cash xx Credit: Accounts Receivable xx
d. Debit: Cash xx Credit: Accounts Receivable xx, Service Income xx

1. Which of the following sequences of documents or records describes the proper

sequence in the accounting cycle?
a. source documents, ledger, journal, financial statements
b. journal, source documents, ledger, financial statements
c. source documents, journal, ledger, financial statements
d. ledger, source documents, journal, financial statements
2. The primary objective of reversing entries is to…
a. correct errors
b. simplify the bookkeeping associated with accruals from the prior period
c. transfer the balance of the expense accounts to the Capital account and set the
accounts equal to zero.
d. place the expenses for the current period in the proper accounts
3. In which financial statement does Income Summary appear?
a. financial performance
b. statement of changes in equity
c. financial position
d. it does not appear in any financial statement
4. When an entity has suffered a loss, the loss amount is entered on the worksheet on
the…
a. debit side of the financial performance columns and the credit side of the
financial position
 b. credit side of the financial performance columns and the debit side of the
financial position columns
c. debit side of both the financial position and financial performance columns
d. credit side of both the financial performance and financial position columns
5. If no adjustments are needed for a particular entity, its
a. post-closing trial balance will be identical to the trial balance
b. adjusted trial balance will be identical to its post-closing trial balance
c. trial balance will be identical to its adjusted trial balance
d. trial balance, adjusted trial balance, and post-closing trial balance will be identical
6. The adjustment for that portion of revenue received in advance which now has been
earned is to debit
a. Cash and credit unearned revenues
b. Service income and credit Unearned income
c. Unearned income and credit Cash
d. Unearned revenue and credit Service revenue
7. If a trial balance were to be prepared on the first day of the new year, and the account
Salaries Expense had a credit balance, you would know that
a. the trial balance is a post-closing trial balance
b. the adjusting entries have been recorded
c. the trial balance is an adjusted trial balance
d. a reversing entry has been made
8. Which of the following accounts could appear in an adjusting entry, closing entry and
reversing entry?
a. interest income
b. salaries payable
c. depreciation expense
d. allowance for uncollectible accounts
9. If the last item on a trial balance reads "Owner's Equity, this must be the
a. post-closing trial balance
b. unadjusted trial balance
c. reversed trial balance
d. adjusted trial balance
10. The closing entry for Salaries Expense, with a balance of P240,000 is…
a. debit Salaries Expense 240,000, credit Income Summary 240,000
b. debit Salaries Expense 240,000, credit Salaries Payable 240,000
c. debit Income summary 240,000, credit Salaries Expense 240,000
d. debit Salaries Payable 240,000, credit Salaries Expense 240,000

MODIFIED MULTIPLE CHOICES

Noble Insurance
Trial Balance
December 31, 2019

Cash 20,000
Accounts Receivable 50,000
Allowance for Uncollectible Accounts 8,000
Prepaid Insurance 15,000
Supplies 20,000
Office equipment 48,000
Accu. Dep'n - Office equipment 20,000
Accounts Payable 35,000
Unearned Service Income 7,000
Binggay, Capital 60,000
Binggay, Drawing 5,000
Service Fees 96,000
Salaries Expense 42,000
Rent Expense 20,000
Advertising expense 6,000
------------ -----------
Totals 226,000 226,000
======= =======

1. If on Dec. 31, 2019, supplies on hand were 5,000, the adjusting entry would contain a
a. credit to Supplies Expense for P15,000
b. credit to Supplies for P5,000
c. Debit to Supplies Expense fo P15,000
d. Debit to Supplies for P5,000
2. If the supplies on hand was not recorded or adjusted, what is the effect?
a. understated expenses
b. overstated expenses
c. understated income
d. overstated assets
3. If on December 31, 2019, the insurance still unexpired amount to P3,000, the adjusting
entry would contain a…
a. credit to Prepaid Insurance for P12,000
b. credit to Prepaid Insurance for P3,000
c. Debit to Insurance Expense for P3,000
d. Debit to Prepaid Insurance for P12,000
4. If the insurance was not adjusted, what is the effect to the net income?
a. understated insurance
b. understated net income
c. overstated net income
d. overstated insurance
5. If services totalling P14,500 had been performed but not yet billed, the adjusting entry to
record this would include a
a. credit to Service Fees P14,500
b. credit to Service Fees for P62,500
c. credit to Unearned Service Fees for P14,500
d. debit to Service Fees for P14,500
6. The unrecognized earnings would result to...
a. understated income
b. understated liability
c. overstated income
7. Accrued salaries at the end of December 31, 2019, P7,500. What should be the debit
and credit entry?
a. Debit Salaries Expense 7,500, credit Cash 7,500
b. Debit Salaries Payable 7,500, credit Salaries Expense 7,500
c. Debit Salaries Expense 7,500, Credit Accrued Salaries 7,500
d. Debit Salaries Payable 7,500, Credit Cash 7,500
8. If salaries are not taken up in the books, what will be the final effect to the net profit?
a. overstated expenses
b. understated expenses
c. understated net profit
d. overstated net profit
9. If there is an unexpired advertising of 2,500, what should be the debit entry?
a. debit Advertising expense,2,500
b. debit Advertising expense 3,500
c. debit Prepaid Advertising 2,500
d. debit Prepaid Advertising 3,500
10. What is the effect of failure to record unexpired portion of advertising?
a. understated expense
b. overstated liability
c. overstated income
d. understated asset
11. The recording of an expense could result in a corresponding increase in
a. liability
b. asset
c. owner's equity
d. Revenue
12. If as of December 31, 2019, the rent of P5,000 for December had been accrued, the
adjusting entry would include a credit of Accrued Rent and the debit is…
a. Accumulated Rent for P5,000
b. Cash for P5,000
c. Rent expense for P5,000
d. Rent Payable for P5,000
13. Consider items 1,2,3,4,5, and 7 as the ADJUSTING entries, how much is the total debits
and credits of the adjustments?
a. 42,000
b. 44,500
c. 56,500
d. 41,500
14. How much is the total debits and credits in the Adjusted Trial Balance?
15. What is the total debits of the Statement of Financial Performance?
 16. What is the total credits of the Statement of Financial Performance?
17. How much is the net income/loss?
18. How much is the total debits of the Statement of Financial Position?
19. How much is the total credits of the Statement of Financial Position?
20. How much is the ending capital balance of Binggay?
21. For the first closing entry, how much should be credited to income summary?
22. The explanation of the second closing entry: To close all the _______?
23. What is the account credited in the 3rd closing entry?
24. What is the account credited in the 4th closing entry?
Refer to the items above from numbers 1 to 7, determine if those adjusting entries would require
a reversing entry or not.
25. Item 1 - Supplies
26. Item 2 - Insurance
27. Item 3 - Accrued fees
28. Item 4 - Salaries
29. Item 5 - Advertising
30. Item 6 - Rent

MATCHING TYPE

a. Account Form b. Liquidity c. Cross Footing

d. Reversing entry e. Income Summary

1. It is used to close the income and expense accounts including the withdrawals.
2. It list down the assets on the left and the liabilities and owner's equity on the right.

3. The trial balance debit or credit amount of ach account is combined with the amount of
any debit or credit adjustment to that account to determine the new balance of account.
This process is known as ___
4. A bookkeeping technique made to simplify the recording of regular transactions in the
next accounting period.
5. It refers to the availability of cash in the near future after taking account of the financial
commitments over this period.

IFA T7

Matching Type

A. Receiving report B. Bill of Lading C. Freight Prepaid D. Check

E. Validated Deposit Slip F. Cash discounts G. FOB Destination H. Sales Invoice
I. Periodic Inventory System J. Gross Sales

1. It consist of total sales for cash and on account during an accounting period.
 2. It is a document issued by the carrier - a trucking, shipping or airline - that specifies
contractual conditions and terms of delivery such as freight terms, time, place and the
person named to receive the goods.
3. It is a document containing information about goods received from a vendor, it formally
records the quantities and description of the goods delivered.
4. It indicates that cash and checks with the supplied details were actually deposited or
credited to the account holder.
5. It is prepared by the seller of goods and sent to the buyer.
6. It is a written order to a bank by a depositor to pay the amount specified in the check
from his checking account to the person named in the check.
7. The seller shoulders the cost of transporting the goods to the purchaser.
8. A characteristic of the inventory system is that no entries are made to the inventory
account as the merchandise is bought and sold.
9. The seller pays the transportation costs before shipping the goods sold.
10. This practice improves the seller's cash position by reducing the amount of money in
accounts receivable for prompt payment.

MODIFIED TRUE OR FALSE

A = S1 True. S2 True
B = S1 False. S2 False
C = S1 True, S2 False
D = S1 False, S2 True
1. S1 -The ending inventory of one period is the beginning inventory of the next period. S2-
Taking a physical inventory refers to making a count of all stocks or goods on hand at a
particular time.
2. S1-The periodic inventory system provides an up-to-date amount of inventory on hand.
S2-Sales Discounts is described as a contra-income account.
3. S1-There is no need for a physical inventory count in the perpetual inventory system.
S2-The purchase of equipment not for resale should be debited to the purchases
account.
4. S1-The chart of accounts for a merchandising entity differs from that of a service
concern.
S2-If the seller is to shoulder the cost of delivery, the term stated as FOB Destination.

5. S1-Transportation out is included in the cost of goods sold calculation.

S2-FOB Shipping point means that the seller bears the cost of shipment.
6. S1-Terms of 2/10, n/30 is an example of cash discount.
S2-Transportation in is included in the selling expenses.
7. S1-Invoice price means that the goods should be recorded at their list price less any
trade discounts.
S2-Inventory account is not affected when a sales allowance is granted.
 8. S1-Invoice evidences the receipt of cash by the seller.
S2-Trade discount encourages the buyer to purchase goods because of markdowns
from the list price.
9. S1-The change in inventory level from the beginning to the end of the year affects cost
of goods sold.
S2-The Financial Performance of a service concern would not have a cost of goods sold
account.
10. S1-Cash discounts on the seller's point of view is called Sales Discounts.
S2-Summing the ending inventory and the cost of goods sold will result in total goods
available for sale.

MULTIPLE CHOICE

1. Under the perpetual inventory system, the entry to record a purchase return would include a
credit to
a. Accounts Payable
b. Cost of goods sold
c. Merchandise Inventory
d. Purchase returns and allowances

2. 2/10/EOM n/30 means a buyer who pays by the 10th of the month following the month of
purchase may deduct a 2% discount from the invoice price. If payment is not made within the
discount period, the entire invoice price is due 30 days from the invoice date. A sale on March
21 with terms of n/10 eom is due to be collected by___ *

a. March 31
b. April 10
c. April 30
d. April 20

3. An amount deducted from the catalog price for an item of merchandise is called a *

a. customer discount
b. trade discount
c. cash discount
d. sales discount

4.Which of the following terms does not mean the same as others?
a. Gross profit
b. Net profit
c. Bottom line
d. Income from operations
5. A physical count of inventory is usually taken
a. in the middle of the fiscal year
b. at the start of the fiscal year
c. at the peak of the busy season
d. at the end of the fiscal year

6. Which of the following activities is not a component of the operating cycle?

a. Collection of cash from merchandise sales
b. Ordering of merchandise
c. Purchase of merchandise
d. Sale of merchandise

7. The periodic inventory system is used most commonly by companies that sell
a. high-priced, high-volume merchandise
b. low-priced, high-volume merchandise
c. high-priced, low-volume merchandise
d. low-priced, low-volume merchandise

8. Which of the following statements regarding cash purchases discounts from suppliers is/are
correct? [1] They are reductions in the retail prices by the manufacturers. [2] They are revenues
to the entity. [3] The cash account is debited when they are received by the entity.
a. [1] only
b. [3] only
c. [1 and 2] only
d. [1 and 3] only

9. Which of the following statements is correct about credit period?

a. If a customer purchases goods within the credit period, a cash discount will be allowed
to the customer
b. If a customer settles the payment within the credit period, a cash discount will be allowed
to the customer.
c. It refers to the period in which customers must settle their debts due.
d. It refers to the period in which customers need to settle 1/3 of the debts in order to avoid
further interests charged.

10. Which of the following cases show(s) the situation (s) that the list price is higher than the net
price after a deduction as stated on the sales invoice? [1] There is a trade discount of 5% given
by the seller. [2] There is a cash discount of 5% given by the seller. [3] Some goods are
returned to the supplier.
a. [1] only
b. [2] only
c. [ 1 and 3] only
 d. [2 and 3] only

MULTIPLE CHOICE SHORT PROBLEMS

1. Mendoza Trading sold 10 units of Product XYZ with a unit list price of P3,000 on March 1,
2019. As a policy, it offers 5% trade discount and 10% cash discount with credit terms of 10
days and 30 days as the credit period. If the customer settles the debt on March 28, 2019, what
is the actual amount he needs to pay?

a. P27,000
b. P25,650
c. P28,500
d. P30,000

2. Suppose Lara Merchandising has completed the following transactions in October 2019.
WHAT IS THE INVOICE PRICE OF THE GOODS SOLD? [a] Sold goods to Balugo Company
with a list price P15,000 and terms: 10%, 3/10, n/30. [b] Purchased goods from Sales Trading
on account. List price of P30,000 with the following terms: 10%, 2/10 and n/20. [c] Purchased
goods with a tag price of P25,000 with P1,000 discount from Colaste Merchandising on credit.
[d] Sold office-use furnitures and cabinets of P 8,000 to Morales Company on credit.credit. *
a. P23,000
b. P13,500
c. P21,500
d. P15,000

2A. What is the total amount of goods purchased on account? *

a. P55,000
b. P54,000
c. P51,000
d. P52,000

2B. How much is the total cash payment to Sales Trading and Colaste Merchandising, if the
discount is availed? *
a. P 51,000
b. P 51,190
c. P 49,470
d. P 50,460

3. Adang Merchandiser made purchases from Constantino Traders. The list price was P30,000
and a trade discount of 10% and 5% was extended being a loyal client. Terms of shipment: FOB
Shipping point, freight prepaid. Terms of credit: 2/10, n/30. The freight charges was P1,200. If
payment was within the discount period, how much cash was paid? *

a. P26,650
b. P25,650
c. P25,137
d. P26,337

SHORT PROBLEMS

BELOW ARE PURCHASE TRANSACTIONS OF KYLE DOLERO MERCHANDISING.

IT IS THE ENTITY'S POLICY TO AVAIL OF THE DISCOUNTS.

A B C D
List price P160,000 P 454,000 P88,000 P250,000
FOB Terms Shipping Destination Shipping Destination
Freight Charges P 4,500 P 8,500 P 3,000 P 6,000
Freight payments Freight collect Freight Prepaid Freight Prepaid Freight Collect
Purchase Returns & Allowances P 5,500 P 7,500 P 0 P 8,500
Credit Terms 2/10 3/10 1/15 3/10
Trade Discount 25% 20%,10% 10% 10%, 5%

1. Data from Column A. How much is the invoice price?

2. Column A. How much is the cash discount availed by Kyle Dolero?
3. Column A. How much is the cash paid to the seller?
4. Data from Column B. How much is the invoice price?
5. Column B. How much is the total trade discounts?
6. Column B. How much is the Purchase Discounts?
7. Column B. How much is the NET PURCHASES?
8. Column B. How much is the cash paid to the seller?
9. Data from Column C. How much is the invoice price
10. Column C. How much is the Net Purchases?
11. Column C. How much is the cash paid to the seller?
12. Data from Column D. How much is the total trade discounts?
13. Column D. How much is the invoice price?
14. Column D. How much is the purchase discounts? *
15. Column D. How much is the NET PURCHASES? *
16. Column D. How much is the amount paid to the seller? *

17. Which combination of transactions where the Freight In account is recorded? *

a. Columns A and B
 b. Columns C and D
c. Columns A and C
d. Columns B and D

18. Which terms of shipment decreases the obligation of Kyle Dolero to the seller? *

a. A
b. B
c. C
d. D

19. Which combination of transactions where the freight charges appeared in the books of the
seller?
a. Columns A and B
b. Columns B and C
c. Columns B and D
d. Columns C and D

IDENTIFICATION

A = Debit in the Financial Position

B = Credit in the Financial Position
C = Debit in the Financial Performance
D = Credit in the Financial Performance
E = Not Applicable

1. Inventory, beginning
2. Sales discounts
3. Purchases
4. Baldonado, Drawing
5. Purchases Returns and Allowances
6. Trade discounts
7. FOB Shipping point, freight collect
8. Sales
9. Cost of Goods Sold
10. Freight in
11. Freight out
12. Accrued Sales Income
13. Inventory, ending
14. Baldonado, Capital
15. FOB Destination, freight prepaid

IFA T8
MULTIPLE CHOICES

1. To remove the _______ balance from the merchandise inventory account requires a debit to
______
a. merchandise inventory, capital
b. beginning inventory, capital
c. ending inventory, income summary
d. beginning inventory, income summary

2. To establish the _________ balance of merchandise inventory is to credit the ____________

a. merchandise inventory, capital
b. beginning inventory, capital
c. ending inventory, income summary
d. beginning inventory, income summary

3. Ending inventory is needed in the computation of ____ *

a. Gross profit
b. Cost of Sales

c. Net sales
d. Goods available for sale

4. The physical count is made at or near the ______ date *

a. calendar
b. fiscal
c. balance sheet
d. income statement

5. In the___________ inventory system, all merchandise bought are accumulated in the

_________ account. *

a. perpetual, inventory

b. perpetual, purchases
c. periodic, inventory
d. periodic, purchases
6. ___________is also referred as the 'cost of sales method' which classifies expenses
according to their function as part of the cost of sales, distribution/selling, administrative and
other operating activities.
a. Function of expense method
b. Line of expense method
c. Income statement method
d. Operating cycle method

7. To reflect the dual effect of the beginning and ending inventory, there are two acceptable
methods.
a. closing and reversing
b. income statement and balance sheet
c. closing and adjusting
d. perpetual and periodic

8. The adjusting entries are journalized and posted to the ____.

a. worksheet
b. T-account
c. ledger
d. trial balance

9. Sales Returns and Allowances, Sales Discounts and Merchandise Inventory beginning have
normal balance of _____ and closed by _______.
a. debit, credit
b. credit, income summary
c. debit, income summary
d. debit, capital

10. Under the perpetual inventory system, there will be no merchandise inventory ______ or
_______entry unlike the periodic inventory system is used.
a. opening or closing
b. journal or adjusting
c. posting or closing
d. adjusting or closing

MODIFIED TRUE OR FALSE

A = S1 True. S2 True
B = S1 False. S2 False
C = S1 True, S2 False
D = S1 False, S2 True

1. S1 -Selling expenses are related to the selling activity.

S2 -The ending figure for capital is found on the worksheet.
 2. S1 - Debts that are to be paid with current assets within one year or one operating cycle
are called current liabilities.
S2 - Mortgage Payable is an example of a non-current liabilities.

3. S1 - By the adjusting process, the beginning inventory of the period is transferred to

Capital Account.
S2 - The post-closing trial balance contains no temporary accounts.

4. S1 - The Purchases account is closed to Merchandise Inventory account.

S2 - Sales Discounts is a contra-revenue account with a normal credit balance.

5. S1 - The worksheet of a merchandising entity that uses the perpetual inventory system
will not have a Transportation In account.
S2 - Both Transportation In and Transportation Out accounts are closed by crediting the
accounts.

6. S1 - Under the perpetual inventory system, the ending merchandise inventory balance is
closed at the same time as Cost of Goods Sold.
S2 - The determination of net cost of purchases would include addition of transportation
out.

7. S1 - Net Sales is not an account title.

S2 - The Sales Returns and Allowances account has a credit balance.

8. S1 - Cost of Goods Sold is a major expense of a merchandising business.

S2 - The excess of gross profit over operating expenses is called operating profit.

9. S1 - An adjusting entry is necessary when the year-end inventory account balance does
not tally with the physical inventory amount under perpetual system.
S2 - When preparing closing entries under the periodic inventory system, Sales and
Purchase Returns and Allowances are both closed in the same entry.

10. S1 - In the income statement, operating expenses are classified as selling expenses,
administrative expenses and other operating expenses.
S2- The closing entry for Transportation In is debits and credits to Income Summary.

SHORT PROBLEMS

The accounts of Berlin Uy Beauty Store selected from December 31, 2019 trial balance are as follows:

Amount Accounts
9,810,000 Sales
70,000 Selling Supplies Expense
 140,000 Sales Discounts
260,000 Sales Returns and Allowances
1,130,000 Salaries Expense - Administrative
960,000 Salaries Expense - Selling
180,000 Purchases Discounts
150,000 Advertising Expense
260,000 Transportation out
110,000 Depreciation Expense - Office Equipment
140,000 Depreciation Expense - Store Equipment
100,000 Transportation In
1,160,000 Merchandise Inventory, Jan. 1, 2019
1,040,000 Merchandise Inventory, December 31, 2019
90,000 Miscellaneous Expenses
430,000 Office supplies expense
6,710,000 Purchases
250,000 Purchases Returns and Allowances

1. How much is the net sales?

2.What should be the value for Net Purchases?
3. How much is the net cost of purchases?
4. What should be the total goods available for sale?
5. What should be reflected as Cost of Sales?
6. How much is the gross profit?
7. What is the total Selling Expenses?
8. What is the total Administrative Expenses?
9. What is the total operating expenses?
10. What is the result of business operations of Berlin Uy Beauty Store?
a. Net profit
b. Net loss
c. breakeven
d. no gain

11. What is the net income/loss from operations? *

12. How do you rate the operations of Berlin Uy's business? *
a. Profitable
b. Liquid
c. Solvent
d. Unprofitable
13. Listed is a partial trial balance of Abrea Retailers at March 31, 2020: [a] Merchandise
inventory, beginning and ending are P80,000 and P74,000 respectively; [b] Sales P200,000,
Sales Returns and Allowances P20,000, Sales Discounts P10,000 and Transportation out
P5,000; [c] Purchases P108,000, Purchases returns and allowances P 16,000 and Purchase
discounts P5,000; and [d] Transportation In P1,000. How much is the Net Sales? *
14. How much is the net cost of purchases?
15. How much is the total goods available for sale?
16.. How much is the cost of goods sold?
17. How much is the groos profit?

WORKSHEET PERIODIC INVENTORY

BELOW ARE THE ADJUSTMENTS:

1. The uncollectible accounts for the year was P2,076.
2. The supplies on hand at the end of the year, P6,380.
3. The unexpired portions of insurance and advertising were P8,000 and P14,000,
respectively.
4. The depreciation for Store Equip and Furniture & Fixtures were P10,000 and P7,500,
respectively.
5. The interest on Notes Payable was P5,040 while on the Notes Receivable was P4,800.

The Merchandise Inventory at December 31, 2019 was P44,200

1. What method is applied for the Insurance and Advertising?

a. Asset
b. Expense
c. Liability
d. Income

2. What type of adjustments are applied to interest?

a. Deferred income
b. Deferred Expense
c. Accruals
d. Uncollectibles

3. What type of worksheet is applied to Sales Center?

a. Periodic inventory
b. Perpetual inventory
c. Service concern
d. Trading concern

4. How much is the total credits in the Adjustment columns?

5. What is the total debits to Adjusted Trial Balance?
6. How much is the computed Net Sales?
7. How much is the Net Purchases?
8. What should be the computed Net Cost of Purchases?
9. How much is the total goods available for sale?
10. How much is the cost of sales?
11. What amount appeared as gross profit?
12. What is the gross profit rate?

a. 60%
b. 40%
c. 57.93%
d. 42.07%

13. Which of the following is excluded from administrative expenses?

a. Office supplies expense
b. Insurance Expense
c. Freight out
d. Utilities-general

14. Which of the following adjusting entries may be reversed?

1. uncollectible accounts
2. Supplies on hand
3. Unexpired portions of Insurance and Advertising
4. Depreciation

15. Using the closing entry method, how much should be credited to Income Summary as first
closing entry?
a. 379,000
b. 396,000
c. 428,000
d. 491,900

16. Using the closing entry method, how much should be debited to Income Summary as
second closing entry?
a. 219,570
b. 416,180
c. 447,336
d. 391,616

17. Using the closing entry method, how much should be debited/credited to Income Summary
as third closing entry?
a. 24,564
b. 19,524
c. 29,364
d. 24,324

18. What should be the 4th closing entry?

a. Debit Larriego, Drawing, Credit Larriego, Capital
b. Debit Larriego, Drawing, Credit Income Summary
 c. Debit Larriego, Withdrawals, Credit Larriego Capital
d. Debit Larriego, Capital, Credit Larriego, Drawing

19. How much is the total Selling Expenses?

20. How much is the total Operating Expenses?
a. 194,766
b. 199,566
c. 189,726
d. 195,006

IFA T9
TRUE OR FALSE
1. The voucher register takes the place of the cash payments journal.
2. A check register is used to record all expenditures.
3. When customers are allowed to return merchandise for credit to their accounts, these
transactions are recorded in the general journal.
4. The voucher is serially numbered form that identifies the name and address of the
payee, the due date, terms, description & invoice amount.
5. A purchase requisition is made out after a company inspects received shipments.
6. Voucher includes a section for designated officers to sign their approval for payment.

7. Purchases discounts is increased by debits.

8. The accounts receivable subsidiary ledger lists in alphabetical order an account for each
customer.
9. A schedule of accounts receivable lists the ending balances from the accounts
receivable ledger.
10. Approved vouchers are entered in the cash payment journal in numerical sequence.

11. Special journals are modified in practice to adapt to the specific needs of the entity.

12. When special journals, control accounts and subsidiary ledgers are used, no posting to
any ledger is performed until the end of the month.
13. Transactions involving the payment of cash for any purpose are usually recorded in cash
journal.
14. Controlling account is a general ledger account which is supported by information in a
subsidiary ledger.
15. Accounts Payable Ledger is a group of accounts containing customer names.

IDENTIFICATION
A = Sales Journal
B = Purchases Journal
C = Cash Receipts Journal
D = Cash Payments Journal
E = General Journal
 1. Unpaid freight cost, FOB destination, freight prepaid.
2. Sold goods. Terms: 10%, 2/10, n/60
3. Made an additional investment
4. Bought a new set of furnitures. Terms: n/30
5. Paid accrued utilities
6. Sent a bill to client for goods delivered on account.
7. Collected the past due accounts of clients.
8. Made purchases on cash basis..
9. Collected 30% of the customer's account with partial discounts.
10. Issued a promissory note for the purchased of store supplies.
11. Received the electric bill payable at the end of the month.
12. Received the approved bank loans applied a week ago.
13. Received the billing statement from CoVIDA merchandising for goods acquired on
account.
14. Withdrew cash for personal use.
15. Received cash for goods sold.

MULTIPLE CHOICES

1. A Sales Journal will be used for:

a. NO (credit sales) YES (cash sales) YES (sales discount)
b. YES (credit sales) NO (cash sales) YES (sales discounts)
c. YES (credit sales) NO (cash sales) NO (sales discounts)
d. YES (credit sales) YES (cash sales) NO (sales discounts)

2. Where in the special journal does the sales on account is recorded?

a. Sales journal
b. purchases journal
c. cash receipts journal
d. cash payments journal
e. general journal

3. Unpaid freight cost on the part of the buyer. Terms: FOB Shipping point, freight collect.
a. Sales journal
b. purchases journal
c. cash receipts journal
d. cash payments journal
e. general journal

4. Which of the following documents that does not initiate an entry to be made in the accounts?
a. Purchase invoice
b. Sales invoice
c. Deposit slip
 d. Purchase order

5. Which of the following is incorrect concerning Subsidiary Ledgers?

a. the purchase ledger is a common subsidiary ledger for creditor on account
b. the accounts receivable ledger is a subsidiary ledger
c. individual customer accounts is entered in a subsidiary ledger
d. an advantage of subsidiary ledger is, it permits a division of labor in posting of payables
and receivables

6. Which is not an advantage of using the special journals

a. It reduces recording time
b. Transactions need no routine explanations for each entry
c. headings and account tiles need not be repeated
d. each entry must be posted separately and individually to the general ledger

7. Which statement is false in relation to sales journal...

a. when all sales have been recorded at the end of the month, the total sales figure is
posted to the general ledger
b. the amounts recorded in the sales journal are posted daily
c. Daily updating of the subsidiary ledger of each customer allows the credit department to
review & monitor a customer's account
d. Daily posting permits the business to answer customer inquiries in a delayed manner.

8. When special journals are used, all adjusting entries are recorded in....
a. General Journal
b. Columnar book
c. Subsidiary ledger
d. General Ledger

9. The primary document that support the purchases is...

a. Purchase requisition
b. Purchase order
c. Receiving report
d. Purchases approval

10. Which of the following is least likely recorded int he general journal?
a. Write-offs of uncollectible accounts
b. Non-cash transactions
c. Merchandise returns
d. Personal withdrawal
SPECIAL JOURNALS PROBLEM

BELOW WERE THE TRANSACTIONS TAKEN FROM GRACIOUS HEAVEN CENTER DURING THE MONTH OF MAY 2019.

1 Initial investment of Gracious Guevarra in her new business, Gracious Heaven Center, P 400,000
Paid in advance a 6-months Ads to ABS-CBN. Monthly subscription was P 1,800. Ck#1000
2 Purchased 1 unit computer & furnitures from ABC Complex with list price of P50,000 & P40,000,
respectively. Terms: 10%, 2/10, n/60. Discounts are granted on partial payments. RR001
3 Made an additional investment, P200,000.
4 Purchased goods from Faith Store with tag price of P 60,000. Terms: 10%, 3/10, 1/15, n/30
FOB shipping point, freight prepaid. Freight cost was P 500. RR002
5 Purchased goods from NeoHope with list price of P 80,000. Terms: 20%, 2/15, n/60 RR003
6 Returned to NeoHope, P10,000 goods because of not meeting the desired specifications.
Sold merchandise to HumbleNa. List price P 50,000. Terms: 5%, 2/10, n/60. CS#001
FOB destination, freight collect id. Freight cost was P 600. CS#001
9 Received a bill from GogoExpress for freight cost on July 5 purchases, P 750. Bill789
Sold merchandise to Charity, P 40,000. Terms: 2/15, n/45 CS#002
10 Received from HumbleNa returned goods for P 3,500
Cash sales to various clients, P 38,000. SI#001
11 Cash refund of P3,000 on July 10 sales due to inferior quality. Ck#1001
12 Bought store supplies from Simplicity Books with list price of P 20,000. Terms: 5%, n/15 RR004
Paid in full Faith Store. Ck#1002
15 Paid salaries of workers, P25,500. Ck#1003
Collected in full HumbleNa's account. SI#002
Cash purchases, P25,300 less P5,300 trade discount. Ck#1004
16 Bought office supplies from Simplicity Books, P4,700 less P200 trade discount. Terms: n/20
RR005
17 Returned P 400 office supplies to simplicity Books.
Cash sales, P 53,750 less trade discount of P 3,250. SI#003
18 Purchased additional goods from Faith Store. Tag price = P 50,000. Terms: 10%, 2/10, eom RR006
19 Paid in full NeoHope. Ck#1005
22 Sold merchandise to PatiencePo. List price P15,000. Terms: 10%, 2/10, n/30 CS#003
23 Sold merchandise to BelieveMe. List price P 40,000. Terms: 20%, 2/10, n/60, CS#004
FOB destination. Unpaid freight cost of P 800 to GogoExpress.
24 Paid 50% of its account to ABC Complex. Ck#1006
25 Paid GoGoExpress in full. Ck#1007
Cash sales, P 89,650 less trade discout of P1.650. SI#004
26 Sent an interest bearing promissory note to Simplicity Books for the May 12 and 16 purchases.
29 Withdrew P18,000 for personal use. Ck#1008
30 Paid salaries of workers, P20,000. Ck#1009

Below are the chart of accounts.

100 Cash 500 Sales
110 Accounts Receivable 510 Sales Returns & Allowances
130 Office Supplies 520 Sales Discounts
140 Store Supplies 600 Purchases
150 Prepaid Advertising 610 Purchases Returns & Allowances
200 Store Computer 620 Purchases Discounts
200A Accu. Depreciation- Computer 630 Transportation In
210 Store Furniture & Fixtures 700 Salaries
210A Accu. Depreciation –Furn/Fix 710 Transportation out
300 Accounts Payable 720 Advertising Expense
310 Notes Payable 730 Depreciation Expense
320 Salaries Payable 740 Store Supplies Used
330 Utilities Payable 750 Office Supplies Used
340 Interest Payable 760 Utilities
400 Heaven, Capital 770 Interest Expense
410 Heaven, Withdrawals

1. In the Sales Journal of Gracious Heaven, how much is the total Accounts Receivable on May
31?
2. What is the total sales reflected in the Cash Receipts Journal?
3. What is the total debits to cash in the Cash Receipts Journal?
4. How much is the Sales Discounts afforded to Humble Na last July 15?
5. How much is the total credits to cash in the Cash Payments Journal?
6. July 12, what should be recorded as Purchases Discounts enjoyed from Faith Store?
7. What is the total Purchases Discounts reflected in the Cash Payments Journal?
8. The refund of cash sales is recorded in what book?
a. general journal
b. cash receipts journal
c. cash payments journal
d. sales journal

9. What is the total Purchases recorded in Purchases journal?

10. What is the total credit to Accounts Payable in Purchases Journal?
11. What is the total debits in the section, OTHER ACCOUNTS in Cash Payments Journal?
12. What is the total sales credited in the Sales Journal?
13. What is the total cash debited in the Cash Receipts Journal?
14. What is the total credit to capital of Guevarra?
15. How much is the total debits to Salaries?
16. How much is credited to Notes Payable-Simplicity Books on May 26?
17. What was the total amount paid to Gogo Expresess on May 25?
18. What is the total cash purchases?
19. What should be the total debits to the Trial Balance?
a. 1,043,400
b. 1,030,800
c. 1,043,000
d. 1,010,800

20. What is the total Accounts Receivable reflected in the trial Balance?
21. What is the total Sales reflected in the Trial Balance?
22. What is the total Store Supplies reflected in the Trial Balance?
23. The total Purchases Returns and Allowances reflected in the Trial Balance?
24. What is the total Sales Returns and Allowances reflected in the Trial Balance?
25. What is the total cost of transportation spent for the goods purchased?
26. What is the total cost of transportation spent for delivering the goods sold to the clients?
27. What is the final amount of Office Supplies reflected in the Trial Balance?

IFA T10

A. Fair Market Value B. Articles of Partnership C. Liquidating Partner

D. Silent Partner E. Industrial Partner

1. One who is designated to wind up or settle the affairs of the partnership after dissolution.

2. One who contributes his knowledge or personal service to the partnership.

3. An estimated amount that a willing seller would receive from a financially capable buyer
for the sale of the asset in a free market.
4. Where agreements of the partners are embodied.
5. One who takes active part in the business of the partnership though may be known as a
partner.

A. Manner of Creation B. Number of Persons C. Terms of Existence

D. Management E. Extent of Liability

1. A partnership is created by mere agreement of the partners while a corporation is

created by operation of law.
2. Two or more persons may form a partnership. In a corporation, at least 5 persons, not
exceeding 15.
3. In a partnership, for any period of time stipulated by the partners in a corporation, not to
exceed 50 years but to extension.
4. In a partnership, every partner is an agent of the partnership if the partners did not
appoint a managing partner, n a corporation, management is vested on the Board of
Directors.
5. In partnership, each of the partners except a limited partner is liable to the extent of his
personal assets,; in a corporation, stockholders are liable only to the extent of their
investment in the corporation.

MULTIPLE CHOICES

1. The person who assumes full co-ownership of a partnership including unlimited liability is a
a. general partner
b. sole proprietor
 c. shareholder
d. limited partner

2. A large cash withdrawal by Partner Alta from Tierra, Alta, Montana and Mundo Partnership,
which is viewed by all partners as a permanent reduction of Alta's ownership equity in the
partnership, is recorded with a debit to
a. Alta, Capital
b. Retained Earnings
c. Loan Receivable from Alta
d. Alta, Drawing

3. A partnership
a. Is created by agreement of the partners
b. has a juridical personality separate & distinct from that of each of the partners
c. may be constituted in any form, except where immovable property or real real rights are
contributed, in which case, the law requires that a public instruments be executed
d. is dissolved by death of a partner
e. all of the above

4. Which of the following partnership characteristics is an advantage?

a. mutual agency
b. unlimited liability
c. ease of formation
d. limited life

5. Which of these characteristics does not apply to a general professional partnership?

a. mutual agency
b. unlimited life
c. unlimited liability
d. no business income tax

6. A business would be organised as a limited liability partnership to

a. reduce regulation of the business
b. eliminate double taxation
c. limit the liability of the owners to their investmen
d. raise additional capital

7. A partner whose liability for partnership debts is limited to his capital contribution is called
a. industrial partner
b. general partner
c. limited partner
d. secret partner
8. Partner's investments may include which of the following?
a. Cash
b. Non-cash assets
c. Non-cash assets with liabilities to be assumed
d. all of the above

9. A partner who contributes work, labor or industry to the common fund of the partnership is
called
a. industrial partner
b. limited partner
c. capitalist partner
d. managing partner

10. One who takes charge of the winding up of partnership affairs upon dissolution called
a. industrial partner
b. general partner
c. limited partner
d. secret partner
e. not given

11. Which of the following is a characteristic of most partnerships?

a. unlimited partner
b. mutual contribution
c. limited liability
d. division of profits only

12. Non-cash assets invested into a partnership are recorded at

a. zero
b. their original cost
c. their carrying value
d. their fair market value

13. The partner's capital account is credited in the following cases except when it involves the
recording of the
a. Additional investment
b. original investment
c. debit balance of the drawing account at the end of the period
d. share inprofit

14. Which of the following is not a conflict of interest for general partner in a limited partnership?
a. buying personal assets & then selling them to the limited partnership
b. taking out personal loans from the partnership
c. acting as an agent for the partnership
d. accepting money for agreeing not to compete with the limited partnership
15. A partnership agreement should include
a. each partner's duties
b. the purpose of the business
c. the method of allocating profits and losses
d. all of these

16. In a limited partnership

a. the general partners have limited liability
b. all but the general partners have limited liability
c. all partners have limited liability
d. all but the general partners have unlimited liability

17. Which of the following would least likely be stated in the articles of partnership?
a. Who will make the final decisions

b. How much each partner will invest

c. What the duties of each partner are
d. What products the company will sell
e. What will happen if a partner dies or wants to dissolve the partnership

18. Butterfly and Eagle decided to go into business together. They started by listing the
essential terms of their agreement along with their rights and duties. Butterfly and Eagle created
a (n)
a. articles of partnership
b. licensing agreement
c. articles of incorporation
d. division of partnership agreement

19. The partner who can lose only what he has invested in a business is the
a. general partner
b. sole proprietor
c. manager
d. employee
e. limited partner

20. Blue, Gold and White are partners in an accounting firm with each partner owning an equal
share of the business. Gold died suddenly of a heart attack. What will most likely become of the
partnership?
a. Blue and White will be able to purchase Gold's interest from his estate.
b. It will be dissolved. Blue and White will lose personal property to pay business debts
c. Gold's share of the business will automatically be split between Gold and White
d. It will immediately cease to exist. Blue and White will have to find new jobs.
TRUE OR FALSE

A = S1 True. S2 True
B = S1 False. S2 False
C = S1 True, S2 False
D = S1 False, S2 True

1. [1] A partnership is a legal entity separate and apart from its owners. [2] The basis of
valuation for non-cash investments should be fair market value always.

2. [1] A partnership should always be constituted in writing. [2] Mutual agency means that each
partner has the right to bind the partnership to contracts.

3. [1] As long as the action is within the scope of the partnership, any partner can bind the
partnership. [2] The manner in which profits are to be shared should be specified in the articles
of partnership.

4. [1] A partnership cannot be established for religious purposes. [2] A partnership must always
have at least two owners.

5. [1] A partnership with a capital of less than P3,000 is valid even if it is unregistered with the
Securities and Exchange Commission. [2] A de jure partnership is one which has complied with
all the legal requirements for its establishment.

6. [1] Bankruptcy of a partner will dissolve the partnership. [2] There can never be a partnership
without contribution of money, property or industry to a common fund.

7. [1] All partnerships are subject to tax at the rate of 30% of taxable income. [2] A partnership
may be established for charity.

8. [1] A limited partnership must have at least one general partner. [2] In general partnership,
each partner's liability for losses is limited to his investment in the firm.

9. [1] A partner by estoppel is one who is actually not a partner but who represents himself as
one. [2] The basis of valuation for non-cash investments should be at values agreed upon by
the partners.

10. [1] A partner usually retains title to assets contributed to a partnership, so that certain assets
may be identified as belonging to a given partner. [2] Adjustments prior to formation may be
omitted since these will not affect the partner's capital credits.

SHORT PROBLEMS
1. Padapat and Sentorias started a partnership. Padapat contributed a building that she
purchased 10 years ago for P100,000. The accumulated depreciation on the building on the
date of formation of the partnership is P25,000 and the fair market value is P110,000. Sentorias
had to invest twice the capital of Padapat. For what amount will Padapat's capital account be
credited on the books of the partnership?
a. P100,000
b. P75,000
c. P110,000
d. P25,000

1A. How much is the investment of Sentorias?

a. P 220,000

b. P 200,000
c. P 150,000
d. not given

2. On July 1, Queeny and Princess formed a partnership, agreeing to share profits and losses in
the ratio of 40:60, respectively. Queeny contributed a parcel of land that cost P25,000. The land
was sold for P 50,000 on July 1, three (3) hours after the formation of the partnership. How
much should be recorded in Queeny's capital account on formation of the partnership?
a. P 10,000
b. P 25,000
c. P 50,000
d. P 20,000

2A. How much should be recorded as capital investment of Princess?

a. 75,000
b. 37,500
c. 50,000
d. not given

3. On May 1, 2019, Lao and Lim formed a partnership and agreed to share profits and losses in
the ratio of 30:70, respectively. Lao contributed a Machineries that cost P 130,000 with an
accumulated depreciation of P20,000, Cash of P50,000 and Accounts Payable related to the
purchased of the Machineries of P10,000. Lim will contribute Cash twice higher than the
contribution of Lao and the balance charged to Materials and Supplies. The fair market of
Machineries was P200,000 on May 1, 2019 during the formation of the partnership. What should
be the recorded net value of the Machineries with consideration of the liability involved?
a. P 110,000
b. P 100,000
c. P 190,000
d. P200,000
3A. On May 1, 2019, Lao and Lim formed a partnership and agreed to share profits and losses
in the ratio of 30:70, respectively. Lao contributed a Machineries that cost P 130,000 with an
accumulated depreciation of P20,000, Cash of P50,000 and Accounts Payable related to the
purchased of the Machineries of P10,000. Lim will contribute Cash twice higher than the
contribution of Lao and the balance charged to Materials and Supplies. The fair market of
Machineries was P200,000 on May 1, 2019 during the formation of the partnership. What
amount should be recorded in Lao's capital account on formation of the partnership?
a. P 110,000
b. P 150,000
c. P 200,000
d. P 240,000

3B. How much is value of the Materials and Supplies contributed by Lim?
a. P 200,000
b. P 300,000
c. P 360,000
d. P 460,000

3C. What amount should be recorded as Lim's capital?

a. P 560,000
b. P 400,000
c. P 460,000
d. Not given

PROBLEM SOLVING

The business assets of Lapeciros and Tambis before the formation of the partnership appear
below:

Lapeciros Tambis Accounts

11,000 22,354 Cash
20,000 Marketable Securities
234,536 567,890 Accounts Receivable
120,035 260,102 Inventories
603,000 Land
428,267 Building
30,345 34,789 Furniture and Fixtures
2,000 3,600 Other Assets
--------------- ---------------
1,020,916 1,317,002
======== ========
 178,940 243,650 Accounts Payable
200,000 345,000 Notes Payable
641,976 728,352 Capital
---------------- ---------------
1,020,916 1,317,002
======== ========

Lapeciros and Tambis agreed to form a partnership contributing their assets and equities
subject to the following adjustments:
(a) Accounts Receivable of P20,000 in Lapeciros' books and P35,000 in Tambis' books are
determined to
be uncollectible.
(b) The value of land has increased by 20%. Whereas, the building is decreased by 8,267.
(c) Inventories are considered worthless of P5,500 abd P6,700 for Lapeciros and Tambis,
respectively.
(d) Other assets are to be written off or cancelled as worthless.
(e) Marketable securities due to pandemic decreased by 3%.
(f) All the liabilities are assumed by the partnership.

. What account should be credited to recognise the determined uncollectible accounts?

a. Allowance for Uncollectible Accounts
b. Accounts Receivable
c. Uncollectible Accounts
d. Bad Debts - Worthless Accounts

2. How much is the adjusted value of the Land?

3. How much is the total adjustments to the accounts of Lapeciros?
4. How much is the decrease in the Marketable Securities?
5. How much is the adjusted capital of Lapeciros?
a. P 641,976
b. P 734,476
c. P 736,476
d. P 714,476

6. How much is adjusted total assets of Lapeciros?

7. How much is the total adjustments to the capital of Tambis?
8. What is the adjusted capital of Tambis?
9. How much is the total liabilities and owner's equity of Tambis?
10. What is the total Accounts Receivable in the Partnership books? *
11. What is the total Inventories in the Partnership books?
12. What is the total Assets in the Partnership books?
13. How much is the total Accounts Payable in the Partnership books?
14. What is the total Notes Payable in the Partnership books?
15. What is the total capitalization of the Partnership?
16. What is the total current assets of the Partnership books?
17. What is the total current liabilities of the Partnership books?

IFA T11

MULTIPLE CHOICE

1. The most equitable distribution of partnership partnership profit on capital contributions uses
which of the following capital concept?
a. beginning capital
b. ending capital
c. equally
d. average capital

2. Which of the following is not considered a legitimate expense of a partnership?

a. supplies used in the partners' offices
b. salaries for management hired to run the business
c. interest paid to partners based on the amount of their invested capital
d. depreciation on assets contributed to the partnership by the partners

3. Periodic withdrawals by partners are best viewed as

a. distribution of partnership assets to the partners
b. expense of going business
c. taxable income to the partners
d. payment for partners' personal services to the partnership

4. A 1:3:2 ratio is the same as

a. 10%:30%:20%
b. 1/10: 3/10: 2/10
c. 1/6: 1/2: 1/3
d. 20%: 50%: 30%

5. Closing entries of a partnership include entries to *

a. close the profits or losses and dividends declared accounts to retained earnings
b. close income & expense accounts to the income summary account; & then close the
profits or losses to the drawing accounts.
c. record distribution of cash to the partners
d. eliminate the capital accounts & record the distribution of assets to partners to effect the
partnership termination & liquidation

6. A partner who contributes money or property as well as his work or industry to the capital of
the partnership is called
a. industrial partner
 b. capitalist-industrial partner
c. capitalist partner
d. managing partner

7. Which of the following distributions would be made last in dividing profits to the partners when
interest on capital balances and salary allowances are involved?
a. specified ratio
b. equally
c. salary allowances
d. interest on capital balances

8. Which of the following is not a component of the formula used to distribute profit?
a. interest on average capital investments
b. salary allowances to the managing partners
c. after all allocations, the remainder divided according to the profit and loss sharing profits
d. interest on notes to partners

9. The division of profits on the basis of salaries, interest and at agreed ratio is usually
necessary because
a. partners seldom contribute time, effort and resources equally
b. this prevents arguments among the partners
c. most investors require this method of distribution
d. this reflects the amount of time devoted to the partnership by the partners

10. If the partnership agreement does not specify how profit is to be allocated, profits or losses
should be allocated
a. equally
b. in accordance with their capital contribution
c. in proportion to the average of capital invested during the period
d. equitably so that partners are well compensated for their time and effort

11. Apple is an industrial partner. Besides his services, he also contributed capital to the
partnership. There is no agreement as to the distribution of profits or losses. The share of Apple
in the profit is
a. pro-rata to his contribution
b. such share as may be just and equitable under the circumstances
c. combination a and b
d. to be determined by the remaining partners

12. Which os the following best describes the nature of salary and interest allowances in a
partnership profit and loss sharing agreement?
a. a means of determining reasonable monthly withdrawals by each partner
b. the amount upon which each partner will have to pay personal income tax
 c. a means of distributing profit in relation to services rendered and capital invested by
partners
d. expenses of the business that should be deducted from revenue in determining profit

13. The partner's capital account is credited in the following cases except when it involves the
recording of the
a. additional investment
b. original investment
c. debit balance of the drawing account at the end of the period

d. share in profit

14. A partner will not bind the partnership to an outside purchase contract when the
a. item purchased is not within the normal scope of the business
b. the item purchased is considered immaterial in amount
c. partner who made the purchase withdraws from the partnership
d. partner was not authorized by the other partners to make the purchase

15. Orange agreed with Blue and Gold to form a partnership. One of the concerns was uneven
productivity among the partners. The agreement required each partner to contribute to every
aspect of the business receive an equal portion of the profits. This agreement did not reflect the
idea that
a. Each partner may enter into contracts on behalf of all the others
b. the Limited Partnership Law requires every general partnership to have at least one
limited partner
c. general partners are required to be active in day-to-day business operations
d. partners need not be 'equal' because each bring varied talents and knowledge into the
partnership
e. customers and creditors of a limited partnership need not be protected

MODIFIED TRUE OR FALSE

A = S1 True. S2 True
B = S1 False. S2 False
C = S1 True, S2 False
D = S1 False, S2 True

1. [1] The equity of a partner in the net assets of the partnership is not the same as the partner's
share in the profits or losses. [2] It is possible for a partner's capital account to increase as a
result of the allocation of a loss.
2. [1] Profits or losses are divided equally among the partners unless the partnership agreement
specifies to the partners. [2] A stipulation that excludes one or more partners from any share in
the profits or losses is valid.

3. [1] When salary and interest allocations exceed profit, a loss has occurred. [2] When a loss is
closed into the partners' capital accounts, income summary is credited.

4. [1] It is possible to allocate profit or loss to the partners based solely on the stated ratio. [2] It
is possible to allocate profit or loss to partners based solely on interest.

5. [1] it is possible to allocate profit or loss to partners solely on salaries. [2] In the absence of a
specific agreement, the law requires that partnership profits be divided equally among the
partners.

6. [1] the interest of partners' capital can be considered as expenses depending on partners'
agreement. [2] The increase in equity of the partner due to distribution of profit can be attributed
to a particular asset.

7. [1] Partnership profits and losses are divided among partners according to their sharing
agreement. If no sharing agreement exists, profits or losses are divided equally. [2] It is possible
to allocate profit or loss to partners based solely on average capital balances.

8. [1] When beginning capital balances are used in allocating profits, year-end investments are
discouraged. [2] If a partnership agreement does not specify how profits or losses are to be
distributed, they should be allocated based on relative capital account balances.

9. [1] The salary allocation to partners also appears as salaries expense on the partnership's
statement of comprehensive income. [2] The form and content of the statement of
comprehensive income of a partnership resemble those of a sole proprietorship with no
exceptions.

10. [1] Industrial partner is not liable for losses because he cannot withdraw the work or labor
already done by him. [2] Interest on loans from partners is recognized as partnership income. *

SHORT PROBLEMS

Alviar, a partner in the Alviar, Adang & Company, has a 30% participation in the partnership
profits and losses.
Alviar's capital account has a net decrease of P120,000 during the calendar year 2019.
During 2019, Alviar withdrew P260,000, charged against his capital account and contributed
property valued at P50,000 to the partnership.

1. How much is the net profit share of Alviar?

 a. 50,000
b. 120,000
c. 140,000
d. 90,000

2. What was the profit of Alviar, Adang & Company for the year 2019?
a. P1,100,000
b. P466,667
c. P300,000
d. P700,000

3. How much is the share of Adang in the net profit?

a. P 140,000
b. P260,000
c. P300,000
d. P210,000

A partnership showed the following account balances:

Sales, P70,000; Cost of Goods Sold, P40,000; Operating Expenses, P10,000; Partner's
salaries, P13,000; interest paid to banks, P2,000; and partners' drawings, P8,000.

1. The partnership profit is

a. (P3,000)
b. P20,000
c. P5,000
d. P18,000

White, Brown and Green are partners sharing residual profits in the ratio of 3:2:1.
The partnership agreement provides for 8% interest on capital and a quarterly salary for Brown
for P20,000.
Profit for 2019 was P840,000 and the year-end balances on partners' capital accounts are as
follows:
White, P200,000; Brown, P150,000; and Green, P120,000.

1. What was Green's share of residual profits for 2019?

a. P120,400
b. P126,670
c. P130,000
d. P140,000
2. The partner that received the highest profit share is
a. White
b. Brown
c. Green
d. All are the same

3. What are the total share of each partners?

a. White P361,200; Brown P240,800, and Green P120,400
b. White P361,200; Brown P240,800, and Green P130,000
c. White P377,200; Brown P332,800, and Green P130,000
d. White P347,200; Brown P317,600, and P120,400

1. Sunshine has a capital balance of P400,000 for five months, P500,000 for four months, and
P600,000 for three months. The average capital balance is
a. P483,333
b. P500,000
c. P485,000
d. P491680

2. Partners Mandin and Baldonado receive a salary allowance of P30,000 and P70,000,
respectively, and share the remainder equally. If the business earned P40,000 during the
period, what is the effect on Baldonado's capital?
a. P40,000 increase
b. P30,000 decrease
c. P50,000 increase
d. P90,000 increase

3. Partners Joshua and Jericho receive a salary of P150,000 and P300,000, respectively, and
share profit and losses in a 2:1 ratio, respectively. If the partnership suffered a P150,000 loss in
2019, by how much would Joshua's account decrease?
a. P400,000
b. P200,000
c. P250,000
d. P100,000

4. The partnership of Jay, John & Jan divides profits or losses in the ratio of 4:5:3. During 2019,
the business earned P80,000. Jan's share of this profit is
a. P33,334
b. P 26,667
c. P32,000
d. P 20,000
Sol, Luna and Tierra formed a partnership on January 1, 2018 and contributed P150,000,
P200,000 and P250,000, respectively. Their articles of co-partnership provided that the
operating profit be shared among the partners as follows:
- Salary: Sol for P24,000, Luna for P18,000 and Tierra for P12,000.
- 12% interest on the average capital balances
- Residual of the net profit will be divided at the ratio of 2:4:4, respectively

The operating profit for the year ended, December 31, 2018 amounted to P176,000.

Additional information:
Sol contributed additional capital of P30,000 on July 1 and made a withdrawal of P10,000 on
October 1.
Luna made an additional investment of P20,000 on August 1 and withdrew P10,000 on October
1.
Tierra made a withdrawal of P30,000 on November 2018.

1. How much is the average capital of Luna?

a. 247,000
b. 210,000
c. 205,833
d. 245,000

2. How much interest is credited to Tierra?

a. 29,400
b. 24,700
c. 24,500
d. 24,000

3. How much is the residual in the net profit after proving the salaries and interest? *
a. 60,760
b. 48,400
c. 53,180
d. 62,060

4. How much is the share of Luna in the net profit?

a. 60,760
b. 48,400
c. 53,180
d. 62,060
5. The partners capital balances on December 31, 2018 are
a. Sol, P179,680; Luna, P229,360; and Tierra, P239,360
b. Sol, P223,180; Luna, P272,060; and Tierra, P280,760
c. Sol, P189,680; Luna, P239,360; and Tierra, P269,360
d. Sol, P179,760; Luna, P229,520; and Tierra, P239,520

The partnership agreement of Coo, Vida & Pande provided for the year-end allocation of profit
in the following order:
> First, Coo is to receive 10% share in the profit up to P200,000 and 20% in excess or over
P200,000.
> Second, Vida and Pande each are to receive 5% of the remaining profit over P300,000.
> The remainder of profit is to be allocated 1:1:1 among the three partners.
The partnership's 2019 profit was P500,000 before any allocation to partners.

1. How much is the share of Coo in the net profit before allocating the residual?
a. 20,000
b. 60.000
c. 80,000
d. 136,000

2. What amount should be allocated to Coo as share in the net profit?

a. 216,000
b. 202,000
c. 206,000
d. 220,000

3. How much is the share of Vida in the net profit?

a. 216,000
b. 202,000
c. 142,000
d. 136,000

Winter, Summer and Spring formed a partnership called the Three Seasons Partnership.
The profit-sharing arrangements are as follows:
Until June 30, 2019, the semi-annual salaries of Summer and Spring are P20,000 and
P10,000, respectively.
The residual profit will be shared in the ratio of 6:2:2.
From July 1, 2019, the salaries will be discontinued and the profit to be divided in the
revised ratio of 5:3:2.

Profit for the year ended December 31, 2019 was P400,000 before charging partner's salaries,
accruing evenly through the year, and after charging an expense of P40,000, which was agreed
related wholly to the first six months of the year.
1. From January to June 2019 (first six months) how much is the share of Spring?
a. P30,000
b. P40,000
c. P50,000
d. P44,000

2. How much is the residual profit on the second half of 2019? *

3. How much is the share of each partner?

a. Winter P182,000; Summer P130,000; and Spring P88,000
b. Winter P200,000; Summer P116,000; and Spring P84,000
c. Winter P198,000; Summer P118,000; and Spring P88,000
d. Winter P180,000; Summer P132,000; and Spring P88,000

Lovely, Faith and Hope formed a partnership on January 1, 2019 with the following initial
investments:
Lovely P100,000, Faith P150,000 and Hope P225,000.
The partnership agreement states that profits and losses are to be shared equally by the
partners after consideration of the following:
- Salaries allowed to partners Lovely, Faith and Hope are P60,000, 48,000 and 36,000,
respectively.
- Average partner's capital balances during the year shall be allowed interest.
Additional information:
- On June 30, 2019, Lovely invested an additional P60,000.
- Hope withdrew P70,000 from the partnership on September 30, 2019.
- Share in the remaining partnership profits was P5,000 for each partner.

1. How much is the average capital of Lovely?

a. 150,000
b. 156,000
c. 130,000
d. not given

2. How much interest is credited to Faith?

a. 48,000
b. 15,000
c. 18,000
d. Not given

3. How much is the net profit for 2019?

4. How much is the share of Hope in the net profit?
a. 68,000
b. 78,000
c. 56,750
d. 61,750

5. What is the total Partners' Equity as at December 31, 2019?

a. 405,000
b. 671,500
c. 672,750
d. 480,000