Republic of the Philippines

Department of Education
National Capital Region
Schools Division Office of Quezon City

SECOND QUARTER EXAMINATION

Fundamentals of Accountancy in Business & Management I
SY 2023-2024

Directions: Read each question carefully and choose the letter of the best answer. Write your answer
on your paper.

1. Adjusting the accounts is the process of_________.

A. recording transactions as they occur during the period
B. subtracting expenses from revenues to measure net income
C. updating the accounts at the end of the period
D. zeroing out account balances to prepare for the next period
2. The special feature of accrual basis of accounting is:
A. Recording expense only when cash is paid.
B. Recording revenues only when cash is received.
C. Recording adjustments only if it has a favorable effect on the company’s income
D. Recording revenues and expenses when they are earned and incurred respectively,
regards of when cash is received or paid.
3. The matching principle states
A. That revenue is recorded only when cash is received.
B. That revenue is recorded only after you have earned it.
C. That revenue and expenses are recorded only if they have favorable effect to the business.
D. That expenses be recorded in the period when they are incurred and pair them against the
revenues earned during the same period.
4. Cash received from customers prior to the delivery of services is an example of
A. Prepaid expense
B. An accrued expense
C. An accrued revenue
D. An unearned revenue
5. Adjusting entries are necessary in order to:
A. Bring asset accounts to correct balances
B. Bring liability accounts to correct balances
C. Measure properly the company’s income for the period
D. All of the above
6. Adjusting entry for accrued revenue is required when:
A. Cash is received for services rendered.
B. Cash is received after the revenue is earned.
C. Cash is received before the revenue is earned.
D. None of the above.
7. An entry that results in a debit to an expense account and a credit to a related liability account
is an example of which category of adjusting entry?
A. Accrued expense
B. Prepaid expense
C. Accrued revenue
D. Uncollectible account

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8. An entry that results in a debit to an expense account and a credit to a related asset account is
an example of which category of adjusting entry?
A. Prepaid expense
B. An accrued expense
C. An accrued revenue
D. An unearned revenue
9. All adjusting entries are necessary to:
A. Record revenue for the period
B. Ensure the equality of the debits and credits
C. Balance the books at the end of the accounting period
D. Update the balance of some ledger accounts at the end of the accounting period
10. All adjusting entries involve
A. An asset account and a liability account
B. An asset account and an equity account
C. An asset account and a contra asset account
D. A balance sheet account and income statement account.
11. The decrease in the usefulness of property, plant and equipment as time passes is called
A. Depletion
B. Deterioration
C. Depreciation
D. Consumption
12. Which of the following is an example of an adjusting entry?
A. Recording depreciation expense on a truck
B. Recording purchase of supplies on account
C. Recording the payment of employees salaries
D. Recording the receipt of cash from customers for services rendered
13. An item that represents the advance payment received by the firm for services to be rendered in
the future is:
A. Accrued revenue
B. Accrued expense
C. Unearned revenue
D. Prepaid expense
14. Which of the following is an example of deferral?
A. A commission collected in advance C. Interest expense incurred but not yet paid
B. Interest earned on a bank account D. Medical fees earned but not yet collected
15. Unearned Revenue is always
A. a liability B. an asset C. Income D. Stockholders Equity
16. Accrued salaries are _________________
A. Salaries that have been paid
B. Salaries that have been earned by employees but not with paid
C. Salaries that have been neither earned by employees nor paid
D. Salaries that ere earned by employees and have been paid
17. Which of the following is an example of an accrual?
A. Bookkeeping purchased for use in the business
B. Equipment purchased for use in the business
C. Interest earned but not yet received
D. Six months rent paid in advance
18. Entries required at the end of the accounting period to bring the accounts up to date are called:
A. Journal entries
B. Compound entries
C. Adjusting entries
D. Closing entries.
19. Each of the following is a major type or category of adjusting entries except:
A. Prepaid expenses
B. Accrued revenues
C. Accrued expenses
D. Earned revenues
20. Which of the following account would likely NOT need to be adjusted at year-end?
A. Land B. Office Supplies C. Prepaid Advertising D. Unearned Revenue
21. The earned but uncollected revenues that are recorded during the adjusting process is called.
A. Accrued Expenses C. Deferred Expenses
B. B. Accrued Revenues D. Deferred Revenues
22. The incurred but unpaid expenses that are recorded during the adjusting process is called
A. Accrued Expenses C. Deferred Expenses
B. Accrued Revenues D. Deferred Revenues
23. Which of the following represents the amount an entity paid to acquire the depreciable asset?
A. Cost B. Depreciation C. Salvage Value D. Useful Life
24. The estimated number of periods that an entity can make use of the asset is called
A. Cost B. Depreciation C. Salvage Value D. Useful Life
25. Unearned Revenues are recorded by companies that___________
A. pay money in advance of the performance of a service
B. pay money at the time the performance of a service is complete
C. receive money in advance of the performance of a service
D. receive money at the time the performance of a service is complete
26. A prepaid expense is NOT an
A. Asset B. Economic Resource C. Expired Cost D. Unexpired Cost
27. When revenue is greater than expenses, you have a ____________
A. Contributed Capital B. Historical Evaluation C. Net Profit D. Net Loss
28. ABC Shapes gains a client who prepays Php540 for a package of six physical training sessions.
After four training sessions, what should ABC Shapes report on its Income Statement?
A. Cash of Php180 C. Service Revenue of Php540
B. Service Revenue of Php360 D. Unearned Service Revenue of Php360
29. Assuming that you prepay ABC Shapes for a package of six physical training sessions. Which
type of account should you have in records?.
A. Accrued Revenue C. Prepaid Expense
B. Accrued Expense D. Unearned Revenue
30. Which situation indicates a Net Loss within the Income Statement columns of the worksheet?.
A. Total credits exceed total debits
B. Total debits exceed total credits
C. Total debits equal total credits
D. None of these
31. Failure to record the entry for accrued salaries results in________.
A. profit being understated
B. salaries expense being understated
C. salaries that have been neither earned by employees nor paid
D. salaries that were earned by employees and have been paid
32. The entry to record expired insurance is omitted. This error causes____________.
A. Assets to be overstated C. Liabilities to be overstated
B. Expenses to be overstated D. Liabilities to be understated
33. If the services totaling Php25,000 had been performed but not yet billed, the adjusting entry to
record this would include a__________
A. Debit to Service Revenues for PHP25,000
B. Credit to Unearned Service Revenues, Php25,000
C. Credit to Service Revenues, Php25,000
D. Credit to Service Revenues, Php25,000
34. If as of Dec.31,,2018 the rent of Php10,000 for December had not been recorded or paid, the
adjusting entry would include a __________
A. Credit to Accumulated Rent for Php10,000 C. Debit to Rent Payable for Php10,000
B. Credit to Cash for Php10,000 D. Debit to Rent Expense for Php10,000 .
35. If the estimated depreciation for Office Equipment were Php20,000, the adjusting entry would
contain_________________
A. Credit to Accumulated Depreciation-Office Equipment for Php20,000
B. Credit to Depreciation Expense-Office Equipment for Php20,000
C. Credit to Office Equipment for Php20,000
D. Debit to Accumulated Depreciation-Office Equipment for Php20,000
36. If on Dec. 31, 2018,the insurance still unexpired amounted to Php2,000, the adjusting entry
would contain_______________
A. Credit to Prepaid Insurance for Php2,000
B. Credit to Prepaid Insurance for Php3,000
C. Debit to Prepaid Insurance for Php2,000
D. Debit to Prepaid Insurance for Php3,000
37. If on December 31, 2018, supplies on hand were Php2,000, the adjusting entry would contain a
______.
A. Credit to Supplies, Php2,000 C. Debit to Supplies, Php2,000
B. Credit to Supplies Expense, Php13,000 D. Debit to Supplies Expense, Php3,000
38. Failure to record depreciation at yar-end will result in an____________
A. Overstatement of total liabilities C. Understatement of profit
B. Overstatement of total assets D. Understatement of total liabilities
39. Office Supplies were Php9,000 at the end of January and Php11,400 at the end of February.
During February, Office Supplies Expense equaled Php3,000. How much cash was paid for
office supplies during February?
A. Php2,400 B. Php5,400 C. Php14, 400 D. Php17,400
40. The trial balance shows Supplies P2,700.00 and Supplies Expense P0. If P1,200 of supplies
are on hand at the end of the period, the adjusting entry is :
A. Supplies P1,200
Supplies Expense P1,200
B. Supplies P1,500
Supplies Expense P1,500
C. Supplies Expense P1,500
Supplies P1,500
D.Supplies Expense P1,200
Supplies P1,200
41. The most important asset of a merchandising business
A. Prepayments
B. Accounts Receivable
C. Inventory
D. Supplies
42. Merchandising business starts with
A. Purchase of goods it intends to sell
B. Planning of goods it intends to sell
C. Marketing of products and services
D. Storing Inventory
43. Purchases Journal is used for recording
A. Cash Sales
B. Credit Sales
C. Discount
D. Cost of Goods Sold
44. The entry to close the Income Summary includes
A. Credit to Income Summary
B. Debit to Income Summary
C. Credit to Owners Equity
D. Debit to Capital
45. Closing Entries are done at the end of the period to bring all temporary accounts back to zero
EXCEPT
A. Sales
B. Expense
C. Supplies
D. Drawing
46. Reversing entries are only applicable to
A. Prepaid Expenses
B. Accrued Expense
C. Unearned Income
D. Doubtful Accounts
47. The Cost of Goods Sold together with the ______ form part of the first step Income Statement
A. Sales
B. Gross Proft
C. Net Process
D. Expenses
48. No journal entry was made for a transaction is an example of what type of error
A. Faliure to record
B. Failure of Omission
C. Transposition
D. Original Entry
49. On a Post-Closing Trial Balance, only real accounts are listed EXCEPT
A. Cash
B. Accounts Receivable
C. Sales
D. Capital
50. Income Summary is transferred to what account?
A. Owners Capital
B. Assets
C. Liabilities
D. Revenues