Chapter 1: Introduction to Accounting

PROBLEM 1: TRUE OR FALSE

1. TRUE
2. FALSE – only accountable events
3. TRUE
4. TRUE
5. TRUE
6. TRUE
7. TRUE
8. TRUE
9. FALSE
10. TRUE

PROBLEM 2: TRUE OR FALSE

1. FALSE
2. FALSE
3. FALSE – Finance
4. TRUE
5. FALSE
6. TRUE
7. TRUE
8. FALSE – sole proprietorship
9. FALSE – corporation
10. TRUE

PROBLEM 3: FOR CLASSROOM DISCUSSION

1. D
2. D
3. A
4. C
5. C
6. C
7. C
8. C
9. D
10. D

PROBLEM 4: MULTIPLE CHOICE

1. D
2. A
3. B
4. C
5. D
6. D
7. C
8. A
9. C
10. D

PROBLEM 5: MULTIPLE CHOICE

1. A
2. B
3. B
4. D
5. A
6. A
7. D
8. A
9. D
10. A
 Chapter 2: Accounting Concepts and Principles
PROBLEM 1: TRUE OR FALSE
1. TRUE
2. TRUE
3. TRUE
4. FALSE – liquidating concern
5. TRUE
6. FALSE
7. FALSE – should not exceed
8. TRUE
9. TRUE
10. TRUE

PROBLEM 2: TRUE OR FALSE

1. FALSE – Going Concern
2. FALSE – Consistency
3. TRUE
4. FALSE – Prudence or Conservatism
5. TRUE
6. FALSE – SEC
7. FALSE
8. FALSE – PFRSs only. The Conceptual Framework is not a Standard.
9. TRUE
10. TRUE

PROBLEM 3: FOR CLASSROOM DISCUSSION

1. A
2. B
3. A
4. A
5. A
6. B
7. C
8. D
9. C
10. B
11. D
PROBLEM 4: MULTIPLE CHOICE
1. D
2. C
3. A
4. A
5. C
6. C
7. B
8. C
9. C
10. C

PROBLEM 5: MULTIPLE CHOICE

1. B
2. D
3. C
4. A
5. B
6. C
7. C
8. B
9. D
10. D
 Chapter 3: The Accounting Equation
PROBLEM 1: TRUE OR FALSE
1. TRUE
2. FALSE
3. FALSE
4. FALSE – assets and liabilities, respectively
5. FALSE
6. TRUE
7. TRUE
8. FALSE – also contracts and other operation of law
9. FALSE – only past events
10. TRUE

PROBLEM 2: TRUE OR FALSE

1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. FALSE
6. TRUE
7. TRUE
8. TRUE
9. FALSE
10. FALSE

PROBLEM 3: TRUE OR FALSE

1. TRUE
2. FALSE - ₱4
3. TRUE
4. FALSE - ₱90
5. TRUE
6. TRUE
7. TRUE
8. TRUE
9. TRUE
10. FALSE - ₱40

PROBLEM 4: FOR CLASSROOM DISCUSSION

1. D
2. D
3. A
4. D
5. D
6. D
7. B
8. A
9. C
10. B

PROBLEM 5: COMPUTATIONS – BASIC EQUATION

Solution:
ASSETS = LIABILITIES + EQUITY
1. ₱460,000 ₱190,000 ₱270,000
2. ₱230,000 ₱160,000 ₱70,000
3. ₱1,120,000 ₱990,000 ₱130,000
4. ₱1,020,000 ₱610,000 ₱410,000
5. ₱820,000 ₱580,000 ₱240,000
PROBLEM 6: COMPUTATIONS – BASIC EQUATION
Solution:
ASSETS = LIABILITIES + EQUITY
1. ₱780,000 ₱290,000 ₱490,000
2. ₱990,000 ₱720,000 ₱270,000
3. ₱1,060,000 ₱890,000 ₱170,000
4. ₱1,420,000 ₱1,060,000 ₱360,000
5. ₱1,920,000 ₱890,000 ₱1,030,000

PROBLEM 7: COMPUTATIONS – EXPANDED EQUATION

ASSETS = LIABILITIES + EQUITY + INCOME - EXPENSES
1. ₱590,000 ₱380,000 ₱130,000 ₱210,000 ₱130,000
2. ₱490,000 ₱280,000 ₱40,000 ₱350,000 ₱180,000
3. ₱860,000 ₱220,000 ₱360,000 ₱360,000 ₱80,000
4. ₱360,000 ₱160,000 ₱90,000 ₱180,000 ₱70,000
5. ₱870,000 ₱410,000 ₱170,000 ₱480,000 ₱190,000

PROBLEM 8: COMPUTATIONS – EXPANDED EQUATION

ASSETS = LIABILITIES + EQUITY + INCOME - EXPENSES
a. ₱920,000 ₱710,000 ₱290,000 ₱440,000 ₱520,000
b. ₱870,000 ₱310,000 ₱240,000 ₱470,000 ₱150,000
c. ₱890,000 ₱240,000 ₱240,000 ₱600,000 ₱190,000
d. ₱740,000 ₱530,000 ₱170,000 ₱1,900,000 ₱1,860,000
e. ₱1,440,000 ₱780,000 ₱470,000 ₱680,000 ₱490,000

PROBLEM 9: COMPUTATIONS - ACCOUNTING EQUATION

Solution:
ASSETS = LIABILITIES + EQUITY
Ex. ₱100 0 ₱100
1. ₱20 0 ₱20
2. ₱500 ₱500 0
3. ₱2,000 0 ₱2,000
4. (₱800) 0 (₱800)
5. ₱1,820 ₱500 ₱1,320

PROBLEM 10: MULTIPLE CHOICE

1. A
2. C
3. D
4. B
5. D
6. C
7. B
8. C
9. D
10. B
PROBLEM 11: MULTIPLE CHOICE
1. D
2. D
3. B
4. A
5. B
6. B
7. C
8. C
9. D
10. A
PROBLEM 12: MULTIPLE CHOICE
1. A
2. B
3. A
4. A
5. C
6. A
7. B
8. C
9. B
10. A

PROBLEM 13: MULTIPLE CHOICE

1. B
2. A
3. D
Solution:
Assets = Liabilities + Equity
Beg. 120 = 75 + 45
Decrease in liabilities/ Profit (20) 25
End. ? = 55 + 70
Answer: Ending total assets = (55 liabilities, end. + 70 equity, end.) = 125

4. C
Solution:
Assets = Liabilities + Equity
Beg. Irrelevant = Irrelevant + 50
Profit Irrelevant 25
End. ? = 40 + 75
Answer: Ending total assets = (40 liabilities, end. + 75 equity, end.) = 115

5. A
Solution:
Assets = Liabilities + Equity
Beg. 100M = 60M + 40M*
Increase in assets/Profit 30M - Irrelevant
End. 130M = 60M + ?
* squeezed amount
Answer+: Ending total equity = (130 assets, end. - 60 liabilities, end.) = 70

6. A
Solution:
Assets = Liabilities + Equity
Beg. 120 = 75 + 45*
Income less expenses (60 – 45) Irrelevant Irrelevant 15
End. Irrelevant = Irrelevant + ?

* squeezed amount
Answer: Ending total equity = (45 equity, beg. + 15 profit) = 60

7. A
Solution:
Assets = Liabilities + Equity
Beg. 120 = 70 + 50*
Income less expenses (60 – 40) Irrelevant Irrelevant 20
End. 130 = ? + 70

* squeezed amount

Answer: Ending total liabilities = (130 assets, end. - 70 equity, end.) = 60

8. C
Solution:

Step 1:
Assets, end. 60 – Liabilities, end. 45 = Equity, end. 15

Step 2:
Equity, beginning (given) 10
Add: Income (given) 25
Less: Expenses (squeeze) (20)
Equity, ending (see Step 1) 15

9. C
Solution:

Step 1:
Assets, end. 160 – Liabilities, end. 90 = Equity, end. 70

Step 2:
Equity, beginning (given) 30
Add: Income (squeeze) 90
Less: Expenses (given) (50)
Equity, ending (see Step 1) 70

10. A
Solution:

Step 1:
Assets, end. 180 – Liabilities, end. 70 = Equity, end. 110

Step 2:
Equity, beginning (given) 75
Profit (Loss) squeeze 35
Equity, ending (see Step 1) 110

PROBLEM 14: MULTIPLE CHOICE

1. A
Solution: 15,000 – (4,000 + 100) = 10,900 profit
2. A
3. C
4. A
Solution:
(20 x 4 weeks in a month) - ? = 10 profit
? = 70 total expenses in a month ÷ 4 weeks = 17.5 weekly spending
5. C (20 allowance – 20 spending – 16 cost of balut) = (16) loss
6. B (20 x 52) – 936 = 104
7. A
8. D
9. C
10. C

Chapter 4: Types of Major Accounts

PROBLEM 1: TRUE OR FALSE
1. FALSE - account
2. TRUE
3. TRUE
4. TRUE
5. FALSE – debit balance
6. TRUE
7. TRUE
8. FALSE – income statement
9. TRUE
10. FALSE – Supplies expense

PROBLEM 2: TRUE OR FALSE

1. TRUE
2. TRUE
3. FALSE – accounts receivable
4. FALSE – accounts payable
5. TRUE
6. FALSE – interest expense
7. TRUE
8. TRUE
9. FALSE – revenue
10. TRUE

PROBLEM 3: FOR CLASSROOM DISCUSSION

1. D
2. D
3. D
4. C
5. B
6. A
7. B
8. A
9. C
10. B

PROBLEM 4: IDENTIFICATION

Account Titles COLUMN A COLUMN B

1. Accounts receivable ASSET BALANCE SHEET
2. Bad debt expense EXPENSE INCOME STATEMENT
3. Building ASSET BALANCE SHEET
4. Notes payable LIABILITY BALANCE SHEET
5. Rent expense EXPENSE INCOME STATEMENT
6. Owner’s equity EQUITY BALANCE SHEET
7. Interest income INCOME INCOME STATEMENT
8. Cash ASSET BALANCE SHEET
9. Gain INCOME INCOME STATEMENT
10. Computer equipment ASSET BALANCE SHEET
11. Depreciation EXPENSE INCOME STATEMENT
12. Utilities payable LIABILITY BALANCE SHEET
13. Freight-out EXPENSE INCOME STATEMENT
14. Rent income INCOME INCOME STATEMENT
15. Unearned income LIABILITY BALANCE SHEET
PROBLEM 5: IDENTIFICATION

Account Titles COLUMN A COLUMN B

INCOME
1. Taxes and licenses EXPENSE
STATEMENT
2. Furniture & fixture ASSET BALANCE SHEET
INCOME
3. Supplies expense EXPENSE
STATEMENT
INCOME
4. Interest expense EXPENSE
STATEMENT
5. Inventory ASSET BALANCE SHEET
6. Land ASSET BALANCE SHEET
7. Accounts payable LIABILITY BALANCE SHEET
8. Notes receivable ASSET BALANCE SHEET
9. Prepaid insurance ASSET BALANCE SHEET
INCOME
10. Loss EXPENSE
STATEMENT
11. Prepaid supplies ASSET BALANCE SHEET
12. Rent payable LIABILITY BALANCE SHEET
INCOME
13. Sales INCOME
STATEMENT
14. Interest receivable ASSET BALANCE SHEET
15. Transportation
ASSET BALANCE SHEET
equipment

PROBLEM 6: IDENTIFICATION
1. Income
2. Accounts receivable
3. Inventory
4. Advertising expense
5. Balance sheet or Statement of financial position
6. Bad debts expense
7. Sales
8. Cost of sales or Cost of goods sold
9. Supplies expense
10. Notes payable

PROBLEM 7: IDENTIFICATION
1. Income statement or Statement of profit or loss
2. Freight out (Delivery expense, Transportation-out, or Carriage outwards)
3. Accounts payable
4. Prepaid supplies or Office supplies
5. Unearned income (Unearned revenue or Advances from customers)
6. Miscellaneous expense
7. Utilities expense
8. Allowance for bad debts
9. Depreciation expense
10. Accumulated depreciation
PROBLEM 8: MULTIPLE CHOICE
1. D
2. D
3. A
4. B
5. A
6. B
7. A
8. C
9. A
10. D

PROBLEM 9: MULTIPLE CHOICE

1. A
2. D
3. A
4. A
5. B
6. A
7. B
8. A
9. B
10. A

PROBLEM 10: MULTIPLE CHOICE

1. C
2. B
3. A
4. B
5. D
6. C
7. D
8. B
9. C
10. D

PROBLEM 11: MULTIPLE CHOICE

1. B
2. D
3. C
4. A
5. B
6. B
7. C
8. B (100K ÷ 5 yrs.) = 20,000
9. A 20,000 x 3 yrs. = 60,000
10. C 100,000 cost – (20,000 x 2 yrs.) = 60,000