EASY

1 A company reported total equity of P145,000 at the beginning of the year. The
company reported P210,000 in revenues and P165,000 in expenses for the year.
Liabilities at the end of the year totaled P92,000. What are the total assets of the
company at the end of the year?
A P45,000
B P92,000
C P98,000
D P210,000
E P282,000

2 If a company has excess space in its building that it rents to another company for
P700, what is the effect on the accounting equation when the first rent payment is
collected?
A Assets would decrease P700 and liabilities would decrease P700
B Assets would decrease P700 and equity would increase P700
C Assets would increase P700 and equity would decrease P700
D Assets would increase P700 and equity would increase P700
E Liabilities would decrease P700 and equity would increase P700

3
An entity had cash inflows from operating activities of P27,000; cash outflows from
investing activities of P22,000, and cash outflows from financing activities of
P12,000. Calculate the net increase or decrease in cash.
A P61,000 increase
B P37,000 increase
C P7,000 decrease
D P7,000 increase
E P34,000 decrease

4 Manning Corporation issued a one-year, 9%, P200,000 note on April 30, 2018.
Interest expense for the year ended December 31, 2019 was
A P18,000
B P13,500
C P12,000
D P10,500
E P6,000

5
D' Maka Move-on Company collected P8,400 in May of 2018 for 4 months of service
which would take place from November 2018 through February 2019. The revenue
reported from this transaction during 2018 would be
A P0
B P6,300
C P8,400
D P4,020
E P4,200

6 Pinaglaruan University sold season tickets for the 2018 Dodgeball season for
P160,000. A total of 8 games will be played during September, October and
November. In September, two games were played. In October, three games were
played. The balance in Unearned Revenue at October 31 is
A P0
B P40,000
C P6,000
D P100,000
E P60,000

7
 Linis Puti Company purchased P6,500 worth of laundry supplies on June 2 and
recorded purchase as an asset. On June 30, an inventory of the laundry supplies
indicated only P2,000 on hand. The adjusting entry that should be made by the
company on June 30 is
A Debit Laundry Supplies Expense, P2,000; Credit Laundry Supplies, P2,000
B Debit Laundry Supplies Expense, P4,500; Credit Laundry Supplies, P4,500
C Debit Laundry Supplies, P4,500; Credit Laundry Supplies Expense, P4,500
D Debit Laundry Supplies, P2,000; Credit Laundry Supplies Expense, P2,500
E Debit Laundry Supplies Expense, P6,500; Credit Cash, P6,500

8 Zapper has beginning equity of P257,000, net income of P51,000, withdrawals of

P40,000 and investments by owners of P6,000. Its ending equity is:
A P223,000
B P240,000
C P268,000
D P274,000
E P208,000

9 Stephen Curry withdrew P50,000 from the GWS Company debiting Salaries
Expense and crediting Supplies. Correcting entry for this transaction includes
A Credit Stephen Curry, Drawings, P50,000
B Debit Cash, P50,000
C Credit Salaries Expense P45,000
D Debit Supplies, P50,000
E Credit Equipment, P50,000

10 A company's balance sheet shows: cash P22,000, accounts receivable P16,000,

office equipment P50,000, and accounts payable P17,000. Trial Balance shows
amount of
A P71,000
B P88,000
C P105,000
D P5,000
E P39,000
 AVERAGE

11. A company purchases a one-year insurance policy on June 1 for P1,260. The adjusting entry on
December 31 is
a. debit Insurance Expense, P630 and credit Prepaid Insurance,
P630.
b. debit Insurance Expense, P525 and credit Prepaid Insurance,
P525.
c. debit Insurance Expense, P735, and credit Prepaid Insurance, P735.
d. debit Prepaid Insurance, P630, and credit Cash, P630.

12. What is the proper adjusting entry at April 30, the end of the fiscal year, based on a prepaid insurance
account balance before adjustment, P16,000, and unexpired amounts per analysis of policies,
P6,000?
a. debit Insurance Expense, P6,000; credit Prepaid Insurance, P6,000
b. debit Insurance Expense, P16,000; credit Prepaid Insurance, P16,000
c. debit Prepaid Insurance, P10,000; credit Insurance Expense, P10,000
d. debit Insurance Expense, P10,000; credit Prepaid Insurance, P10,000

13. The balance in the prepaid rent account before adjustment at the end of the year is P24,000, which
represents four months' rent paid on December 1. The adjusting entry required on December 31 is
a. debit Rent Expense, P6,000; credit Prepaid Rent, P6,000
b. debit Prepaid Rent, P18,000; credit Rent Expense, P6,000
c. debit Rent Expense, P18,000; credit Prepaid Rent, P6,000
d. debit Prepaid Rent, P6,000; credit Rent Expense, P6,000

14. During the end-of-period processing which of the following best describes the logical order of this process
a. Preparation of adjustments, adjusted trial balance, financial statements
b. Preparation of Income Statement, adjusted trial balance, Balance Sheet
c. Preparation of adjusted trial balance, cross-referencing, journalizing
d. Preparation of adjustments, adjusted trial balance, posting

15. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance?
a. The Adjusted Trial Balance will show the net income (loss) as an additional account.
b. Both will need to be in balance in order to continue with the end-of-period processing
c. The Adjusted Trial Balance includes the postings of the adjustments for the period in the
balance of the accounts.
d. The Unadjusted Trial Balance will be used to record the adjustments for the period.

16. Which of the following is not true about closing entries?

a. There are four closing entries that update the owner’s equity account.
b. After the second closing entry, the income summary account is equal to the net income or
(loss) for the period.
c. All real accounts are closed at the end of the period.
d. By closing nominal accounts at the end of the period to zero, it is possible to isolate next
period’s information correctly.
17. The balance in the office supplies account on June 1 was P6,300, supplies purchased during June were
P3,100, and the supplies on hand at June 30 were P2,500. The amount to be used for the appropriate
adjusting entry is
a. P3,700
b. P11,900
c. P5,700
d. P6,900

18. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:
Accumulated Depreciation P 2,300
Fees Earned 14,700
Depreciation Expense 1,300
Insurance Expense 200
Prepaid Insurance 4,800
Supplies 900
Supplies Expense 3,800

Net income for the period is

a. P1,400
b. P9,400
c. P14,700
d. P7,100

19. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns show debits of P36,678 and the credits of P41,101. This indicates
that
a. neither net income or loss can be calculated because it is found on the income statement
b. the company has a net loss of P4,423 for the period
c. the company has a net income of P4,423 for the period
d. The amounts are out of balance and need to be corrected

20. The income statement columns in the worksheet show that debits are equal to P55,800 and credits are
P62,705. What does this information mean to the accountant?

a. Net income of P6,905

b. Net loss of P6,905
c. The accounts are out of balance, indicating an error has been made.
d. The accounts have not been updated.
21. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:

Accumulated Depreciation P 2,000

Fees Earned 15,000
Depreciation Expense 1,000
Insurance Expense 500
Prepaid Insurance 4,500
Supplies 1,200
Supplies Expenses 3,500

Net income for the period is

a. P2,300
b. P10,000
c. P4,300
d. P5,000

Mantle Company
Worksheet
For the Year Ended December 31, 2008

Adjusted Trial Balance Income Statement Balance Sheet

Account Title Debit Credit Debit Credit Debit Credit
Cash 16,000 16,000
Accounts Receivable 6,000 6,000
Supplies 2,000 2,000
Equipment 19,000 19,000
Accumulated Depr-Equip 6,000 6,000
Accounts Payable 10,000 10,000
Wages Payable 2,000 2,000
Capital Stock 11,000 11,000
Dividends 1,000 1,000
Fees Earned 47,000 47,000
Wages Expense 21,000 21,000
Rent Expense 6,000 6,000
Depreciation Expense 5,000 5,000
Totals 76,000 76,000 32,000 47,000 44,000 29,000
Net Income (Loss) 15,000 15,000
47,000 47,000 44,000 44,000

22. The journal entry to close revenues would be:

a. debit Income Summary P47,000, credit Fees Earned P47,000
b. debit Retained Earnings P47,000, credit Fees Earned P47,000
c. debit Fees Earned P47,000; credit Income Summary P47,000
d. credit Fees Earned P47,000; credit Capital Stock P47,000
23. Based on the preceding trial balance, the entry to close expenses would be:
a. Wages Expense P21,000
Rent Expense 6,000
Depreciation Expense 5,000
Income Summary 32,000
b. Expenses 32,000
Income Summary 32,000
c. Wages Expense P21,000
Rent Expense 6,000
Depreciation Expense 5,000
Retained Earnings 32,000
d. Income Summary 32,000
Wages Expense P21,000
Rent Expense 6,000
Depreciation Expense 5,000

24. Using the following information, what is the amount of cost of merchandise sold?

Purchases P28,000 Purchases discounts P800

Merchandise inventory 6,500 Merchandise inventory 7,800
April 1 April 30
Sales returns and 750 Sales 57,000
allowances
Purchases returns and 1,000 Transportation In 880
allowances

a. 25,780
b. 23,270
c. 31,220
d. 24,020

25. Using the following information, what is the amount of gross profit?
Purchases P28,000 Purchases discounts P800
Merchandise inventory 6,500 Merchandise inventory 7,800
April 1 April 30
Sales returns and 750 Sales 57,000
allowances
Purchases returns and 1,000 Transportation In 880
allowances

a. 31,970
b. 30,470
c. 25,780
d. 56,250
26. Using the following information, what is the amount of net sales?

Purchases P28,000 Purchases discounts P800

Merchandise inventory 6,500 Merchandise inventory 7,800
April 1 April 30
Sales returns and 750 Sales 57,000
allowances
Purchases returns and 1,000 Transportation In 880
allowances

a. 25,780
b. 57,000
c. 57,750
d. 56,250

27. Silver Co. sold merchandise to Bronze Co. on account, P23,000, terms 2/15, net 45. The cost of the
merchandise sold is P18,500. Silver Co. issued a credit memorandum for P2,500 for merchandise
returned that originally cost P1,900. The Bronze Co. paid the invoice within the discount period. What is
amount of net sales from the above transactions?
a. P20,090
b. P20,500
c. P3,490
d. P23,000

28. Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a
a. debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales
b. debit to Cash and a credit to Sales
c. debit to Cash, credit to Credit Card Expense, and a credit to Sales
d. debit to Sales, debit to Credit Card Expense, and a credit to Cash

29. Merchandise subject to terms 1/10, n/30, FOB shipping point, is sold on account to a customer for
P15,000. The seller paid transportation costs of P1,000 and issued a credit memorandum for P5,000 prior
to payment. What is the amount of the cash discount allowable?
a. P160
b. P150
c. P140
d. P100

30. Apple Co sells merchandise on credit to Zea Co in the amount of P8,000. The invoice is dated on
September 15 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the
invoice be paid in order for the buyer to take advantage of the discount?
a. P160, September 30
b. P160, September 25
c. P80, September 30
d. P80, September 25
31. Based on the following information, what would be recorded as the cash payment if the invoice is
paid within the discount period?
1. P5,000 of merchandise inventory was ordered on April 2, 2007
2. P2,000 of this merchandise was received on April 5, 2007
3. On April 6, 2007, an invoice dated April 4, 2007, with terms of 2/10, net 30 for P2,150
which included a P150 prepaid freight cost, was received.
4. On April 10, 2007, P500 of the merchandise was returned to the seller.

a. P1,470
b. P1,520
c. P2,150
d. P1,620

32. If the merchandise costs P4,000, insurance in transit costs P200, tariff costs P50, processing the
purchase order by the purchasing department costs P35, and the company receiving dock
personnel cost
P15, what is the total cost charged to the
merchandise?
a. P4,250
b. P4,285
c. P4,300
d. P4,000
 The following is the adjusted trial balance for Steely Company.

Steely Company
Adjusted Trial Balance
For the Year ended December 31, 2008

Cash 6,130
Accounts Receivable 2,300
Prepaid Expenses 750
Equipment 13,400
Accumulated Depreciation 1,200
Accounts Payable 1,700
Notes Payable 5,000
Capital Stock 12,000
Dividends 870
Fees Earned 6,600
Wages Expense 1,450
Rent Expense 900
Utilities Expense 475
Depreciation Expense 150
Miscellaneous Expense 75
Totals 26,500 26,500

33. Determine the net income (loss) for the period.

a. Net Income 26,500
b. Net Loss 870
c. Net Loss 3,550
d. Net Income 3,550

34. Determine the stockholders’ equity ending balance for the

period.

a. P14,680
b. P11,130
c. P15,550
d. P2,680

35. Determine total

assets.
a. P26,500
b. P15,380
c. P21,380
d. P22,580
36. Determine the current
assets.
a. P22,580
b. P9,180
c. P21,380
d. P26,500

37. Determine the total liabilities for the

period.
a. P6,700
b. P1,700
c. P5,000
d. P18,700

38. The work sheet at the end of September has P4,000 in the Balance Sheet credit column for
Accumulated Depreciation. The work sheet at the end of October has P4,750 in the Balance Sheet
credit column for Accumulated Depreciation. What was the amount of the depreciation expense
adjustment for the month of October?
a. amount cannot be determined
b. P4,750
c. P4,000
d. P750

39. After all of the account balances have been extended to the Balance Sheet columns of the work
sheet, the totals of the debit and credit columns are P25,250 and P21,825, respectively. What
is the amount of net income or net loss for the period?
a. P3,425 net income
b. P25,250 net loss
c. P3,425 net loss
d. P21,825 net income

40. After all of the account balances have been extended to the Income Statement columns of the
work sheet, the totals of the debit and credit columns are P87,500 and P98,300, respectively. What
is the amount of the net income or net loss for the period?
a. P10,800 net income
b. P10,800 net loss
c. P98,300 net income
d. P87,500 net loss

41. After totaling all of the columns in the work sheet, the Balance Sheet show debits of P35,678 and
the credits of P39,901. This indicates that
a. neither net income or loss can be calculated because that is found on the income
statement
b. the company recorded a net loss of P4,223
c. the company recorded a net income of P4,223
d. The amounts are out of balance and need to be corrected
42. The column of the income statement show the debits are equal to P56,899 and credits are
P60,333. What do this information mean to the accountant?
a. Net income of P3,434
b. Net loss of P3,434
c. the accounts are out of balance
d. None are correct.

43. A company, using the periodic inventory system, has merchandise inventory costing P140 on hand
at the beginning of the period. During the period, merchandise costing P400 is purchased. At year-
end, merchandise inventory costing P180 is on hand. The cost of merchandise sold for the year
is
a. P720
b. P550
c. P360
d. P140

44. A company using the periodic inventory system has the following account balances: Merchandise
Inventory at the beginning of the year, P4,000; Transportation-In, P450; Purchases, P12,000;
Purchases Returns and Allowances, P2,300; Purchases Discounts, P220. The cost of
merchandise purchased is equal to
a. P13,930
b. P9,930
c. P9,489
d. P14520

45. Gross profit is equal to:

a. sales plus (sales discounts and sales returns and allowances) plus cost of merchandise sold
b. sales plus sales returns and allowances less sales discounts less cost of merchandise sold
c. sales plus sales discounts less sales returns and allowances less cost of merchandise sold
d. sales less (sales discounts and sales returns and allowances) less cost of merchandise sold

46. TG Consulting bought P 9,000 of furniture. Accumulated Depreciation had a

balance of P 3,000 prior to the recording of this year’s depreciation. Depreciation
Expense at the end of the year is P 2,000. What is the book value of the furniture at
the end of the year?

A P 4,000
B P 11,000
C P 6,000
D P 3,000

47. The following accounts were closed to the Income Summary account: Salary
Expense, P 500 debit; Telephone Expense, P 800 debit; Utilities Expense, P 250
 debit; Service Revenue, P 1,200 credit. The amount and entry to close Income
Summary to the Capital account would be

A P 350 credit to the Income Summary account

B P 350 debit to the Income Summary account
C P 1,200 debit to the Income Summary account
D P 2,050 credit to the Income Summary account

48. An asset account with a P 600 beginning balance, no deductions, and a P 1,000
ending balance, would have the following amount recorded in it.

A P 600 credit entry

B P 600 debit entry
C P 400 debit entry
D P 400 credit entry

49. Regarding one purchase of merchandise, the following entries were made by Yap
Company DR. Purchases 17,000
CR. Accounts Payable - Supplier 17,000
#
DR. Transportation - in 1,900
CR. Accounts Payable - Supplier 1,900

What are the shipping terms regarding this transaction?

A FOB destination, freight prepaid

B FOB destination, freight collect
C FOB shipping point, freight prepaid
D FOB shipping point, freight collect

50. The assets of Sydney Company amounted to P 810,000 on December 31, 2018,
but increased to P 1,305,000 by December 31, 2019. During the same period,
liabilities increased by P270,000. Owner’s equity on December 31, 2018 amounted
to P 495,000. What was the amount of the Owner’s Equity on December 31, 2019?
A P 585,000
B P 1,035,000
C P 720,000
D P 1,080,000