UNIVERSITY OF SANTO TOMAS ASSIGNMENT

Name: _______________________________ Course/Yr/Sec.: ___________ BASIC FINANCIAL

ACCOUNTING AND REPORTING
Professor: ____________________________ Day/Time: _______________ DATE: ________________

Use the following information to answer questions 1 to 5 below:

Account Name Debit Credit
Sales 750,000
Sales Returns and Allowances 15,000
Sales Discounts 10,000
Purchases 170,000
Purchases Returns and Allowances 20,000
Transportation In 30,000
Selling Expenses 75,000
General and Administrative Expenses 275,000
In addition, the beginning merchandise inventory was P55,000, and the ending merchandise inventory was P35,000.

1. Net sales for the period were

a. P755,000.
b. P725,000.
c. P735,000.
d. P775,000.

2. Net purchases for the period were

a. P150,000.
b. P180,000.
c. P210,000.
d. P430,000.

3. Cost of goods sold for the period was

a. P235,000.
b. P160,000.
c. P200,000.
d. P170,000.

4. Gross profit for the period was

a. P425,000.
b. P525,000.
c. P545,000.
d. P450,000.
5. Profit for the period was
a. P525,000.
b. P450,000.
c. P250,000.
d. P175,000.

6. Which of the following is not considered in computing net cost of purchases?

a. Purchases returns and allowances.
b. Purchases.
c. Transportation paid on purchased goods.
d. Transportation paid on goods shipped to customers.

7. The entry to record a sale of P7,500 with terms of 2/10, n/30 would include a
a. Debit to Sales Discounts for P150.
b. Debit to Sales for P7,350.
c. Credit to Accounts Receivable for P7,500.
d. Credit to Sales for P7,500.

This examination is intended for the use of UST-AMV COLLEG OF ACCOUNTANCY. Any unauthorized reproduction of this examination is prohibited.Page 1
 8. The collection of a P5,000 account beyond the 2% discount period would result in a
a. Debit to Cash for P4,900.
b. Credit to Accounts Receivable for P5,000.
c. Credit to Cash for P5,000.
d. Debit to Sales Discounts for P100.

9. Goods totaling P50,000 were purchased February 2 with terms of 2/10, n /30. Returns of P10,000 were made on
February 10. What discounts, if any, can be availed of if the invoice was paid on February 12?
a. None.
b. P1,000.
c. P800.
d. P200.

10. The entry to record a payment on a P15,000 account within the 2% discount period would include a
a. Debit to Cash for P15,000.
b. Debit to Accounts Payable for P14,700.
c. Credit to Purchases Discounts for P300.
d. Credit to Accounts Payable for P15,000.

11. A buyer received an invoice for P6,000 dated June 10. If the terms are 2/10, n/30, and the buyer paid the invoice within
the discount period, what amount will the seller receive?
a. P6,000.
b. P5,880.
c. P4,800.
d. P 120.

12. Rivera Company purchased merchandise from Dimatulac Suppliers for P3,600 list price, subject to a trade discount of
25%. The goods were purchased on terms of 2/10, n/30, FOB Destination. Rivera paid P100 transportation costs.
Rivera returned P400 (list price) of the merchandise to Dimatulac and later paid the amount due within the discount
period. The amount paid is
a. P2,254.
b. P2,252.
c. P2,246.
d. P2,352.

13. The December 31, 2010 trial balance for Rueda Company included the following purchases, P40,000; purchases
returns and allowances, P2,000; transportation in, P3,000; ending inventory was P8,000. What was the cost of goods
sold for 2010?
a. P39,000.
b. P33,000.
c. P38,000.
d. None of the above

14. Assuming that net purchases was P900,000 during the year and that ending merchandise inventory was P20,000 less
than the beginning merchandise inventory of P250,000, how much was cost of goods sold?
a. P1,130,000
b. P 670,000
c. P 920,000
d. P1,170,000

15. Which of the following accounts is closed by debiting the account?

a. Sales Returns and Allowances.
b. Transportation In.
c. Purchases Returns and Allowances.
d. Purchases.

16. Which of the following activities is not a component of the operating cycle?
a. Ordering of merchandise.
b. Sale of merchandise.
c. Collection of cash from merchandise sales.
d. Purchase of merchandise.
This examination is intended for the use of UST-AMV COLLEG OF ACCOUNTANCY. Any unauthorized reproduction of this examination is prohibited.Page 2
 17. Each of the following companies is a merchandising company except a
a. Wholesale Parts Company.
b. Candy store.
c. Car wash.
d. Furniture store.

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

19. A physical count of inventory is usually taken

a. At the peak of the busy season.
b. In the middle of the fiscal year.
c. At the end of the fiscal year.
d. At the start of the fiscal year.

20. A merchandiser will earn an operating income of exactly zero when

a. Net sales equals cost of goods sold.
b. Cost of goods sold equals gross margin.
c. Operating expenses equals net sales.
d. Gross margin equals operating expenses.

21. Gross Margin / Gross Profit equals the difference between net sales and
a. Operating expenses.
b. Cost of goods sold.
c. Profit.
d. Cost of goods sold plus operating expenses.

22. Operating income will result if gross profit exceeds

a. Cost of goods sold.
b. Operating expenses.
c. Purchases.
d. Cost of goods sold plus operating expenses.

23. Which of the following is not considered an operating expense?

a. Cost of goods sold.
b. Advertising expense.
c. Transportation Out.
d. Administrative Expenses.

24. Which of the following goods would not be included in merchandise inventory for a purchasing company?
a. Goods in transit shipped FOB shipping point.
b. Goods in transit shipped FOB destination.
c. Goods ordered and received from the supplier.
d. Goods on hand in the showroom.

25. A sale on March 21 with terms of n/10 eom is due to be collected by

a. March 31.
b. April 1.
c. April 10.
d. April 30.
26. An amount deducted from the catalog price for an item of merchandise is called a
a. Trade discount.
b. Sales discount.
c. Customer discount.
d. Purchases discount.

This examination is intended for the use of UST-AMV COLLEG OF ACCOUNTANCY. Any unauthorized reproduction of this examination is prohibited.Page 3
 27. Under the perpetual inventory system, which of the following accounts would not be used?
a. Sales.
b. Purchases.
c. Cost of Goods Sold.
d. Merchandise Inventory.

28. The entry to record the return of goods from a customer would include a
a. Debit to Sales.
b. Credit to Sales.
c. Debit to Sales Returns and Allowances.
d. Credit to Sales Returns and Allowances.

29. Under the periodic inventory system, the entry to record a purchase return would include a credit to
a. Accounts Payable.
b. Purchases Returns and Allowances.
c. Cost of Goods Sold.
d. Merchandise Inventory.

30. Merchandise inventory becomes part of cost of goods sold when a company
a. Pays for the inventory.
b. Purchases the inventory.
c. Sells the inventory.
d. Receives payment from the customer.

31. The purchases discount account is a contra account to

a. Accounts payable.
b. Sales.
c. Purchases.
d. Sales discount.

32. When a seller of merchandise allowed a customer a reduction from the original price for defective goods, the seller will
issue to the customer a
a. Debit memorandum.
b. Credit memorandum.
c. Sales invoice.
d. Official receipt.

33. The account that appears in the chart of accounts for a merchandising entity but not for a service entity
a. Accounts receivable.
b. Advertising expense.
c. Sales returns and allowances.
d. Accumulated depreciation.

34. In preparing a ten-column worksheet for a merchandising firm that uses the periodic inventory system
a. The beginning inventory is extended as a credit in the income statement columns.
b. The beginning inventory is extended as a credit in the balance sheet columns.
c. The ending inventory is shown as a debit in the income statement columns and as a credit in the balance sheet
columns.
d. The ending inventory is shown as a credit in the income statement columns and as a debit in the balance sheet
columns.

35. A Revenue
a. Increases assets and liabilities.
b. Increases assets and owner’s equity.
c. Increases assets and decreases owner’s equity.
d. Leaves total assets unchanged.

36. Revenues should be recorded when

a. They are earned.
b. A contract is signed.
c. Cash is received from the customer.
This examination is intended for the use of UST-AMV COLLEG OF ACCOUNTANCY. Any unauthorized reproduction of this examination is prohibited.Page 4
 d. Work has begun on a job.

37. An owner’s withdrawal

a. Increases assets and owner’s equity.
b. Increases assets and decreases owner’s equity.
c. Decreases assets and owner’s equity.
d. Decreases assets and increases owner’s equity.

38. Which of the following items has no effect on owner’s equity?

a. Expense.
b. Withdrawals.
c. Land acquired.
d. Revenue.

39. An expense
a. Decreases assets and liabilities.
b. Deceases owner’s equity.
c. Leaves owner’s equity unchanged.
d. Is basically the same as liabilities.

40. The payment of a liability

a. Decreases assets and owner’s equity.
b. Increases assets and decreases liabilities.
c. Decreases assets and increases liabilities.
d. Decreases assets and liabilities.

41. The acquisition of an asset for cash

a. Increases assets and owner’s equity.
b. Increases assets and liabilities.
c. Decreases assets and increases liabilities.
d. Leaves total assets unchanged.

42. The acquisition of an asset on credit

a. Increases assets and owner’s equity.
b. Increases assets and liabilities.
c. Decreases assets and increases liabilities.
d. Leaves total assets unchanged.

43. The sale (at cost) of an asset on credit

a. Increases assets and liabilities.
b. Decreases assets and liabilities.
c. Leaves total assets unchanged.
d. Decreases assets and increases liabilities.

44. An investment b the owner in a business increases

a. Assets and owner’s equity.
b. Assets and liabilities.
c. Liabilities and owner’s equity.
d. Assets only.

45. On November 15, 2023, cash is received in advance of rendering services. Assuming that the services have been
performed by December 31, 2023, the adjusting entry would be a debit to
a. Unearned Revenues and a credit to Cash.
b. Service Revenues and a credit to Accounts Receivable.
c. Unearned revenues and a credit to Service Revenues.
d. Cash and a credit to Service Revenues.

46. Which of the following pairs of accounts could not be included in the same adjusting entry?
a. Salaries Expense and Salaries Payable.
b. Unearned Revenues and Service Revenues.
c. Rent Expense and Rent Payable.
This examination is intended for the use of UST-AMV COLLEG OF ACCOUNTANCY. Any unauthorized reproduction of this examination is prohibited.Page 5
 d. Interest Expense and Interest Receivable.

47. As the usefulness of the asset Property and Equipment expires,

a. A liability is created.
b. A related expense account is reduced.
c. An amount is transferred from one asset account to another.
d. The cost of the asset is allocated to an expense account.

48. Which of the following accounts could not be credited in an adjusting entry?
a. Interest Receivable.
b. Prepaid Rent
c. Service Revenues.
d. Office Supplies.

49. The principal difference between depreciation and most other types of expenses is that depreciation
a. Does not require an immediate cash outlay.
b. Is subject to more precise measurement.
c. Can be avoided if the asset is in as good condition as when it was purchased.
d. Is not deductible if it will cause a loss.

50. When a sale takes place

a. Liabilities will increase.
b. One asset account will increase and another will decrease.
c. Assets will be unaffected.
d. A revenue account will increase.

51. Which of the following accounts is a contra account?

a. Accumulated Depreciation-Office Equipment.
b. Unearned Revenues.
c. Depreciation Expense-Office Equipment.
d. Office Equipment.

52. Which of the following situations is an example of an accrual?

a. Recording unrecorded revenues.
b. Recording depreciation.
c. Recording supplies consumed.
d. Recording the portion of prepaid rent that has expired.

53. Which of the following is an example of an accrual?

a. Salaries incurred but not yet paid.
b. The purchase of office supplies.
c. Payment of two years’ insurance in advance.
d. Tuition revenue collected in advance.

54. An adjusted trial balance is prepared to

a. Both test that the ledger is still in balance after the accounts have been adjusted and facilitate preparation of
the financial statements.
b. Test that the ledger is still in balance after the accounts have been adjusted.
c. Facilitate preparation of the financial statements.
d. Facilitate preparation of the adjusting entries.

55. The records for Uptown Pet Shop showed the following:
Sales $75,000 Beginning merchandise inventory $10,000
Purchase 45,000 Cost of goods sold 50,000
s
The ending merchandise inventory must have been
a. $5,000
b. $15,000
c. $25,000
d. $40,000
This examination is intended for the use of UST-AMV COLLEG OF ACCOUNTANCY. Any unauthorized reproduction of this examination is prohibited.Page 6
 56. Company records disclose the following:
Sales $95,000 Beginning merchandise $10,000
inventory
Purchases 45,000 Gross profit from sales 50,000
Transportation- 500 Purchases discounts 1,000
In
The ending merchandise inventory (periodic)
a. must be $5,000
b. must be $6,000
c. must be $9,500
d. must be $10,000

57. An item of merchandise was sold with an invoice price of $400 and credit terms of 2/10, n/30. The entry to record the
sale would include a credit to Sales of
a. $400.00
b. $396.00
c. $408.00
d. $392.00

58. An item of merchandise was sold for $800 cash by a business using the perpetual inventory system. The product sold
cost the business $600. After the sale entry has been recorded, a second entry will
a. debit Cash and credit Sales for $800
b. debit Sales and credit Merchandise Inventory for $600
c. debit Cost of Goods Sold and credit Merchandise Inventory $600
d. debit Merchandise Inventory and credit Cost of Goods Sold $800

59. An item of merchandise with a list price of $100 was purchased with a trade discount of 40% and credit terms of 2/10,
n/30. If the vendor is paid within the discount period, the journal entry to record the payment would be
a. Purchases, dr., $100.00; Purchase Discounts, cr., $42.00; Cash, cr., $58.00
b. Accounts Payable, dr., $60.00; Purchase Discounts, cr., $1.20; Cash, cr., $58.80
c. Accounts Payable, dr., $100.00; Purchase Discounts, cr., $42.00; Cash, cr., $58.00
d. Accounts Payable, dr., $40.00; Purchase Discounts, cr., $.80; Cash, cr., $39.20

60. If gross sales is $40,000, sales returns and allowances $1,000, sales discounts $400, and delivery expenses $100, the
net sales of the business will total
a. $38,500
b. $38,600
c. $40,000
d. $39,000

61. If revenues for the accounting period total $10,000, and the expenses total $11,000, then the net income (loss) must
total
a. $1,000
b. $22,000
c. ($1,000)
d. ($22,000)

62. If revenues for the accounting period total $16,000, and the expenses totals $10,000, then the net income (loss) must
total
a. $16,000
b. $4,000
c. ($4,000)
d. ($16,000)

63. Nike sold a pair of shoes to a retailer for $100. The retailer sold the shoes to you for $125. It cost Nike $80 to make the
shoe. It cost the retailer $105 total to buy and sell the shoe. Which answer below is not correct?
a. Nike will make $20 on the transaction

This examination is intended for the use of UST-AMV COLLEG OF ACCOUNTANCY. Any unauthorized reproduction of this examination is prohibited.Page 7
 b. The retailer will make $20 on the transaction
c. They both will have the same revenue on the sale
d. They both will have the same net profit on the sale

64. Assets total $50,000 and Liabilities total $10,000. The equity of the business must total
a. $4,000
b. $40,000
c. $400
d. $40

65. Better-Cars Selection, a used car dealer, has total assets and liabilities of $50,000 and $18,000, respectively. The firm
constructed a shelter for its automobiles by promising to pay the building contractor, upon completion of the building,
$500 per month for twenty-four months. Upon completion, owner's equity will:
a. increase by $12,000
b. remain unchanged
c. decrease by $12,000
d. increase by $500, each month

66. If during the accounting period the assets increased by $5,000, and the owner's equity increased by $1,000, then the
liabilities must have
a. increased by $6,000
b. increased by $4,000
c. decreased by $4,000
d. decreased by $6,000

67. At the end of the accounting period, the business had $450 of office supplies on hand, which was a 50% increase over
the beginning balance. If the business purchased $1,200 of office supplies during the year, then $_____ of office
supplies were used during the year.
a. $975
b. $1,050
c. $1,650
d. $1,425

68. The subtotals of the Income Statement columns of the work sheet are $3,500 and $4,900, respectively. If the subtotal of
the Balance Sheet Debit column is $9,600, then the subtotal of the Balance Sheet Credit column should be
a. $1,400
b. $11,000
c. $8,200
d. $6,800

69. The subtotals of the Income Statement columns of the work sheet are $6,200 and $4,900, respectively. If the subtotal of
the Balance Sheet Debit column is $19,000, then the subtotal of the Balance Sheet Credit column should be
a. $20,300
b. $1,300
c. $17,700
d. $14,400

70. At the end of the fiscal year, an adjusting entry was made for accrued salaries of $500. The salaries for one week,
$1,250, were paid on the first Friday of the new fiscal period. The entry to record paying the salaries expense for the
week would be a
a. Sal. Exp., dr., $750; Salaries Payable, dr., $500; Cash, cr., $1,250
b. Sal. Exp., dr., $500; Salaries Payable, dr., $750; Cash, cr., $1,250
c. Salaries Exp., dr., $1,250; Cash, cr., $1,250
d. Salaries Exp., dr., $1,250; Salaries Payable, cr., $1,250

71. A tenant rented space in our companies office building on September 1 at $450 per month, paying six months' rent in
advance. The bookkeeper recognized a current liability of $2,700. The December 31, year-end adjusting entry would be
a. Unearned Rent, dr., $1,800; Rent Revenue, cr., $1,800
b. Unearned Rent, dr., $1,350; Rent Revenue, cr., $1,350
c. Rent Revenue, dr., $900; Unearned Rent, cr., $900
d. Cash, dr., $2,700; Rent Rev., cr., $1,800; Unearned Rent, cr., $900
This examination is intended for the use of UST-AMV COLLEG OF ACCOUNTANCY. Any unauthorized reproduction of this examination is prohibited.Page 8
 72. A tenant rented space in an office building on October 1 at $450 per month, paying six months' rent in advance. The
bookkeeper recorded the October entry with a debit to Cash and a credit to Rent Revenue. The December 31, year-end
adjusting entry would be
a. Unearned Rent, dr., $1,800; Rent Revenue, cr., $1,800
b. Unearned Rent, dr., $1,350; Rent Revenue, cr., $1,350
c. Rent Revenue, dr., $1,350; Unearned Rent, cr., $1,350
d. Cash, dr., $2,700; Rent Rev. cr., $1,350; Unearned Rent, cr., $1,350

73. A tenant rented space in an office building on October 1, at $450 per month, paying six months' rent in advance. The
bookkeeper recognized a current liability upon receipt of the $2,700. No year-end adjustment was recorded. As a
consequence of overlooking the required adjustment,
a. revenue was overstated and liabilities were understated
b. revenue was understated and liabilities were understated
c. revenue was overstated and liabilities were overstated
d. evenue was understated and liabilities were overstated

74. Dee Preciated rented an office space to Core Poration for three months at $500 per month, payable at the end of the
third month, January 31. No year-end adjusting entry was recorded on December 31. As a consequence of this
oversight,
a. assets were overstated and revenue was overstated
b. assets were overstated and revenue was understated
c. assets were understated and revenue was overstated
d. assets were understated and revenue was understated

75. What is the correct full name of your Teacher in CA5101?

a. Gerber G. Mendoza
b. Gerber G. Mendosa
c. Gerver G. Menodza
d. Gerbre G. Mendoza

=End of Exam=

/////////GGM/////////

This examination is intended for the use of UST-AMV COLLEG OF ACCOUNTANCY. Any unauthorized reproduction of this examination is prohibited.Page 9