ACCCOB1 Quiz 1 Reviewer PDF

ACCCOB1 Quiz 1 Reviewer
MULTIPLE CHOICE
1. An awareness of the normal balances of accounts would help to locate which of the
following as an error in recording?
A. A debit balance in the drawings account
B. A credit balance in an expense account
C. A credit balance in a liability account
D. A credit balance in a revenue account
2. When an owner makes a withdrawal

A. the drawings account will be increased with a debit
B. the drawings account will be increased with a credit
C. the capital account will be directly increased with a debit
D. the drawings account will be decreased with a debit
3. Which statement is not true?

A. Expenses increase owner’s equity.
B. Expenses have normal debit balances.
C. Expenses decrease owner’s equity.
D. Expenses are a negative factor in the computation of profit.
4. The right side of an account

A. is the correct side.
B. reflects all transactions for the accounting period.
C. is the side that always has the biggest peso value.
D. is the credit side.
5. Which of these rules is incorrect?

A. Credits decrease the drawing account.
B. Debits increase the capital account.
C. Credits increase revenue accounts.
D. Debits decrease liability accounts.
6. A credit is not the normal balance for which account listed below?
A. Capital account C. Revenue account
B. Liability account D. Drawing account
7. A compound journal entry involves

A. two accounts. C. three accounts.
B. three or more accounts. D. four or more accounts.
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8. Noland Company purchases equipment for P1,200 and supplies for P400 from Sanders Co
for P1,600 cash. The entry for this transaction will include a
A. debit to Equipment P1,200 and a debit to Supplies Expense P400 for Sanders.
B. credit to Cash for Sanders.
C. credit to Accounts Payable for Noland.
D. debit to Equipment P1,200 and a debit to Supplies P400 for Noland.
9. In recording an accounting transaction in a double-entry system

A. the number of debit accounts used must equal the number of credit accounts used.
B. there must always be entries made on both sides of the accounting equation.
C. the total of the debits entries must equal the total of the credit entries.
D. there must only be two accounts affected by any transaction.
10. An accountant has debited an asset account for P1,000 and credited a liability account for
P500. Which of the following would be an incorrect way to complete the recording of the
transaction?
A. Credit an asset account for P500.
B. Credit another liability account for P500.
C. Credit an owner’s equity account for P500.
D. Debit an owner’s equity account for P500.
11. Which of these rules is INCORRECT?

a. Credits decrease in the drawing account.
b. Debits increase the capital account.
c. Credits increase revenue accounts.
d. Debits decrease liability accounts.
12. A repair shop rendered service for P15,000 on November 30. The customer is sent a
statement on December 5 and a cheque is received on January 10. The repair shop uses
accrual accounting. When is the P15,000 considered to be earned?
a. December 5
b. January 10
c. November 30
d. December 1
13. In recording an accounting transaction in a double-entry system

a. the number of debit accounts used must equal the number of credit accounts used.
b. there must always be entries made on both sides of the accounting equation.
c. the total of the debits entries must equal the total of the credit entries.
d. there must only be two accounts affected by any transaction.
14. An bookkepper has debited an asset account for P10,000 and credited a liability for P5,000.
Which of the following would be an INCORRECT way to complete the recording of the
transaction?
a. Credit an asset account for P5,000.
b. Credit another liability account for P5,000.
c. Credit an owner’s equity account for P5,000.
d. Debit an owner’s equity account for P5,000.
15. The statement that is TRUE is

a. Debits increase assets and increase liabilities.
b. Credits decrease assets and decrease liabilities.
c. Credits decrease assets and increase liabilities.
d. Debits decrease assets and decrease liabilities.
16. Which of these shows the correct sequence of steps in the recording process?
a. Posting, journalising, analysing
b. Journalising, analysing, posting
c. Analysing, posting, journalising
d. Analysing, journalising, posting
17. After a business transaction has been analyzed and entered in the book of original entry, the
next step in the recording process is to transfer the information to the
a. trial balance.
b. journal.
c. ledger accounts.
d. financial statements.
18. A journal provides

a. the balances for each account.
b. information about a transaction in several different places.
c. a list of all accounts used in the business.
d. a record of transactions in date order.
19. Another name for a journal is

a. listing.
b. book of original entry.
c. book of transactions.
d. book of source documents.
20. The purchase of supplies using cash will
A) decrease capital.
B) increase expenses.
C) not affect total assets.
D) increase total liabilities.
21. The basic purpose of a trial balance is to

A) list all of the accounts in the general ledger.
B) verify that the total credits equal to the total debits.
C) be sure that all journal entries have been recorded.
D) list all of the accounts in the general ledger that have a balance.
22. If an owner makes a withdrawal of cash from the business bank account, then
a. there has been a violation of accounting principles.
b. owner’s equity will increase.
c. owner’s equity will decrease.
d. there will be a new liability showing the owner owes money to the business.
23. If the owner’s equity account increases from the beginning of the year to the end of the year,
then which of these is a possible explanation?
a. profit is less than owner drawings.
b. a loss is less than owner drawings.
c. additional owner investments are less than loss.
d. profit is greater than owner’s drawings.
24. An income statement

a. summarises the changes in owner’s equity for a specific period of time.
b. reports the changes in assets, liabilities, and owner’s equity over a period of time/
c. reports the assets, liabilities, and owner’s equity at a specific date.
d. presents the revenue and expenses for a specific period of time.
25. What financial statement represents accounting equation?

a. Income Statement
b. Statement of Cash Flows
c. Statement of Financial Position
d. Statement of Changes in Equity
TRUE OR FALSE
26. The standard form of a journal entry has the debit account entered first and indented. FALSE
27. When journalizing, the refence column is used to reference the source document. FALSE
28. An account is a record of changes in specific assets, liabilities, and owner’s equity items.
TRUE
29. The normal balance of an expense account is a credit. FALSE
30. Revenue is a subdivision of owner’s equity. TRUE
31. Debit and credit can be interpreted to mean increase and decrease, respectively. FALSE
32. Under the double-entry system, revenue must always equal expenses. FALSE
33. Business documents provide evidence that a transaction has occurred. TRUE
34. A simple journal entry requires one debit to an account and one credit to an account. TRUE
35. A journal provides a chronological record of transactions. TRUE
36. The double-entry system of accounting refers to a method of recording which results in equal
debits and credits for each transaction. TRUE
37. A compound journal entry must always require several debits to one account and at least two
credits to another account. FALSE
38. Adjusting entries are made after the preparation of the financial statements. FALSE
39. Financial statements cannot be correctly prepared without the worksheet. FALSE
40. Revenues, expenses, withdrawals and investments are necessary in the computation of the
net profit or net loss for the period. FALSE
41. The statement of financial position can be presented using the natural form and functional
form. FALSE
42. The statement of cash flows summarizes the activities that affected the equity (capital
account) owner for a given period of time. FALSE
43. In a service-type business, revenue is considered earned when the cash is received. FALSE
44. The accrual principle states that expenses should be matched with revenue. FALSE
45. Expenses paid and recorded as assets before they are used up or expire are called accrued
expenses. FALSE
46. If supplies that have been purchased are used in the course of business, then owner’s equity
will decrease. TRUE
47. If the total liabilities increased by P40,000, then assets must have decreased by P40,000.
FALSE
PROBLEM SOLVING
A. Mark Company reported total revenues of P168,000 for 2019 as well as:
Total liabilities as of 12/31/19 P280,000

Net Loss for the year 2019 36,000
Total cash payments for the year 2019 148,000
What is the company’s total expenses for the year 2019?

Revenues P168,000
Add Net Loss 36,000
TOTAL EXPENSES P204,000
B. On January 1, 2019, the capital of John Company was P1,700,000 and on December 31,
2019, the capital was P2,400,000. During the year John made additional investment of
P300,000 but withdrew P100,000 worth of office equipment for his personal use.
What is the net income or net loss for the year?

Capital Dec 31 P2,400,000
Add John, Drawing 100,000
Subtotal P2,500,000
Less John Capital, Jan 1 P1,700,000
Additional Investment 300,000 2,000,000
NET INCOME P500,000
C. Tanya holds a 180-day 10% note for P120,000 dated November 5, 2019, that was received
from a customer in settlement of its account.
How much is the accrued interest at year end?

Principal P120,000
X Interest rate 10%
P12,000
X Time 56/360
ACCRUED INTEREST P1,866,67
D. Marla has accounts receivable at the end of the year totaling P100,000. The Allowance for
Doubtful Accounts has a beginning balance of P2,000. If the firm’s policy is to maintain its
valuation account at 10% of outstanding customer’s accounts,
By what amount will the valuation account be adjusted at the end of the year. What
is the net realizable value of accounts receivable after adjustment?
Required Allowance (P100,000x10%) P10,000
Less AFDA beg. 2,000
Adjustments P8,000
Accounts Receivable P100,000

Less AFDA 10,000
NET REALIZABLE VALUE P90,000
E. Supplies beginning amount P30,000. Supplies bought during the year was P35,000. As of
December 31, 2019 balance in supplies was P24,000.
What was the supplies expenses account on December 31, 2019?

Supplies beg. P30,000
Add Purchases 35,000
Total P65,000
Less Supplies, end 24,000
SUPPLIES EXPENSE P41,000
F. On December 31, 2019, the account unearned rent income had a balance of P64,000 on the
books Sandra. Sandra received rent payment on July 1 to cover September 1, 2019 to August
31, 2020. Assuming all adjusting entries have been made for 2019, what was the amount of
the rent received on July 2019?
Rent from Sept 1 to Dec 31, 2019 (P8,000x4) P32,000
(monthly rent (64,000/8mos)
Unearned Income as of Dec 31 64,000
RENT RECEIVED JULY 1 P96,000
G. The Prepaid Insurance account had a balance of P36,000. The balance represents amount
paid for two one-year insurance policies. Policy A was obtained on February 1, 2019 for
P24,000. Policy B was acquired on June 1, 2019, for P12,000. Compute for Insurance
Expense at December 31, 2019.
Policy A (24,000 x 11/12) P22,000
Policy B (12,000 x 7/12) 7,000
INSURANCE EXPENSE P29,000
8. The Unearned Interest Revenue has a credit balance of P4,000 interest paid in advance by a
customer on his 20% one-year P20,000 note. The note is dated October 30, 2019.
What amount should be credited to earned interest revenue as December 31, 2019?
Interest P4,000
x No. of months earned 2/12
INTEREST REVENUE P666.67
H. The machinery was installed on May 1, 2019 at a cost of P455,000. The machine is
estimated to have a 20-year life and will be of no value at the end of its useful life.
How much is the depreciation expenses at December 31, 2019?

Machinery P455,000
Useful life 20 years
Annual Depreciation P22,750
no. of months - 2019 8/12

DEPRECIATION 2019 P15,166.67
I. Compute for the following:

a. Net Cash Flows from Operating Activities
b. Net Cash Flows from Investing Activities
c. Net Cash Flows from Financing Activities
d. Ending Cash balance
Cash at the beginning of the year 20,000

Payment of accounts payable 110,000
Proceeds from sale of land 65,000
Bank loan from BDO 300,000
Investments by the owner 75,000
Payments for income taxes 64,100
Receipts from customers 629,700
Payments for interests 12,000
Withdrawal by the owner 128,000
Purchase of equipment 157,000
Payment for operating expenses 175,300
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers P629,700
Payment of accounts payable (110,000)
Payment for income taxes (64,100)
Payment for interests (12,000)
Payments for operating expenses (175,300)
NET CASH FLOWS FROM OA P268,300
CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of land P65,000
Purchase of equipment (157,000)
NET CASH FLOWS FROM IA (P92,000)
CASH FLOWS FROM FINANCING ACTIVITIES:

Bank loan from BDO P300,000
Investments by the owner 75,000
Withdrawal by the owner (128,000)
NET CASH FLOWS FROM FA P247,000
Net Cash Flows from Operating Activities P268,000

Net Cash Flows from Investing Activities (92,000)
Net Cash Flows from Financing Activities 247,000
NET INCREASE IN CASH P423,300
Add Cash Beg 20,000
Ending Cash balance P443,300
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ACCCOB1 Quiz 1 Reviewer

2. When an owner makes a withdrawal

3. Which statement is not true?

4. The right side of an account

5. Which of these rules is incorrect?

7. A compound journal entry involves

9. In recording an accounting transaction in a double-entry system

11. Which of these rules is INCORRECT?

13. In recording an accounting transaction in a double-entry system

15. The statement that is TRUE is

18. A journal provides

19. Another name for a journal is

21. The basic purpose of a trial balance is to

24. An income statement

25. What financial statement represents accounting equation?

Total liabilities as of 12/31/19 P280,000

What is the company’s total expenses for the year 2019?

What is the net income or net loss for the year?

How much is the accrued interest at year end?

Accounts Receivable P100,000

What was the supplies expenses account on December 31, 2019?

How much is the depreciation expenses at December 31, 2019?

no. of months - 2019 8/12

I. Compute for the following:

Cash at the beginning of the year 20,000

CASH FLOWS FROM INVESTING ACTIVITIES:

CASH FLOWS FROM FINANCING ACTIVITIES:

Net Cash Flows from Operating Activities P268,000

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