I. Choose a letter that corresponds to your answer. Write 10.

________principle states that no revenue can be

it in an answer sheet provided. earned w/o incurring corresponding expenses.
A. Matching C. Relevance
1. What is the correct accounting equation? B. Disclosure D. Uniformity
A. Assets + Liabilities=Capital
B. Assets-Capital=Liabilities 11. Is the routine activity of recording, classifying, and
C. Capital + Liabilities=Assets summarizing business transactions in systematic
D. B or C manner.
A. Auditing
2. The system must fit the firm's unique features and B. Financial Accounting
culture C. Management Accounting
A. Relevance C. Compatibility D. Basic Accounting
B. Flexibility D. Cost- Benefit
12. Is a highly professional characteristic which requires
3. Business that resolve around the idea of a company you to be honest, sincere and trustworthy.
providing its customers with intangible goods A. Objectivity C. Independent
A. Service C. Manufacturing B. Integrity D. Sincere
B. Merchandising D. None of the above
13. Type of business operation converts basic inputs
4. Is a progress report shows list of assets, Liabilities such as materials, labor and overhead into finished
and Owner’s Equity. products which are sold to customers
A. Statement of Cash Flow A. Service C. Manufacturing
B. Statement of Financial Position B. Merchandising D. None of the above
C. Statement of Owners Equity
D. Income Statement 14. Another component of reliability that accountant
should be enhanced the financial statements for the user
5. An economic unit that engages in buying and selling to have an informed judgment; taking the importance of
of goods and services. each information.
A. Merchandise C. Business Firm A. Neutrality C. Consistency
B. Bank D. Government B. Prudence D. Completeness

6. A form of business organized as a separate legal 15. Accountants must see to it that Revenue and
entity from the owners Expenses should not overstated nor understated.
A. Partnership C. Sole proprietor A. Business entity C. Neutrality
B. Corporation D. A and B B. Prudence D. Good Governance

7. It provides the ending balance of capital for Statement 16. Recognize only revenue/ income if it is earned
of financial position A. Accrual Assumption
A. Net income B. Money Measurement
B. Revenue C. Reporting period
C. Statement of Owners Equity D. Business Entity Concept
D. Cash Balance
17. This concept states that in preparing the financial
8. The business will continue for foreseeable future statements of an entity, personal and business
A. Prudence C. Going Concern information are separated
B. Materiality D. Accruals A. Business Entity C. Cost Principle
B. Going Concern D. Objectivity
9. The accounting information should have verified
supporting documents such as invoice, vouchers or 18. Which form of ownership burdens owners with the
official receipt. greatest risk of loss of their personal assets?
A. Consistency C. Materiality A. Limited partnership (LP)
B. Objectivity D. Matching B. Sole proprietorship
C. Corporation
D. Limited liability partnership (LLP)
19. Is a process in which transactions are recorded in 27. A revenue account....
the books of original entries. A. Is increased with a credit
A. Recording C. Summarizing B. Ultimately increases retained earnings
B. Classifying D. Communicating C. Is closed at the end of the accounting period
D. Is an income statement account
20. The recording of financial transactions and events E. All of the above are correct
manually or electronically is called which of the
following? 28. Debit means
A. Reporting C. Auditing A. Asset
B. Budgeting D. Bookkeeping B. Right side
C. Left side
21. An accountant has the responsibility to coordinate D. Can be either right or left side
the annual budget processes of the business corporation
she works for. In which of the following areas of 29. If at the end of the accounting period the liabilities
accounting is she most likely to be employed? total P18,000, and equity totals P32,000, then what must
A. Public accounting be the total of the assets?
B. Managerial accounting A. P14,000
C. Financial accounting B. P18,000
D. Auditing C. P32,000
D. None of the above
22. Which of the following statements is true?
A. Revenue accounts are increased by debit entries 30. Accured expense is classified as a/an:
B. An account shows increase and decreases, but does A. Operating Income
not show the balance B. Operating Expense
C. Journalizing precedes posting C. Current Liability
D. Debit entries are entries involving the right-hand side D. Current Assets
on an account
31. A trial balance prepared at the end of year after
23. Which of the following is not an equity account? preparing the financial statements is called
A) Owner's Capital A. Unadjusted Trial Balance
B) Owner's Withdrawals B. Year End Trial Balance
C) Revenue C. Closing Trial Balance
D) Unearned Revenue D. Post Adjusting Trial Balance
E) Expenses
32. What if the accountant failed to record rent expense
24. Purchasing equipment on account will have what of the company?
effect on the components of the accounting equation? A. Rent Expense: Understated; Net Income: Understated
A. Increase in equipment and a decrease in equity B. Rent Expense: Overstated; Net Income: Overstated
B. Increase in equipment and an increase in equity C. Rent Expense: Overstated; Net Income: Understated
C. Increase in equipment and an increase in liabilities D. Rent Expense: Understated; Net Income: Overstated
D. Increase in equipment and a decrease in liabilities
33. What of the following is a contra asset?
25. Purchasing equipment for cash... A. Depreciation Expense
A. Does not affect total assets B. Net Value
B. Increase assets and decreases Liabilities C. Accumulated Depreciation
C. Increase both assets and Liabilities D. Doubtful Accounts
D. Decrease both assets and Liabilities
34. Asset Cost minus accumulated depreciation will give
26. Which of the following changes describes the receipt you an answer of...
of P1,000 as payment on a customer’s account? A. Book Value
A. Assets and owners' equity increase by P1,000 B. Scrap Value
B. Assets and owners' equity decrease by P1,000 C. Depreciation Expense
C. Assets and liabilities increase by P1,000 D. Expected life in years
D. Assets and liabilities decrease by P1,000
35. These are entries that doesn't affect cash I.B. Write the letter of your answer in your answer sheet
A. Journal Entries if you think it is Normal Balance in adjusted trial
B. Adjustment Entries balance.
C. Posting Entries
D. None of the Above A. Debit
B. Credit
36. A barber shop is an example of a
A. Service Business 41. Accounts Receivable
B. Trading Business 42. Office Supplies
C. Merchandising Business 43. Cash
D. Manufacturing Business 44. Unearned Rental Fees
45. Accounts Payable
37. When an asset is debited, the method used is 46. Wages Expense
A. Liability Method 47. Prepaid Rent
B. Asset Method 48. Accumulated Depreciation-Office Equipment
C. Both Asset and Expense Method 49. Utilities Expense
D. Expense Method 50. P. Salvador, Drawing

38. Acquired Property, Plant and Equipment should be Write the letter of your answer in your answer sheet if
recorded at its cost. you think this account will be in Income Statement or
A. Cost or Exchange Price Balance Sheet.
B. Capital Expenditure
C. Investment Property A. Income Statement
D. Current Market Value B. Balance Sheet

39. It occurs when a better model is invented or 51. Bad Debts

produced than what was originally acquired. 52. Land
A. Inadequacy 53. Salary Expense
B. Sale of properties 54. Cash on Hand
C. Obsolescence 55. Service Fees Earned
D. Return Of Asset Purchased 56. B. Valdez, Drawing
57. Office Supplies on Hand
40. It results when the Asset can no longer meet the 58. Notes Receivable
demands of business. 59. Advertising Expense
A. Inadequacy 60. Interest Income
B. Sale of properties
C. Obsolescence
D. Return of Asset Purchased