1. A business received P10,000 cash from charge customers to apply on account.

The effect of the

transaction is
A. Increase in asset and increase in revenue
B. Increase in asset and decrease in asset
C. Increase in asset and decrease in liability
D. Increase in asset decrease in equity

2. The owner of a business invested P100,000 in the business. What are the effects on the fundamental
accounting equation?
A. Asset increase P100,000; liabilities, no effect; owner’s equity increases P100,000
B. Asset increase P100,000; liabilities increases P100,000 ; owner’s equity increases, no effect
C. Asset increase P100,000; liabilities increases P50,000; owner’s equity increases P50,000
D. Asset decrease P100,000; liabilities, no effect; owner’s equity increases P100,000

3. Which of the following transactions does not include an increase to expenses?

m
A. Received and paid the phone bill.

er as
B. Bought office supplies on account

co
eH w
C. Received cash for service performed
D. Paid the week’s salaries

o.
rs e
4. When the rent for the business is paid with a check,
ou urc
A. Cash is decreased and Rent expense is decreased.
B. Cash decreased and Rent income in is increased.
C. Cash is decreased and Rent expense is increased.
o

D. Cash is decreased and Accounts payable is decreased.

aC s
vi y re

5. Over a period of time, if total assets increase by P170,000 and liabilities increase by P70,000, then
the owner’s equity will be increased by
A. P70,000
ed d

B. P100,000
ar stu

C. P170,000
D. P240,000

6. When an owner deposits cash in account in the name of the business, it is an increase to
is

A. Cash and Accounts Receivable

Th

B. Cash and Withdrawals

C. Cash and Capital
D. Cash and Accounts Payable
sh

7. Amounts owed by the business are referred to as

A. Assets
B. Equities
C. Liabilities
D. Capital

This study source was downloaded by 100000824232487 from CourseHero.com on 06-22-2021 00:43:30 GMT -05:00

https://www.coursehero.com/file/44656889/FUNACCdocx/
 8. If an owner invest her laptop computer and printer in the business, there is an increase to
A. Cash and capital
B. Computer equipment and withdrawals
C. Cash and withdrawals
D. Computer equipment and capital

9. The purchase of an asset on account will

A. Increase in total asset and decrease in total liabilities
B. Increase in total liabilities and decrease in total asset
C. Increase in total asset and increase in total liabilities
D. Increase in total asset and decrease in owner’s equity

10. Which of the following is a form of a Revenue?

A. A check paying a mortgage
B. A credit purchase invoice

m
C. Credit sales to charge to customers

er as
D. A cash purchase invoice

co
eH w
11. Which of the following equations is the fundamental accounting equation?

o.
A. Assets – Liabilities = Owner’s Equity
rs e
B. Assets = Liabilities + Owner’s Equity
ou urc
C. Assets + Liabilities = Owner’s Equity
D. Assets + Owner’s Equity = Liabilities
o

12. When an entity pays employees for their services, the effect is an increase in
aC s

A. Expenses
vi y re

B. Assets
C. Income
D. Liabilities
ed d
ar stu

13. A credit entry decreases the balance of

A. Owner’s equity
B. Assets
C. Income
is

D. Liabilities
Th

14. Decrease in asset may

A. Decrease another asset
sh

B. Decrease liabilities
C. Increase capital
D. Increase liabilities

This study source was downloaded by 100000824232487 from CourseHero.com on 06-22-2021 00:43:30 GMT -05:00

https://www.coursehero.com/file/44656889/FUNACCdocx/
 15. All of the following affect the owner’s equity account except
A. Original investment
B. Payment of a liability
C. Additional investment
D. Withdrawal by the owner

16. Withdrawals by the proprietor has all of the following except

A. Reduction of total asset
B. Reduction of owner’s equity
C. Reduction of profit for the period
D. Reduction of cash balance

17. The expectation of a future payment from a customer for goods sold is
A. A prepaid expense
B. A notes receivable

m
C. An accounts receivable

er as
D. All of the above

co
eH w
18. The company collected in full an account receivable. Considering this transaction alone,

o.
A. Total assets will remain the same
rs e
B. Total asset will increase
ou urc
C. Total asset will decrease
D. Equity will increase
o

19. Which of the following is an asset of a firm?

aC s

A. The capital of a firm

vi y re

B. Computer equipment owned by the firm

C. Money owed by the firm to its supplier
D. An overdrawn balance on the firm’s account
ed d
ar stu

20. Which of the following equations is correct?

A. Assets + Capital = Liabilities
B. Liabilities + Capital = Asset
C. Capital = Assets + Liabilities
is

D. Liabilities - Capital = Asset

Th

21. Which of the following is a liability?

A. A building owned by the firm
sh

B. Cash in the firm’s safe

C. Money which the firm has borrowed and has not yet repaid
D. Money owed to the firm by tis debtors

22. The person to whom the liability is owed

A. Debtor

This study source was downloaded by 100000824232487 from CourseHero.com on 06-22-2021 00:43:30 GMT -05:00

https://www.coursehero.com/file/44656889/FUNACCdocx/
 B. Creditor
C. Owner
D. Investor

23. A company is engaged in processing of raw materials to finished goods intended for sale
A. Service Company
B. Merchandising Company
C. Manufacturing Company
D. Financial Institutions
24. The capital account of the owner of sole proprietorship is comprised of
A. His original investment
B. His additional investment
C. The results of operation
D. All of the above
25. The increase in owner’s equity

m
A. Withdrawal and net loss

er as
B. Investment and net income

co
eH w
C. Donations and charitable institutions
D. None of the above

o.
rs e
Part II. State whether each of the following is an ASSET, LIABILITY or CAPITAL
ou urc
1. Petty cash fund
2. Prepaid Rent Expense
o

3. Cash in Bank
aC s

4. Furniture
vi y re

5. Prepaid Insurance
6. Notes Payable
7. Land
ed d

8. W. Martinez, Capital
ar stu

9. Inventory
10. W. Martinez, Drawing

Part III. State the effects of the following transactions on the assets, liabilities and capital by placing a
is

plus ( + ) sign and I minus ( - ) sign on the spaces provided for.

Th

TRANSACTIONS ASSET LIABILITIES CAPITAL

1. Invested cash and equipment

sh

2. Collected cash from a customer

3. Purchased equipment on credit
4. Paid the assistant’s salary
5. Billed customer for service rendered
6. Paid the telephone bill
Withdrew cash from the business for personal use

This study source was downloaded by 100000824232487 from CourseHero.com on 06-22-2021 00:43:30 GMT -05:00

https://www.coursehero.com/file/44656889/FUNACCdocx/
 7. Paid the account due in No. 3
8. Received payment from customer in number 5
9. Purchased supplies for cash

Part IV. Prepare journal entries for the following transactions.

1. Purchased supplies for cash P7,200

2. Purchased supplies on credit to A. FuentesP10,000
3. Pa id the rent of the shop P4,000
4. Purchased a service truck for cash P270,000
5. Billed S. Roces on service rendered P 6,500

m
6. Paid one-half of the account due to A. Fuentes,

er as
7. Collected P1,500 from S. Roces

co
8. Paid gas and oil placed in the truck during the month ogf P2,500

eH w
9. Purchased additional supplies from A. Fuentes on credit P2, 750

o.
10. Completed work for S. Valdez on credit P9,000
rs e
ou urc
o
aC s
vi y re
ed d
ar stu
is
Th
sh

This study source was downloaded by 100000824232487 from CourseHero.com on 06-22-2021 00:43:30 GMT -05:00

https://www.coursehero.com/file/44656889/FUNACCdocx/
Powered by TCPDF (www.tcpdf.org)