Midterm (Integrated Accounting

Fundamentals)
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Points:
84/100
1.When the firm pays its utility bill upon receipt of that bill
(1/1 Point)
a. assets and owner's equity increase.
b. assets decrease and expenses increase.
c. assets and liabilities decrease.
d. expenses increase and owner's equity increases.
2.When a business collects an account receivable

(0/1 Point)
a. total assets do not change.
b. assets increase and revenues increase.
c. assets and liabilities increase.
d. assets increase and owner's equity increases.
3. At the start of the period, a business has total assets of ₱500,000 and total
liabilities of ₱300,000. During the period, the business earned total income of
₱1,000,000 and incurred total expenses of ₱640,000. No additional investments
or withdrawals were made by the owner. How much is the total equity at the end
of the period?
(1/1 Point)
a. 480,000
b. 520,000
c. 560,000
d. 640,000
4.When uncertainty exists, the convention of conservatism or prudence uses
estimates of a conservative nature in an attempt to ensure which of the
following?
(1/1 Point)
a. Assets, income, liabilities, and expenses are not overstated
b. Assets, income, liabilities, and expenses are not understated
c. Assets and income are not understated; liabilities and expenses are not overstated
d. Assets and income are not overstated; liabilities and expenses are not understated
5.Which of the following is not true of the terms debit and credit?
(0/1 Point)
a. They can be abbreviated as Dr. and Cr.
b. They can be interpreted to mean increase and decrease.
c. They can be used to describe the balance of an account.
d. They can be interpreted to mean left and right.
6.The balance sheet is also called
(1/1 Point)
a. the statement of owner's equity
b. the income statements
c. the statement of operations
d. the statement of financial position
7.A check is issued to pay the rent for six months in advance. The cash account
will be credited. What account will be debited for this transaction?
(1/1 Point)
A. Prepaid Rent
B. Rent Expense
C. Unearned Rent
D. Rent Payable
8.Which one of the following represents the expanded basic accounting
equation?
(1/1 Point)
a. Assets = Liabilities + Owner's Capital + Owner's Drawings – Revenue – Expenses.
b. Assets + Owner's Drawings + Expenses = Liabilities + Owner's Capital + Revenues.
c. Assets – Liabilities – Owner's Drawings = Owner's Capital + Revenues – Expenses.
d. Assets = Revenues + Expenses – Liabilities.
9.A company which sells and services medical insurance policies received one
payment of P14,000 cash from a customer for insurance coverage for the next
two years. Recording the receipt of this cash when it is received will require which
of the following?
(0/1 Point)
a. Withdrawals to be debited, an asset to be credited
b. A liability to be debited, an asset to be credited
c. An asset to be debited, capital to be credited
d. One asset to be debited, another asset to be credited
10.Amelia Company received its telephone bill on February 15, 2011 in the
amount of P325. This bill covered the period from January 1, 2011 through
January 31, 2011. Amelia paid this bill immediately. The company uses a calendar
year accounting period and prepares its financial statements only once a year at
the end of the year. The general journal entry to record this transaction includes:
(1/1 Point)
a. A debit to the Cash account for P325.
b. A credit to the Telephone Expense account for P325.
c. A debit to the Telephone Expense account for P325.
d. A credit to Accounts Payable for P325.
11.The start-up capital of a business consisted of ₱1,000,000 cash provided by
the business owner and an additional ₱250,000 from a bank loan. The total start-
up assets of the business therefore is
(1/1 Point)
a. ₱1,250,000
b. ₱1,000,000
c. ₱750,000
d. ₱250,000
12.The characteristic that is demonstrated when a high degree of consensus can
be secured among independent measurers using the same measurement
methods is
(1/1 Point)
a. relevance.
b. faithful representation.
c. verifiability.
d. neutrality
13.The official accounting standard setting body in the Philippines is the
(1/1 Point)
a. Accounting Standards Committee (ASC).
b. Financial Reporting Standards Council (FRSC).
c. Bureau of Internal Revenue (BIR).
d. Financial Accounting Standards Board (FASB).
14. Which of the following is not a step in the accounting process?
(1/1 Point)
A. identification.
B. verification.
C. recording.
D. communication.
15.One of your company's business checks clears the bank at its correct amount
of P500. The transaction that underlies this check was the cash purchase of office
supplies. The entry was recorded as a debit to Insurance Expense for P50 and a
credit to Cash for P50. The correcting entry should include which of the
following?
(0/1 Point)
a. A debit to Accounts Receivable for P450.
b. A credit to Supplies Expense for P500.
c. A credit to Cash for P50.
d. A credit to Cash for P450..
16.The double-entry system requires that each transaction must be recorded
(1/1 Point)
a. in at least two different accounts.
b. in two sets of books.
c. in a journal and in a ledger.
d. first as a revenue and then as an expense.
17.It refers to money held and bank deposits that are available for unrestricted
use by the business.
(1/1 Point)
a. Cash
b. Accounts receivable
c. Income
 d. Inventory
18.As of December 31, 2005, Tetrick Company has assets of P3,500 and owner's
equity of P2,000. What are the liabilities for Tetrick Company as of December 31,
2005?
(1/1 Point)
A. P1,500.
B. P1,000.
C. P2,500.
D. P2,000.
19.When equipment is purchased on credit,
(1/1 Point)
a. assets and liabilities increase.
b. assets increase and liabilities decrease.
c. assets and owner's equity increase.
d. assets and expenses increase.
20.Which of the following is not true of the terms debit and credit?
(0/1 Point)
a. They can be abbreviated as Dr. and Cr.
b. They can be interpreted to mean increase and decrease.
c. They can be used to describe the balance of an account.
d. They can be interpreted to mean left and right.
21.The final step in the recording process is to transfer the journal information to
the
(1/1 Point)
a. trial balance.
b. financial statements.
c. ledger.
d. file cabinets.
22.Mr. Van owns a butcher shop, a restaurant, and a catering business. Separate
financial statements are prepared for each business independent of the other
businesses. What accounting principle or assumption is being applied in this
situation?
(1/1 Point)
a. Time period assumption
 b. Separate entity assumption
c. Full-disclosure principle
d. Matching
23.Cash of P100 received at the time the service was rendered was journalized
and posted as a debit to Cash P100 and a credit to Accounts Receivable P100.
Assuming the incorrect entry is not reversed, the correcting entry is:
(0/1 Point)
a. debit Service Revenue P100 and credit Accounts Receivable P100.
b. debit Cash P100 and credit Service Revenue P100.
c. debit Accounts Receivable P100 and credit Service Revenue P100.
d. debit Accounts Receivable P100 and credit Cash P100.
24.The recording process occurs
(1/1 Point)
a. once a year.
b. once a month.
c. repeatedly during the accounting period.
d. infrequently in a manual accounting system.
25.Users of financial statements are assumed to need no knowledge of business
and financial accounting matters to understand information contained in financial
statements.
Financial statements are the principal means through which a company
communicates its financial information to those outside it.
(1/1 Point)
a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
26. At any given point in time, it is possible to describe general ledger accounts
as having an expected or "normal" balance: either a debit balance or a credit
balance. This normal balance is on the side of the account, that is, the debit side
or credit side, which represents the "increase" side of the account. In order, what
is the normal balance for the Equipment account, the Owner's Equity account,
and the Sales Revenue account?
(1/1 Point)
a. Debit, credit, credit.
 b. Debit, debit, debit.
c. Credit, debit, credit.
d. Credit, credit, debit.
27.Under the accrual basis of accounting,
(1/1 Point)
a. income is recorded only when cash is received and expenses are recorded only when cash is
paid.
b. liabilities, owner's capital, and drawings all have normal credit balances.
c. all real accounts have normal debit balances.
d. income is recorded in the period it is earned and expense is recorded in the period it is
incurred, irrespective of when cash is received or paid.
28.Entity A had total assets and total liabilities of ₱120M and ₱75M, respectively,
at the beginning of the period. During the period, Entity A earned total income of
₱60 and incurred total expenses of ₱45. How much is Entity A’s ending total
equity?
(1/1 Point)
a. ₱60M
b. ₱80M
c. ₱90M
d. ₱120M
29.On January 14, Franco Industries purchased supplies of $500 on account. The
entry to record the purchase will include
(1/1 Point)
a. a debit to Supplies and a credit to Accounts Payable.
b. a debit to Supplies Expense and a credit to Accounts Receivable.
c. a debit to Supplies and a credit to Cash.
d. a debit to Accounts Receivable and a credit to Supplies.
30.Net income is the amount:
(0/1 Point)
a. the company earned after subtracting expenses and dividends from revenue.
b. by which assets exceed expenses.
c. by which assets exceed liabilities.
d. by which revenues exceed expenses.
31.In the first month of operations, the total of the debit entries to the cash
account amounted to $900 and the total of the credit entries to the cash account
amounted to $500. The cash account has a(n)
(1/1 Point)
a. $500 credit balance.
b. $800 debit balance.
c. $400 debit balance.
d. $400 credit balance.
32.If your business uses special journals, where will you record the transactions in
#’s 49 and 50 above?

Transaction in #1                                                  Transaction in #2

     a. Sales journal                           Cash receipts journal
     b. General journal                       General journal
     c. General journal                       Cash receipts journal
      d. Not recorded                           Cash receipts journal
(-/1 Point)
a.
b.
c.
d.
33. An accountant has debited an asset account for $1,000 and credited a liability
account for

$500. Which of the following would be an incorrect way to complete the

recording of the transaction?
(1/1 Point)
a. Credit an asset account for $500.
b. Credit another liability account for $500.
c. Credit an owner's equity account for $500.
b. Debit an owner's equity account for $500.
34.Prudence or conservatism means when in doubt, choose the solution that will
be least likely to overstate liabilities or expenses.
Relevance and faithful representation are the two primary qualities that make
accounting information useful for decision making.
(1/1 Point)
a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
35. Which of the following statements is true?
(1/1 Point)
a. Revenue accounts are increased by debit entries.
b. Journalizing entries occurs after posting entries.
c. Debit entries are entries involving the right-hand side on an account.
d. An account shows increases and decreases and an account balance.
36.The personal residence of Samuel Leonard was landscaped with all new trees,
shrubs, and flowers. This improvement was paid for with a check written against
Samuel's business checking account. The landscaping provides no benefit to
Samuel's business. What account should be debited for this transaction?
(1/1 Point)
a. Samuel Leonard, Capital.
b. Samuel Leonard, Withdrawals.
c. Landscaping Improvements.
d. Landscaping Expense.
37.Which of the following would result to income of ₱320,000?
(1/1 Point)
a. Total expenses of ₱280,000 and loss of ₱40,000
b. Total expenses of ₱360,000 and profit of ₱40,000
c. Total expenses of ₱220,000 and loss of ₱100,000
d. Total expenses of ₱360,000 and loss of ₱40,000
38.A credit to a liability account
(1/1 Point)
a. indicates an increase in the amount owed to creditors.
b. indicates a decrease in the amount owed to creditors.
c. is an error.
d. must be accompanied by a debit to an asset account.
39.Entity A had total assets of ₱100M and total liabilities of ₱60M at the
beginning of the period. If at the end of the period, total assets increased by
₱30M, while total liabilities remained the same, Entity A’s total equity at the end
of the period would be
(1/1 Point)
a. ₱70M
b. ₱60M
c. ₱90M
d. ₱80M
40.Expenses are reported on the:
(1/1 Point)
a. income statement in the time period in which they are paid.
b. income statement in the time period in which they are incurred.
c. balance sheet in the time period in which they are paid.
d. balance sheet in the time period in which they are incurred.
41.When the owner invests cash in a business,
(0/1 Point)
a. assets and revenue increase.
b. assets increase and owner's equity decreases.
c. liabilities decrease and owner's equity increases.
d. assets and owner's equity increase.
42.Able Company pays its employees twice a month, on the 7th and the 21st. On
June 21, Able Company paid employee salaries of $4,000. This transaction would
(0/1 Point)
a. increase owner’s equity by $4,000.
b. decrease the balance in Salaries Expense by $4,000.
c. decrease net income for the month by $4,000.
d. be recorded by a $4,000 debit to Salaries Payable and a $4,000 credit to Salaries Expense.
43.Dawson’s Delivery Service purchased equipment for $2,500. Dawson paid $500
in cash and signed a note for the balance. Dawson debited the Equipment
account, credited Cash and
(1/1 Point)
a. nothing further must be done.
b. debited the Dawson, Capital account for $2,000.
 c. credited another asset account for $500.
d. credited a liability account for $2,000.
44.Which of the following statements about users of accounting information is
incorrect?
(1/1 Point)
a. Management is an internal user.
b. Taxing authorities are external users.
c. Present creditors are external users.
d. Regulatory authorities are internal users.
45.Expenses represent cash paid for goods sold or services rendered in the
process of generating revenue.
To record a decrease in capital, the capital account must be credited.
(1/1 Point)
a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
46.At January 1, 2008, Burton Industries reported owner’s equity of $130,000.
During 2008, Burton had a net loss of $30,000 and owner drawings of $20,000. At
December 31, 2008, the amount of owner’s equity is
(1/1 Point)
$130,000.
b. $140,000.
c. $100,000.
d. $80,000.
47.When the owner withdraws cash for personal use
(1/1 Point)
a. assets decrease and expenses increase.
b. assets decrease and owner's equity increases.
c. assets decrease and owner's equity decreases.
d. owner's equity decreases and revenue decreases.
48.Amalia Dela Cruz Realty Company had the following balance sheet accounts
and balances
Cash                            P30,000           Land                            P70,000

Accounts Receivable   P10,000         Accounts Payable       P60,000

Equipment                   P70,000           Dela Cruz,Capital                ?

Building                               ?

If the balance of the Dela Cruz Capital account was P210,000,what would be the
balance of the Building account.
(1/1 Point)
a. P 75,000
b. P 90,000
c. P 100,000
d. P 150,000
49.Entity A had total assets, liabilities, and equity of ₱140M, ₱90M and ₱50M,
respectively, at the beginning of the period. During the period, Entity A’s total
liabilities decreased to ₱40M, while its profit was ₱25M. There were no other
transactions or events that affected equity during the period. How much is Entity
A’s ending total assets?
(1/1 Point)
a. ₱75M
b. ₱95M
c. ₱115M
d. ₱125M
50.Which of the following is a business event that is also considered a recordable
transaction?
(1/1 Point)
a. A company hires a new employee
b. A customer purchases merchandise
c. A company order a product from a supplier
d. An employee sends a purchase requisition to the purchasing department;
51. Which of the following statements regarding the recording of events is valid?
(1/1 Point)
a. Only non-accountable events are recorded in the accounting books.
 b. Only accountable events are recorded in the accounting books.
c. Both non-accountable and accountable events are recorded in the accounting books.
d. Neither non-accountable nor accountable events are recorded in the accounting books.
52. The objective of financial reporting is to provide financial information about
the reporting entity that is useful to present and potential equity investors, but
not to users who are not investors.
If equipment costing P 93,000 is bought by paying P 30,000 as a down payment
and the remaining P 63,000 in 30days, owner’s equity is increased by P 93,000.
(1/1 Point)
a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
53.The branch of accounting that deals with providing financial information to
external decision makers is
(1/1 Point)
a. Public accounting.
b. Government accounting.
c. Financial accounting.
d. Managerial accounting.
54.Entity A has ending total assets of ₱60M and ending total liabilities of ₱45M.
Entity A had a beginning equity of ₱10M. If Entity A earned total income of ₱25M
during the year, how much were the total expenses?
(1/1 Point)
a. ₱0
b. ₱15M
c. ₱20M
d. ₱25M
55.Mr. Juan Batumbakal is an accountant in the Philippines while Mr. John
Stonesteel  is an accountant in a foreign country that uses the International
Financial Reporting Standards. Which of the following statements is correct?
(1/1 Point)
a. Mr. John’s accounting standards are superior to those of Mr. Juan’s.
b. Mr. John is more intelligent than Mr. Juan because Mr. John uses better accounting standards.
 c. Mr. Juan is an inferior accountant compared to Mr. John because Mr. John is a foreigner and
Filipinos give higher regard to foreigners compared to their fellow countrymen.
d. Mr. Juan and Mr. John use essentially the same accounting standards.
56.Arise from the sale in value of assets other than merchandise.
(1/1 Point)
A. Gains or losses
B. Revenue
C. Gross profit
D. Income
57. You are a business owner. Which of the following would you most likely
consider as a favorable event?
(1/1 Point)
a. Your total liabilities increased, while your total assets decreased.
b. Your business earned income of ₱10M and incurred expenses of ₱40M.
c. Your total equity increased despite the fact that you did not make any contributions to the
business during the period.
d. Your business becomes a liquidating concern.
58. Information has this qualitative characteristic if two different users could
reach a general agreement as to what the information intends to represent.
(1/1 Point)
a. Relevance
b. Comparability
c. Faithful representation
d. Verifiability
59.The usual sequence of steps in the recording process is to analyze each
transaction, enter the transaction in the
(1/1 Point)
a. journal, and transfer the information to the ledger accounts.
b. ledger, and transfer the information to the journal.
c. book of accounts, and transfer the information to the journal.
d. book of original entry, and transfer the information to the journal.
60. Grayton Industries purchased supplies for $1,000. They paid $500 in cash and
agreed to pay the balance in 30 days. The journal entry to record this transaction
would include a debit to an asset account for $1,000, a credit to a liability account
for $500. Which of the following would be the correct way to complete the
recording of the transaction?
(1/1 Point)
a. Credit an asset account for $500.
b. Credit another liability account for $500.
c. Credit the Grayton, Capital account for $500.
d. Debit the Grayton, Capital account for $500.
61.These users are interested in information about the continuance of an entity,
especially when they have a long term involvement with or are dependent on the
entity
(0/1 Point)
a. Customers
b. Employee
c. Trade union
d. Suppliers
62.Profit can be maximized by the following except,
(1/1 Point)
a. Increasing sales volume
b. Decreasing cost of production
c. increasing cost of operation
d. improving market share
63.On March 1, 2011, a company collects a P500 deposit from a customer for the
installation of a home-theater system. The installation is scheduled for May 5,
2009. How should the company record this entry on March 1, 2011?
(1/1 Point)
a. The Cash account is credited for P500.
b. The Sales Revenue account is credited for P500.
c. The Unearned Sales Revenue account is credited for P500.
d. The Unearned Sales Revenue account is debited for P500.
64.Accounts that normally have debit balances are:
(1/1 Point)
A. assets, expenses, and revenues.
B. assets, expenses, and owner's capital.
C. assets, liabilities, and owner's drawings.
 D. assets, owner's drawings, and expenses.
65.While making a delivery, the driver of Fastrac Courier collided with another
vehicle causing both property damage and personal injury. The party sued
Fastrac for damages which could exceed Fastrac's insurance coverage. Existence
of the lawsuit was reported in the notes to Fastrac's financial statements. What
accounting principle, assumption or constraint is being applied in this situation?
(1/1 Point)
a. Full-disclosure principle
b. Conservatism constraint
c. Matching principle
d. Unit-of-measure assumption
66.A compound journal entry involves
(1/1 Point)
a. two accounts.
b. three accounts.
c. three or more accounts.
d. four or more accounts.
67.A revenue account:
(1/1 Point)
a. is increased by debits. 
b. is decreased by credits.
c. has a normal balance of a debit.
d. is increased by credits.
68.When a business sells services on credit
(0/1 Point)
a. assets decrease and owner's equity increase.
b. assets increase and revenues increase.
c. assets and liabilities increase.
d. liabilities increase and owner's equity decreases.
69.In the first month of operations for Pocket Industries, the total of the debit
entries to the cash account amounted to $8,000 ($4,000 investment by the owner
and revenues of $4,000). The total of the credit entries to the cash account
amounted to $5,000 (purchase of equipment $2,000 and payment of expenses
$3,000). At the end of the month, the cash account has a(n)
(1/1 Point)
a. $2,000 credit balance.
b. $2,000 debit balance.
c. $3,000 debit balance.
d. $3,000 credit balance.
70.The Baker sole proprietorship started operations on January 1, 2011 and uses
a calendar-year accounting period. On February 7, 2011, the company purchases
an automobile with an invoice cost of P10,000. To settle this transaction, the
company immediately pays P3,000 cash to the automobile dealership and signs a
three-month note payable for the P7,000 purchase price balance. A partial
general journal entry is given below. Which item accurately describes the partial
entry from Baker's viewpoint?
(1/1 Point)
a. Cash is debited for P3,000 and Notes Payable is credited for P7,000.
b. The asset account Vehicles is debited for P7,000 and Cash is credited for P3,000.
c. The asset account Vehicles is credited for P10,000 and Cash is credited for P3,000.
d. Cash is credited for P3,000 and Notes Payable is credited for P7,000.
71.An increase to an account is recorded
(1/1 Point)
a. in the debit side of that account.
b. in the credit side of that account.
c. in the side of that account that represents its normal balance.
d. beside the account.
72.Double-entry accounting requires which of the following?
(0/1 Point)
a. All journal entries must be posted twice.
b. At least two accounts are involved, with at least one debit and one credit.
c. The total amount debited must equal the total amount credited.
d. Both A and C are correct.
73.A journal provides
(1/1 Point)
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 chronological record of transactions.
74.Assume that, after analyzing its business transaction, a firm has the following
ending balances: accounts payable P3,400, accounts receivable P2,000, cash
P1,000, capital P3,600, equipment P3,000, prepaid rent P600, and supplies P400.
What is the total amount of assets that will be reported on the firm's balance
sheet?
(1/1 Point)
a. P6,400
b. P7,000
c. P9,800
d. P14,000
75.Assume that a firm has the following information in its analysis of its business
transactions during its first year of business: fees income of P7,000, an investment
by the owner of P5,000, salaries expenses of P4,000, and withdrawals of P2,000.
What is the total amount of owner's equity that will be reported on the firm's
balance sheet?
(1/1 Point)
a. P3,000
b. P6,000
c. P9,000
d. The amount cannot be determined from the information provided.
76.What is meant by comparability when discussing financial accounting
information
(1/1 Point)
a. Information has predictive and confirmatory value
b. Information is reasonably free from error
c. Information is measured and reported in a similar fashion across entities
d. Information is timely
77.The normal balance of any account is the
(1/1 Point)
a. left side.
b. right side.
c. side which increases that account.
b. side which decreases that account.
78. On the last day of the period, Jim Otto Company buys a P700 machine on
credit. This transaction will affect the:
(0/1 Point)
A. income statement only.
B. balance sheet only.
C. income statement and retained earnings statement only.
D. income statement retained earnings statement, and balance sheet.
79.Which underlying assumption serves as the basis for preparing financial
statements at regular artificial points in time
(1/1 Point)
a. Accounting entity
b. Going concern
c. Accounting period
d. Stable monetary unit
80.Under this concept, the life of the business is divided into series of reporting
periods. Thus, businesses normally prepare financial statements at least annually.
(1/1 Point)
a. Time period
b. Conservatism constraint
c. Matching principle
d. Unit-of-measure assumption
81.Which of the following statements is correct?
(1/1 Point)
a. Freight-out is an expense account.
b. Building is a liability account.
c. Unearned income is an income account.
d. In accounting parlance, depreciation means the decline in the value of an asset.
82. Which of the following statements about financial accounting is correct?
(1/1 Point)
A. Financial accounting reports are used primarily by employees to make business decisions
related to production.
B. Financial accounting reports are used primarily by management to understand whether a
product line should be discontinued.
C. Financial accounting reports are primarily prepared to provide information for external
decision makers.
 D. Financial accounting reports primarily contain detailed internal records of the company.
83.The cost principle states that:
(1/1 Point)
A. assets should be initially recorded at cost and adjusted when the market value changes.
B. activities of an entity are to be kept separate and distinct from its owner.
C. assets should be recorded at their cost.
D. only transaction data capable of being expressed in terms of money be included in the
accounting records.
84.Amalia Dela Cruz Realty Company had the following balance sheet accounts
and balances

Cash                            P30,000           Land                            P70,000

Accounts Receivable   P10,000         Accounts Payable       P60,000

Equipment                   P70,000           Dela Cruz,Capital                ?

Building                               ?

If the balance of building account was P140,000 and P30,000 of Accounts Payable
account was paid in Cash, what would be the balance of the Dela Cruz, Capital
account?
(1/1 Point)
a. P 350,000
b. P260,000
c. P 230,000
d. P 150,00
85.A proprietorship employs one full-time accountant. This person is considered
an employee. On the desk in front of her are five different business documents.
Which one of the following would not be considered an original source
document from the proprietorship's point of view?
(1/1 Point)
a. A bank receipt for P10,000 evidencing yesterday's cash receipts deposited in the bank.
b. The original copy of the insurance policy taken out by the proprietorship to insure the vehicle
it purchased during its first month of operations. The annual insurance premium of P500 was printed
within the contract.
 c. The invoice received by the proprietorship from Samsung Electronics when the proprietorship
purchased its first lot of inventory to be sold to its customers.
d. A copy of the Statement of Financial Position at the end of the company's first year of
existence.
86.An accountant has debited an asset account for $1,000 and credited a liability
account for
$500. What can be done to complete the recording of the transaction?
(1/1 Point)
a. Nothing further must be done.
b. Debit an owner's equity account for $500.
c. Debit another asset account for $500.
d. Credit a different asset account for $500.
87.If equipment is bought by paying P 20,000 as a downpayment and the
remaining P 40,000 in 30days, total liabilities are increased by P 20,000.
When a business receives cash, it is always recorded as an increase to Cash and a
decrease to an Expense.
(1/1 Point)
a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
88.One of the following statements about the accrual basis of accounting is false.
The false statement is:
(1/1 Point)
a. Events that change a company's financial statements are recorded in the periods in which the
events occur.
b. Revenue is recognized in the period in which it is earned.
c. This basis is in accord with generally accepted accounting principles.
d. Revenue is recorded only when cash is received, and expense is recorded only when cash is
paid.
89. A credit is not the normal balance for which account listed below?
(1/1 Point)
a. Capital account
b. Revenue account
c. Liability account
 d. Drawing account
90.livia, the proprietor, deposited P40,000 in the company's bank account. She
received the money as the result of a settlement of a class action lawsuit and
decided to invest it in her business to help with expansion. Recording the
transaction on the company books will require which of the following?
(1/1 Point)
a. An asset to be debited, a liability to be credited.
b. A liability to be debited, an asset to be credited.
c. An asset to be debited, capital to be credited.
d. Withdrawals to be debited, an asset to be credited.
91.Debits:
(-/1 Point)
A. increase both assets and liabilities.
B. decrease both assets and liabilities.
C. increase assets and decrease liabilities.
D. decrease assets and increase liabilities.
92. Amalia Dela Cruz Realty Company had the following balance sheet accounts
and balances

Cash                            P30,000           Land                            P70,000

Accounts Receivable   P10,000         Accounts Payable       P60,000

Equipment                   P70,000           Dela Cruz,Capital                ?

Building                               ?

If the balance of the Building account was P170,000, what would be the total of
liabilities and owner’s equity?
(1/1 Point)
a. P350,000
b. P 260,000
c. P 250,000
d. P 230,000
93.On June 1, 2008, Delbert Inc. reported a cash balance of $12,000. During June,
Delbert made deposits of $3,000 and made disbursements totalling $16,000.
What is the cash balance at the end of June?
(1/1 Point)
a. $1,000 debit balance
b. $15,000 debit balance
c. $1,000 credit balance
d. $4,000 credit balance
94.Entity A had total assets and total liabilities of ₱120M and ₱70M, respectively,
at the beginning of the period. During the period, Entity A earned total income of
₱60 and incurred total expenses of ₱40. Entity A’s total assets increased to
₱130M by year-end. There were no additional contributions by, or distributions
to, the owner during the period. How much is Entity A’s ending total liabilities?
(1/1 Point)
a. ₱60M
b. ₱70M
c. ₱80M
d. ₱90M
95.Entity A had total assets, liabilities, and equity of ₱120M, ₱75M and ₱45M,
respectively, at the beginning of the period. During the period, Entity A’s total
liabilities decreased by ₱20M, while its profit was ₱25M. There were no other
transactions or events that affected equity during the period. How much is Entity
A’s ending total assets?
(1/1 Point)
a. ₱70M
b. ₱85M
c. ₱95M
d. ₱125M
96. When a customer buys goods from your business and promises orally to pay
for the sale price next week, you will
(1/1 Point)
a. debit accounts receivable.
b. credit accounts receivable.
c. not give him the goods.
d. ignore the customer.
97.Performing services on account will have the following effects on the
components of the basic accounting equation:
(0/1 Point)
A. increase assets and decrease owners' equity.
B. increase assets and increase owners' equity.
C. increase assets and increase liabilities.
D. increase liabilities and increase stockholders' equity.
98.At year-end, Entity A’s total assets and total liabilities are ₱180M and ₱70M,
respectively. If Entity A had a beginning equity of ₱75M and there were no
contributions from, or distributions to, the owner during the period, how much
profit (loss) did Entity A earn (incur) during the year?
(1/1 Point)
a. ₱35M
b. (₱35M)
c. ₱25M
d. (₱25M)
99.Entity A has ending total assets of ₱160M and ending total liabilities of ₱90M.
Entity A had a beginning equity of ₱30M. If Entity A incurred total expenses of
₱50M during the year, how much was the total income?
(1/1 Point)
a. ₱70M
b. ₱80M
c. ₱90M
d. ₱120M
100.The principle or assumption dictating that efforts (expenses) be matched with
accomplishments (revenues) is the:
(1/1 Point)
a. matching principle.
b. cost principle.
c. periodicity principle.
d. revenue recognition principle.
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