Polytechnic University of the PhilJ-'piros

COLLEGE OF ACCOUIMTANCV

A C 2I:):LG MiDTERr./! DE^'ARTIV1ENTA^ EXAM

Aug,u:st23,2009

Complete alUnformation needed in ynursaannatlK shoe.'! (nns\vcr sheet).

Point system: Numbers 1-35 > 1.143 pts coch Numbers 35-65 > 2 pts each

CHOOSE A FOR TRUE AND B FOR FALSE

1 Financial statements are structured financial representation of th« financial position of and the
transactions undertaken by an enterprise.
2 Dr, A.M. Wan records his rever^ue only upon collection from uatientj; and expenses when he
issues a check as payment. Dr. Wan uses the accru. I basis of accounting.
3 IFRS mean.'-. International Financial Reporting System
4 A computerized acxounling system s compes<?d of I lard .'are, Software and Peopieware.
5 Cash investment by the owner is .ncluded in the Cash flows t>om investing activities in the
Statement of Cash IHows.
6 General Journals, Ledgers and worksheets are evidence of transactions that describes the
essential facts of the transactions and are hereby called source documents.
7 Cross indexing is a process rlone during posting.-
8 Prepaid Insurance Notes Receivable, N/lortgage Payable and Unearned Revenues are real
accounts.
9 The Ledger is called the book of final entry vviilfe the Genenii Journal is the book of knowledge,
10 fvlatching principle signifies that the Statement of Financial Position prepared contains^ Assets
during the period which correspond:; with that of the Liabilities and Owner's Equity during the
same period,
11 Failure to recognize the accrual of liabilities wil; overstate tfie n:.t income and understate the
liabilities.
12 Non-current assets include Purnilure and Fixture, Land, Building, Off;ce Supplies, Office
Equipmentand Notes Receivable due in S years,
13 During posting, tn i bookkeeper (lifailed to post sn entire entry , (2)posted an entry twice .and
(3) postf'd an entry in reverse - msaning what vvas suppcsftd to ye debited was credited and.
vice versa. For sure the trial balance will not balance after Xn-i ths-ee error's.
14 The amount of net income would be. shov/iri.i a worksheet = deoit Xo Balance Sheet and a
credit to Income Statement
15 Liabilities are deducted from Assets to get the owner's equit^^, therefore Liabrlities are contra-
asset account
16 Cost of depreciable assets less it;; accumulated depreciation is equal to L^ook Vdkie of tfie asset.
17 An equipment purchased at the beginning of the year 10 year", ago costing P200,000 with an
annual depreciation rate of El% will be shown on the balance jheat at the end of this year as
"Equipment ~ P200,000 and Accumulated Depreciation - P100,C00'.
18 Reversing entries are entries made at the end of an accoun>:ing period where all adjusting
entries are brought to rero in preparation for the next accountintj period.
19 Adjusting entries are cne and the same as correcti.'ig entries, wfiere erroneous entries made
previously are rechecked and ciirected,
20 A worksheet is an integral part of the Finaiicial Statements of a company to be submitted to the
users of accounting informa'cion.

MULTIPLE CHOICE. CHOOSE THE eOT ANSWER

21 All ere sectors in the accounting profession under tfie umbrella org-jnization of PICPA, except
a.ACPAE • b.CPAACO c. ^CPACI d. GACPA

22 Proceeds from lssuancf.\f bonds and note;; fiayahici, proctseds from other short- or long-term
borrowing transactions, payments of dividemils and other aiT(Ounv.s distributed to owners are
included in th'.> cash flov/ii. f mi /^lat activity
a. operating b.itw«sting c. financing d. lending

1
23 The income summary accoi it of the company has a credit 'jiiiance jfter posting the closing
entries on revenues and expenses. The company has - ,
a. Net Income b. Net Loss c. both A and B d. none of the above

24 All the accounts in the ledger have a debit side and a credic side. Cash has a normal debit
balance while expenses has a normal . balance
a. credit b. debit c. debit & credit d. neither a nor b

25 To be qualiflsd as having passed the CPA licensure examination, a candidate must obtain a
general average of %, v/ith no grade lower than % in any given subject.
a. 75%, 65% b. 65%, 75ro c. 75%, 70% d. 75%, 60%

26 A field of accounting which is involved in presenting a plan of fin.sncial operations for a period,
and providing comparison of actual operation with the predetermined plan.
a. Managemt r»t Advisory Service b. Auditing c. Cost Accounting d. Budgeting

27 Users must be able to draw a parallel regarding the Financial Statements of an entity through
time ill order to id mtify trends in its financial position and perfor.mance. This cfiaracterizes a
Financial Sta tement that is
a. understandable b. relevant. c. reliable d. comparable

28 The Information system that measures business activities, processes said information Into
reports, and communicates the results to decision makers.
a. Database fiyianagement b. Accounting c. Accoun'ency d. Bookkeeping

29 The mathematician fro.m Venice who first published a description of the method of keeping
accounts which Is comparable or similar to double entry bookkeeping.
a. Leonardo da Vinci b. Luca Pacioli c. Eugenio Pjcelli d. Lucca Paclolo

30 An assumption that a business will continue to operate in the future -

a. going concern b. business entity c. ^ trofitabilit) d. permanence concept

31 A. Worksheet is prepared
B. Transactions are analyzed examining source documents
C. The adjlisting entries and cl'osing enti'ies are journalized and posted to the ledger
D. Financial statements are prepared
E. Transactions are journalized and poi'.ed

The steps in the accounting q. cl ? are in v/hat order?

a. A-B-C-D-E b. D-E-A-D-C c. 3-E-A-C-D d. C-A-D-E-B

32 I. Failure to recognize the consumption of prepaid expense wil) ijnderstate net Income and
overstate assets
II. Failure to recognize earnings of prwlously unearned revenue will understate net income
and overstate I iabllitie.';
a. Oiily I is true b. Only II is true c. I and II are trae d. I and II are false

33 Which of the following does not belong?

c. Earned Commission b. Sales c. Professional FetiS d. Unearned Rent

34 The following are unearned revenue, except

a. Attorney's fees to be collected by a \aw^cr far attending a client's hearing
b. Fees collected by a property assessor before the actual appraiiial
c. Check received by a dental clinic contracted for cleaning the students' teeth
d. J\eceipts from lease of an office space by the building administrator
e. Commission received in advance based on possible customer; in ? direct selling business

2
35 The following are adjusting en'^^ries lo be reversed if the company opt! fof »uch procedure
a. Dr. Cash; Cr. Accounts Receivablt! c. Dr. Supplies Exponw; Di. Supplies
Dr. Accounts receivable; Cr. Revenut Dr. Unearned Rent; Cr. Rent Revenue

b. Or. Salaries Expense; Cr. Salaries Payable d. Dr. Utilities Expense; Cr. Utillllcs Payable
Dr. Dep Exppense; Cr, Accum Depreciation Dr. Interest Receivable Cr, Interest Revenue

36 tnrlque K. Mario Builders rendered services totalling P1,320,00G for the year with the following
expenses: Salaries, P223,C00; Advertisin:{, l>62,500; Utilities, P252,000; Interest, P20,000;
Miscellaneous, P19,500; Depreciation Expense, (>136,000; Reprcsonlallon allowance, P154,000.
Compute for the net income (loss) for the year,
a. P867,000 . b. P4r.3,0Q0 c. (P453,000) d, zero

37 Using the data In number 36, assuming withdrawals for the year amountod to PISO.OOO while
the net increase In capital was P303,000, how much wjs the owner'i lnvritn\ont?
a. P153,000 b. P453,000 c, P303,C0O d. lero

38 The purchase of Supplies wortti P9,D00 and equiprniint P30,00U on Account wa» erroneouily
credited to Notes Payable. The correcting entry would be
a. Notes r^ayable 39,000 ' c. Accounts Payablo 39,000
Accounts Payable 39,000 Notes Paynbin 39,000
b. Notes Payable 39,000 d. Supplies 9,000
Supplies 9,000 Equipment 30,000
Equipment 30,000 ^ Accounts Pd/«bl«> 39,000

39 Ramon Leccumbeni Resto paid for the tollowinfj insurance policy |)rornlunn:

1 P 54,000 3 years Februa^ 1,2006

2 P 3,000 Gmonllii M.irch, 7008
3 P 24,000 1 year AuKuvt 1, 2008

The restaurant uses the expense method. Thi iuijusilng entry on Uotumtir 31, 2008 vouUl
show a debit of -
a. Prepaid Insuriince 62,500 (. Prepaid liiiuiancif 20,S(XJ
b. Prepaid insurance 15,500 il. liuuraPLo lixpunw) 62,5()(^

40. Sanlino Enterprise show the following bal.mici «ib o( the bei{l()nlf\4i ol the yoar: A>i !ts,
P550,000; Lldbilltif^s, P175,000. During Uw yi',jr, llie compiiiiy («i\duri!d u-rvlces for cash
amounting to P50,000 and on .iccount (or f'n'.,(H)0. Addillonal Inveitmentj totalled P6p,000
while wilhdfawals were at P2,000 at the L'nc' ol every month. Nut l.on lor the year wat P3,000,
How much Is the ending Capital of Santiiio tnteipilse?
a, P428,000 b, P408,0U0 t . ['375,000 d.'>459,000

41 Based on vhc previous number, how much i,. rhe total operating expomej (or the year?
a. incomplete data b. P92,000 c P98,000 d, P39,0O0

42 Payment of rent was made in advance iimocnilric to P54,666 for 6 month* loave on a storeroom.
The company made this payment on Novemlier 1, 2008 and It u«oj the cxpenie method. The
adjusting entry on Der.embei 31, 2008 will be
a. Prepaid Rent 18,222 c. Prepaid Rent 36,444
Rent Expense 18,222 Rent ExptMue 36,441

b. Rent Expense 18,222' d. Rent Expense 36,444

Prepaid Rent 18,222 Prepaid Rent 36,444

43 The depreciation rate of the furniture and fixtuit' was at 12.5%. What w«j the eitlmated uieful
lifeof the arset?
a.l21/2ycars b.l6years c.25years d. U years

3
44 Audrey Merchand sing was unable to record the adjusting entries (1) on the accrual of interest
on Notes Payable amounting to P3,000 and (2) on supplies consumed worth ?,500, The effect
on the Net Income by these omissions would be
a. overstated by P5,500 c. no effect
b. understated by P5,500 d. overstated by P500

45 An old warehouse was purchased on Septernbei 1, 2007 iimounting to P30b,000 with an

estimated salvage value of P30,000 and an estimated useful "lie of 10 years. The financial
statements for the year ended b'^cember 31,2008 would shew balances of:
depreciation Expense AxLmulatedDepredation
a. P30,000 P54,000
b. P36,000 P36,000
c. P 9,000 P36,000
d. P27,000 P36,000
e. P30,000 P36,000

46 The accounting records of David Garcia & Sons show the foilowiri; ar; of year 200B:
Assets Liabilities
December 31,200A P423,000 -' P215,000
December 31,200B 515,000 280,500

During .he year, owners' investments amounted to P43,000 while withdrawals totalled P18,000.
How much Is the ending capital balance?
3. P208,000 a. P92,000 c. P75,500 ^ d. P234,500

47 Based on the previous number, how much was the net income (lor.s) during the year?
a.(Pl,500) b P26,500 c. Pl,500 d. P25,000

48 Based on the records of David Garcia 8t Sons, how much is the net Increase (decrease) In capital?
a. (PLSOOj b. P26,500 c. Pl,500 d, (P26,500)

49 A store equipment worth PSO.OOO was purdissed on March 1, 2008. It has an estimated scrap
value of P5,f)00 with a useful life of 10 years. Oepreciaticn Expense for the 3-month period
ending December 31, 2008 \d be debited by
a. P4,500 b, Pl,125 c. P3,750 d. P375

50. Strawbern,' & Cupcakes Salon rendered sen/ices totalling P930,000 for the year with the
following expenses: Salaries, P233,000; Advertising, P72,r.W; Utlllt;es, P259,000; Interest,
P24,000; Miscellaneous, "19,900; Depreciation Expense, P146,0C0; Representation allowance,
P155,000. The Income summary Account will show what amount/balance after all the closing
entries are posted?
a. P930,000 b P909,400 c P20,6UC d. not given

51 Salaries Expense of P25,O00 was erroneoi'sly credited whlli;! Prepaid Rent was understated by
P3,3O0. The total debits in the Trial balance was P340,000. After correcting the trial balance, the
total debits In the trial balance wil! be
a. P393,300 b. P368,300 c. P340,000 d. P343,300

52 The following accounts were taken from the books of Jack Bauftr Men's Salon: (l)Service
Revenue, P230,000; (2)Saiahes Expense, P110,000; (3)D('.orGdation Expense, P45,000;
(4)Supplies, P3,000; {5/Repair 8i Maintenance, P4,000; {6)Advertisirig Expenses, 6,000 (7)
Accrued interest, P1,000. Which of the mentioned accounts would .surely NOT be Included
(added or deducted) in any of ths activities in the Statement of Cas>-> Fio^vs?
a. 1,2,3,5,6 c. 3,7 d. all are included
53 A store equipment lias a debit balance of P200,000 as of Dece mber 31, 2008 which Includes
purchases made on October 1, 2C07 amourUing to P30,000 ani on Ma/ 1, 2008 amounting to
P80,000. Annual depreciation rate is 12%. Depreciation for the year ended 2008 would be-
a. P13,600 b. P20,400 c. P20,800, d. P18,800

54 Gonsalvo Poiicarpio Publishing has total assets amounting to P400,000 at the beginning of the
year. During the year capital increased by P23,000 while liabilities decreased by P9,000. How
much would be the total assets at the end of the year?
a. cannot be computed b. P432,000 c. P400,000 d. P414,000

Jillian Housekeeping Services has the following balances from tht^ adjusted trial balance as of
December 31,2008:
Advertising Expense 8,990.00 Jun Pyo, Drawing 15,000.00
Accounts Receivable 76,000.00 Notes payable 211,000.00
Accounts payable 3,3,000.00 Prepaid Rent . 72,500.00
Accumulated Depreciation 7,900.00 Service Revenue 96,230,90)
Ca:.h 90,925.00 Supplies .1,200.00
Depreciation E>pense 2,300.00 Supplies Expense 8,200.00
Equipment ' 75,000.00 Unearned Service Re/enue 2,300.00
Interest Expense 3,000.00 Utilities Expense 7,000.00
Jun Pyo, Capital ???? •Wages Expense 48,700.00

How mucin will be the Total Assets in the Balance sheet as of December 31,2008
a. P307,725 b. P315,625 . c, 240,625 d. P67,100

56 Jillian Housekeeping Services has total liabilities amounting to -

a. P244,000 , b. P211,000 c. ?254,200 d. P246,300

57 How mucli is the Nt t Income (loss) of Jillian Housekeeping Services?

a. P18,040 b. P64,265 c. P78,190 d, P174,420

58 The Statement of Changes in owner's equity o f Jillian Housekenpin/^ Seivices would show an
ending capital of?
a. P46,424 b. P64,265 c. P61,425 d. P104,000

59. The Bud Brothers' Orchard received a 12% SO-day note fron-. Walirig-waling Funeral Parlor
amounting to P250,000 for variou;; ornamental plants sold. The farsactlon was made on
December 2, 2008. Give the adjusting entry to b?, recorded by the ,^;eller on December 31, 2008.
a. Interest Expense 2,500 c. Interest Receivable 2,500
Interest payable 2,500 Intertst Revenue 2,500'

b. Interest Expense 5,000 d. Interest Receivable 5,000

Interest Payable 5,,000 Interest Revenue 5,000

60 The trial balance of Jan Dl Learning Centre prepared on December 3 J, did not equal. Tr^jtal debits
was P159,250 and total cr edits was P153,2.Q0. After verifying the soi/rce of the disparity, the
bookkeeper discovered the follcwirg errors: a credit to cash of P650 vvas not posted; a P2,000
credit to Earned Commission was cn^dited to Accounts Receivable instead; the Utilities Payable
account balance of P9,300 was tistiKl in the trial balance as P3,90'), The correct trial balance
should be -
a.P161,250 b,P:l60,600 c. P159,250 d. P15.3,200

61 The real account was debltei for ['36,000 upon payment of one year fire insurance policy
cotmmencing on November J,, 200S. The adjusting entry at the enc) of che fiscal year ending
February 28, 2009 will have a dabit of -
a. prepaid insurance 12,000 c. prepaid insiiranctf 24,000
b. insurance expense 12,000 d. insurance fj<peni;a 3,000

5
62 The following information v/as taken from the books of Jcnkee Pakyeo Clothing Line. ^.
Assets and Liabilities for January' 1 amounted to P423,500 and P.97,000 respectively, wftile
assets at the end of the year amounted to P343,100.
Net Loss during the year amounted to ^35,000, while lieilillities remained the same. The
owner of the company would have made an investment {withdrawal) of -

a. P(80,400) b. P45,400 c. (P45,400) d. P70,000

63 The Accounts Payable of George & Cecil Security Agency has a ending balance of P63,550 3S of
December 31, 2008. During the year, the company bought supplie; and equipment on account.
Supplies purchased on account from Junisia's Gun Supply amounted to P33,000. Furthur
information showed that the Agency issued several checks as paymefit for the said payable
account totalling P110,600.. How much was the equipment purchased on account assuming the
payable account hat': a beginning balance of P95,000?
a.P46,lS0 b.P79,150 c. P47,950 d. P41,450

64 Ingrid Photography was commissioned to shoot 20 family pictures aiV a servicing rate of Pl,990
per session. At the end of the year, only half the nu.nber of pictures has been taken. The
adjusting entry on December 31 wouid be
a. Accounts Receivable 19,950 c. Unearned Service Revenue 199
Service Revenue 19,9f»0 Service R«venue 199

b. Service Revenue 19,9(90 d. Accounts ilecelvable 199

Unearned Service Revenue 19,900 Service Revenue 199

65 The following transactions affecting the supplies account was recorded In the books of "Kuya
Kim Karenderya" for the calendar year 2008. Purchases during the year were as follov/s: March
5 - P5,200; September 10 - P6,020; December 25 - P4,200. Return of defective supplies
happened on October 4 - Pl,8':)4, Beginning inventory of supplies was P2,002 while ending was
P4,208. How much supplies were c< nsurried during ?hi.? year?
a.P6,lC2 b. P4,208 c. Pll,320 d- P15,732

66 The Unearned Commission account was credited ujjon receipt of i>;>,388 for the sale of two
dozen vials of ,10 ml cologne. As of December 31, or^ly 5 bottles were .'NCld. The adjusting entry
at the end of the period waulc' be -
a.Accounts receivable 1,122.50 c. Unearnei Commissions 1,122.50
Commissions Revenue 1,122.50 Earned Corr.'missions 1,122.50

• b. Earned commissions 2,245.00 d. Earned Cornmis,;ians 4,2645.50

Unearned Commissions 2,245.ryO Unei^riied Commissions 4,265.50

/mmd 8/19/09