1.

As of January 1, 2020, an entity reported total liabilities of

P700,000, which represented 40% of total assets. During 2020, loss
was incurred amounting to P100,000 and there were no contributions
nor withdrawals made by the owner. At the end of the year liabilities
represented 50% of the total assets. Determine the amount of equity
as of December 31, 2020.
950,000

2. The preparation and subsequent publication of highly summarized

information
Financial Accounting

3. A mechanical task involving the collection of basic financial data

Book-keeping

4. Samboy plans to offer Business Sale for the entire month of

November, since he will be closing the business for amonth-long
vacation in October. He plans to reopen December 1 and will continue
operating his business indefinitely.
Going-concern assumption

5. The owner of a business invested P50,000 in the business. What is

the effect on the fundamental accounting equation?
Assets increases 50,000,liabilities no effect;owners equity 50,000

6. In recording transactions
Assets, expenses and drawing accounts are debited for increases

7. When uncertainty exists, the convention of conservatism or

prudence uses estimates of a conservative nature in an attempt to
ensure which of the following?
Assets and income are not overstated; liabilities and expenses are not
understated

8. The purchase of an asset for cash will

Have no effect on total assets or total liabilities

9. The beginning balances of an entity amounted to P4,000,000 and

P2,200,000 for total assets and total liabilities, respectively. The
assets increased to 120% of its beginning balance while the
liabilities increased by 75%. The amount of loss was P1,100,000 and
no withdrawals were made during the year. Determine the amount of
contributions made during the year.
250,000

10. Last January 1, 2020, Mrs. Dimalanta started a laundry shop

business by contributing cash of P1,500,000. At the end of the year,
assets totaled P3,000,000 while liabilities totaled P500,000.
Additional contributions made during the year totaled P600,000, while
periodic withdrawals totaled P400,000. Determine the net income for
2020.
800,000
11. Concerned with the supply of information to owners of the entity
Management Accounting

12. Accounting concepts and principles can be derived from

All of these are sources of accounting concepts and principles used
in practice

13. Under this concept, the cost of processing and communicating

information should not exceed the benefits to be derived from it.
Cost-benefit

14. Accounting can be used as a tool in doing evil things, like

embezzling of funds. All of the following can guide the accountant so
that he/she will not misuse accounting, except
The regular use of social media and the strict adherence to the
values promoted by tv shows and Hollywood movies

15. Accounting has been given various definitions, which of the

following is not one of those definitions
Accounting is a systematic process of objectively obtaining and
evaluating evidence regarding assertions about economic actions and
events to ascertain the degree of correspondence between these
assertions and established criteria and communicating the results to
interested users.

16. The term ‘control’ as used in the definition of an asset means

(2) you can prevent others from enjoying the benefits that an
economic resource may produce.
(1) you have the exclusive right to enjoy the economic benefits that
an economic resource may produce.

17. Edgar has a business. He issued a check amounting P4,000 to MQC.

This amount represents payment of his daughter’s tuition fee for her
schooling. What accounting principle relates to this scenario?
Business entity assumption

18. The payment of a liability

Decrease assets and liabilities

19. The beginning balances of a business amounted to P3,200,000 and

P1,500,000 for total assets and total equity, respectively. Total
liabilities decreased by P400,000 while the equity increased to
P1,600,000. Determine the ending balance of total assets.
2,900,000

20. A parcel of land is offered for sale at P1,000,000, its zonal

value for tax purposes is at P600,000, the purchasers estimated its
worth to be P900,000, and is sold for P1,500,000. At what amount
should the land be recorded in the purchaser's books?
1,500,000
21. What is the primary purpose of accounting?
To provide information that is intended to be useful in making
economic decisions.

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

A credit sales to charge customer

23. Under this concept, the life of the business is divided into
series of reporting periods. Thus, businesses normally prepare
financial statements at least annually.
Time period

24. Which of the following accounting principles require that all

goods and services purchased be recorded at actual cost?
Cost principle

25. On September 9 of the current year, VTA Accounting Services

signed a contract and received P60,000 contract from a client to
provide bookkeeping services to the client in the following year.
Which accounting principle would require VTA Accounting Services to
record the bookkeeping revenue in the following year and not the year
the cash was received?
Revenue recognition principle/Realization Principle

26. Which of the following does not form part of the accounting
standards used in the Philippines?
Philippine Auditing Practice Statements

27. As of January 1, 2020, an entity reported total liabilities of

P700,000, which represented 40% of total assets. During 2020, loss
was incurred amounting to P100,000 and there were no contributions
nor withdrawals made by the owner. At the end of the year liabilities
represented 50% of the total assets. Determine the amount of total
liabilities as of December 31, 2020.
950,000

28. Revenue is properly recognized:

Upon completion of the sale or when services have been performed and
the business obtain the right to collect the sales price

29. The beginning balances of a sole proprietorship amounted to

P3,000,000 and P1,200,000 for total assets and total liabilities,
respectively. The assets increased by 80% while the liabilities
increased to 150% of its beginning balance. Determine the ending
balance of equity.
3,600,000

30. Information has this qualitative characteristic if two different

users could reach a general agreement as to what the information
intends to represent.
Verifiability
31. As of January 1, 2020, an entity reported total liabilities of
P700,000, which represented 40% of total assets. During 2020, loss
was incurred amounting to P100,000 and there were no contributions
nor withdrawals made by the owner. At the end of the year liabilities
represented 50% of the total assets. Determine the amount of total
assets as of December 31, 2020.
1,900,000

32. Which of the following is not a considered an account?

revenue

33. Statement I: Financial information is information expressed in

terms of money. Statement II: Financial information is always
qualitative information.
True;false

34. The branch of accounting that deals with providing financial

information to external decision makers is
Financial Accounting

35. It is an economic resource controlled by the entity that has

resulted from past events and has a potential to produce economic
benefits
Assets

36. The J9 Prime Trading Corporation acquired a building for

P2,700,000. The building was appraised at a value of P3,000,000. The
seller had paid P1,500,000 for the building 6 years ago. Which
accounting principle would require J9 Prime Trading Corporation to
record the building on its records at P2,700,000?
Cost Principle

37. At the beginning of the year, a business had total assets of

P900,000 and P300,000 of liabilities. At the end of the year, assets
increased by 75% while the amount of profit during the year amounted
to P120,000. No other transactions affected the equity. Determine the
ending balance of the liabilities.
855,000

38. External users of general-purpose financial statements include

all of the following except
Owners who are directly involved in managing the business

39. Which of the following accounting principles prescribes that a

company record its expenses incurred to generate the revenue
reported?
Matching principle

40. Under the accrual basis of accounting,

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.
41. 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?
Separate entity assumption

42. Which of the following statements regarding the recording of

events is valid?
Only accountable events are recorded in the accounting books.

43. If owner invests her laptop computer and printer in the business,
there is an increase to
Computer Equipment and Capital

44. It is a present obligation that has resulted from past events and
has the potential to cause a transfer of an economic resource in its
settlement.
Liability

45. The official accounting standard setting body in the Philippines

is the
Financial Reporting Standards Council (FRSC).

46. Regin Tuano is the owner of Hub a’ Spa. Which accounting

principle requiresRegin to keep her personal financial information
separate from the financial information ofHub a’ Spa?
Business entity assumption

47. Elmer received a shipment of equipment from Japan for his

business here in the Philippines. The sales invoice was stated in
Japanese Yen. Elmer’s business functional and presentation currency
is in Philippine Peso.
Stable Monetary Unit Principle

48. At the beginning of 2020, a business had total liabilities of

P1,800,000 and P600,000 of equity. Total assets increased by 25%
while the total liabilities remained the same. Contributions made by
the owner amounted to P500,000 while the profit amounted to
P1,000,000. Determine the amount of withdrawals made by the owner
during the year
900,000

49. At the beginning of 2020, a business had total assets of P900,000

and P300,000 of equity. No additional contributions nor withdrawals
were made and that only profit or loss affected the equity during
2020. At the end of 2020, assets totaled P1,125,000 while the
liabilities totaled P675,000. Determine the net income for 2020.
(Positive amount for Profit and Negative, e.g., (1,000), amount for
Loss)
150,000
50. The following are decisions made by internal users except
To impose taxes