Ramon Magsaysay Memorial Colleges

Bachelor of Science in Accountancy Program

Pioneer Ave., General Santos City
Tel. No. 552-3348

Name: ______________________________ Date: ___________ Score: _____________

Subject : Acctg11- Financial Accounting and Reporting Midterm Examination
Instructor: Mrs. Marivic B. Peñaflor, CPA,MBA AY: 2021-2022 1st semester

General Instruction: Use blue or black ink pen only. Read the instructions carefully before answering. Answers have no credit for not following
instructions.

Test I : Multiple Choice : Write the letter of your choice on the answer sheet.

1. The financial information must be free from material error that will lead to material misstatement and should contain the degree of confidence
when used by interested parties.
a. Objectivity
b. Reliability
c. Understandability
d. Consistency
2. The communicating process of accounting includes all of the ff. ,except
a. Recording
b. classification
c. Summarizing
d. Interpreting
3. What is the law regulating the practice of accountancy in the Philippines?
a. R.A. no. 9298
b. R.A. no. 9198
c. R.A. no. 9928
d. R.A. no. 9892
4. It is the body authorized by law to promulgate rules and regulations affecting the practice of the accountancy profession in the
Philippines.
a. Board Of Accountancy
b. Philippine Institute Of Certified Public Accountants
c. Securities And Exchange Commission
d. Financial Reporting Standards Council
5. Accountants employed in entities in various capacity as accounting staff, chief accountant or controller are said to be engaged in
a. Public accounting
b. Private accounting
c. Government accounting
d. Financial accounting
6. It is the accounting standard setting body in the Philippines at the present time.
a. Accounting Standards Council
b. Auditing And Assurance Standards Council
c. Philippine Accounting Standards Board
d. Financial Reporting Standards Council

7. The purpose of the International Financial Reporting Standards is to

a. Issue enforceable standards which regulate the financial accounting and reporting of multinational entities.
b. Develop a uniform currency in which the financial transaction of entities throughout the world would be measured
c. Promote uniform accounting standards among countries of the world
d. Arbitrate accounting disputes between auditors and international entities.
8. Those who lend money or deliver goods and services before being paid are called
a. Investors
b. Debtors
c. Underwriters
d. Creditors
9. Obligations which are expected to be liquidated through the use of existing current assets or the creation of other current liabilities
are call
a. Current assets
b. Current liabilities
c. Long-term liabilities
d. Unearned income
10. Which of the following is a form of revenue?
a. A check paying a mortgage
b. A credit purchase invoice
c. Credit sales to charge customers
d. A cash purchase invoice
e. A check paying utilitites
11. In recording transactions,

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 a. Assets, expenses, and drawing accounts are debited for increases
b. The word “debit” means increase and the work “ credit” means decrase.
c. Liabilities, revenue, and drawing accounts are debited for increases
d. Assets, expenses and capital accounts are debited for increases
12. The issuance of a note by an entity for services received should be recorded as
a. An unearned revenue
b. A notes payable
c. A prepaid expense
d. An accounts receivable
13. The expectation of a future payment from a customer for goods sold is
a. A prepaid expense
b. A notes receivable
c. An accounts receivable
d. All of the above
14. When an entity pays employees for their services, the effect is an increase in
a. Expenses
b. Assets
c. Income
d. Liabilities
15. Which of the following events would not be considered an accounting transaction?
a. Payment of fees to a tax consultant
b. Purchase of print advertising space for an new service
c. Sale of a new product during the first month of operation
d. Tabulation of the results of a customer satisfaction survey

19. If the equipment cost P 200,000 and accumulated depreciation amounts to P 60,000, the book value of the equipment is
a. 260,000
b. 60,000
c. 140,000
d. 200,000
e. Cannot be determined with the information provided
20. Failure to record the entry for accrued salaries results in
a. Salaries payable being overstated
b. Profit being understated
c. Salaries expense being understated
d. Total assets being understated
e. Total assets being overstated
21. The entry to record expired insurance is omitted. This error causes
a. Assets to be overstated
b. Expenses to be overstated
c. Liabilities to be overstated
d. Liabilities to be understated
e. An increase in liabilities on the balance sheet.

Test 2: Adjusting entry preparation. Prepare adjusting entries on December 31, 2021.

Instruction: Prepare adjusting entries on December 31,2021. Write your adjusting entries on the answer sheet.

22. Paid 180,000 for a 3 year fire insurance policy to commence on June 30, 2021. The amount of premium
was debited to insurance expense.
23. Borrowed P 400,000 by issuing a ten months note with 10% annual interest to BDO on May 1, 2021.
24. Paid P 85,000 cash to purchase a brand new computer on March. 1, 2020. The brand new computer was expected to have a 5 year
life and a salvage value of P 5,000. Depreciation is computed on a straight line basis.
25. Received a P 40,000 cash advance for a contract to provide services in the future. The contract required a 2 year commitment,
starting April 1, 2021. Service income account was credited upon receipt of cash.
26. Purchased P 40,000 of supplies for cash. At year’s end, P 10,000 supplies has already been used.
27. Invested P 85,000 cash in a certificate of deposit that paid 10% annual interest. The certificate was acquired on May 1, 2021 and
carried a 3 year term to maturity.
28. Paid P 60,000 cash in advance on November 1, 2021 for a one year lease on office space.
29. Payroll for a six-day workweek, to be paid on Saturday , is P 100,000. The last day of the period is a Wednesday.
30. The supplies account showed a beginning balance of P 20,000. Purchases during the year were P 60,000. The ending inventory re-
vealed supplies on hand of P 20,000.

Test 3: Preparation of Worksheet, Income Statement, Balance Sheet and Statement of Changes in Equity.

For item nos. 31 to 45.

A. Complete the working paper for the month of December of MAGANDA ANG BUHAY Delivery Service below after
determining the adjustments based on the following information:

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 a. P 4,900 of supplies is still available at the end of the month.
b. Building is depreciated at 10% while equipment , 10% annually.
c. 70% of the prepaid insurance has already been expired.
d. Interest on notes receivable have been accrued at year end, P 20,000
e. Unpaid salaries and wages at year end amounted to P 18,000.
f. Rent expense covers three months period, and was paid on December 1, 2021.
g. 5% of accounts receivable is estimated to be uncollectible at the end of the month.

MAGANDA ANG BUHAY Delivery Service

Worksheet
December 31, 2021

Account Titles Unadjusted Trial Adjustments Income Statement Balance Sheet

Balance
DR CR
Cash 63,400
Accounts Receivable 16,100
Estimated Uncollectible Accounts 2,000
Notes Receivable 30,000
Supplies 8,900
Prepaid insurance 19,000
Land 480,000
Buildings 820,000
Accum. Depreciation-buildings 189,600
Equipment 530,000
Accum. Depreciation- equipment 168,000
Accounts payable 21,600
Unearned delivery services 21,000
Mortgage payable 580,000
Maganda , capital 716,300
Maganda , withdrawal 10,000
Delivery fees earned 364,600
Salary expense 76,700
Utilities expense 4,700
Rent Expense 4,300
Total 2,063,100 2,063,100

B. Refer to test 3-A , prepare a balance sheet – 5 pts ( item nos. 46-50)

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C. Refer to test 3 -A, prepare an Income Statement- 5 pts ( item nos. 51-55)

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D. Refer to test 3 -A, prepare a statement of changes in equity-3pts ( item nos. 56-58)
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Test 4: Preparation of closing entries, reversing entries and post-closing trial balance

A. Refer to test 3 -A, prepare closing entries- 4 pts ( item nos. 58-62)
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B. Refer to test 3 -A, prepare reversing entries- 4 pts ( item nos. 63-66)
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C. Refer to test 3 -A, prepare a post closing trial balance- 4pts ( item nos. 67-70)
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END OF EXAMINATION!
GOD BLESS!

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