Practice Quiz #1

False

According to the Conceptual Framework, the primary users of financial statements are the owner/s and managers. 

True or False

True

Luca Pacioli was a monk, mathematician, and friend of Leonardo da Vinci, and published the first known book on double-entry bookkeeping entitled Summa De Arithmica, Geometria, Proporitioni et Proportionale.

True or False

True

Limited liability and indefinite business life are characteristics of a corporation.

True or False

True

The natural form of Statement of Profit or Loss is generally used by service businesses because of its simplicity.

True or False

True

Income is an inflow of assets that results from the sales of goods or services or from the use of money or property.

True or False

False

The business offers term of 90 days for its sales on account. It records the revenue from these sales as soon as the sales are made rather than waiting until cash is received from the customers. This is in accordance with matching principle.

True or False

False

The form of the statement which shows the liabilities and owner’s equity below the total assets is called the account form of the Statement of Financial Position.

True or False

False

Accounting is defined as the process of recording financial and non-financial transactions pertaining to a business. Which includes summarizing, analyzing, and reporting these transactions to various stakeholders.

True or False

False

Cost-Benefit Test is not difficult to determine as both cost and benefits are easy to measure.

True or False

False

Tax compliance refers to giving advice to clients on how to structure their financial affairs in order to reduce tax liability.

True or False

B

Notes to a company's financial statements

 

A. Are irrelevant facts that are immaterial in amount.

 

B. Are an integral part of a company's financial statements.

 

C. Are relatively unimportant facts that do not belong in the basic financial statements.

 

D. Document the source of financial statement facts, like literary footnotes.

C

Which of the following is the best description of “faithful representation” in relation to information in financial statements?

 

A. Comprehensibility to users

 

B. Inclusion of a degree of caution

 

C. Freedom from material error

 

D. Influence on the economic decisions of users

B

Which of the following is NOT related to an expense?

 

A. Bills received from utility company

 

B. The payment of a creditor on account

 

C. The used portion of prepaid supplies

 

D. The expired portion of the advance rental paid early this year

C

The business entity concept means that

 

A. the owner is part of the business entity.

 

B. an entity is organized according to the laws of the country.

 

C. the entity is an individual economic unit for which data are recorded, analyzed, and reported.

 

D. an entity is organized according to the rules set by the accounting standards body.

A

Under the accrual basis of accounting,

 

A. Revenue is recorded in the period in which it is earned and expenses are recorded in the period in which incurred.

 

B. Revenue and expenses are recorded when cash is received or paid.

 

C. Expenses are recorded in the period in which they are incurred and revenue is recorded when payment is received.

 

D. When revenues and expenses are recorded, it would be up to the owners and/or managers.

B

Which of the following companies would be considered as a service business:

 

A. Phoebe, who is selling Chia Seeds and other healthy packed food through platforms such as Lazada and Shopee.

 

B. Joey, who is engaged in creating, designing, and implementing website servers to various clients.

 

C. Rachel, who is engaged in the production of tables and chairs used in various offices located in Pasig City.

 

D. Chandler, who buys and sells different sports cards online and resells them on Facebook marketplace.

A

Oliveira Company is selling a piece of land adjacent to their business. An appraisal reported the market value of the land to be P1,000,000. The Marquina Company initially offered to buy the land for P870,000. The companies settled on a purchase price of P950,000. On the same day, another piece of land on the same block sold for P1,020,000. Under the historical cost concept, what is the amount that will be used to record this transaction in the accounting records of Marquina Company?

 

A. P950,000

 

B. P1,000,000

 

C. P1,020,000

 

D. P870,000

B

Owner’s drawings

 

A. increase expenses.

 

B. decrease owner’s equity.

 

C. increase cash.

 

D. decrease expenses.

B

Which of the following is not considered a type of business ownership?

 

A. One person corporation

 

B. Retail

 

C. Partnership

 

D. Sole proprietorship

D

The going concern assumption assumes that:

 

A. The financial statements of a business reflect the affairs of the business—not the affairs of the owners.

 

B. A business's life can be separated into time periods with income being reported within one economic time period.

 

C. Financial events are meaningful only when they can be expressed in economic terms.

 

D. The business will continue to operate indefinitely.

80500

On October 31, 2021, Freddy Fazbear's Pizzeria had the following (alphabetically arranged) items and amounts: 

Accounts payable	P12,000	Furniture and Fixtures	P40,000
Accounts receivable	23,000	Owner's withdrawals	6,000
Accrued expense	2,000	Rent expense	10,000
Cash	17,500	Salaries expense	6,500
Revenues	70,000	Utilities expense	15,000
Long-term Notes payable	10,000	Unearned revenue	5,000

Calculate for the total assets.

1033000

My Hero Academia Tutorial Services had the following financial information by the end of the year:

Particulars	Beginning (Jan 1, 2020)	Ending  (Dec 31, 2020)
Assets	P1,000,000	P1,450,000
Liabilities	650,000	900,000
Owner’s Withdrawal		363,000
Expenses		470,000

How much was revenue for 2020?

19000

On October 31, 2021, Freddy Fazbear's Pizzeria had the following (alphabetically arranged) items and amounts: 

Accounts payable	P12,000	Furniture and Fixtures	P40,000
Accounts receivable	23,000	Owner's withdrawals	6,000
Accrued expense	2,000	Rent expense	10,000
Cash	17,500	Salaries expense	6,500
Revenues	70,000	Utilities expense	15,000
Long-term Notes payable	10,000	Unearned revenue	5,000

Calculate for the current liabilities.

8000

Utility bills of Adventure Guild  totalling P15,000 were paid. P7,000 of this amount was associated with previous period’s operations. How much should be decreased in the Owner’s Equity for the current period?

9700

Hargreeves Company reported revenues for P273,500 and expenses for P263,800. The owner withdrew P30,000 for personal use. How much is the net income of Hargreeves Company for the year?

100000

Jake Peralta opened a detective services business by depositing P100,000 in the business bank account. He wrote two checks from the business bank account: P20,000 for office furniture and P5,000 for office supplies. What is his financial interest in the company?

170000

Yoon Hye-jin opened a dental service business opened on October 1, 2021.   Initial investment recorded are as follows:

Cash: P180,000

Dental Equipment: P220,000

Dental Supplies: P80,000

Total Initial Investment: P480,000

On its first month of operation, the business has rendered dental services for a total amount of P180,000. Cash withdrawal of the owner for personal use amounted to P30,000.   Total Expenses was P70,000 which include the costs of salaries, utilities and rent for the month.   Credit purchases of dental supplies have reached a total of P90,000 and remains unpaid as of end October 2021. How much is the increase in Assets in October 2021?

20000

For the month of October 2021, Faith D. Nakpil Accounting Services (FDNACCT) rendered accounting services amounting to P20,000.   On October 31, 2021, a client gave the business P10,000 for accounting services for the month of November. How much was the income of FDNACCT for the month of October?

495000

At the start of the year, Keating Law Firm had assets of P650,000 and liabilities of P225,000.  The assets increased by P85,000 and liabilities increased to P240,000.  Determine the Owner’s Equity at year-end.

585000

The owner’s equity of Faith D. Nakpil Accounting Services (FDNACCT) is P195,000 which is equal to ¼ the amount of Total Assets. How much is total liabilities?

188000

Faith D. Nakpil Accounting Services (FDNACCT) has the following information on October 31, 2021.

Assets	P300,000
Liabilities	?
Capital, beginning	99,000
Revenues	75,000
Expenses	62,000
Drawings	None

How much is the total liabilities of the business on October 31, 2021?

443700

Seong Gi-hun started his cleaning services business on November 1, 2020, with a P240,000 investment from his personal savings and P120,000 from a bank loan. During the first half of the year, the net income of the business was P48,700. For the fiscal year ended October 31, 2021, Seong Gi-hun withdrew P10,000 cash to pay for his personal condo rental. Accordingly, no other transactions affected owner’s equity during the year. By the end of the year, the liabilities of the business have increased by P45,000 due to business payables.  How much is the total assets of the business at year end?

262750

FDNACCT has the following information on October 31, 2021.

Assets	Liabilities	Capital, beginning	Revenues	Expenses	Drawings
?	P46,000	P195,000	P81,750	P55,000	P5,000

How much is the total assets of the business on October 31, 2021?

233000

Faith D. Nakpil Accounting Services (FDNACCT) paid for the following:

Purchase of equipment: P50,000

Operating expenses: P230,000

Interest of bank loan: P3,000

Principal of bank loan: P20,000

The owner also made a cash withdrawal of P50,000.

 How much is the total expense of the business?

60000

Shaun Murphy started his medical practice on May 1, 2021 by investing P80,000 cash and his medical equipment with a fair market value of  P20,000.  On October 31, 2021, the total assets of the business amounted to P150,000, liabilities, P10,000 and the owner’s capital, P140,000.  The services that he rendered to patients amounted to P100,000. No withdrawals were made during the six month period. How much was the total expenses of the business?