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CAE 2 Financial Accounting and Reporting: L-NU AA-23-02-01-18
CAE 2 Financial Accounting and Reporting: L-NU AA-23-02-01-18
LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City
Name:_____________________________________ Score:____________________
7. The amounts shown on this trial balance represent the beginning balances of accounts in the next
accounting period.
a. Unadjusted trial balance
b. Adjusted trial balance
c. Post-closing trial balance
d. Carry-over trial balance
Nov. 1, 20x1 The business owner provides ₱2,000,000 cash as investment to the business.
Nov. 5, 20x1 Entity A obtains a ₱500,000 loan and issues a promissory note.
Nov. 8, 20x1 Entity A acquires land costing ₱1,000,000 on cash basis.
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Nov. 16, 20x1 Entity Arenders services worth ₱1,200,000 on account.
Nov. 30, 20x1 Entity Apays salaries expense of ₱280,000.
8. How much is the total assets at the end of the period? (Hint: use the basic accounting equation)
a. 4,320,000
b. 3,840,000
c. 3,420,000
d. 2,980,000
10. How much is the equity at the end of the period after taking into account income and expenses?
a. 2,920,000
b. 2,980,000
c. 3,120,000
d. 3,280,000
11. In a worksheet, which of the following is prepared after the unadjusted trial balance?
a. Adjusted trial balance columns
b. Income statement columns
c. Adjusting entries columns
d. Balance sheet columns
12. In accounting parlance, an account that has no balance is called a
a. closed account.
b. dead account.
c. ghost account.
d. blocked account.
13. This trial balance contains only real accounts.
a. Unadjusted trial balance
b. Adjusted trial balance
c. Post-closing trial balance
d. Permanent trial balance
14. The first step in the accounting cycle is
a. posting to the ledger.
b. journalizing.
c. preparing the adjusting entries.
d. analyzing events.
17. A business sells goods in Year 1 but collects the sale price only in Year 2. According to the accrual
basis and time period concepts, the business should include the sale in its income statement in
a. Year 1.
b. Year 2.
c. Year 3.
d. Every year
18. Debit and debit result to
a. addition.
b. deduction.
c. multiplication.
d. two debits.
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Instruction for the next twelve (12) questions: Choose the letter corresponding to the correct journal
entry for each of the transactions described.
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c. Cash Advertisement payable
d. Advertising expense Accounts payable
32. Recording assets at their acquisition cost (entry value), rather than at their net selling price (exit
value), is in line with the concept of
a. Single entity concept.
b. Historical cost concept.
c. Going concern concept.
d. Matching principle.
34. At the beginning of the period, Addy had a cash balance of ₱20,000 and a notes payable of ₱15,000.
During the period, Addy collected ₱11,000 accounts receivable, paid ₱8,000 notes payable, and
issued additional notes payable of ₱5,000 in exchange for cash. How much are the ending balances
of cash and notes payable, respectively?
Cash Notes payable
a. 17,000 20,000
b. 20,000 12,000
c. 28,000 12,000
d. 36,000 20,000
35. A business has total assets, liabilities, and equity of ₱10,000, ₱7,000 and ₱3,000, respectively, at the
beginningof the period. During the period, total liabilities decreased to₱4,000 while profit
was₱5,000. How much is the ending total assets?
a. 12,000
b. 11,000
c. 9,000
d. 7,000
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36. Which of the following is not a special journal?
a. General Journal
b. Sales Journal
c. Purchase Journal
d. Cash Receipts Journal
37. A business sells goods on cash basis. This transaction is most likely recorded in which of the
following special journals?
a. Sales journal
b. Purchases journal
c. Cash receipts journal
d. Diary journal
38. At the beginning of the period, Entity A’s notes payable had a balance of ₱1,200. During the period,
Entity A obtained an additional loan of₱800 and made total payments of ₱500. How much is the
ending balance of Entity A’s notes payable?
a. 1,800
b. 1,500
c. 1,200
d. 900
39. This branch of accounting involves teaching accounting, taxation, and other business-related
subjects.
a. Accounting education
b. Government Accounting
c. Accounting research
d. Tax accounting
40. This account is used to record payments received from customers prior to the delivery of goods or
rendering of services.
a. Accrued income
b. Unearned income
c. Prepaid asset
d. Accounts receivable
43. The beginning equity is ₱5,000. If total income for the period is ₱8,000 while total expenses are
₱6,000, how much is the ending balance of equity?
a. 7,000
b. 5,000
c. 3,000
d. 1,000
44. The ending equityis ₱9,000. If total income for the period is ₱5,000 while total expenses are ₱8,000,
how much is the beginning balance of equity?
a. 12,000
b. 9,000
c. 6,000
d. 0
45. 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 total expenses of ₱640,000.
No additional investments or withdrawals were made by the owner. Total assets at the end of the
period were ₱830,000. How much is the total liabilities at the end of the period?
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a. 280,000
b. 270,000
c. 260,000
d. 240,000
46. The generally accepted accounting principles (GAAP) in the Philippines are represented by the PFRSs
which are issued by the
a. Pinoy Accounting Standards.
b. Kapisanan ng mga Kontador sa Pilipinas.
c. Financial Reporting Standards Council.
d. Philippine Accounting Standards Board.
49. Which of the following special journal is used when a business purchases inventoryon cash basis?
a. Cash disbursements journal
b. Purchases journal
c. Inventory journal
d. Cash receipts journal
50. If the ending balance of accounts payable is ₱100,000 and the total debits and credits to that
account during period were ₱60,000 and ₱40,000, respectively, the beginning balance must be
a. 0
b. 20,000
c. 80,000
d. 120,000
51. A business has total assets of ₱640,000 and total equity of ₱360,000 at the beginning of the period.
The business earns income of ₱220,000 during the period and reports profit of ₱80,000. There were
no transactions with the owner during the period. Total liabilities increased by ₱40,000 by the end
of the period. How much is the total assets at the end of the period?
a. 560,000
b. 440,000
c. 860,000
d. 760,000
52. On January 1, 20x1, Johnny Company acquires a building for ₱10M. The building is estimated to
have a useful life of 20 years. How much expense is recognized in 20x1 in relation to the building?
a. 10,000,000
b. 1,000,000
c. 500,000
d. 0
54. This branch of accounting focuses on catering to the information needs of external users.
a. Management accounting
b. Financial accounting
c. Auditing
d. External accounting
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55. Entity A’s income statement shows a line item described as “Cost of goods sold.” Entity A is most
likely a
a. service business.
b. merchandising business.
c. sole proprietorship business.
d. partnership business.
56. Under this concept, the business is treated separately from its owners.
a. Separate entity concept
b. Historical cost concept
c. Going concern
d. Matching principle
57. Which of the following statements regarding owner’s capital is not valid?
a. It is increased by investments to the businessby the owner.
b. It is increased by income earned by the business.
c. It is increased by distributions to the owners (drawings by owners).
d. It is decreased by expenses incurred by the business.
59. Which of the following does not describe an advantage of a partnership over the other forms of
business organizations?
a. “Two heads are better than one.”
b.“The more the merrier.”
c.Making business decisions may give rise to conflict among the partners.
d.Sharing of risk.
60. Entity A has accounts receivable of ₱500,000 and a related allowance for bad debts of ₱120,000.
How much is the carrying amount of the accounts receivable?
a. 620,000
b. 500,000
c. 480,000
d. 380,000
Mr Uhtred opened a business called a business called Bebbanburg Merchandising. The following were
the transactions for the year ended December 31, 20x1:
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2. Bebbanburg obtained a loan of 400,000.
3. Bebbanburg purchased inventory worth 200,000 on cash basis
4. Bebbanburg purchased inventory worth 500,000 on account
5. Bebbanburg sold goods for 900,000, on account. The cost of the goods is 400,000.
6. Bebbanburg paid 400,000 accounts payable
7. Bebbanburg collected 500,000 accounts payable
8. Bebbanburg purchased equipment for 480,000 cash
9. Bebbanburg distributed 10,000 cash to Mr. Uhtred
10. Bebbanburg paid interest expense of 5,000
Requirements:
a. Provide the journal entries
b. Post the entries to the ledger (use T-accounts)
c. Prepare the unadjusted trial balance
ajmiranda
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Goodluck and Godbless
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