ACC 111 FINANCIAL ACCOUNTING AND REPORTING

First Exam

Theories

1. Who was the inventor of double-entry bookkeeping?

a. Nicolas Petri
b. Amatino Manucci
c. Luca Pacioli
d. Benjamin Workman
2. The Philippine Accountancy Act of 2004 which was signed into law on May
13,2004 by President Gloria Macapagal Arroyo.
a. RA 9892
b. RA 9298
c. RA 9289
d. RA 2998
3. Statement 1: Any candidate who fails in three complete CPA Board examinations
shall be disqualified from taking another set of examinations unless he/she
submits evidence that he/she enrolled and completed at least 24 units of subjects
given in the licensure examination.
Statement 2: A candidate must obtain a general average of at least 75% with no
grades lower than 65% in any given subject.
a. Only statement 1 is correct
b. Both statements are false
c. Both statements are true
d. Only statement 2 is correct
4. It is in this field of professional practice where CPAs are considered as an
“independent entity” vested with freedom to exercise his own judgement and
impartiality of the reports prepared.
a. Government accounting
b. Private accounting
c. Public accounting
d. Accounting education
5. The accredited national professional organization of CPAs is
a. Association of CPAs in Education
b. Association of CPAs in Commerce and Industry
c. Government association of CPAs
d. Philippine Institute of Certified Public Accountants
6. The core competencies framework for accountants includes all the following
except:
a. Technical proficiency
b. Skills
c. Knowledge
d. Values
7. Which of the following assumptions distinguishes the personal transactions of
owners from business transactions?
a. Business Entity Concept
b. Identity Concept
c. Time Period Assumption
d. Going-concern assumption
8. Which of the following is NOT part of the fundamental principles that a
professional accountant is required to observe as enumerated in the Code of
Ethics for the professional accountants in the Philippines?
a. Objectivity
b. Confidentiality
c. Integrity
d. Consistency
9. What is the branch of accounting that involves independent examination that
ensures the fairness and reliability of the reports prepared by the management?
a. Bookkeeping
b. Financial Accounting
c. Management Accounting
d. Auditing
10. These are the authoritative statements of how particular types of transactions
and other events should be reflected in financial statements
a. Accounting standards
b. Auditing standards
c. Neither of the choices
d. Both of the choices
11. Which of the following statements are correct?
I. The total amount of liabilities can be greater than the total amount of
capital.
II. Assets= Liabilities + Capital
III. The total amount of assets can be greater than the sum of liabilities and
capital
a. I, II and III
b. II and III only
 c. I and III only
d. I and II only
12. If the cash account of the entity is to be increased, the same shall be:
a. Credited
b. Debited
c. Half of the amount shall be debited while the other half is to be credited
d. Cash account shall not be debited or credited
13. The entity purchases equipment for entity uses on the account. Which of the
following will be affected?
I. Assets
II. Liabilities
III. Capital
a. I and III only
b. I, II and III
c. I and II only
d. II and III only
14. What is the effect on the accounting equation if the entity is able to collect from
customers on accounts?
a. No overall effect on the accounting equation
b. Both assets and owner’s equity
c. Only assets increase and liabilities
d. Both assets and liabilities will increase
15. What is the journal entry when the entity collects from customers on account?
a. Debit cash and credit accounts receivable
b. Debit accounts receivable and credit cash
c. Debit cash and credit accounts payable
d. Neither of the choices
16. Which of the following is an appropriate definition of accounting?
a. Electronic collection, organization and communication of vast amounts of
information
b. A means of recording transactions and keeping records
c. The interconnected network of subsystems necessary to operate a business
d. The measurement, processing and communication of financial information
about an identification of economic entity.
17. The basic purpose of accounting is
a. To provide information that the creditors of an economic entity can use in
deciding whether to make additional loans to the entity
b. To provide quantitative financial information about a business enterprise that
is useful in making rational economic decision
 c. To provide the information that the managers of an economic entity need to
control the operation
d. To measure the periodic income of the economic entity
18. A financial statement which directly relates to the measurement of financial
position of an enterprise as of given date
a. Statement of cash flow
b. Statement of changes in equity
c. Balance sheet
d. Income statement
19. A credit entry decreases the balance of
a. Expense
b. Liability
c. Income
d. Owner’s equity

Problems

20. If asset is 300,000 and owner’s equity is P120,000, how much is the liabilities?
a. P300,000
b. P480,000
c. P120,000
d. P180,000
21. If the liabilities amount to P150,000 and owner’s equity is 40% of the total assets,
how much is the total assets of the company?
a. P150,000
b. P100,000
c. P250,000
d. P50,000
22. At the beginning of the year, St. Rosary Dormitory has assets of P300,000 and
liabilities of P100,000. If asset has increased to P500,000 and liability has
decreased by P20,000, how much is the owner’s equity after these changes took
place?
a. P420,000
b. P300,000
c. P480,000
d. P200,000
23. At the beginning of the year, St. Dominic Dormitory has assets of P100,000 and
owner’s equity of P60,000. If asset has increased by P70,000 and owner’s equity
has increased by P30,000, how much is the liabilities at end of the year?
 a. P40,000
b. P90,000
c. P80,000
d. P60,000
24. Building P500,000
Prepaid Insurance P20,000
Accounts Payable P50,000
Prepaid Rent P10,000
Accounts Receivable P80,000
Advertising Expense P20,000

How much is the total assets?

a. P660,000
b. P680,000
c. P610,000
d. P600,000
25. Swatch is famous for fashion wristwatch. At the end of the recent year, Swatch’s
total assets added up to P381 million, and owner’s equity was P264 million. How
much were Swatch’s liabilities?
a. P264 million
b. P664 million
c. P117 million
d. P381 million

Mr. Ricardo Dalisay made the following investments: cash – P100,000 and equipment –
P200,000. At the end of the month, the total income earned and the total expenses
incurred by the business were P90,000 and P30,000 respectively. If all income and
expenses were all accounted for cash and incurrence of liability for P50,000 was due to
the acquisition of furniture and fixtures, towards the month-end.

26. How much profit was earned at the end of the month?
a. P70,000
b. P110,000
c. P60,000
d. P65,000
27. How much is the owner’s equity balance of Mr. Dalisay at the beginning of the
month?
a. P300,000
b. P400,000
 c. P200,000
d. P100,000
28. Hush Company was able to generate total revenue of P90,000 at the end of the
month. This resulted in a profit of P13,000. How much is the amount of the total
expenses for the month?
a. P15,000
b. P103,000
c. P77,000
d. P90,000
29. If the owner’s equity, beginning was P80,000 and the profit for the period is
P20,000 while the drawing by the owner is P40,000. How much would be the
owner’s equity, end?
a. P100,000
b. P60,000
c. P70,000
d. P80,000

Answers

1. B
2. B
3. D
4. C
5. D
6. A
7. A
8. D
9. D
10. A
11. D
12. B
13. C
14. A
15. A
16. D
17. B
18. C
19. A
20. D
 21. C
22. A
23. C
24. C
25. C
26. B
27. A
28. C
29. B

2nd Exam

Theories

1. Which of the following gives the correct sequence of accounting procedures?

a) Financial Statements, Journal, Ledger, Trial Balance
b) Financial Statements, Trial Balance, Ledger, Journal
c) Ledger, Trial Balance, Journal, Financial Statements
d) Journal, Ledger, Trial Balance, Financial Statements
2. Which of the following events does not require an entry in journal form?
a) Payment of service performed previously
b) Performance of a service agreed to at a past date
c) Agreement to perform a service at a future date
d) Purchase a one-year insurance policy
3. Which of the following is a business event that is NOT considered a recordable
transaction?
a) A company pays for work performed
b) A company receives a product previously ordered
c) A customer inquires about the availability of the service
d) A customer availed the services of the entity
4. Which of the following accounts will not affect owner’s equity?
a) Advertising Expense
b) Land
c) Owner’s Withdrawals
d) Service Revenue
5. The first step in recording transaction in a journal is to
a) Record the credit
b) Record the debit
c) Record the date
d) Write an explanation
6. What function do accounting journals serve in the accounting process?
a) Classifying
b) Recording
c) Reporting
d) Summarizing
7. To find an explanation for a transaction, one should look at the
a) Trial Balance
b) Chart of Accounts
c) Journal
d) Ledger
8. When collections are made on Accounts Receivable,
a) Owner’s Equity increases
b) Total Assets decrease
c) Total Assets increase
d) Total Assets remain the same
9. A purchase of supplies on account should be recorded as
a) A debit to Accounts Payable and a credit to Supplies
b) A debit to Supplies Expense and a credit to Accounts Payable
c) A debit to Supplies Expense and a credit to Accounts Receivable
d) A debit to Supplies Expense and a credit to Cash
10. Which of the following accounts might be placed first in proper journal entry?
a) Cash, when it has been decreased
b) Accounts Payable when it has been decreased
c) Interest income when it has been increased
d) Unearned revenues when it has been increased
11. If a P4,700 cash purchase of supplies is recorded as P5,700 debit to Supplies
Expense and a P5,700 credit to Cash, the result will be that
a) Supplies expense will be overstated, and Cash will be understated
b) The Cash account will be overstated
c) The Supplies Expense account will be understated
d) The trial balance will be out of balance
12. When a company has performed a service but has not yet received payment, it
a) Debit Accounts Receivable and credit Service Revenues
b) Debit Service Revenues and credit Accounts Payable
c) Debit Service Revenues and Accounts Receivable
d) Debit to Cash
13. Which of the following errors will cause the trial balance to be out of balance?
a) A debit entry was entered in wrong debit account
 b) An entire transaction was entered in the general journal as P53 instead of
P35
c) An entire transaction was omitted from the general journal
d) The balance of an account was incorrectly computed
14. The equality of debits and credits should be verified at the end of each
accounting period by preparing
a) A balance report
b) A trial balance
c) An accounting statement
d) An account verification report

Problems

15. The accounts payable account has beginning balance of P90,000. During the
year, debit postings amounted to P170,000 while credit postings amounted to
P140,000. How much is the ending balance of the Accounts Payable?
a) P60,000 credit
b) P60,000 debit
c) P90,000 credit
d) P90,000 debit

Answers

1. d

2. c

3. c

4. b

5. c

6. b

7. c

8. d

9. b

10. b
11. a

12. a

13. d

14. b

15. a

4th Exam

Theories

1. Which of the following accounts shall be extended in the Income Statement

column of a worksheet?
a) Cash
b) Depreciation
c) Allowance for Doubtful Accounts
d) Accounts Receivable
2. If total credits exceed the total debits in the Balance Sheet column of a worksheet,
a) a loss has occurred
b) a profit has occurred
c) a mistake has been made
 d) assets exceed liabilities
3. The real accounts are extended to what section of the worksheet?
a) The statement of financial position section
b) The statement of comprehensive income section
c) Debit side of the statement of financial position
d) Credit side of the statement of financial position
4. Assuming a company is profitable in the current period, the total of the balance
sheet credit column in the worksheet will be
a) Larger than the balance sheet debit column
b) Larger than the income statement credit column
c) Larger than the income statement debit column
d) Smaller than the balance sheet debit column
5. A statement of financial position which is patterned after the accounting
equation, A = L + OE is presented in a horizontal order
a) Natural form
b) Account form
c) Report form
d) Functional form
6. A statement of changes in equity
a) Has no relationship with the balance sheet
b) Indicates whether the cash position of the entity will permit withdrawals
of the owner
c) Provides link between the income statement and the balance sheet
d) Shows the income and expenses of the entity for the given period
7. The following statements pertaining to closing entries are true except
a) All nominal accounts are closed
b) Closing entries are done at the end of the year
c) Closing entries are recorded in the General Journal
d) Income accounts are closed by a credit
8. Closing entries will have the following effects
a) It will increase the owner’s capital balance
b) It will decrease the owner’s capital balance
c) It will increase or decrease the owner’s capital balance
d) It will not affect the owner’s capital balance
9. Most probably, the last account which could be listed in the post-closing trial
balance is
a) Rent payable
b) Accumulated Depreciation
c) Owner’s equity
 d) Owner’s drawing
10. Which of the following accounts included in post-closing trial balance?
a) Asset account
b) Income account
c) Expense account
d) Drawing account
11.

Answer

1. b

2. a

3. a

4. d

5. b

6. c

7. d

8. c

9. c

10. a