Basic Accounting - Set A

Which of the following has no effect on owner’s equity?

• Expense

• Owner’s withdrawal

• Purchase of land

• Revenue

Using accrual accounting, revenue is recorded and reported only _________

• If cash is received after the services are rendered.

• When cash is received at the time services are rendered.

• When the services are rendered without regard to when cash is received.

• When cash is received without regard to when the services are rendered

On January 1, 2016, Potter Company bought a building for P2,750,000 to serve as the Company’s office. It was estimated that the said building will be useful for 20 years. After the end of its useful life, the building can still be sold for P250,000. What is the amount of depreciation expense that should be recognized by Potter Company on December 31, 2018?

• P100,000

• P125,000

• P150,000

• P175,000

As of December 31, Ravenclaw Merchandising Company’s records show the following amounts: Purchases P1,250,000: Purchase Discount P25,000: Purchase returns P140,000.

If Ravenclaw Company’s beginning inventory amounted to P375,000, the Company’s total Cost of Goods Available for sale is ______.

• P710,000

• P1,805,000

• P1,460,000

• P1,250,000

The unearned rent account has a balance of P36,000. If P4,000 of the P36,000 is unearned at the end of the accounting period, the amount of the adjusting entry is

• P4,000

• 40,000

• P32,000

• P36,000

Treasury stock is classified as a(n)

• Stockholder’s equity account

• Contra-asset

• Asset

• Contra-stockholder’s equity account

Erica and Mica formed a partnership on January 1, 2016 by investing P50,000 each into EM Coffee Shop. On June 30, 2016, Mica invested an additional P50,000 into the business. If they agreed to divide profit based on initial capital investment, how will they divide the P120,000 profit they earned in 2016?

• P60,000 to both of them.

• P40,000 to Erica and P80,000 to Mica

• P80,000 to Erica and P40,000 to Mica

• P100,000 to Erica and P20,000 to Mica

In the liquidation of the partnership, the first cash realized is used to

• Pay the creditors

• Pay the general partners

• Pay the industrial partners

• Pay all the partners

A corporation purchased 1,000 shares of its P10 par common stock at P20 and subsequently sold 500 of the shares at P30. What is the amount of revenue realized from the sale?

• P0

• P2,500

• P5,000

• P15,000

Unlimited liability of the partners in a limited partnership pertains to

• All the partners

• Limited partners only

• General partners only

• The entities that owe the partne