1ST SUMMATIVE TEST - FABM

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

• expenses

• owner's withdrawal

• purchase of land

• revenue

The asset created by a business when it makes a sale on account is termed ____________.

• accounts payable

• accounts receivable

• prepaid expense

• unearned revenue

All of the following describe accounting, except

• A service activity

• An information system

• An exact science rather than art

• A universal language of business

The overall objective of accounting is

• To provide the information that the managers of an entity need to control the operations

• To provide information that the creditors can use in deciding whether to make additional loans

• To measure the periodic income of the entity

• To provide quantitative financial about an entity that is useful in making economic decision

Equipment with an estimated market value of P60,000 is offered for sale at P90000. The equipment is acquired for 30,000 in cash and a note payable of P50,000 due in 30 days. The amount used in buyer's accounting records to record acquisition is _______

• P80,000

• P60,000

• P90,000

• P30,000

These users require information on risk and return on investment

• creditors

• investors

• lenders

• customers

It pertains to resources which are controlled and owned by the business.

• assets

• liabilities

• equity

• resources

It is derived from deducting the total liabilities to the total assets of a company.

• assets

• liabilities

• equity

• resources

Which of the following pertains to the obligations that the business owed to other entities arising from past events which are to be settled in the future?

• assets

• liabilities

• equity

• resources

Which of the following is the correct Accounting Equation?

• Assets + Liabilities = Equity

• Assets = Liabilities - Equity

• Assets - Liabilities + Equity

• Assets + Equity = Liabilities