Accounting Fundamentals Midterm Examination

The accounting equation must be in balance

• only when journal entries are recorded.

• only when the trial balance is prepared.

• only when the financial statements are prepared

• throughout the accounting process.

The debit and credit analysis of a transaction normally takes place at what point in the accounting process?

• Prior to recording the transaction in journal

• When the journal entry is posted to the ledger.

• When the trial balanced is prepared.

• At some other point in the accounting cycle.

A business has total assets of P780,000 and total liabilities of P220,000. How much is the equity?

• P1,000,000

• P560,000

• P650,000

• P530,000

If an owner invests her laptop computer and printer in the business, what are the effects on the fundamental accounting equation?

• option A

• option B

• option C

• option D

Which of the following is not a true statement about the accounting equation and its elements?

• The accounting equation is Assets = Liabilities - Stockholders’ Equity.

• Assets are the economic resources controlled by a business entity.

• Liabilities represent obligations of a business.

• Equity represents the owner’s claim against the total economic resources of the business

When a business entity receives payment for services rendered, the cash account is

• credited

• debited

• debited or credited

• not affected

The general ledger is known as

• Books of original entry

• Books of accounts

• Books of final entry

• business document

Revenues should be recorded when

• work has begun on a job.

• a contract is signed.

• earned.

• cash is received from the customer

A debit entry decreases the balance of

• Assets

• Expenses

• Liabilities

• Owner’s Withdrawal

Modern bookkeeping can be traced from the book Summa de Arithmetica written by this author.

• Amatino Manucci

• Luca Pacioli

• Jacques Savary

• Eugen Schmalenbach