. Which of the following is not an example of additional capital? a. A sole proprietor purchases a car through the bank account of the entity. b. A sole proprietor brings a second-hand computer from his home to the office. c. A sole proprietor transfers P 1,000 from his own bank account to the entity’s account. D. A sole proprietor uses his own building as an office without receiving any rent.

(a)  

Which of the following is not an example of non-current assets? a. a second-hand computer used in the office b. a van that is purchased through installments the total amount of which is not fully settled c. c. P40,000 cash d. a building bought by the entity

(a)  

Which of the following statements are correct? 1. The total amount of liabilities can be greater than the total amount of capital. 2. Assets = Capital + Liabilities 3. The total amount of assets can be greater than the sum of liabilities and capital. a. (1) and (2) only b. (1) and (3) only c. (2) and (3) only d. (1), (2) and (3)

(a)  

The entity purchases P10,000 fixtures for entity use on credit. Which of the following will be affected? 1. assets 2. liabilities 3. capital a. (1) and (2) only b. (1) and (3) only c. (2) and (3) only d. (1), (2) and (3)

(a)  

Suppose a debtor repays his debt of P50,000 by transferring the money into the bank account of the business. The effect of the transaction on the accounting equation would be: a. Both assets and liabilities increase by P50,000. b. Both assets and liabilities decrease by P50,000. c. Only assets decrease by P50,000. d. Assets and liabilities remain unchanged.

(a)  

Under the double-entry system, what is the value of X if assets, current liabilities, non-current liabilities and capital are X, P40,000, P60,000 and P350,000 respectively? A. P250,000 b. P350,000 c. P370,000 d. P450,000

(a)  

Which of the following is correct under the double-entry system? a. Asset amount must be equal to liability amount. b. The change in asset must be compensated by a change in liability. c. The change in a debit-side entry must be compensated by a change in credit-side entry. d. An increase in asset must be compensated by a decrease in asset.

(a)  

Which of the following statements regarding the double-entry system is incorrect? a. An increase in asset means a credit entry in assets account. b. A decrease in liability means a debit entry in liabilities account. c. An increase in drawings means a debit entry in capital account. d. A decrease in non-current asset means a credit entry in assets account.

(a)  

Which of the following transactions affects the total value of liabilities of a firm? a. goods purchased from suppliers by cash b. interest received from bank c. office equipment bought on credit d. goods sold to customers on credit

(a)  

On Apr. 1, 2022, Efren Barillo sets up a firm and brings in office equipment of P50,000 and inventory of P30,000 to the business. Efren Barillo puts P80,000 into the firm's cash box and P100,000 into the firm's bank account. Meanwhile, the firm lends P50,000 cash to S and Associates and borrows P200,000 from the bank to acquire a piece of premises. What is the amount of the firm's capital on Apr. 1, 2022? a. P510,000 b. P210,000 c. P260,000 d. P460,000

(a)  

Which of the following is correct if the sole proprietor of an entity borrows P30,000 in the name of the entity and deposits it into the entity's bank account? a. The assets of the entity increase by P30,000. b.The liabilities of the entity decrease by P30,000. c.The capital of the entity increases by P30,000. d.The drawings of the entity increase by P30,000.

(a)  

Which of the following steps in the accounting cycle are listed in a logical order. a. Post the closing entries, take a post-closing trial balance, and journalize the closing entries. b. Post the journal entries to the general ledger accounts, prepare a worksheet, and then take a trial balance. c. Take a trial balance, prepare a worksheet, then prepare financial statements. d. Prepare the income statement, prepare the balance sheet and then prepare a trial balance.

(a)  

The debit and credit analysis of a transaction normally takes place a. before an entry is recorded in a journal. b. when the entry is posted to the ledger. c. when the trial balance is prepared. d. at some other point in the accounting cycle.

(a)  

A sale on account would be recorded by a. debiting revenue. b. crediting assets. c. crediting liabilities. d. debiting assets.

(a)  

Incurring an expense for advertising on account would be recorded by a. debiting liabilities. b. crediting assets. c. debiting an expense. d. debiting assets.

(a)  

A trial balance a. proves that debits and credits are equal in the ledger. b. supplies a listing of open accounts and their balances that are used in preparing financial statements. c. is normally prepared three times in the accounting cycle. d. all of these.

(a)  

First statement: A ledger is where the entity initially records transactions and selected other events. Second statement: Nominal (temporary) accounts are income and expense accounts and are periodically closed. a. True, True b. True, False c. False, True d. False, False

(a)  

First statement: The withdrawals account is considered a real account. Second statement: The "book of original entry" is also known as the journal. a. True, True b. True, False c. False, True d. False, False

(a)  

First statement: The first step in the accounting cycle is the journalizing of transactions and selected other events. Second statement: Basic steps in the recording process include transferring the journal information to the appropriate account in the statement of financial position. a. True, True b. True, False c. False, True d. False, False

(a)  

First statement: The trial balance uncovers any errors in journalizing and posting prior to preparation of the statement of financial position. Second statement: The trial balance is a listing of all the accounts and their balances in the order the accounts appear on the statement of financial position. a. True, True b. True, False c. False, True d. False, False

(a)  

First statement: One purpose of a trial balance is to prove that debits and credits of an equal amount are in the general ledger. Second statement: A general journal chronologically lists transactions and other events, expressed in terms of debits and credits to accounts. a. True, True b. True, False c. False, True d. False, False

(a)  

The primary function of an account in the accounting system is to a. store accounting transactions until they are classified. b. identify the type of organization. C. accumulate accounting information. d. determine at what point a transaction should be recorded.

(a)  

When a customer buys services on credit, the contract is regarded as complete when a. the services are rendered. b. the bill is presented. c. the cash payment is received d. the date specified in the contract is at hand.

(a)  

Most companies use a chart of accounts prepared by the a. Accounting Standards Council. b. Securities and Exchange Commission. C. Bureau of Internal Revenue. d. entity's accounting department.

(a)  

Which of the following accounts is classified differently from the others listed? a. Prepaid Rent b. Cash C. Accounts Receivable d. Owner's Capital

(a)  

When owner's equity decreases, one of the following must occur: a. withdrawals decreases b. an asset increases c. an income increases d. a liability increases

(a)  

What function do accounting journals serve in the accounting process? a. Classifying b. Summarizing c. Reporting d. Recording

(a)  

The normal balance of an account is on the a. side represented by decrease in the account balance. b.debit side of the account. c. side represented by increases in the account balance. d.credit side of the account.

(a)  

When cash is debited, a typical credit is to a. withdrawals. b. accounts payable. c. accounts receivable. d.expenses.

(a)  

Payment of insurance premiums in advance gives rise to a. prepaid expense. b. unearned income. c. accrued income. d.accrued expense.

(a)  

The manner in which the accounting records are organized and employed within a business is referred to as a. business document. b. voucher system. c. special journal. d. accounting information system.

(a)  

The accounting cycle is a. the length of time it takes to complete a set of financial statement after the books are closed. b. a process that begins with adjusting entries and ends with the preparation of the financial statements. c. applicable only to manual systems, not to computerized systems. d. the sequence of procedures used by a business to process economic information and to produce financial statements.

(a)  

A ledger is defined as a collection of a: all statement of financial position accounts. b. all income statement accounts. c. account titles - asset, liability, equity, income and expense accounts. d. transactions.

(a)  

The equality of debits and credits in the ledger should be verified at the end of each accounting period by preparing a. an accounting statement. b. an account verification report. c. a trial balance. d. a balance report.

(a)  

Of the following errors, the one that will cause an inequality in the trial balance totals is a. failure to record a transaction. b. recording the same transaction more than once. c. posting a transaction to the wrong account. d. incorrectly computing an account balance.

(a)  

Office supplies are expensed a. at no time, since they are assets. b. when they are paid for. c. when they are purchased. d. when they are consumed (used up).

(a)  

Which of the following statements is false about a proper journal entry? a. It may have more than one debit or credit entry. b. A space should be skipped between journal entries. c. Credits are always indented. d. Accounts that are increased are always listed first.

(a)  

Transactions are recorded chronologically in the a. ledger. b. T-account. C. daybook. d. journal.

(a)  

When an entity pays for goods or services before actual receipt, the payment should be recorded as a decrease in Cash and an increase in a. an owner's equity account. b. an asset. c. an expense. d. a liability.

(a)  

Entries recorded on the right side of any account are called . a. debits. b. increases. c. credits. d. decreases.

(a)  

Which of the following accounts probably would be listed after the others in a chart of accounts? a. Unearned Art Fees b. Prepaid Rent c. Owner's Capital d. Art Revenues

(a)  

Unearned Revenues are recorded by companies that a. pay money in advance of the performance of a service. b. pay money at the time the performance of a service is complete. c. receive money in advance of the performance of a service. d. receive money at the time the performance of a service is complete.

(a)  

Which of the following statements regarding a trial balance is incorrect? a. A trial balance helps to localize errors within an identifiable time period. b. A trial balance is a test of the equality of the debit and credit balances in the ledger. C. A trial balance is a list of all of the open accounts in the ledger with their balances as of a given date. d. A trial balance-proves that no errors of any kind have been made in the accounts during the accounting period.

(a)  

A simple journal entry a. consists of two debits and one credit. b. consists of one debit and two credits. c. is a memorandum entry. d. consists of one debit and one credit.

(a)  

Penetrante owns and operates a large hardware store in Cabanatuan City that employs about forty-five personnel. She delegates some of the decision making to two supervisors. Penetrante's business is organized as a a. corporation. b. partnership. c. sole proprietorship. d. limited partnership.

(a)  

Jumawan loves to cook. She receives unqualified praise whenever she prepares a meal for someone. Encouraged by these compliments and eager to put her culinary talents to good use, Jumawan decides to open a boutique restaurant in Dumaguete City. Since she plans to maintain complete control of the business, she will most likely organize it as a a. limited partnership. b. corporation. c. general partnership. d. sole proprietorship.

(a)  

A budding wants to start a business but is unsure of the legal form suited for her. Short of cash, she has to take the form that is least expensive and most flexible in terms of decision making and implementation. Which would you recommend? a. Joint venture b. Partnership c. Sole proprietorship d. Cooperative e. Corporation

(a)  

Unlimited liability means a. there is no limit on the amount an owner can borrow. b. creditors will absorb any loss from nonpayment of debt. c. the business can borrow money for any type of purchase. d. the owner is responsible for all business debts. e. shareholders can borrow money from the business.

(a)  

Cabrera inherited a large amount of money from his parents, Cabrera wishes to start his own business in Batangas. His lawyers encourage him to make it a corporation. What disadvantage of a sole proprietorship are the lawyers trying to avoid? a. Unlimited liability b. Lack of management skills c. Retention of all profits d. Lack of money

(a)  

After Russell has maximized her standby credit limit from the CDO Bank and still cannot cope with the working capital needs of her fast-growing business, what is her recourse if she wants her company to continue growing?" a. Obtain a partner or form a corporation to accessmore funds. b. Hire more employees. c. Turn away potential new customers. d. Continue to plead with the bank for more money. e. Hold a fundraising campaign.

(a)  

Daganta's partnership agreement with two partners was done haphazardly and thus caused some limitations. One of the concerns was uneven productivity among the partners. The agreement required each partner to contribute to every aspect of the business to receive an equal portion of the profits. This agreement did not reflect the idea that a. partners need not be "equal" because each bring varied talents and knowledge into the partnership. b. general partners are required to be active in day-to-day business operations. c. customers and creditors of a limited partnership need not be protected. d. the Limited Partnership Law requires every general partnership to have at least one limited partner. e. each partner may enter into contracts on behalf of all the others.

(a)  

The person who assumes full co-ownership of a partnership including unlimited liability is a a. sole proprietor. b. shareholder. c. limited partner. d. general partner.

(a)  

The partner who can lose only what he has invested in a business is the a. general partner. b. sole proprietor. c. manager: d. employee. e. limited partner.

(a)  

Alibangbang and Sol decided to go into business together. They started by listing the essential terms of their agreement along with their rights and duties. Alibangbang and Sol created a(n) a. articles of partnership. b. licensing agreement. c. articles of incorporation. d. division of partnership agreement.

(a)  

Which of the following would least likely be stated in the articles of partnership? a. Who will make the final decisions b. How much each partner will invest c. What the duties of each partner are d. What products the company will sell e. What will happen if a partner dies or wants to dissolve the partnership

(a)  

Burgos, Del Mundo and Gonzales are partners in an accounting firm with each partner owning an equal share of the business. Del Mundo died suddenly of a heart attack. What will most likely become of the partnership? a. It will immediately cease to exist. Burgos and Gonzales will have to find new jobs. b. Del Mundo's share of the business will automatically be split between Burgos and Gonzales. c. Burgos and Gonzales will be able to purchase Del Mundo's interest from his estate. d. It will be dissolved. Burgos and Gonzales will lose personal property to pay business debts.

(a)  

Treasury stock is considered to be a. authorized and issued shares. b. issued and outstanding shares. c. authorized and unissued shares. d. unissued and outstanding shares.

(a)  

Which of the following statements about treasury stock are correct: I. Treasury stock does not receive dividends. II. Treasury stock is not included in the earnings per share calculation. III. Treasury stock is the same as unauthorized stock. IV. Treasury stock does not have voting rights. a. I, II, and IV b. I, II, and Ill c. II, III, and IV d. I, II, III, and IV

(a)  

When a corporation issues new ordinary shares, which of the following will increase? I. Total Liabilities II. Total Assets III. Quick Assets IV. Net Worth a. l and II b. Ill and IV c. II, III, and IV d. I, II, III, and IV

(a)  

An advantage of a partnership is a. limited liability. b. ability to raise capital. c. ease of formation. d. transfer of ownership.

(a)  

If a partner in a partnership dies, a. each remaining partner receives an equal share of the deceased partner’s ownership of the business. b. the partnership is dissolved. c. the partner’s spouse takes the deceased partner’s place d. a new partner is added to the partnership

(a)  

An advantage of a corporation is a. ease of formation. b. limited liability. c. regulation. d. double taxation.

(a)  

If a significant amount of capital is needed to start a business, how should the business be organized? a. Corporation b. General partnership c. Limited liability partnership d. Sole proprietorship

(a)  

On the balance sheet, a corporation must disclose all of the following except the number of shares a. authorized. b. issued. c. unissued. d. outstanding.

(a)  

Authorized shares are the a. of shares that have been distributed to shareholders b. total number of shares that can be issued by the corporation at any time. c. number of shares that are owned by shareholders at the balance sheet date. d. number of shares the corporation has repurchased.

(a)  

Issued shares are the a. number of shares that have been distributed to shareholders b. total number of shares that can be e issued by the corporation at any time. c. number of shares that are owned by shareholders at the balance sheet date. d. number of shares the corporation has repurchased.

(a)  

Outstanding shares are the a. number of shares that have been distributed to shareholders. b. total number of shares that can be issued by the corporation at any time. c. number of shares that are owned by shareholders at the balance sheet date. d. number of shares the corporation has repurchased.

(a)  

Treasury shares are the a. number of shares that have been issued to shareholders. b. total number of shares that can be issued by the corporation at any time. c. number of shares that are owned by shareholders at the balance sheet date. d. number of shares the corporation has repurchased

(a)  

The difference between issued shares and outstanding shares of stock is a. stock. b. common stock. c. preferred stock. d. treasury stock.

(a)  

When Bradley Corporation incorporated, it was authorized to issue 1,000,000 shares of common stock. It immediately issued 50,000 shares. In 2018, it issued an additional 20,000 shares. In 2021, it repurchased 5,000 shares with the intent of reissuing them. On the Dec. 31, 2021, balance sheet, Bradley Corporation would show a. 50,000 shares issued and 45,000 shares outstanding. b. 70,000 shares issued and 65,000 shares outstanding. c. 0,000 shares issued and 70,000 shares outstanding. d. 1,000,000 shares issued and outstanding.

(a)  

On a statement of financial position, treasury stock is shown as a(n) a. asset. b. liability. c. deduction from the ordinary shares account. d. deduction from total shareholders' equity.

(a)  

Which of the following is a characteristic of ordinary shares? a. Voting rights b. Guaranteed dividends c. Maturing date d. Receives dividends before preference shareholders

(a)  

Ordinary shareholders usually have all of the following rights except to a. vote to elect the board of directors. b. share in the assets in a profitable liquidation. c. participate in day-to-day operations of the entity. d. receive their proportional share of dividends, if dividends are declared.

(a)  

Which of the following is a characteristic of preference shares? a. Voting rights b. Guaranteed dividends c. Maturity date d. Receives dividends before ordinary shareholders

(a)  

A corporation might repurchase its own stock for all of the following reasons except a. vote for the board of directors. b. use for employee compensation. c. improve financial ratios. d. deter a takeover attempt.

(a)  

Which of the following is not an advantage of the corporate form of organization? a. Government regulation. b. Easy transfer of ownership. c. Limited liability of shareholders. d. Continuous existence of the entity.

(a)  

Treasury stock transactions may result in a. increases in the balance of retained earnings. b. increases or decreases in the amount of profit. c. increases or decreases in the amount of shares authorized to be issued. d. decreases in the balance of retained earnings.

(a)  

Par value a. is the legal capital established for a share of stock. b. is established for a share of stock after it is issued. c. represents what a share of stock is worth. d. represents the original selling price for a share of stock.

(a)  

The number of shares of issued equals a. authorized shares minus treasury shares. b. outstanding shares plus treasury shares. c. unissued shares minus authorized shares d. subscribed shares plus outstanding shares.

(a)  

A corporation's residual equity is its a. ordinary and preference share. b. preference share. c. ordinary shares. d. creditors.

(a)  

An individual shareholder is entitled to receive any dividends declared on shares owned, provided the share is held on the a. date of declaration. b. date of record. c. date of payment. d. last day of a fiscal year.

(a)  

The maximum number of ordinary shares that may be issued according to the corporation's charter is referred to as a. issued shares. b. unissued shares. c. authorized shares. d. outstanding shares.

(a)  

Treasury stock is best described as a. unissued share. b. an asset acquired by making a cash disbursement. c. reacquired share which was previously outstanding. d. retirement of a portion of outstanding share which increases total equity.

(a)  

When ordinary shares is sold on subscription a. a shareholders' equity account called Subscriptions Receivable is used to record the par value of the shares issued. b. the Ordinary Shares account is credited when the subscription contract is signed and a down payment is received. c. the Ordinary Shares account is credited when the subscription price has been fully paid and the share is issued. d. the Ordinary Shares account is not used. Shares issued on subscription are credited to Subscribed Ordinary Shares, a permanent shareholders' equity account.

(a)  

The amount of stock that a corporation has sold at some point in time is called a. issued share. b. share capital. c. outstanding share. d. authorized share.

(a)  

Which of the following terms are most likely to appear in the owners' equity section of a corporate statement of financial position? a. share capital, revaluation or contributed capital and retained earnings. b. share capital, contributed capital in excess of par and earned surplus. c. contributed capital, earned surplus and unrealized gains and losses. d. ordinary shares, share premium and retained earnings.

(a)  

Outstanding shares of stock are a. authorized shares that have not yet been issued. b. shares of stock owned by unknown individuals. c. issued shares that are still in circulation. d. also called treasury shares.

(a)  

Treasury shares plus outstanding shares equal a. authorized shares. b. unissued shares. c. subscribed shares. d. issued shares.

(a)  

On Feb. 1, 2020 authorized ordinary shares was sold on a subscription basis at a price in excess of par value, and 20% of the subscription price was collected. On May 1, the remaining 80% of the subscription price was collected. Share premium increased on February 1 May 1 a. No Yes b. No No c. Yes No d. Yes Yes

(a)  

The purchase of treasury stock will result in a. a decrease in assets and a decrease in shareholders' equity. b. a decrease in one asset account and an increase in a different asset account. c. a decrease in assets and a decrease in liabilities. d. no net changes in assets, liabilities, or shareholders' equity.

(a)  

On Jan. 6, 2021, De Chavez Corp. issues a share dividend to investors of record on Feb. 3, 2021. When determining how to account for this share dividend, which of the following factors is the most important factor to De Chavez Corp.? a. the par value of the shares b. the market value of the shares c. the number of shares authorized d. the size of the share dividend

(a)  

The Caroro Corporation has 200.000 shares of P10 par value ordinary shares out- standing on Dec. 31, 2020. On Jan. 2. 2021, they declare a share dividend of 10,000 shares when the fair market value is P18. On the date of record, Feb. 3, 2021, the share price is P15. The shares are issued on March 1, 2021, when the market value of the shares is P25 36. When Caroro Corporation records the journal entry for the share dividend, retained earnings will be debited for the number of new shares multiplied by which of the following amounts? a. par value of the shares b. market value of the shares on Jan. 2, 2021 c. market value of the shares on Feb. 3, 2021 d. market value of the shares on March 1, 2021

(a)  

The Caroro Corporation has 200.000 shares of P10 par value ordinary shares out- standing on Dec. 31, 2020. On Jan. 2. 2021, they declare a share dividend of 10,000 shares when the fair market value is P18. On the date of record, Feb. 3, 2021, the share price is P15. The shares are issued on March 1, 2021, when the market value of the shares is P25 When recording the journal entry to distribute the share dividend, Caroro Corporation will credit share premium for a. P80,00 b. P100,000 c. P50,000 d. P150,000

(a)  

On June 25, 2021, Rosada Corp. issues a 30% share dividend on its 200,000 shares of P10 par value ordinary shares. The shares will be issued on July 8, 2021. The market price of Rosada Corp. stock is P15 P per share e on June 25, and on the date the shares are distributed, the stock is selling for P12 per share. 38. The journal entry to record the declaration of the share dividend on June 25, 2021, will include a a. debit to retained earnings for P600,000 b. debit to retained earnings for P900,000 c. credit to share premium for P300,000 d. credit to share premium for P200,000

(a)  

On June 25, 2021, Rosada Corp. issues a 30% share dividend on its 200,000 shares of P10 par value ordinary shares. The shares will be issued on July 8, 2021. The market price of Rosada Corp. stock is P15 P per share e on June 25, and on the date the shares are distributed, the stock is selling for P12 per share. The journal entry on June 25. 2021, will include a credit to ordinary shares distributable in the amount of a. P200,000 b. P300,000 c. P600,000 d. P900,000

(a)  

On July 8, 2021, the share premium account is credited for a. P300,000 b. P200,000 c. P600,000 d. -0-

(a)  

Which of the following dividends will result in a decrease to total shareholders' equity? I. large share dividend II. cash dividend III. small share dividend a. I, II, and III b. II and III c. II only d. III only

(a)