SAN PEDRO APARTADO NATIONAL HIGH SCHOOL

Brgy. San Pedro Apartado Alcala, Pangasinan 2425

Second Quarter Examination (Second Semester)

Fundamentals of Accounting, Business and Management 1

Name:_________________________________________ Score:________________

Section:_______________________________________ Date:_________________

I – Multiple Choice. Read and analyze each item. Circle the letter of the best answer.
1. Which of the following is NOT considered a service company?
a. Beauty salon
b. Carwash business
c. Bus company
d. Bakeshop
2. Erica buys candies from Candies Manufacturing and sells them in her sari-sari store. Erica earns revenue from
a. The sale of Candies Manufacturing
b. The purchase of supply of candies
c. The sale of candies in her sari-sari store
d. All of the above
3. Which of the following is considered a merchandising company?
a. National Bookstore
b. SM Hypermarket
c. Marco’s Convenience Store
d. All of the above
4. Which of the following statements regarding merchandising companies is false?
a. Merchandising companies provide tangible products
b. Merchandising companies may sell directly either to customers or retailers
c. Merchandising companies buy raw materials, convert them into finished goods, and sell the goods to
customers.
d. Merchandising companies generally incur less cost relative to other types of business as they consume less
conversion time and effort.
5. These companies use raw materials, components, or parts which are processed using machines, computers, and
labor to create their own products.
a. Service companies
b. Merchandising companies
c. Manufacturing companies
d. Partnerships
6. Which of the following is not considered as a manufacturing company?
a. Car company
b. Bank
c. Bakery shop
d. Oil company
7. One of the advantages of manufacturing companies is
a. Existence of inventory
b. Capital outlay
c. High conversion costs
d. Quality control
8. Statement I – Service companies are firms that generally use raw materials to provide intangible products or
services to customers.
Statement II – Service companies earn revenues from the performance of services.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statements are false
9. Statement I – One of the advantages of a service company over the other types of business is the absence of
inventory or tangible goods held by the company.
Statement II – One major difference of the operating cycle of a merchandising company and a service
company is the storing of inventory.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statements are false
10. Statement I – One of the advantages of a manufacturing one’s product is quality control wherein
manufacturing companies can ensure that their products meet the standards set.
Statement II – Examples of quality control activities are inspection of products and training of factory workers.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statements are false
11. This accounting principle assumes that the company has an indefinite life.
a. Time period principle
b. Going concern principle
c. Business entity principle
d. Matching principle
12. The accounting guideline that requires financial statement information to be supported by independent,
unbiased evidence other than someone's belief or opinion is the:
a. Business entity principle
b. Monetary unit principle
c. Going-concern principle
d. Objectivity principle
13. The principle that requires every business to be accounted for separately and distinctly from its owner or owners
is known as the:
a. Objectivity principle
b. Business entity principle
c. Going-concern principle
d. Revenue recognition principle
14. Which of the following accounting principles would require that all goods and services purchased be recorded
at cost?
a. Going-concern principle
b. Materiality principle
c. Cost principle
d. Business entity principle
15. According to this concept, revenues, and expenses exhibiting cause-and-effect relationships should be
recognized in the same accounting period.
a. Matching principle
b. Accrual accounting principle
c. Disclosure principle
d. Conservatism principle
16. Also known as conservatism
a. Use of judgment and estimates
b. Accounting entity assumption
c. Matching principle
d. Prudence
17. Which of the following can be considered a fiscal year?
a. January 1 – December 31
b. February 1 – January 31
c. March 1 – December 31
d. October 1 – May 31
18. All relevant information should be included in the financial reports.
a. Disclosure principle
b. Cost principle
c. Conservatism principle
d. Objectivity principle
19. Minimal costs incurred should be recorded as an expense.
a. Cost principle
b. Monetary unit principle
c. Materiality principle
d. Matching principle
20. A Philippine company should report financial statements in pesos.
a. Cost principle
b. Monetary unit principle
c. Materiality principle
d. Matching principle
21. In which of the following cases can the accounting equation be rewritten?
a. Assets + Liabilities = Equity
b. Assets – Liabilities = Equity
c. Equity – Assets = Liabilities
d. Equity + Assets = Liabilities
22. When an entity performs services for cash, how will the accounting equation be affected?
a. Increased equity and increased assets
b. Increased equity and decreased assets
c. Increased assets and decreased liabilities
d. No effect
23. When an entity buys goods through credit, how will the accounting equation be affected?
a. Increased equity and decreased assets
b. Increased liabilities and decreased assets
c. Increased assets and increased liabilities
d. No effect
24. When an entity buys an equipment for cash, how will the accounting equation be affected?
a. Increased equity and increased assets
b. Increased equity and decreased assets
c. Increased assets and decreased liabilities
d. No effect
 25. The following transactions would change the accounting equation, except one.
a. Purchase of land on credit
b. Investment of additional capital
c. Sale of goods for cash
d. Deposit of cash in bank
26. The following transactions would not change the accounting equation, except one. Which is the exception?
a. Hiring of a new employee with basic salary of ₱15,000 per month.
b. Offer to purchase land.
c. Negotiation of a new equipment for ₱50,000.
d. Disposal of expired merchandise.
27. During the year, the equity of Jovan Company increased by ₱30,000 while its liabilities decreased by ₱10,000.
How did Jovan Company’s asset change during the year?
a. Increase of ₱40,000
b. Increase of ₱20,000
c. Decrease of ₱40,000
d. Decrease of ₱20,000
28. If the liabilities of Jude Company increased by ₱10,000 while its equity remained constant, which of the following
transactions could correspondingly occur?
a. Investment of additional capital of ₱10,000
b. Withdrawal of capital of ₱10,000
c. Incurrence of a bank loan of ₱10,000
d. Payment of taxes of ₱10,000
29. If the asset of AVON Company decreased by ₱10,000 while its equity remained constant, which of the following
transactions could correspondingly occur?
a. Withdrawal of capital of ₱10,000
b. Decrease in bank deposits of ₱10,000
c. Purchase of inventory on credit worth ₱10,000
d. Payment of bank loan worth ₱10,000
30. If the assets of Watson Company increased by ₱10,000, while its equity remained constant, which of the
following transactions could correspondingly occur?
a. Purchase of inventory on cash worth ₱10,000
b. Purchase of inventory on credit worth ₱10,000
c. Sale of merchandise on cash worth ₱10,000
d. Sale of merchandise on credit worth ₱10,000

TEST II. A Classify each of the following either as Asset, Liability, Equity, Income or Expense.
____1. Accounts payable
____2. Accounts Receivable
____3. Cash
____4. Furniture and Fixtures
____5. Notes Payable
____6. Salaries expense
____7. Utilities expense
____8. Service Revenue
____9. De Jesus, drawing
____10. De Jesus, Capital

B. From the accounts given above prepare a Chart of Accounts (5points)

TEST III – Problem Solving(15 points)

Mario Nasiglat is a computer technician. He decided to open his computer repair shop on February 14, 2018, naming it
Nasiglat Computer Repairs. Mario knows that business transactions should be separated from personal finances. Thus, he
decided to invest PHP200,000 in this business. He deposited the amount with Banco De Oro.

● February 15, 2018 - Mario purchased one computer unit from XYZ Computer Store to be used for the business. He
issued check number 001 amounting to PHP25,000.
● February 16, 2018 - Mario hired Maria Magaling, an experienced secretary.
● February 17, 2018 – Repaired the computer of Juan and collected PHP10,000.
● February 18, 2018 – Repaired Pedro’s computer. However, Pedro will pay PHP15,000 on March 18, 2018
● February 19, 2018 – Mario purchased Office Supplies from MM Merchandise amounting to PHP5,000 on account. Mario
will pay this on March 30, 2018.
● February 25, 2018 – Paid the salary of Maria amounting to PHP5,000.

Required:

a. Prepare the General Journal

b. Post the journal entries to the ledger accounts.
c. Prepare the trial balance

Prepared by: Marilyn N. Tamayo

Subject Teacher