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Basic Accounting (CRC-ACE) Ed
Basic Accounting (CRC-ACE) Ed
Basic Accounting (CRC-ACE) Ed
BASIC ACCOUNTING
EASY:
1. The origins of accounting are generally attributed to the work of (10 Sec)
a. Christopher Columbus.
b. Abner Doubleday.
c. Luca Pacioli.
d. Leonardo da Vinci.
3. An item of merchandise was sold with an invoice price of P400 and credit terms of 2/10,
n/30. The entry to record the sale would include a credit to Sales of (20 Sec)
a. P400.00
b. P396.00
c. P408.00
d. P392.00
5. Squirt Company sold 3,000 shares of P15 par value common stock for P55,000. In recording
this transaction, Squirt should credit Common Stock for what amount? (20 Sec)
a. P 10,000
b. P 25,000
c. P 45,000
d. None of the above
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6. An arbitrary value placed on shares at the time of its original issue is: (10 Sec)
a. par value.
b. redemption value.
c. market value.
d. book value.
7. If gross sales is P40,000, sales returns and allowances P1,000, sales discounts P400, and
delivery expenses P100, the net sales of the business will total (20 Sec)
a. P38,500
b. P38,600
c. P40,000
d. P39,000
9. The entry to record the receipt of payment within the discount period on a sale of P750 with
terms of 2/10, n/30 will include a credit to (20 Sec)
a. Sales Discounts for P15.
b. Cash for P735.
c. Accounts Receivable for P750.
d. Sales for P750.
10. A corporation issued 20,000 shares of P12 par value common stock for P15 per share. The
journal entry to record the issue of the stock would include which of the following?
a. A credit to Gain On Sale of Common Stock, P240,000. (20 Sec)
b. A debit to Paid-In Capital in Excess of Par Value, Common Stock, P50,000.
c. A credit to Common Stock, P240,000.
d. A credit to Common Stock, P300,000.
AVERAGE:
1. Which of the following is true about the par value of a share of stock? (10 Sec)
a. The par value is a reliable measure of the market value of the stock
b. The par value is assigned after it has been voted on by the stockholders.
c. The par value assigned must be between P1 and P10.
d. The par value is used to determine the legal capital of the corporation.
2. Net income for the period totalled P55,000, preferred dividends paid totaled P10,000, and
common dividends paid totalled P30,000. If there were 100,000 common shares
outstanding throughout the year, what was the earning per common share?
a. P4.50 (45 Sec)
b. P44.50
c. P.45
d. P.30
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5. A credit sale of P800 is made on April 25, terms 2/10, n/30, on which a return of P50 is
granted on April 28. What amount is received as payment in full on May 4? (45 Sec)
a. P735
b. P784
c. P800
d. P750
6. A shareholder who holds over 80% of the common shares cannot: (10 Sec)
a. sell the shares to other parties.
b. be chairman of the board and company president at the same time.
c. elect all of the members of the board of directors.
d. bind the corporation to a contract with a third party.
7. On July1, 2013, Austin and Aurelius form a partnership, agreeing to share profits and
losses in the ratio of 4:6, respectively. Austin contributed a parcel of land that cost him P
25,000. Aurelius contributed P 50,000 cash. The land was sold for P 50,000 on July 1,
2013 four hours after formation of the partnership.
How much should be recorded in Austin capital account on formation of the partnership?
a. P 10,000
b. P 20,000 (45 Sec)
c. P 25,000
d. P 50,000
8. The collection of a P600 account within the 2 percent discount period will result in a
a. debit to Sales Discounts for P12.
b. debit to Accounts Receivable for P588. (45 Sec)
c. credit to Cash for P588.
d. credit to Accounts Receivable for P588
9. Bookkeeping differs from accounting in that bookkeeping primarily involves which part of
the accounting process? (10 Sec)
a. Identification
b. Communication
c. Recording
d. Analysis
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10. Company A has a simple capital structure of 100,000 shares of P10 par common shares, no
preferred shares, and retained earnings of P750,000. The company made no sales or
purchases of its common shares. The earnings per share was P.75. What was the amount
of net income? (45 Sec)
a. P750,000
b. P75,000
c. P100,000
d. P50,000
DIFFICULT:
2. Andrew, Avon and Allen form a partnership on May 1, 2013. They agree that Andrew will
contribute office equipment with a total fair value of P 40,000. Avon will contribute delivery
equipment with a fair value of P 80,000 and Allen will contribute cash.
(60 Sec)
If Allen wants a one third interest in the capital and profits he should contribute cash of
a. P 40,000 b. P 60,000 c. P 120,000 d. P 180,000
3. Which of the following is NOT true with regard to appropriations of retained earnings?
a. They will restrict the amount of possible cash dividends. (10 Sec)
b. They may be required because of contractual obligations.
c. They may be made at the discretion of the board of directors.
d. They require setting aside a reserve of cash for the appropriations.
5. Which of the following accounts would not be classified as a contributed capital account?
a. Contributed Capital, Common Shares (10 Sec)
b. Treasury Shares, Common
c. Stock Dividends Distributable
d. Contributed Capital, Preferred Shares
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6. Carson and Lamb establish a partnership to operate a used-furniture business under the
name of C&L Furniture. Carson contributes furniture that cost P60,000 and has a fair value
of P90,000. Lamb contributes P30,000 cash and delivery equipment that cost P40,000
and has a fair value of P30,000. The partners agree to share profits and losses 60% to
Carson and 40% to Lamb. Calculate the peso amount of inequity that will result if the initial
noncash contributions of the partners are recorded at cost rather than fair market value.
(60 Sec)
a. P30,000 b. P10,000 c. P20,000 d. P18,000
7. Contingent assets need not be disclosed in the financial statements or the notes thereto
if they are considered? (10 Sec)
a. Probable virtually certain.
b. Probable.
c. Likely.
d. Possible but not probable.
9. It is the measurement base in which the assets are carried at the amount of cash or
cash equivalents that could currently be obtained by selling the asset in an orderly
disposal and liabilities are carried at their settlement values; that is, the undiscounted
amounts of cash or cash equivalents expected to be paid to satisfy the liabilities in the
normal course of business.
10. The MN Partnership was formed on January 2, 2009. Under the partnership agreement,
each partner has an equal initial capital balance accounted for under the goodwill method.
Partnership net income or loss is allocated 60% to M and 40% to N. To form the
partnership, M originally contributed assets costing P30,000 with a fair value of P60,000
on January 2, 2009, while N contributed P20,000 in cash. Drawings by the partners during
2009 totaled P3,000 by M and P9,000 by N. MN’s net income for 2009 was P25,000.
N’s initial capital balance in MN Partnership is:
a. P20,000 b. P25,000 c. P40,000 d. P60,000
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CLINCHER QUESTIONS:
1. It is the body authorized by law to promulgate rules and regulations affecting the practice
of the accountancy profession in the Philippines.
a. Board of Accountancy
b. Philippines Institute of Certified Public Accountants
c. Securities and Exchange commission
d. Financial Reporting Standard Council
4. The manner in which accounting records are organized and employed within a business
is referred to as
11. The buyer received an invoice from the seller for merchandise with a list price of P400
and credit terms of 2/10, n/60. The number 10 in the credit terms is the
a. credit period
b. cash discount allowed for early payment of the invoice
c. discount period
d. trade discount
12. The process of verifying that total debits equal total credits in a columnar journal is
called:
a. Crossfooting
b. Journalizing
c. Posting
d. Footing
a. Assets = Equities.
b. Assets – Liabilities = Owner's Equity.
c. Assets = Liabilities + Owner's Equity.
d. all of these.
15. Freight costs paid by a seller on merchandise sold to customers will cause an increase
a. in the selling expense of the buyer.
b. in operating expenses for the seller.
c. to the cost of goods sold of the seller.
d. to a contra-revenue account of the seller
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17. The “communicating” process of accounting includes all of the following, except
a. Recording
b. Classifying
c. Summarizing
d. Interpreting
21. A Statement of Assets and Liabilities (SALN), which government officials are required
to file for public scrutiny in the name of transparency reporting is comparable to an
entity’s
22. Which of the following operations can be performed by a computer without requiring an
accountant’s judgment?
23. Modified cash basis (or hybrid basis) differs from the accrual basis in the computation of
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25. After audit, the party responsible for the financial statements of the entity is the
27. Under the periodic inventory system, the Purchases account is used to record
a. only cash purchases of merchandise inventory
b. purchases of any asset on account or note payable
c. only purchases of merchandise inventory on account
d. purchases of merchandise inventory for cash or on account
28. When perpetual inventory is maintained, the cost of goods sold is recorded by a journal
entry in which a credit is made to the
a. Cost of Goods Sold account
b. Merchandise Inventory account
c. Accounts Receivable account
d. Purchases account
30. To determine the collectability of a customer's account would require evaluation of the
records found in the
a. Balance Sheet
b. Schedule of Accounts Payable
c. Accounts Receivable Subsidiary Ledger
d. Schedule of Accounts Receivable
34. Which one of the following characteristics applies to both a sole proprietor and a general
partnership, but not a corporation?
a. Continuous life
b. A separate legal entity
c. Unlimited liability
d. Limited liability
35. The date on which the board of directors votes whether or not to distribute a dividend is called
which of the following?
a. Date of Payment c. Date of Vote
b. Date of Record d. Date of Declaration
38. Which is the order in which the dates related to cash dividends occur?
a. declaration, record, payment
b. payment, declaration, record
c. payment, record, declaration
d. record, declaration, payment