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Qualifying Exam Reviewer Basic Accounting
Qualifying Exam Reviewer Basic Accounting
Answer: C
Answer: B
3.) What is the law regulating the practice of accountancy in the Philippines?
Answer: D
a. A service activity
b. An information system
c. An exact science rather than an art
d. A universal language of business
Answer: C
a. To provide the information that the managers of an entity need to control the
operations
b. To provide information that the creditors can use in deciding whether to make
additional loans
c. To measure the periodic income of the entity
d. To provide quantitative financial information about an entity that is useful in making
economic decision
Answer: D
Answer: B
7.) Equipment with an estimated market value of P60 000is offered for sale at P90 000.
The equipment is acquired for P30 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
__________
a. P 80 000 c. P 90 000
b. P 60 000 d. P30 000
Answer: A
Answer: C
9.) On January 1, 2016, Potter Company bought a building for P2,750,000 to serve as
the Company’s office. It was estimated that the said building will be useful for 20 years.
After the end of its useful life, the building can still be sold for P250,000. What is the
amount of depreciation expense that should be recognized by Potter Company on
December 31, 2016?
a. P 100,000
b. P 125,000
c. P 150, 000
d. P 175, 000
Answer: B
10.) Which of the following entries records the receipt of a utility bill from the water
company?
Answer: C
12.) An item retailing for P 100,000, subject to a trade discount of 25% is paid for within
the discount period on terms 2/10, n/30. What is the amount of payment made?
a. P 73,500 c. P 75,000
b. P 74,000 d. P 100,000
Answer: A
a. P 710,000
b. P 1,085,000
c. P 1,460,000
d. P 1,250,000
Answer: C
15.) The unearned rent account has a balance of P 36,000. If P 4,000 of the P 36,000 is
unearned at the end of the accounting period, the amount of the adjusting entry is
a. P 4,000
b. P 40,000
c. P 32,000
d. P 36,000
Answer: C
Answer: D
Answer: D
18.) Erica and Mica formed a partnership on January 1, 2016 by investing P 50,000
each into EM Coffee Shop. On June 30, 2016, Mica invested an additional 50,000 into
the business If they agreed to divide profit based on initial capital investment, how will
they divide the P 120,000 profit they earned in 2016.
Answer: A
19.) Erica and Mica formed a partnership on January 1, 2016 by investing P 50,000
each into EM Coffee Shop. On June 30, 2016, Mica invested an additional 50,000 into
the business If they agreed to divide profit based on ending capital investment, how will
they divide the P 120,000 profit they earned in 2016.
Answer: B
20.) If the partner withdraws from the partnership before the end of the accounting
period, updating of the partnership books is
a. Required
b. Optional
c. Not necessary
d. None of the above
Answer: A
21.) The following are kinds of partners except one, choose the exception:
a. Capitalist partner
b. Capitalist-secret partner
c. Industrial-managing partner
d. Limited-industrial partner
Answer: D
a. P 150,000 c. P 175,000
b. P 125,000 d. P 145,000
Answer: C
23.) Gumball and Darwin agreed to form a partnership from which Gumball will
contribute P 300,000. If Darwin’s contributions is 1/3 of the total agreed capitalization,
how much is the partnerships net assets after the formation using the bonus method?
a. P 500,000 c. P 450,000
b. P 350,000 d. P 900,00
Answer: C
24.) This allowance for profit distribution is granted only if there is profit
a. Bonus c. Salary
b. Interest d. All of the above
Answer: A
At December 31, Haha and Hehe are partners with capital balances of P 40,000 and
P20,000, and they share profits and losses in the ratio of 2:1, respectively. On this date
Hihi invests P 17,000 in cash for a one-fifth interest in the capital and profit of the new
partnership.
25.) Assuming asset revaluation will be recorded, how much is the balance of Hehe’s
capital after Hihi is admitted into the partnership?
a. P 45,333
b. P 22,667
c. P 17,000
d. P 8,000
Answer: B
26.) Assuming bonus method is used and there is no increase in net assets is
recognized, what would be the total capital of the partnership after the admission by
investment of Hihi?
a. P 85,000
b. P 60,000
c. P 61,600
d.P 77,000
Answer: D
27.) If the amount invested by the incoming partner is equal to the interest he acquires,
then there is
Answer: A
28.) The total number of shares the corporate charter permits the corporation to issue is
called
a. outstanding stock
b. issued stock
c. authorized stock
d. ordinary shares capital
Answer: C
29.) If shares of stock are sold for less than their par value, the difference is called
a. discount
b. earnings
c. a gain
d. a premium
Answer: A
As of December 31, 2016, the balances of the shareholder’s equity of Herbie Auto
Inc. are shown below:
Ordinary Share Capital, P6 par
(30,000 shares authorized, 13 000 shares issued) _________
30.) The amount of Ordinary Share Capital using the above data is:
a. P 180,000
b. P 78,000
c. P 60,000
d. P 360,000
Answer: B
31.) The amount of Preference Share Capital using the above data is:
a. P 60,000
b. P192,000
c. P 180,000
d. P 12,000
Answer: A
32.) The amount of Treasury Stock-Ordinary Share Capital using the above data is:
a. P 360,000
b. P 60,000
c. P 12,000
d. P 180,000
Answer: C
a. Retained Earnings
b. Share Capital
c. Premium on Sale of Share Capital
d. Cash
Answer: A
34.) The reduction of par or stated value of stock by issuance of a proportionate number
of additional shares is termed a:
a. liquidating dividend
b. stock split
c. stock option
d. preferred dividend
Answer: B
Answer: D
36.) The entry to record the purchase of 5,000 shares of a corporation’s own P20 par
common stock at P25, paid in cash, includes a debit to:
Answer: D
Answer: C
38.) When the investment of a new partner exceeds the new partner’s initial capital
balance and asset revaluation is not recorded, who will receive the bonus?
Answer: D
39.) In the liquidation of the partnership, the first cash realized is used to
a. Pay the creditors
b. Pay the general partners
c. Pay the industrial partners
d. Pay all the partners
Answer: A
40.) A corporation purchased 1,000 shares of its P10 par common stock at P20 and
subsequently sold 500 of the shares at P30. What is the amount of revenue realized
from the sale?
a. P0 c. P 5,000
b. P2,500 d. P15,000
Answer: A