Chapter 5

Books of Accounts and Double-entry System

PROBLEM 1: TRUE OR FALSE

1. FALSE
2. FALSE
3. TRUE
4. FALSE – General ledger
5. FALSE – Subsidiary ledger
6. TRUE
7. TRUE
8. TRUE
9. FALSE – double-entry system
10. FALSE – concept of duality

PROBLEM 2: TRUE OR FALSE

1. TRUE
2. TRUE
3. FALSE – credit
4. FALSE
5. FALSE – ₱6M (10M – 4M)
6. TRUE
7. FALSE – (100 + 20 – 70) = ₱50
8. FALSE – debit
9. FALSE – decrease
10. TRUE
PROBLEM 3: FOR CLASSROOM DISCUSSION
1. Purchases journal
2. Cash receipts journal
3. General journal
4. Cash disbursements journal
5. General ledger
6. Subsidiary ledger

ACCOUNTS COLUMN A COLUMN B

7. Cash ASSET DEBIT
8. Owner’s equity EQUITY CREDIT
9. Accounts receivable ASSET DEBIT
10. Prepaid supplies ASSET DEBIT
11. Accounts payable LIABILITY CREDIT
12. Salaries payable LIABILITY CREDIT
13. Accumulated depreciation CONTRA-ASSET CREDIT
14. Sales INCOME CREDIT
15. Cost of sales EXPENSE DEBIT
16. Depreciation EXPENSE DEBIT

17. DEBIT
18. CREDIT
19. CREDIT
20. CREDIT

21. C
Solution:
Cash
beg. 20,000
Collection of accounts Payment of notes
receivable 11,000 8,000 payable
Issuance of notes
payable 5,000
28,000 end.

Notes payable
15,00
0 beg.
Issuance of
Payment of notes payable 8,000 5,000 notes payable

12,00
end. 0

PROBLEM 4: IDENTIFICATION (BOOKS OF ACCOUNTS)

1. Sales journal
2. Purchases journal
3. Cash receipts journal
4. Cash disbursements journal
5. Cash disbursements journal
6. Cash receipts journal
7. Cash disbursements journal
8. General ledger
9. Subsidiary ledger
10. Journal
PROBLEM 5: IDENTIFICATION (TYPES OF ACCOUNTS)

ACCOUNTS COLUMN A COLUMN B

1. Notes receivable ASSET DEBIT
2. Salaries expense EXPENSE DEBIT
3. Owner’s drawings CONTRA-EQUITY DEBIT
4. Building ASSET DEBIT
5. Service fees INCOME CREDIT
6. Advances from customers LIABILITY CREDIT
7. Gains INCOME CREDIT
EXPENSE DEBIT
8. Interest expense
LIABILITY CREDIT
9. Unearned income
ASSET DEBIT
10. Equipment
ASSET DEBIT
11. Interest receivable
EQUITY CREDIT
12. Owner’s capital ASSET DEBIT
13. Equipment EXPENSE DEBIT
14. Freight-out EXPENSE DEBIT
15. Losses INCOME CREDIT
16. Service fees CONTRA-ASSET CREDIT
17. Allowance for bad debts ASSET DEBIT
18. Inventory EXPENSE DEBIT
19. Depreciation LIABILITY CREDIT
20. Utilities payable
PROBLEM 6: IDENTIFICATION (RULES OF DEBIT/CREDIT)

Account Titles INCREASED BY A

1. Cash DEBIT
2. Sales CREDIT
3. Accumulated depreciation CREDIT
4. Depreciation DEBIT
5. Inventory DEBIT
6. Owner’s capital CREDIT
7. Rent expense DEBIT
8. Rent income CREDIT
9. Interest receivable DEBIT
10. Interest expense DEBIT
11. Prepaid rent DEBIT
12. Owner’s drawings DEBIT
13. Accounts payable CREDIT
14. Unearned income CREDIT
15. Cost of sales DEBIT
16. Equipment DEBIT
17. Notes payable CREDIT
18. Insurance expense DEBIT
19. Prepaid insurance DEBIT
20. Gains CREDIT
21. Notes receivable DEBIT
22. Land DEBIT
23. Building DEBIT
24. Furniture & fixture DEBIT
25. Freight out DEBIT
PROBLEM 7: MULTIPLE CHOICE
1. D
2. B
3. B
4. A
5. D
6. D
7. A
8. D
9. A
10. D

PROBLEM 8: MULTIPLE CHOICE

1. D
2. D
3. A
4. A
5. A
6. A
7. B
8. A
9. C
10. D

PROBLEM 9: MULTIPLE CHOICE

1. A
2. A
3. C
4. D
5. D
6. B
7. C
8. B
9. A
10. B
PROBLEM 10: MULTIPLE CHOICE
1. C
2. C
3. B
4. B
5. A
6. D
7. A
8. C
9. C
10. C