Name: Bea Angelee Arellano Score: _________________ 13.

_________________ 13. A corporation pays its annual property tax bill of approximately P12,000
in one payment each December 28. During the year, the corporation's
1. The personal assets of the owner of a company will not appear on the monthly income statements report Property Tax Expense of P1,000. This is an
company's balance sheet because of which principle/guideline? example of which accounting principle/guideline?
A. Cost C. Monetary Unit A. Monetary Unit C. Materiality
B. Economic Entity D. Going Concern B. Matching D. Cost

2. Which principle/guideline requires a company's balance sheet to report its 14. A company sold merchandise of P8,000 to a customer in December. The
land at the amount the company paid to acquire the land, even if the land company's sales terms require the customer to pay the company in 30 days.
could be sold today at a significantly higher amount? The company's income statement reported the sale in December. This is
A. Cost C. Monetary Unit proper under which accounting principle/guideline?
B. Economic Entity D. Going Concern A. Full Disclosure C. Revenue Recognition
B. Monetary Unit D. Cost
3. Which principle/guideline allows a company to ignore the change in the
purchasing power of the peso over time? 15. Accrual accounting is based on this principle/guideline.
A. Cost C. Monetary Unit A. Cost C. Monetary Unit
B. Economic Entity D. Going Concern B. Full Disclosure D. Matching

4. Which principle/guideline requires the company's financial statements to 16. The creative chief executive of a corporation who is personally
have footnotes containing information that is important to users of the responsible for numerous inventions and innovations is not reported as an
financial statements? asset on the corporation's balance sheet. The accounting principle/guideline
A. Conservatism C. Full Disclosure that prevents the corporation for reporting this person as an asset is
B. Economic Entity D. Materiality A. Conservatism C. Going Concern
B. Cost D. Materiality
5. Which principle/guideline justifies a company violating an accounting
principle because the amounts are immaterial? 17. An asset with a cost of P120,000 is depreciated over its useful life of 10
A. Conservatism C. Full Disclosure years rather than expensing the entire amount when it is purchased. This
B. Economic Entity D. Materiality complies with which principle/guideline?
A. Cost C. Monetary Unit
6. Which principle/guideline is associated with the assumption that the B. Full Disclosure D. Matching
company will continue on long enough to carry out its objectives and
commitments? 18. Near the end of the current year, a company required a customer to pay
A. Economic Entity C. Time Period P200,000 as a deposit for work that is to begin in the following year. At the
B. Going Concern D. Materiality end of the current year the company reported the P200,000 as a liability on
its balance sheet. Which accounting principle/guideline prevented the
7. A very large corporation's financial statements have the peso amounts company from reporting the P200,000 on its income statement for the
rounded to the nearest P1,000. Which accounting principle/guideline justifies current year?
not reporting the amounts to the penny? A. Revenue Recognition C. Going Concern
A. Conservatism C. Full Disclosure B. Monetary Unit D. Cost
B. Monetary Unit D. Materiality
19. A retailer wishes to report its merchandise inventory on its balance sheet
8. Accountants might recognize losses but not gains in certain situations. For at its retail value. This would violate which accounting principle/guideline?
example, the company might write-down the cost of inventory, but will not A. Full Disclosure C. Going Concern
write-up the cost of inventory. Which principle/guideline is associated with B. Monetary Unit D. Cost
this action?
A. Conservatism C. Full Disclosure 20. A company borrowed P100,000 in December and will make its only
B. Monetary Unit D. Materiality payment for interest when the note comes due six months later. The total
interest for the six months will be P3,600. On the December income
9. Which principle/guideline directs a company to show all the expenses statement the accountant reported Interest Expense of P600. This action was
related to its revenues of a specified period even if the expenses were not the result of which accounting principle/guideline?
paid in that period? A. Revenue Recognition C. Matching
A. Monetary Unit C. Materiality B. Monetary Unit D. Cost
B. Matching D. Cost
21. The two main methods of bookkeeping and accounting are 1) the cash
10. When the accountant has to choose between two acceptable method, and 2) the __________ method. ACCRUAL
alternatives, the accountant should select the alternative that will report less
profit, less asset amount, or a greater liability amount. This is based upon 22. __________-entry bookkeeping means that every transaction will affect
which principle/guideline? two or more accounts. DOUBLE
A. Conservatism C. Cost
B. Monetary Unit D. Materiality 23. A __________ amount will appear on the left side of a T-account.
A. Debit B. Credit
11. Public utilities' balance sheets list the plant assets before the current
assets. This is acceptable under which accounting principle/guideline? 24.A listing of the balances in the accounts in order to determine whether
A. Conservatism C. Cost debits are equal to credits is a __________ balance. TRIAL
B. Materiality D. Industry Practices
25.The listing of accounts that are available for posting transactions is the
12. A large company purchases a P250 digital camera and expenses it __________ of accounts. CHART
immediately instead of recording it as an asset and depreciating it over its
useful life. This practice may be acceptable because of which 26.When a check is written, a cash account should be __________.
principle/guideline? A. Debited B. Credited
A. Monetary Unit C. Materiality
B. Matching D. Cost 27.Liability accounts will normally have __________ balances.
A. Debit B. Credit
 A. Accrual B. Deferral
28. Revenue accounts will normally have __________ balances.
A. Debit B. Credit
46. A private organization which establishes broad accounting principles as
well as specific accounting rules is the
29. The bookkeeping or accounting equation is Assets = Liabilities +
a. Securities and Exchange Commission.
Owner's __________. EQUITY
b. Internal Revenue Service.
c. Financial Accounting Standards Board.
30. The book of original entry is the definition of a __________.
d. Corporate Board of Directors.
A. Journal B. Ledger
47. The right side of an account is always
31. When a sale is made on credit, the seller will debit the
a. the debit side.
Accounts __________. RECEIVABLE
b. the credit side.
c. the balance of that account.
32. Asset, __________, and stockholders' equity accounts are known as
d. carried forward to the next accounting period.
balance sheet accounts. LIABILITY
48. Posting is the process of
33.Large corporations should report revenues on their income statements
a. preparing a chart of accounts.
when the __________.
b. adding a column of figures.
A. Cash Is Received B. Revenues Are Earned
c. transferring journal entries to ledger accounts.
d. recording entries in a journal.
34.The difference between the balance in a company's cash account and its
bank statement is documented in the __________ of the bank statement.
RECONCILIATION
49. Which one of the following accounts is not closed at the end of an
accounting period?
35. Accrued expenses are likely to pertain to transactions that have
a. Common Stock
__________ been paid.
b. Dividends
A. Already B. Not Yet
c. Service Revenue
d. Insurance Expense
36. Deferred revenues likely involve cash amounts that have __________
been received.
50. The second set of debit and credit columns on a work sheet is generally
A. Already B. Not Yet
used for
a. closing entries.
37. A__________ entry typically removes an accrual-type adjusting entry that
b. the trial balance.
had been recorded in the preceding accounting period. REVERSING
c. the balance sheet figures.
d. the adjustments.
38. Cash and Accounts Receivable are two examples of accounts that are
reported on the classified balance sheet under the
heading __________ assets. CURRENT

39. A supplier of goods or services is known as a __________.

A. Debtor B. Vendor C. Creditor D. Vendee

40. Company S received money in advance of providing services to Company

P. The money received before it is earned is an increase to Company S's asset
account Cash. The amount unearned should also be reported as
Another Asset
A Liability B. Revenues C. Capital D. Expenses

41. It is acceptable that some adjusting entries contain estimated amounts.

A. True B. False

42. Adjusting entries are often categorized into two groups:

__________ and deferrals. Accruals

43. An adjusting entry to record interest expense incurred by a company but

not yet included in its accounting records is categorized as a(n).
A. Accrual B. Deferral

44. An adjusting entry to adjust the amounts already recorded in the asset
account Supplies and in the income statement account Supplies Expense is
categorized as a(n).
A. Accrual B. Deferral

45. A law firm has received P10,000 for services to be performed in the
future. In which category would you put the entry to adjust the accounts
involved (Service Revenues and Unearned Revenues)?