Teodocio, Anne Pauline L.

BSBA Marketing Management

Module 2

Pre-Assessment
Exercise 1-Multiple Choice:

1. The business is considered as an entity that is separate and distinct from the owner:
a. Accounting Entity c. Business Entity
b. Separate Entity d. All of these

2. The accounting assumption that gives the business a continuous life of existence:
a. Periodicity c. Stable Monetary Unit
b. Going Concern d. Accrual

3. It represents the residual in the assets of the business after deducting its liabilities:
a. Neth Worth c. Capital
b. Owner’s Equity d. All of the above

4. Accounting is the bridge of communication between the owner of the business and
various users through:
a. Balance Sheet c. Financial Statements
b. Income Statements d. Statements of Owner’s Equity

5. The record of properties acquired, and services availed of by a business are

maintained in accordance with the:
a. Proprietorship Principle c. Cost Principle
b. Business Entity Concept d. Matching Principle
Exercise 2:

Hanna Grace Co. showed the following account balances. Determine the unknown
accounting values in two (2) separate cases:

Case 1 – Account Payable P 40,000

Unearned Income 25,000

Hanna Grace, Capital 207,000

How much is Assets? 272,000

Case 2 – Cash in Bank P 70,000

Account Receivable 180,000

Estimated Uncollectible Accounts (3,000)

Prepaid Expenses 10,000

Supplies Inventory 15,000

How much is Owner’s Equity balance? 272,000

Activity/Evaluation
Exercise 1: Accounting Concepts, Assumptions, and Principles:

Multiple Choice: Encircle the letter that describes the statement.

1. The financial statement should be stated in terms of the common financial

denominator:
a. Accrual c. Time period
b. Going concern d. Stable monetary unit

2. This principles requires relevant information to form part of financial statements for
decision making purposes:
a. Objectivity c. Adequete disclosure
b. Materiality d. Accounting entity

3. The encompass the conventions, rules and procedures necessary to define what is
the accepted accounting practice:
a. Accounting concepts
b. Generally accepted accounting principles
c. Conceptual frameworks
d. Accounting assumptions

4. The assumption that an entity will continue to operate for the foreseeable future is
called:
a. Accrual basis
b. Comparability
c. Going concern
d. Relevance
5. The record of properties acquired, and services availed of by a business maintained
in accordance with the:
a. Matching principle
b. Cost principle
c. Business entity concept
d. Proprietorship principle

Exercise 2: Elements of Financial Statements

Instruction: Classify the following account titles as Assets, Liabilities, and Owner’s
Equity (Income, Cost, and Expense). Use a “checkmark”.

Asset Liability Owner’s Equity

1. Cash in bank _ _______ _______
2. Unused Office Supplies __ _______ _______
3. Insurance Expense ____ ______ _____
4. Accrued Income ___ _____ _______
5. Taxes and Linceses ______ _____ ________
6. Juan Dela Cruz, Capital ______ _____ ___ _
7. Account Receivable ______ ________ _______
8. Freight Out ______ ________ ____
9. Accounts Payable _______ ________ _____
10. Sales _______ ________ ______

Reinforcement /Assignment:
Open aSingle Proprietor business of your choice and start creating your business. Chart
of accounts by applying the elements of the financial statements. Submit in a bond
paper.

ANNE’S SELF SERVICE LAUNDRY SHOP

Account Number Account Name Account Type Credit / Debit

1-001 Cash in hand Assests Debit

1-005 Merchandise Assets Debit
inventory
1-009 Furniture and Assets Debit
Fixtures
2-001 Accounts payable Liabilities Credit
2-008 Loans payable Liabilities Debit
3-001 Capital Equity Credit
4-001 Sales Revenues Debit
5-002 Taxes and Expenses Credit
Licenses
5-004 Insurance Expenses Credit
expenses
5-005 Light and water Expenses Credit
expenses
5-006 Supplies expenses Expenses Credit
5-010 Repairs and Expenses Credit
maintenance