Question 1

The balance of the Commission income account includes a 35,000 commissions received in advance for
selling eight units of refrigerators. However, only three units were sold during the year. Of the 35,000,
how much will be shown in the liability section of the statement of financial position as of December 31,
2019?

1. 35,000

2. 13,125

3. 4,375

4. 21,875

Question 4

The following are example of unearned revenue, except:

5. Check received by a dental clinic contracted for cleaning the student’s teeth.

6. Commission received in advance based on possible customers in a direct selling business.

7. Fees collected by s property assessor before the actual appraisal.

8. Attorney’s fees to be collected for attending a client’s hearing.

Question 5

Adjusting Entries are recorded because an entity _______.

9. has a revenue earned during the period

10. Has expenses

11. Uses the cash basis of accounting

12. Uses the accrual basis of accounting

Question 6

Depreciation is best described as a process designed to_______.

13. Reflect the change in value of an asset as a result of obsolescence.

14. Allocate the cost of an asset across its useful life to an entity.

15. Spread the cost of an asst across a period no grater than five years.

16. Reduce the carrying amount of an asset to reflect the fair market value of asset.

Question 7

At the end of the accounting period, Jack & Jill Company failed to record accrued salaries. As a result, the
current period’s assets, liabilities, equity and net income would be________.
17. Correct, overstated, understated and overstated, respectively.

18. Correct, overstated, understated and understated, respectively.

19. Correct, understated, overstated and overstated, respectively.

20. Correct, understated, overstated and understated, respectively.

Question 8

For the fiscal year ended May 31, 2019, the company reported a balance of Unearned Rent Revenue of
220,000 before any adjustment. The details of the unearned rent were presented below:

21. 180, 000-received from a tenant in November 20, 2018, representing one year rental beginning
December 2018.

22. 40,000-received from a tenant on May 1, 2019, representing four months of rental beginning in
May 2019.

The adjusted balance of unearned rent revenue that would appear in the statement of profit and loss is

23. 115,000

24. 120,000

25. 0

26. 105,000

Question 10

2 Points

(NOTE: THIS IS A CHAIN QUESTION CONSISTING OF 3 QUESTIONS. HENCE, IT WOULD BE BENEFICIAL FOR
YOU IF YOU TAKE NOTE OF YOUR ANSWER IN EVERY QUESTION.)

Liliw Island Business Services has the following information relative to its property, plant and equipment:

i. Transportation Equipment – total cost is P431,500, with estimated useful life of six years and salvage
value of P35,500. The transportation equipment was purchased on March 31, 2018.

ii. Furniture and Fixtures - On April 1, 2019, the firm purchased desks and cabinets with estimated useful
life of three years, depreciable cost of P105,000 and estimated residual value of P15,000.

The firm started its operation on January 1, 2019 and will be preparing its annual financial statements for
the year ended December 31, 2019. The firm uses the straight-line method of depreciation.

QUESTION: How much is the total book value of the firm’s property, plant and equipment as of
December 31, 2019?

27. P409,750

28. P316,000
 29. P393,000

30. P404, 250

Question 11

1 Point

Which of the following is a correct adjusting entry for prepayments under Expense Method?

31. Debit – Revenue account ; Credit – Liability account

32. Debit – Liability account ; Credit – Revenue account

33. Debit – Expense account ; Credit – Prepaid Expense account

34. Debit – Prepaid Expense account ; Credit – Expense account

Question 12

1 Point

(NOTE: THIS IS A CHAIN QUESTION CONSISTING OF 3 QUESTIONS. HENCE, IT WOULD BE BENEFICIAL FOR
YOU IF YOU TAKE NOTE OF YOUR ANSWER IN EVERY QUESTION.)

Liliw Island Business Services has the following information relative to its property, plant and equipment:

i. Transportation Equipment – total cost is P431,500, with estimated useful life of six years and salvage
value of P35,500. The transportation equipment was purchased on March 31, 2018.

ii. Furniture and Fixtures - On April 1, 2019, the firm purchased desks and cabinets with estimated useful
life of three years, depreciable cost of P105,000 and estimated residual value of P15,000.

The firm started its operation on January 1, 2019 and will be preparing its annual financial statements for
the year ended December 31, 2019. The firm uses the straight-line method of depreciation.

QUESTION: How much is the Depreciation Expense-Furniture and Fixtures that the firm will report as of
December 31, 2019?

35. P30,000

36. P35,000

37. P22,500

38. P26,250

Question 13

1 Point

Assume that on December 31, 2019, the Company has outstanding Accounts Receivable of P425,000.
The Company believes that 4% of the outstanding accounts receivable might not be collected. If the
allowance for uncollectible accounts before any adjustment has a debit balance of P4,500, how much
would be reported as allowance for uncollectible accounts as of year-end?
 39. P17,000

40. P21,500

41. P4,500

42. P12,500

Question 14

1 Point

(NOTE: THIS IS A CHAIN QUESTION CONSISTING OF 3 QUESTIONS. HENCE, IT WOULD BE BENEFICIAL FOR
YOU IF YOU TAKE NOTE OF YOUR ANSWER IN EVERY QUESTION.)

Liliw Island Business Services has the following information relative to its property, plant and equipment:

i. Transportation Equipment – total cost is P431,500, with estimated useful life of six years and salvage
value of P35,500. The transportation equipment was purchased on March 31, 2018.

ii. Furniture and Fixtures - On April 1, 2019, the firm purchased desks and cabinets with estimated useful
life of three years, depreciable cost of P105,000 and estimated residual value of P15,000.

The firm started its operation on January 1, 2019 and will be preparing its annual financial statements for
the year ended December 31, 2019. The firm uses the straight-line method of depreciation.

QUESTION: How much is the Accumulated Depreciation-Transportation Equipment that the firm will
report as of December 31, 2019?

43. P66,000

44. P49,500

45. P115,500

46. P121,000

Question 15

1 Point

The following are examples of unearned revenue, except:

47. Attorney’s fees to be collected for attending a client’s hearing

48. Commission received in advance based on possible customers in a direct selling business.

49. Check received by a dental clinic contracted for cleaning the students’ teeth

50. Fees collected by a property assessor before the actual appraisal

Question 16

1 Point
(NOTE: THIS IS A CHAIN QUESTION CONSISTING OF 3 QUESTIONS. HENCE, IT WOULD BE BENEFICIAL FOR
YOU IF YOU TAKE NOTE OF YOUR ANSWER IN EVERY QUESTION.)

Happiness Company reported the following financial information in 2019:

Total cash collections on account during the year amounted to P357,040. The Company provides an
allowance for uncollectible accounts based on a certain percentage of the outstanding accounts
receivable.

QUESTION: How much is the uncollectible accounts expense to be reported in 2019?

51. P42,365

52. P0

53. P16,642

54. P59,007

Question 17

1 Point

On December 31, 2019, an adjusting entry was made for one-year prepaid rent paid last August 31,
2019. How much is the payment made by the Company if the year-end adjusting entry recorded was: Dr.
Rent Expense, P38,000 and Cr. Prepaid Rent, P38,000?

55. P38,000

56. P114,000

57. P91,200

58. P76,000

Question 18

1 Point

(NOTE: THIS IS A CHAIN QUESTION CONSISTING OF 3 QUESTIONS. HENCE, IT WOULD BE BENEFICIAL FOR
YOU IF YOU TAKE NOTE OF YOUR ANSWER IN EVERY QUESTION.)

Happiness Company reported the following financial information in 2019:

Total cash collections on account during the year amounted to P357,040. The Company provides an
allowance for uncollectible accounts based on a certain percentage of the outstanding accounts
receivable.

QUESTION: How much is the net realizable value of accounts receivable as of December 31, 2019?

59. P1,669,258

60. P1,685,900

61. P1,643,535
 62. P1,626,893

Question 19

1 Point

(NOTE: THIS IS A CHAIN QUESTION CONSISTING OF 3 QUESTIONS. HENCE, IT WOULD BE BENEFICIAL FOR
YOU IF YOU TAKE NOTE OF YOUR ANSWER IN EVERY QUESTION.)

Happiness Company reported the following financial information in 2019:

Total cash collections on account during the year amounted to P357,040. The Company provides an
allowance for uncollectible accounts based on a certain percentage of the outstanding accounts
receivable.

QUESTION: Happiness Company’s services rendered on account during the year amounted to
_________.

63. P832,540

64. P790,175

65. P475,500

66. P826,770

Question 20

1 Point

An adjusting entry for accrued revenue is required when ________________.

67. revenue is recorded as cash is received

68. none of these

69. cash is received after the revenue is earned

70. cash is received before the revenue is earned

Question 21

1 Point

Which is an incorrect adjusting entry?

71. Debit – Rent Collected in Advance and Credit – Rent Revenue using the income statement
approach

72. Debit – Prepaid Insurance and Credit – Insurance Expense using the income statement approach

73. Debit – Depreciation Expense and Credit – Accumulated Depreciation

74. Debit – Interest Expense and Credit – Interest Payable

Question 22
1 Point

An examination of insurance policies of XYZ Marketing is presented below:

Prepaid insurance was debited for the cost of each policy at the time of its purchase. Expired insurance
was correctly recorded at the end of 2018. How much is the balance of Prepaid Insurance at the end of
2019?

75. P47,821

76. P50,080

77. P48,256

78. P30,410

Question 23

1 Point

The adjusting entry at the end of the accounting period to reflect revenues earned but not yet collected
or recorded will ______________.

79. increase liabilities.

80. decrease revenue.

81. increase assets.

82. decrease net income for the current period.

Question 24

1 Point

All adjusting entries involve one entry to a real account and one entry to a nominal account.

83. True

84. False

Question 25

1 Point

Prepaid expense can be best described as an amount _______.

85. Not paid and not currently matched with revenue

86. Paid and not currently matched with revenue

87. Paid and currently matched with revenue

88. Not paid and currently matched with revenue

Question 26
1 Point

Joy Company obtained a loan from JPIA Bank and Trust Co. amounting to P420,000 on November 16,
2019. On the same date, the Company issued a 90-day, 10% promissory note to the bank. The
accountant must prepare an adjustment for the accrued interest on issued note in the amount of

89. P5,367

90. P5,250

91. P21,000

92. P5,133

Question 27

1 Point

The balance of accumulated depreciation account (before adjustment) is P150,000. The depreciation
expense for the year is P35,500. After posting the adjustment, total book value of the company’s fixed
assets amounted to P375,000. How much is the total costs of the fixed assets?

93. P560,500

94. P189,500

95. P489,500

96. P525,000

Question 28

1 Point

The balance of the Commission Income account includes a P35,000 commissions received in advance for
selling eight units of refrigerators. However, only three units were sold during the year. Of the P35,000,
how much will be shown in the liability section of the statement of financial position as of December 31,
2019?

97. P35,000

98. P4,375

99. P21,875

100. P13,125

Question 29

1 Point

An adjusting entry for revenue collected in advance which was initially credited to revenue when
collected will _______.
 101. decrease liabilities

102. increase revenues

103. increase assets

104. increase liabilities

Question 30

1 Point

An accrued income can be best described as an amount ________.

105. Not collected and not currently matched with expenses

106. Not collected and currently matched with expenses

107. Collected and currently matched with expenses

108. Collected and not currently matched with expenses

Question 31

1 Point

Upon purchase of insurance policy for a two-year period, the company recorded the transaction by
charging the whole policy amount to appropriate asset account. At year-end, the adjusting entry for the
said transaction will include ________________.

109. a credit to asset account for the unexpired portion

110. a debit to an expense account for the expired portion

111. a credit to an expense account for the unexpired portion

112. a debit to an asset account for the expired portion

The accountant leaves two entries off the adjustment column of the worksheet.

i.1,200 of service revenue was not accrued

ii.800 of unearned revenue had been earned

What should be the correct net income if the incorrect income was 35,000?

113. 37,000

114. 35,4000

115. 33,000
 116. 34,600

Question

At the end of February 2020, the first month of operations, the following selected data were taken from
the financial records of Orange Cab company

Profit 33, 750

Total assets 205, 710

Owner’s equity 89, 130

The adjusted total assets =196,360