QUALIFYING EXAM REVIEWER

Cyreniel Joy Claros

Bachelor of Science in Accountancy
S.Y. 2023-2024
1.) Which of the following items has no effect on owner’s equity?

a. Expense c. Purchase of land

b. Owner’s Withdrawal d. Revenue

2.) The asset created by a business when it makes a sale on account is

termed

a. Accounts payable c. Prepaid Expense

b. Accounts receivable d. Unearned Revenue

3.) What is the law regulating the practice of accountancy in the Philippines?

a. R.A. No. 9289 c. R.A. No. 9928

b. R.A. No. 9198 d. R.A. No. 9298

4.) All of the following describe accounting, except

a. A service activity
b. An information system
c. An exact science rather than an art
d. A universal language of business

5.) The overall objective of accounting is

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

6.) These users require information on risk and return on

investment a. Creditors
b. Investors
c. Lenders
d. Customers

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

8.) Using accrual accounting, revenue is recorded and reported only

a. If cash is received after the services are rendered

b. when cash is received at the time services are
rendered
c. when the services are rendered without regard to when cash is received
d. when cash is received without regard to when the services are
rendered

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
10.) Which of the following entries records the receipt of a utility bill from the water
company?

a. debit Accounts Payable, credit Cash

b. debit Accounts Payable, credit Utilities Payable
c. debit Utilities Expense, credit Accounts Payable
d. debit Utilities Payable, credit Accounts Receivable

11.) The process of posting is mostly associated with

a. Financial Statements c. Source documents

b. General Ledger d. Worksheet

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

13.) As of December 31, Ravenclaw Merchandising Company’s records show the

following amounts:
Purchases P 1,250,000
Purchase discount 25, 000
Purchase returns 140,000

If Ravenclaw Company’s beginning inventory amounted to P 375,000, the Company’s

total Cost of Goods Available for sale is_

a. P 710,000
b. P 1,085,000
c. P 1,460,000
d. P 1,250,000

14.) A post-closing trial balance is prepared before

a. Preparing financial statements

b. Reversing the accounts
c. Adjusting and closing the books
d. Preparing a worksheet
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

16.) Treasury stock is classified as a(n)

a. stockholder’s equity account

b. contra-asset
c. asset
d. contra-stockholder’s equity account

17.) Liquidation of partnership usually means that

a. Assets are sold

b. Liabilities are paid
c. Remaining Cash is distributed to the partners
d. All of the above

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.

a. P 60,000 to Erica and P60,000 to Mica

b. P 40,000 to Erica and P80,000 to Mica
c. P 80,000 to Erica and P40,000 to Mica
d. P 100,000 to Erica and P20,000 to Mica

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.

a. P 60,000 to Erica and P60,000 to Mica

b. P 40,000 to Erica and P80,000 to Mica
c. P 80,000 to Erica and P40,000 to Mica
d. P 100,000 to Erica and P20,000 to Mica

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

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

22.) Blossom, Bubbles and Buttercup formed a partnership to which Blossom

contributed a parcel of land with an acquisition cost of P 25,000. Bubbles contributed
P
50,000 cash and Buttercup P 75,000 cash. The land has a fair value of P 50,000 at
the formation date. The total capital credit of the partnership should be

a. P 150,000 c. P 175,000
b. P 125,000 d. P 145,000

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
24.) This allowance for profit distribution is granted only if there is

profit a. Bonus c. Salary

b. Interest d. All of the above

Use the following information for questions 25 and 26:

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

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

27.) If the amount invested by the incoming partner is equal to the interest he
acquires, then there is

a. No bonus nor asset revaluation

b. Positive asset revaluation
c. Bonus to the old partners
D. Bonus to the new partners
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
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

Use the following data for number 30-32

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)

Premium-Ordinary Share Capital P 17,000

Treasury Stock-Ordinary Share Capital

(2,000 shares at P6 per share)

Preference Share Capital, 5%, P12 par

(16,000 shares authorized; 5,000 shares issued)

Premium-Preference Share Capital P 6,000

Preference Share Capital-Subscribed (2,000 shares)

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

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

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

33.) The balance of the income summary account of a corporation is transferred

to which of the following accounts?

a. Retained Earnings
b. Share Capital
c. Premium on Sale of Share Capital
d. Cash 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

35.) Characteristics of a corporation include:

a. Shareholders who are mutual agents

 b. Direct management by the shareholders (owners)
c. its inability to own property
d. shareholders who have limited ability

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:

a. Common Stock c. Retained Earnings

b. Paid-In Capital in Excess of Par d. Treasury Stock

37.) Unlimited liability of the partners in a limited partnership pertains to

a. All the partners

b, Limited partners only
c. General partners only
d. The entities that owes the partnership

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?

a. The new partner

b. The old and new partners in their new profit and loss ratio
c. The old partners in their new profit and loss ratio
d. The old partners in their old profit and loss ratio

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

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

Accounting for Payrol

l6.4.1Definition of Payroll TermsPayroll–
pertains to both:a.Salaries–are paid managerial, administrative and sales
personnelb.
Wages–are based on a rate per hour or on a piecework basis paidto sales
assistants, factory employees and manual laborers
Bonus–agreements for management personnel and employees which maybe based
on such factors as increased sales or profit-may be paid in cash and/or by granting
executives and employees toacquire company shares at favorable prices called share
option plans
6.4.2Calculation of Net Pay or Take Home Pay
Net Pay–determined by subtracting payroll deductions from gross earnings–is
total remuneration earned by an employee
6.4.3Payment with Deductions (SSS, Philhealth, PAG-Ibig, Withholding Tax,Advances
to Employees)
6.4.4Subsequent Remittance to Government Agencies of Amount Withheld
fromSalaries and Corresponding Employer’s Contribution
6.5Accounting for Promissory Notes
promissory Note–is a written promise to pay a specified amount of money on
demandor at a definite time.-may be used (a) when individuals and businesses lend or
borrow money, (b) whenthe amount of the transaction and the credit period exceed
normal limits or (c)settlement of accounts receivable-may be transferred to another
party by endorsement
Issuer–party making the promise to
payPayee–party to whom payment is madeBasic issues in accounting for notes
are:a.recognizing notes
b.valuing notesc.selling notesHonored Note–paid in full at its maturity
dateDishonored Note–not paid in full at maturity and is no longer negotiable
6.5.1Determination of Maturity Date, Interest, Maturity Value, Discounts andCash
Proceeds6.5.2Recording of Transactions Involving Promissory Notes
6.5.2.1Receipts and Issuance
 Temporary or Nominal Accounts–are the accounts that are closed which relate to
onlygiven accounting period and they include all income statement and drawing account

FUNDAMENTALS OF ACCOUNTING AND BUSINESS MANAGEMENT

PURCHASES
-Used to report acquisitions of merchandise for sale.
-Is used to describe the products purchased and intended for sale.

FREIGHT OUT
-Fee paid regarding the transportation to the buyer of the inventory.

SALES
-Used by trading operations, is recognized when goads are delivered.

PURCHASING ACTIVITY
-Contra - purchase
-PURCHASE RETURNS account title used when some of the merchandise are
subsequently returned
.-PURCHASE ALLOWANCES a contra – account which describe reduction on the
acquisition price due to reason similar to purchase return
.- PURCHASE DISCOUNT a cash discount usually used by the seller in order to
encourage buyers to pay earlier purchases made on account.

DRAWING ACCOUNT
-It is used to record withdrawals of the owner.
SALES ALLOWANCES
-Is a contra– sales account used to report the selling price of goods returned by
customers

.
FREIGHT IN
-Refers to shipping cost necessary to bring inventory purchased from the seller to
thepremises of the company.
MERCHANDISE INVENTORY
-It is determined by actual physical count of merchandise owned.

STATEMENT OF CHANGES IN EQUITY

-Is prepared to help the readers understand the transactions that affected the balances
ofthe equity account.

PURCHASE RETURNS
-Is a contra – purchase account that reports the costs of goods returned to suppliers

COST OF GOOD SOLD

Merchandise Inventory, Jan 1 xxx
Add: Purchases xxx
Freight – in xxx
Total xxx
Less: Purchase Returns and Allowances (xxx)
Purchase Discount (xxx)
Total Goods Available for Sale xxx
Less: Merchandise Inventory, Dec 31 (xxx)
Cost of Good Sold xxx

SHIPPING AND FREIGHT PAYMENT ARRANGEMENTS

FOBmeans Freight On Board
FOB Destinantion
• Seller ang owner ng goods na dinedeliver
• Seller ang magbabayad• Freight Out (Pag ikaw ang Seller)

FOB Shipping Poin

• Buyer ang owner ng goods na dinedeliver
• Buyer ang magbabayad
• Freight In (Pag ikaw ang buyer)

Freight Collect
• Binayaran na ng BUYER ang freight cost

Freight Prepaid
• Binayaran na ng SELLER ang freight cost

FOB Destination, Freight Prepaid

• Seller ang magbabayad dapat, seller naman ang nagbayad
Seller’s Entry
freight Out
Cash

FOB Destination, Freight Collect

• Seller ang dapat magbabayad, Buyer ang nagbayad
Seller’s Entry
Freight Out
Accounts Payable
Buyer’s Entry
Accounts Receivable
Cash

FOB Shipping Point, Freight Collect

• Buyer ang dapat magbayad, buyer naman ang nagbayad
Buyer’s Entry
Freight In
Cash
FOB Shippping Point, Freight Prepaid
• Buyer ang dapat magbayad, Seller ang nagbayad
Seller’s Entry
Accounts Receivable
Cash

Buyer’s Entry
Freight In
Accounts Payable
output Tax – Input Tax = VAT Payable
*Kapag mas Malaki ang Output Tax kesa Input Tax,VAT Payable yun

Input Tax – Output Tax = Deferred Tax

Kapag mas Malaki ang Input Tax kesa Output Tax,Deferred Tax yun which is a current
asset

. Gross profit will result if:

A. operating expenses are less than net income.
B. sales revenues are greater than operating expenses.
C. sales revenues are greater than cost of goods sold.
D. operating expenses are greater than cost of goods sold.

Under a perpetual inventory system, when goods are purchased for resale by a company:
A. purchases on account are debited to Inventory.
B. Purchases on account are debited to Purchases.
C. Purchase returns are debited to Purchase Returns and Allowances.
D. freight costs are debited to Freight-Out.
The sales accounts that normally have a debit balance are:
A. Sales Discounts.
B. Sales Returns and Allowances.
C. Both (A) and (B).
D. Neither (A) nor (B).

4. A credit sale of P750 is made on June 13, terms 2/10, net/30. A return of P50 is granted
on June 16. The amount received as payment in full on June 23 is:
A. P700.
B. P686.
C. P685.
D. P650.
5. Which of the following accounts will normally appear in the ledger of a merchandising
company that uses a perpetual inventory system?
A. Purchases.
B. Freight-In.
C. Cost of Goods Sold.
D. Purchase Discounts.

6. To record the sale of goods for cash in a perpetual inventory system:

A. only one journal entry is necessary to record cost of goods sold and reduction of
inventory.
B. only one journal entry is necessary to record the receipt of cash and the sales revenue.
C. two journal entries are necessary: one to record the receipt of cash and sales revenue,
and one to record the cost of goods sold and reduction of inventory.
D. two journal entries are necessary: one to record the receipt of cash and reduction of
inventory, and one to record the cost of goods sold and sales revenue.

7. The steps in the accounting cycle for a merchandising company are the same as those
in a service company except:
A. an additional adjusting journal entry for inventory may be needed in a merchandising
company.
B. closing journal entries are not required for a merchandising company.
C. a post-closing trial balance is not required for a merchandising company.
D. a multiple-step income statement is required for a merchandising company.

8. The multiple-step income statement for a merchandising company shows each of the
following features except:
A. gross profit.
B. cost of goods sold.
C. a sales section.
D. an investing activities section.

9. If sales revenues are P400,000, cost of goods sold is P310,000, and operating
expenses are p60,000, the gross profit is:
A. P30,000.
B. P90,000.
C. P340,000.
D. P400,000.
10. A single-step income statement:
A. reports gross profit.
B. does not report cost of goods sold.
C. reports sales revenue and “Other revenues and gains” in the revenues section of the
income statement.
D. reports operating income separately.