Quiz Quiz 2 Single Entry and Cash Accrual Accounting PDF

3/17/2021 Quiz: Quiz #2 - Single Entry and Cash & Accrual Accounting
Quiz #2 - Single Entry and Cash & Accrual Accounting

Started: Mar 17 at 11:00
Quiz Instructions
1. The solutions must be in good accounting format
2. Solutions shall be uploaded in "Quiz 2 - solutions" under assignment tab within 30 minutes after the
end of the quiz.
3. No solutions, no credit.
Question 1 1.5 pts
The following were taken from the 2021 financial statements of AAA Company:
Accounts receivable: January 1 – P 216,000; December 31 – P 304,000.

Cash sales and Credit Sales – P 4,830,000.
Doubtful accounts expense – P 10,000.
What is the amount of cash collected from customers during 2021?
Question 2 1.5 pts
BBB Company is preparing a statement of cash flows for the year ended December
31, 2021. It has the following account balances:
December 31, 2020 December 31, 2021
https://dlsu.instructure.com/courses/56503/quizzes/116777/take 1/28
Machinery P 2,500,000 P 3,200,000
Accumulated Depreciation 1,020,000 1,200,000
Loss on sale of machinery 40,000
During 2021, BBB sold for P 260,000, a machine that cost P 400,000 and purchased
several items of machinery.
What is the depreciation expense for 2021?
Question 3 1.5 pts
Same with Problem 2
BBB Company is preparing a statement of cash flows for the year ended December
31, 2021. It has the following account balances:
Machinery P 2,500,000 P 3,200,000
Accumulated Depreciation 1,020,000 1,200,000
Loss on sale of machinery 40,000
During 2021, BBB sold for P 260,000, a machine that cost P 400,000 and purchased
several items of machinery.
What is cost of machinery purchased during 2021?
Question 4 1.5 pts
The property, plant and equipment and accumulated depreciation account balances
for CCC Corporation are as follows:
Property, Plant and Equipment:
December 31, 2020 – P 5,130,000

December 31, 2021 – P 4,700,000
Accumulated Depreciation:
December 31, 2020 – P 1,820,000

December 31, 2021 – P 1,700,000
Assuming all changes in the accounts resulted from the sale of an asset and from
depreciation expense of P 80,000.
What is the selling price of the asset if a P 30,000 net gain resulted from the
transaction?
Question 5 1.5 pts
The following information was taken from the 2021 operations of DDD Corporation:
Dividends revenue – P 149,000

Salaries payable: January 1 – P 32,000; December 31 – P 53,000
Dividends receivable: January 1 – P 13,000; December 31 – P 17,000
Salaries expense – P 840,000
What is the amount of dividend revenue received during the year?
Question 6 1.5 pts
The balance of accumulated profits account of EEE Company at December 31, 2020
was P 3,600,000 and at December 31, 2021 was P 2,910,000. Profit for 2021 was P
2,500,000. A bonus issue was declared and distributed which increased ordinary
share capital by P 1,000,000 and share premium by P 550,000. A cash dividend was
also declared and paid.
What is the amount of cash dividend declared and paid in 2021?
Question 7 1.5 pts
For the year ended December 31, 2021, FFF Company reports the following data:
Sales on account P 1,300,000
Cash sales 740,000
Decrease in accounts receivable 610,000
Increase in trade notes payable 125,000
Increase in accounts payable 72,000
Decrease in notes payable to bank 75,000
Increase in inventory 48,000
Costs of goods sold 975,000
What is the amount of cash collections from customers reported by FFF Company for
the year ended December 31, 2021?
Question 8 1.5 pts
Same with Problem 7
For the year ended December 31, 2021, FFF Company reports the following data:
Sales on account P 1,300,000
Cash sales 740,000
Decrease in accounts receivable 610,000
Increase in trade notes payable 125,000
Increase in accounts payable 72,000
Decrease in notes payable to bank 75,000
Increase in inventory 48,000
Costs of goods sold 975,000
What is the amount of cash payments to suppliers reported by FFF Company for the
year ended December 31, 2021?
Question 9 1.5 pts
The following additional information relates to GGG Company:
Dividends payable P 34,000 P 22,000
Equipment 925,000 780,000
Accumulated depreciation – equipment 283,000 300,000
Unappropriated accumulated profits 710,000 500,000
Appropriated accumulated profits 20,000 0

Cash 6,700 3,500
The following additional information relates to 2021:
Profit for the year, P 1,000,000.

Depreciation expense for the year, P 74,000.
During the year, equipment was overhauled at a cost of P 25,000. The amount
was debited to accumulated depreciation.
During the year, equipment with a carrying value of P 100,000 was sold. Loss of P
11,000 was realized on the sale.
How much was the equipment purchased during 2021?
Question 10 1.5 pts
Same with Problem 9
The following additional information relates to GGG Company:
Dividends payable P 34,000 P 22,000
Equipment 925,000 780,000
Accumulated depreciation – equipment 283,000 300,000
Unappropriated accumulated profits 710,000 500,000
Appropriated accumulated profits 20,000 0
Cash 6,700 3,500
The following additional information relates to 2021:
Profit for the year, P 1,000,000.

Depreciation expense for the year, P 74,000.
During the year, equipment was overhauled at a cost of P 25,000. The amount
was debited to accumulated depreciation.
During the year, equipment with a carrying value of P 100,000 was sold. Loss of P
11,000 was realized on the sale.
How much were the dividends paid during 2021?
Question 11 1.5 pts
The records of HHH Corp., which maintains records under cash basis, revealed total
payments made to suppliers of merchandise amounted to P 1,250,000 and total
collections received from customers amounted to P 3,500,000. Further investigation
revealed the following additional information:
Accounts payable, January 1, 2026 P 75,000
Accounts payable, December 31, 2026 108,000
Accounts receivable, January 1, 2026 P 200,000
Accounts receivable, December 31, 2026 160,000
Notes payable – trade, January 1, 2026 57,000

Notes payable – trade, December 31, 2026 42,000
Notes receivable, trade, January 1, 2026 70,000
Notes receivable, trade, December 31, 2026 124,000
Advance collections from customers, January 1 250,000
Advance collections from customers, December 31 180,000
Advance payments to suppliers, January 1 96,000
Advance payments to suppliers, December 31 107,000
Merchandise inventories, January 1, 2026 189,000
Merchandise inventories, December 31, 2026 243,000
Purchase discounts 45,000
Sales discounts taken by customers 50,000
Purchase returns before any payments were made 55,000
Purchase returns after payments were made 25,000
Sales returns before collections were made 65,000
Sales returns after collections were made 15,000
Write-off of worthless accounts receivable 78,000
Cash recoveries from accounts previously written off 80,000
How much is the cost of goods sold for the year?
Question 12 1.5 pts
Same with Problem 11
The records of HHH Corp., which maintains records under cash basis, revealed total
payments made to suppliers of merchandise amounted to P 1,250,000 and total
collections received from customers amounted to P 3,500,000. Further investigation
revealed the following additional information:
Accounts payable, January 1, 2026 P 75,000
Accounts payable, December 31, 2026 108,000
Accounts receivable, January 1, 2026 P 200,000
Accounts receivable, December 31, 2026 160,000
Notes payable – trade, January 1, 2026 57,000
Notes payable – trade, December 31, 2026 42,000
Notes receivable, trade, January 1, 2026 70,000
Notes receivable, trade, December 31, 2026 124,000
Advance collections from customers, January 1 250,000
Advance collections from customers, December 31 180,000
Advance payments to suppliers, January 1 96,000

Advance payments to suppliers, December 31 107,000
Merchandise inventories, January 1, 2026 189,000
Merchandise inventories, December 31, 2026 243,000
Purchase discounts 45,000
Sales discounts taken by customers 50,000
Purchase returns before any payments were made 55,000
Purchase returns after payments were made 25,000
Sales returns before collections were made 65,000
Sales returns after collections were made 15,000
Write-off of worthless accounts receivable 78,000
Cash recoveries from accounts previously written off 80,000
How much is the gross profit for the year?
Question 13 1.5 pts
III company’s accountant prepared the following income statement at the end of the
company’s first year of operations:
III Company
Cash Basis Income Statement
For the Year Ended December 31, 2020
Sales
P2,016,000
Selling and administrative expenses:
Salaries expense P624,000
Rent expense 360,000
Utilities expense 232,000
Equipment 240,000
Commission expense 302,400
Insurance expense 48,000
Interest expense
24,000 1,830,400
Net income
P 185,600
You have been asked to prepare an income statement on the accrual basis. The
following information is given to you to assist in the preparation:
1. Amounts due from customers at year-end were P224,000. Of this amount,

P24,000 will probably not be collected.
2. Salaries of P88,000 for December 2020 were paid on January 5, 2021.
3. III rents its building for P24,000 a month, payable quarterly in advance. The
contract was signed on January 1, 2020.
4. The bill for December’s utility costs of P21,600 was paid January 10, 2021.
5. Equipment of P240,000 was purchased on January 1, 2020. The expected life is 5
years, no salvage value. Assume straight-line depreciation.
6. Commissions of 15% of sales are paid on the same day cash is received from
customers. It is the Company’s policy to not give commissions for those sales
whose collection are doubtful.
7. A 1-year insurance policy was issued in company assets on July 1, 2020.

Premiums are paid annually in advance.
8. III borrowed P400,000 for one year on May 1, 2020. Interest payments based on
an annual rate of 12% are made quarterly, beginning with the first payment on
August 1, 2020.
How much is the net sales under the accrual basis of accounting?
Question 14 1.5 pts
III company’s accountant prepared the following income statement at the end of the
company’s first year of operations:
III Company
Cash Basis Income Statement
For the Year Ended December 31, 2020
Sales
P2,016,000
Selling and administrative expenses:
Salaries expense P624,000
Rent expense 360,000
Utilities expense 232,000
Equipment 240,000
Commission expense 302,400
Insurance expense 48,000
Interest expense
24,000 1,830,400
Net income
P 185,600
You have been asked to prepare an income statement on the accrual basis. The
following information is given to you to assist in the preparation:
1. Amounts due from customers at year-end were P224,000. Of this amount,

P24,000 will probably not be collected.
2. Salaries of P88,000 for December 2020 were paid on January 5, 2021.
3. III rents its building for P24,000 a month, payable quarterly in advance. The
contract was signed on January 1, 2020.
4. The bill for December’s utility costs of P21,600 was paid January 10, 2021.
5. Equipment of P240,000 was purchased on January 1, 2020. The expected life is 5
years, no salvage value. Assume straight-line depreciation.
6. Commissions of 15% of sales are paid on the same day cash is received from
customers. It is the Company’s policy to not give commissions for those sales
whose collection are doubtful.
7. A 1-year insurance policy was issued in company assets on July 1, 2020.
Premiums are paid annually in advance.
8. III borrowed P400,000 for one year on May 1, 2020. Interest payments based on
an annual rate of 12% are made quarterly, beginning with the first payment on
August 1, 2020.
Net income before income tax under the accrual basis of accounting is?
Question 15 1.5 pts
JJJ Company prepared the following comparative statement of financial position on

December 31, 2027:
ASSETS December 31 January 1
Cash P 750,000 P 330,000
Notes receivable 210,000 200,000
Accounts receivable 950,000 740,000
Inventory 1,500,000 1,600,000
Prepaid expenses 100,000 120,000
Investment (at cost) 100,000 400,000
Equipment (net) 1,200,000 1,000,000
TOTAL P 4,810,000 P 4,390,000
LIABILITIES AND EQUITY
Notes payable P 580,000 P 750,000
Accounts payable 750,000 600,000
Interest payable 30,000 0
Accrued expenses 50,000 40,000
Bonds payable 0 500,000
Share capital, P 100 par 1,300,000 1,000,000

Share premium 1,500,000 1,000,000
Retained earnings 600,000 500,000
TOTAL P 4,810,000 P 4,390,000
Cash Receipts Cash Disbursements
Issue of share capital P 800,000 Accounts payable P 1,100,000
Accounts receivable ??? Notes payable 1,000,000
Notes receivable 1,450,000 Expenses 790,000
Notes receivable discounted* 190,000 Dividends 400,000
Promissory notes issued to

300,000 Equipment 280,000
bank**
Sale of investment 250,000 Bonds payable 500,000
*Face value – P 200,000
** Issued on March 1, 2027 at 12%
How much is the collection of accounts receivable?
Question 16 1.5 pts

December 31, 2027:
Cash P 750,000 P 330,000
Inventory 1,500,000 1,600,000
Equipment (net) 1,200,000 1,000,000
TOTAL P 4,810,000 P 4,390,000
Share premium 1,500,000 1,000,000
TOTAL P 4,810,000 P 4,390,000

300,000 Equipment 280,000
bank**
How much is the net sales under the accrual basis of accounting?
Question 17 1.5 pts

December 31, 2027:
Cash P 750,000 P 330,000
Inventory 1,500,000 1,600,000
Equipment (net) 1,200,000 1,000,000
TOTAL P 4,810,000 P 4,390,000
Share premium 1,500,000 1,000,000
TOTAL P 4,810,000 P 4,390,000

300,000 Equipment 280,000
bank**
Determine the net income using the single-entry method.
Question 18 1 pts
Net income is lower under the cash basis than accrual basis of accounting.
True
False
Question 19 1 pts
Net income is higher under the cash basis than accrual basis of accounting.
True
False
Question 20 1 pts
Cash basis of accounting can be used in preparing financial statements for external
users.
True
False
Question 21 1 pts
The double entry accounting system means each transaction is recorded with two
journal entries.
True
False
Question 22 1 pts
When an item of expense is paid and recorded in advance, it is normally called

accrued expenses.
True
False
Question 23 1 pts
If ending balance of accounts receivable exceeds the beginning balance of accounts

receivable, cash collections during the year are less than the amount of revenue
earned.
True
False
Question 24 1 pts
The cash basis is less useful in predicting the timing and amounts of future cash
flows.
True
False
Question 25 1 pts
Under the cash basis of accounting, accounts receivable would appear in the
statement of financial position.
True
False
Question 26 1 pts
The entry to record a cash sale under a single-entry bookkeeping system is debit
cash and credit sale.
True
False
Question 27 1 pts
Incomplete accounting records using only a cash book is a characteristic of single-

entry bookkeeping system.
True
False
Question 28 1 pts
When converting from cash basis to accrual basis of accounting, which of the
following adjustments should be made to cash collections from customers to
determine accrual basis revenue?
Subtract ending accounts receivable
Subtract beginning unearned sales revenue
Add ending accounts receivable
Add cash sales
Question 29 1 pts
Under the cash basis of accounting, revenue is recorded
When earned and realized
When earned and realizable
When earned
When realized
Question 30 1 pts
Under the accrual basis of accounting, cash receipts and disbursements may
Precede, coincide with, or follow the period in which revenue and expenses are recognized
Only coincide with the period in which revenue and expenses are recognized
Precede or coincide with but never follow the period in which revenue and expenses are
recognized
Coincide with or follow but never precede the period in which revenue and expenses are
recognized
Question 31 1 pts
Compared to cash basis net income for the current year, an entity’s accrual basis net
income is increased when it
Sold used equipment for cash at a gain in the current year.
Had a lower accrued expense at the end of the current year than at the beginning of the year.
Wrote off accounts receivable than it reported as uncollectible accounts expense in the
current year.
Declared a cash dividend in the prior year that it paid in the current year.
Question 32 1 pts
Compared to the accrual basis of accounting, the cash basis understates income by
the net decrease during the accounting period of
Accrued expenses but not of accounts receivable
Neither accounts receivable nor of accrued expenses
Both accounts receivable and accrued expenses
Accounts receivable but not of accrued expenses
Question 33 1 pts
The premium on a three-year insurance policy expiring on December 31, 2027 was
paid in total on January 1, 2025. If the entity has six-month operating cycle, then on
December 31, 2025, the prepaid insurance reported as current asset would be for
30 months
24 months
12 months
18 months
Question 34 1 pts
The premium on a three-year insurance policy expiring on December 31, 2027 was
paid in total on January 1, 2025. The original payment was initially debited to a
prepaid asset account. The appropriate adjusting entry had been recorded on
December 31, 2025. The balance in the prepaid asset account on December 31,
2025 should be
The same as the original payment
Zero
Higher than if the original payment had been debited initially to an expense account
The same as it would have been if the original payment had been debited initially to an
expense account
Question 35 1 pts
The inventory and accounts payable balances increased. Should these increases be
added to or deducted from cash payments to suppliers to arrive at cost of goods sold
for the current year?
Inventory – added; Accounts payable – deducted
Inventory – deducted; Accounts payable – deducted
Inventory – added; Accounts payable – added
Inventory – deducted; Accounts payable – added
Question 36 1 pts
An entity wants to convert the financial statements from accrual basis to cash basis.
Both supplied inventory and office salaries payable increased. To obtain cash basis
net income, how should these increases be added to or deducted from accrual basis
net income?
Supplies inventory – added; Office salaries payable – deducted
Supplies inventory – deducted; Office salaries payable – added
Supplies inventory – added; Office salaries payable – added
Supplies inventory – deducted; Office salaries payable – deducted
Question 37 1 pts
When an item of revenue has been earned but yet to be collected, it is normally
called
Unearned revenue
Accrued revenue
Adjusted revenue
Estimated revenue
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3/17/2021 Quiz: Quiz #2 - Single Entry and Cash & Accrual Accounting

Quiz #2 - Single Entry and Cash & Accrual Accounting

Question 1 1.5 pts

Accounts receivable: January 1 – P 216,000; December 31 – P 304,000.

What is the amount of cash collected from customers during 2021?

Question 2 1.5 pts

December 31, 2020 December 31, 2021

Machinery P 2,500,000 P 3,200,000

Accumulated Depreciation 1,020,000 1,200,000

Loss on sale of machinery 40,000

What is the depreciation expense for 2021?

Question 3 1.5 pts

Same with Problem 2

December 31, 2020 December 31, 2021

Machinery P 2,500,000 P 3,200,000

Accumulated Depreciation 1,020,000 1,200,000

Loss on sale of machinery 40,000

What is cost of machinery purchased during 2021?

Question 4 1.5 pts

Property, Plant and Equipment:

December 31, 2020 – P 5,130,000

December 31, 2020 – P 1,820,000

Question 5 1.5 pts

Dividends revenue – P 149,000

What is the amount of dividend revenue received during the year?

Question 6 1.5 pts

What is the amount of cash dividend declared and paid in 2021?

Question 7 1.5 pts

Sales on account P 1,300,000

Cash sales 740,000

Decrease in accounts receivable 610,000

Increase in trade notes payable 125,000

Increase in accounts payable 72,000

Decrease in notes payable to bank 75,000

Increase in inventory 48,000

Costs of goods sold 975,000

Question 8 1.5 pts

Same with Problem 7

Sales on account P 1,300,000

Cash sales 740,000

Decrease in accounts receivable 610,000

Increase in trade notes payable 125,000

Increase in accounts payable 72,000

Decrease in notes payable to bank 75,000

Increase in inventory 48,000

Costs of goods sold 975,000

Question 9 1.5 pts

The following additional information relates to GGG Company:

December 31, 2021 December 31, 20

Dividends payable P 34,000 P 22,000

Equipment 925,000 780,000

Accumulated depreciation – equipment 283,000 300,000

Unappropriated accumulated profits 710,000 500,000

Appropriated accumulated profits 20,000 0

Cash 6,700 3,500

The following additional information relates to 2021:

Profit for the year, P 1,000,000.