BASIC ACCOUNTING

Preliminary Examination
School Year 2019-2020

Name: ___________________________________ Course & Section:_____________ Score:___________

Test I. Multiple Choice.

Instruction: Select the best answer. Write your answer in capital letter only. Any form of erasures will make your
answer wrong.

1. Accounting is the art of recording, classifying and summarizing, in significant manner and in terms of
money, transactions and events which are, in part, at least of financial character and interpreting the
result thereof."
a. AICPA b. AAA c. FRSC
2. Father of Modern Accounting.
a. Luca Pacioli b. Isaac Newton c. Mesopotamia
3. It is used internally by management in order to make fully informed business decisions.
a. Cost Accounting b. Financial Accounting c. Government Accounting
4. Example of internal user.
a. Manager b. Suppliers c. Creditors
5. They use the accounting information for analyzing the viability and profitability of their investments.
a. Owners b. Creditors c. Lenders
6. Advantage of corporation.
a. Limited liability b. Less business requirements c. Easily transmit information
7. Firms offer professional skills, expertise, advice, and other similar products.
a. Service Activity b. Merchandising Activity c. Manufacturing Activity
8. Limited liability is one of the advantages of ?
a. Corporation b. Limited Partnership c. General Partnership
9. It demands a high level of verification before making any legal claims about profits as it also involves the
proper determination of losses and expenditures that can occur.
a. Conservatism b. Faithful representation c. Nuetral
10. A foundation for the preparation of financial statements.
a. Going concern assumption b. Periodicity concept c. Monetary Concept
11. What is the correct accounting equation?
a. Liabilities= Assets-Equity b. Equity- Liabilities= Assets c. Liabilities- Equity+ Assets= 0
12. A borrowed P20,000 to B for A has something to be used in his business. What is the affected
account?
a. Cash b. Accounts payable c. Accounts receivable
13. The total income produced by a given source.
a. Revenue b. Interest c. Principal
14. Decrease in net income that is outside the normal operations of the business.
a. Loss b. Expense c. Force majuere
15. A legally binding obligation payable to another entity.
a. Liability b. Negotiable instrument c. Promissory note
16. It is an easily traded investment that is readily converted into cash, usually because there is a
strong secondary market.
a. Marketable security b. Prepaid expense c. Cash and cash equivalent

17. It is an expenditure that is paid for in one accounting period, but for which the underlying asset will
not be entirely consumed until a future period.
a. Prepaid Expense b. Inconsumable goods c. Unearned revenue
18. An accrued liability is an obligation that an entity has assumed, usually in the absence of a
confirming document, such as a supplier invoice.
a. Accrued liability b. Notes payable c. Invoice note
 19. Cost of goods sold is the accumulated total of all costs used to create a product or service, which
has been sold.
a. Cost of Goods Sold b. Conversion cost c. Period cost
20. It refers to the cost of consumables used during a reporting period.
a. Supplies expense b. Water expense c. Miscellaneous expense
21. It is an index of all the financial accounts in the general ledger of a company.
a. Chart of accounts b. Account name c. Account number
22. The name applied to an account that is used by accountants and managers to refer to it.
a. Account name b. Account number c. Chart of accounts
23. The chart is usually sorted in order.
a. Account number b. Account name c. Liquidity
24. It is of some importance to initially create a chart of accounts that is unlikely to change for several
years, so that you can compare the results in the same account over a multi -year period.
a. Consistency b. Comparability c. Lack down
25. Do not allow subsidiaries to change the standard chart of accounts without a very good reason,
since having many versions in use makes it more difficult to consolidate the results of the busi ness.
a. Lack down b. Size Reduction c. Consistency
Test II. Enumeration
Instruction: List the needed data.
26-29 Qualitative Characteristics of Financial Statements
30- Basic Accounting Equation
31-35- Branches of Accounting
36-40- Financial Statements
Test III. Classification of Accounts
Instruction: Write the normal side of each account.
41. Unearned Revenue
42. Bank Overdraft
43. Prepaid Expense
44. Withdrawals
45. Accumulated Depreciation

Test IV. Transaction Analysis

Instruction: Journalize the following transactions and answer what is being asked.

46. Marianne Bolo invested P100,000 for her business named Bulaluhan ni Bolo.
47. The owner purchased utensils amounting to P10,000 from Venice Balolong Entreprise.
48. She also purchased furniture and fixtures amounting to 25,000 from Danielle Fernandez Enterprise.
49. Aside from those, she paid in advanced for the rent amounting to P3,000.
50. From above transactions (46-49), how much is the total assets?

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