CUP 1 (BASIC ACCOUNTING)

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.) After all of the account balances have been extended to the Balance Sheet columns of the work
sheet, the totals of the Debit and Credit columns are P39,750 and P21,750, respectively. What is the
amount of net income or net loss for the period?
a. P18,000 net income
b. P18,000 net loss
c. P39,750 net income
d. P21,750 net income
18.) After all of the account balances have been extended to the Balance Sheet columns of the work
sheet, the totals of the Debit and Credit columns are P30,750 and P69,750, respectively. What is the
amount of net income or net loss for the period?
a. P39,000 net income
b. P39,000 net loss
c. P30,750 net income
d. P69,750 net income
19.) After all of the account balances have been extended to the Income Statement columns of the work
sheet, the totals of the debit and credit columns are P89,900 and P67,600, respectively. What is the
amount of the net income or net loss for the period?
a. P22,300 net income
b. P22,300 net loss
c. P89,900 net income
d. P67,600 net loss
20.) After all of the account balances have been extended to the Income Statement columns of the work
sheet, the totals of the debit and credit columns are P92,300 and P67,600, respectively. What is the
amount of the net income or net loss for the period?
a. P24,700 net income
b. P24,700 net loss
c. P92,300 net income
d. P92,300 net loss
21.) Which of the following is reported on the Retained Earnings Statement for the current year?
a. Accumulated depreciation
b. Stockholders' additional investment made during the current period
c. Rent expense
d. Wages payable
22.) Adjusting entries are dated in the journal as of:
a. the date they are actually journalized.
b. the last day of the accounting period.
c. the first day of the accounting period.
d. the middle of the accounting period.
23.) Adjusting entries:
a. need not be journalized since they appear on the work sheet and the ledger accounts need
not be adjusted.
b. need not be posted if the financial statements are prepared from the work sheet
c. are not needed if reversing entries are prepared
d. must be journalized and posted
24.) Closing entries:
a. need not be journalized if reversing entries are prepared
b. need not be posted if the financial statements are prepared from the work sheet
c. are not needed if adjusting entries are prepared
d. must be journalized and posted
25.) Closing entries are dated in the journal as of:
a. the date they are actually journalized, although they are generally prepared after the end of
the accounting period
b. the last day of the accounting period, although they are actually journalized after the end of
the accounting period
c. the first day of the accounting period, although they are actually journalized after the end of
the accounting period
d. the first day of the subsequent accounting period
26.) Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
a. Supplies Expense
b. Accumulated Depreciation
c. Prepaid Expenses
d. Unearned revenues
27.) Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?
a. Salaries Expense
b. Fees Earned
c. Unearned Rent
d. Depreciation Expense
28.) Which of the following accounts will be closed to Retained Earnings at the end of the fiscal year?
a. Rent Expense
b. Fees Earned
c. Income Summary
d. Depreciation Expense
29.) Which of the following accounts ordinarily appears in the post-closing trial balance?
a. Dividends
b. Supplies Expense
c. Fees Earned
d. Unearned Rent
30.) The entry to close the appropriate insurance account at the end of the accounting period is debit:
a. Income Summary; credit Prepaid Insurance
b. Prepaid Insurance; credit Income Summary
c. Insurance Expense; credit Income Summary
d. Income Summary; credit Insurance Expense