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Test 1 MULTIPLE CHOICE.

1. Only statement 1 is correct C. Both statements are correct
2. Only statement 2 is correct D. Both statements are incorrect

1.Statement 1: A partner usually retains title to assets contributed to a partnership, so that certain assets may be identified as belonging to a given partner.

Statement 2: There can never be a partnership without contribution of money, property or industry.

2.Statement 1: The salary, interest and stated ratio method of allocation cannot be applied when loss has occurred.

Statement 2: Interest on loans from partners is recognized as partnership income.

3.Statement 1: The president of a corporation must be a director of the corporation.

Statement 2: No par value shares have a minimum stated value of P5 per share.

4.Statement 1: Treasury shares are shares that are issued but not outstanding.

Statement 2: Preference shares has preference over ordinary shares relative to dividends and voting rights.

5.Statement 1: A share dividend is pro rata distribution of cash to a corporation's shareholders.

Statement 2: The retained earnings balance of a corporation is part of its share capital.

6.Statement 1: Consistency means that similar items should receive similar accounting treatment.

Statement 2: Identifying as an accounting process is the recognition or non-recognition of business activities as accountable events.

7.Statement 1: Not all financial transactions can be analyzed in terms of the basic accounting model.

Statement 2: According to the balance sheet equation, the assets of a business entity must always equal the liabilities and owner's equity.

8.Statement 1: An expense may be recognized and recorded although no cash outlay has been made.

Statement 2: A transposition error means a posting of a journal entry to the wrong ledger account.

9.Statement 1: An asset's book value represents the true market value of the asset.

Statement 2: Recording incurred but unpaid expenses is an example of an accrual.

10.Statement 1: Financial statements cannot be prepared correctly until all the accounts have been adjusted.

Statement 2: The statement of changes in equity discloses the withdrawal during the period.

11.Statement 1: The chart of accounts for a merchandising entity differs from that of a service entity.

Statement 2; Ending merchandise inventory is included in the calculation of cost of goods available for sale.

12.Statement 1: The purchase journal is designed to record only the purchase of merchandise on account.

Statement 2: Sales on account of office equipment used in the business would be recorded in the sales journal.

TEST II - Theory. Multiple Choice. Write the Capital Letter of your answer choice.

1. The financial statements should be stated in terms of a common financial denominator.

a.Accrual B. Going concern C. Time period D. Stable monetary unit

2. Revenue from sale of goods in the normal course of business is reported as part of the

earning in the period when the:

a.sale is made C. products are manufactured

b. cash is collected D. sale forecasts are completed

3. Which of the following transactions increases both assets and owner's equity?

a. Payment from a credit customer C. Owner withdrawal of cash

b. Rendered services; payment not yet received D. Received a bank loan

4. Accrued revenues

a. decrease assets B. decrease liabilities C. increase assets D. increase liabilities

5. Which two steps in the accounting cycle are aided by the preparation of a worksheet?

1. Adjusting the accounts and preparing financial statements
2. Analyze source documents and preparing financial statements
3. Posting journal entries and adjusting the accounts
4. Journalizing transactions and closing the accounts

6. Which of the following goods would not be included in merchandise inventory for a

purchasing entity?

1. Good in transit shipped FOB shipping point
2. Goods on hand in the showroom

C. Goods ordered and received from the supplier

D. Goods in transit shipped FOB destination

7. If a firm uses special journal, in which journal would the sale of merchandise for cash be

recorded?

1. Cash disbursement journal C. General journal
2. Cash receipts journal D. Sales Journal

8. It is the supreme authority in matters of management of the regular and business affairs

of a corporation.

1. Majority stockholder B. minority shareholders C. Board of directors D. answer not given

9. The maximum number of ordinary shares that may be issued according to the

corporation's charter is referred to as

1. issued shares B. unissued shares C. authorized shares D. outstanding shares

10. A share dividend

1. decrease shareholders' equity C. leaves total shareholders' equity unchanged
2. Decrease assets D. answer not given

11. Dividends shall be declared and paid out of

1. retained earnings C. share capital

B. profits earned in selling no par shares D. answer not given

12. A corporation declared cash dividends on its ordinary shares in Dec. 2019, payable in

Jan. 2020. Retained earnings will

1. decrease on the date of payment C. not be affected on the date of declaration
2. not be affected on the date of payment D. increase on the date of declaration

TEST III- Indicate the journal (GJ, PJ, SJ, CRJ, CPJ) where the following transactions areto be recorded:

1. Purchased merchandise on account costing P60,000 from White Co. Terms: 2/10, n/30.

2. Sold merchandise on account to Gray Co. P200,000. Terms 2/10, n/30.

3. Returned P8,000 cost of merchandise to White Company.

4. Received P30,000 worth of merchandise returned by Gray Co.

5. Paid the account with White Co. and availed of the 2% discount.

6. Received collection from Gray Co. net of discount availed.

7. Purchased merchandise for cash P75,000 from Red Co.

8. Returned P2,000 worth of merchandise to Red Co.

9. Sold merchandise to Blue Co. for cash, P180,000.

10. Paid freight on merchandise sold to Blue Co. P6,000.

11. Received P6,000 worth of merchandise returned by Blue Co.

12. A. Mabuhay withdrew P50,000 cash for personal use.