UNIVERSAL COLLEGE OF PARANAQUE

8273 DR. A. SANTOS AVENUE, PARANAQUE CITY/ 8772-5272

Integrated School Department

1st Quarter Examination

Grade 11
FUNDAMENTALS OF ACCOUNTING 2
NAME: DATE:
SECTION: SCORE

Directions: Read and analyze each item then select the best answer.

_______1. Debts owed by a business are referred to as

A. accounts receivables
B. equities
C. stockholders’ equity
D. liabilities

_______2. The entity concept means

A. accounts must be prepared every term
B. the financial affairs of a firm and its owner are always kept separate for the purpose of preparing
accounts
C. because a firm is separate and distinct from its owners, those owners cannot have access to its
assets unless the firms ceases to trade
D. none of the above

_______3. Transactions initially recorded in the

A. Trial Balance
B. Journal
C. Ledger
D. T Account

_______4. The assets of the business at the start of the month is P1,000,000 and the owner's equity
P800,000, Equipment worth P500,000 were purchased during the month of which only 150,000 were
paid for. At the end of the month, liabilities will be
A. P550,000
B. P1,150,000
C. P800,000
D. P1,000,000

_______5. Allen Nature Trip, a travel agency, purchased equipment for P120,000, made a down payment of
P50,000 and signed a note for the balance. This transaction will
A. increase total assets by P120,000
B. increase total liabilities by P70,000
C. increase owner's equity by P50,000
D. All of the above are correct
 UNIVERSAL COLLEGE OF PARANAQUE
8273 DR. A. SANTOS AVENUE, PARANAQUE CITY/ 8772-5272

Integrated School Department

_______6. The company assets are P9,000,000 of which 2/3 represents owner’s equity. How much is total
liabilities?
A. P3,000,000
B. P6,000,000
C. P1,500,000
D. P2,700,000

_______7. Double-entry accounting means that each transaction:

A. is recorded in both the journal and in the ledger
B. increases at least one account and decreases at least one account
C. affects both an income statement account and a balance sheet account
D. debits at least one account and credits at least one account

_______8. The fact that each transaction has a dual effect on the accounting equation provides the basis for
what is called:
A. single-entry accounting
B. double-entry accounting
C. compound-entry accounting
D. multiple-entry accounting

_______9. The owner’s equity account contains two major components:

A. Owner’s capital and loan due to BPI
B. Owner’s drawing and owner’s capital
C. Owner’s drawing and loan due to BPI
D. Owner’s capital and bank deposits

_______10. The remaining steps in the accounting cycle performed at the end of the year are:
1. closing entries 3. financial statements 5. post closing trial balance
2. reversing entries 4. adjusting entries
The proper sequence is:
A. 4,1,2,3,5
B. 4,3,5,1,2
C. 4,1,3,5,2
D. 4,3,1,5,2

_______11. An account which represents advance collection of income.

A. deferred revenue
B. accrued revenue
C. revenue
D. deferred charges

_______12. Which of the following is mostly used by accountants in communicating the results of
operations to outside parties?
A. Performance memos
B. Bulletin board postings
 UNIVERSAL COLLEGE OF PARANAQUE
8273 DR. A. SANTOS AVENUE, PARANAQUE CITY/ 8772-5272

Integrated School Department

C. Public announcements of the results of operations

D. Financial statements

_______13. On July 7, 2008, Reethink Enterprises performed cash services of $1,400. The entry to record
this transaction would include
A. a debit to Service Revenue of $1,400.
B. a credit to Accounts Receivable of $1,400.
C. a debit to Cash of $1,400.
D. a credit to Accounts Payable of $1,400.

_______14. The journal entry to record performing a service on account would include a debit to:
A. Cash.
B. Service Revenue Expense.
C. Accounts Receivable.
D. Retained Earnings

_______15. Given non-current assets of P40,000, current assets of P12,000, current liabilities of P5,000
and a long-term loan of P10,000, owners' equity will be:
A. 37,000
B. 57,000
C. 47,000
D. 67,000

_______16. Which of the following items would not fall under the definition of an asset?*
A. Land
B. Machinery
C. Cash
D. Debtors

_______17. A business has the following items in it:

- Land $1,000,000
- Machinery $20,000
- Cash $10,000
- Debt $0
- Owner’s equity ?

What is the value of the owner’s equity?*

A. $1,000,000
B. $1,020,000
C. $1,010,000
D. $1,030,000
E. None of the above.

_______18. A business has the following items in it:

- Land $1,000,000
 UNIVERSAL COLLEGE OF PARANAQUE
8273 DR. A. SANTOS AVENUE, PARANAQUE CITY/ 8772-5272

Integrated School Department

- Machinery $20,000
- Cash $10,000
- Loan $500,000
- Owner’s equity ?

What is the value of the owner’s equity?*

A. $500,000
B. $1,000,000
C. $530,000
D. $1,030,000
E. None of the above.

_______19. A business has the following items in it:

- Owners equity $600,000
- Total liabilities $1,400,000
- Assets ?

What is the value of the assets in this business?*

A. $600,000
B. $800,000
C. $1,400,000
D. $2,000,000
E. None of the above.

_______20. Accounts Payable had a normal starting balance of $750. There were debit postings of $600
and credit postings of $350 during the month. The ending balance is (E)
A. $500 credit.
B. $500 debit.
C. $1,000 debit.
D. $1,000 credit.

_______21. At September 1, 2008, Foli Co. reported owner’s equity of $136,000. During the month, Foli
generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and
withdrew cash of $2,000. What is the amount of owner’s equity at September 30, 2008? (E)
A. $136,000
B. $8,000
C. $137,000
D. $142,000

_______22. Office Supplies had a normal starting balance of $75. There were debit postings of $90 and
credit postings of $70 during the month. The ending balance is:
A. $55 debit.
B. $95 debit.
C. $55 credit.
D. $95 credit.
 UNIVERSAL COLLEGE OF PARANAQUE
8273 DR. A. SANTOS AVENUE, PARANAQUE CITY/ 8772-5272

Integrated School Department

_______23. The assumption that states that the activities of each company be kept separate from the
activities of its owners and all other companies is the
A. Economic entity assumption.
B. Going concern assumption.
C. Monetary unit assumption.
D. Time period assumption.

_______24. When amounts of a transactions are entered in an account on the right hand side, they are said
to be (M)
A. Credited
B. Debited
C. Added
D. Subtracted

_______25. Which of the following accounts is increased with a credit entry?

A. Accounts payable
B. Supplies
C. Rent expense
D. Accounts receivable

_______26. The purchase of an asset on credit results in

A. a debit to assets and a debit to expense
B. a debit to assets and a debit to liabilities
C. a credit to assets and a credit to liabilities
D. a debit to assets and a credit to liabilities

_______27. Which of the following rules is incorrect?

A. Credits decrease the drawing account.
B. Debits increase the capital account.
C. Credits increase revenue accounts.
D. Debits decrease liability accounts.

_______28. Which of the following is NOT a business transaction?

A. The company sells goods for cash.
B. The company buys land for cash.
C. The company hires a new president.
D. The company pays salaries to its employees.

_______29. If a transaction causes an asset account to decrease, which of the following related effects may
occur?
A. An increase of equal amount in an owners' equity account.
B. An increase in a liability account.
C. An increase of equal amount in another asset account.
D. An increase in the combined total of liabilities and owners' equity.
 UNIVERSAL COLLEGE OF PARANAQUE
8273 DR. A. SANTOS AVENUE, PARANAQUE CITY/ 8772-5272

Integrated School Department

_______30. Strum Hardware has total assets of $50,000. What are the total assets if new equipment is
purchased for $5,000 cash?
A. $45,000
B. $50,000
C. $55,00
D. $60,000

_______31. If equity is $300,000 and liabilities are $192,000, then assets equal: $108,000.
A. $192,000.
B. $300,000.
C. $492,000.
D. $792,000.

_______32. At the beginning of the period assets were $400,000 and equity was $150,000. During the
year assets increased by $30,000, liabilities increased by $50,000, and equity was unchanged. Beginning
liabilities must have been:
A. $230,000
B. $250,000
C. $280,000
D. $300,000

_______33. On November 1 of the current year, the assets and liabilities of Jim Chu, M.D., are as follows:
Cash, $10,000; Accounts Receivable, $8,200; Supplies, $1,050; Land, $25,000; Accounts Payable, $6,530.
What is the amount of equity as of November 1 of the current year?
A. $37,720
B. $44,430
C. $21,500
D. $50,780

_______34. Forty percent of the total assets of Bellmore Corporation have been financed through
borrowing. The total liabilities of the company are $600,000. What is the amount of owners' equity?
A. $ 240,000.
B. $1,500,000.
C. $2,100,000.
D. $ 900,000.

_______35. A transaction caused a P10,000 decrease in total assets. This could have been due to a/an
A. Payment of a note
B. Purchase of equipment on account
C. Cash investment made by owner
D. Purchase of equipment on account

_______36. The payment of cash to the bank for money borrowed by the business will
 UNIVERSAL COLLEGE OF PARANAQUE
8273 DR. A. SANTOS AVENUE, PARANAQUE CITY/ 8772-5272

Integrated School Department

A. decrease both assets & liabilities

B. decrease both assets & owner's equity
C. increase both assets & liabilities
D. increase both assets & owner's equity

_______37. It is the residual interest in the assets of the enterprise after deducting all its liabilities.
A. Revenue
B. Expenses
C. Net income
D. Equity

_______38. The origins of accounting are generally attributed to the work of

A. Christopher Columbus.
B. Abner Doubleday.
C. Luca Pacioli.
D. Leonardo da Vinci.

_______39. Which of the following statements is false?

A. Revenues increase owner's equity.
B. Revenues have normal credit balances.
C. Revenues are a positive factor in the computation of net income.
D. Revenues are increased by debits.

_______40. Decreases in equity that represent costs of assets or services used to earn revenues are called:
A. Liabilities.
B. Withdrawals.
C. Expenses.
D. Owner's Investment.

Prepared by:

Din Rose B. Gonzales

Faculty Member

(Please submit on MS Word Format and kindly attach your e-signature)