FDNACCT

AY 2022-24 Term 1
Quiz #1
SET C
TEST I. TRUE OR FALSE

1. Bookkeeping and accounting are one and the same because the bookkeeping function includes
the accounting process.
FALSE
Accounting deals with providing financial statements to aid users in making decisions.

2. An accounting information has relevance if that could make a difference in a decision by the user
of the accounting information.
TRUE

3. Accrual assumes that revenue is reported when it’s earned, regardless of when collection is
actually received while expense is reported when it’s incurred, regardless of when payment is
actually made.
TRUE

4. Prudence means to be aggressive in your accounting assumption.

FALSE
Prudence means being conservative in your accounting assumption.

5. The time period assumption means that the life of a company can be divided into time periods
such as months and years.
TRUE

6. When a business is organized as a sole proprietorship, the owner may combine his personal
financial information with the business financial information since he is the same person who owns
the business.
FALSE
Entity - Should not combine personal financial information with business financial information

7. The ability of a company to generate profits for a given period is known as its financial position.
FALSE
Financial performance.

8. The Statement of Owner's Equity is prepared before the Statement of Financial Position so that
the ending capital balance is available.
TRUE

9. Prepaid salaries are cash advances given to employees to be liquidated in the form of service.
FALSE
Advances to Employees

10. A functional form of Statement of Profit or Loss is normally prepared by a service business.
FALSE
Natural form

TEST II. MULTIPLE CHOICE THEORY

1. All of the following are achieved by accounting, except:

A. Identifies and records business activities
B. Aids a variety of users in making better decisions
C. Communicates information about business activities
D. Eliminates the need for interpreting financial data

2. Managerial accountants usually do which of the following?

A. Audit financial statements
B. Prepare and audit tax returns
C. Prepare internal reports for management
D. Investigate companies for possible violations of law
3. All of the following are external users of accounting information EXCEPT
A. Current investor
B. Creditor
C. Labor union
D. Supplier

4. The three major legal forms of business entity are the Sole Proprietorship, the Partnership, and
A. Merchandising
B. Corporation
C. Service
D. Small to Medium-sized Enterprises (SMEs)

5. Select the statement below that does NOT correctly describe the qualitative characteristic of
faithful representation.
A. Faithful representation means that the information should be complete.
B. Faithful representation means that the information should be neutral.
C. Faithful representation means that the information should have confirmatory value.
D. Faithful representation means that the information should be free from error.

6. If not specified, then the default assumption is that the company is a

A. Sole proprietorship
B. Merchandising company
C. Going concern
D. Liquidating concern

7. The stable monetary unit assumption states that in times of currency appreciation or depreciation,
A. only fluctuations in currency value that are disadvantageous to the company should be reflected.
B. only fluctuations in currency value that are advantageous to the company should be reflected.
C. all fluctuations in currency value should be reflected in the books of accounts of the company.
D. any fluctuations in currency value will not be reflected in the books of the company.

8. Which principle requires important facts that would have an effect on an investor's decisions be
included in the financial statements?
A. Matching principle
B. Revenue recognition principle
C. Historical cost basis principle
D. Full disclosure principle

9. A present economic resource controlled by the entity as a result of past events, and are expected
to be realized as cash within one year or the normal operating cycle of the business, whichever is
longer
A. Assets
B. Current Assets
C. Liabilities
D. Current Liabilities

10. The Statement of Financial Position will arrange current assets according to
A. Due dates
B. Magnitude
C. Amounts
D. Liquidity

TEST III. PROBLEM SOLVING

1. FDN Accounting Services reports the following income and expenses accounts in its business records for
the year ending December 31, 2022:
Accounting Revenues, ₱900,000
Transportation Expense, ₱130,000
Supplies Expense, ₱70,000
Interest Income, ₱8,000
Salaries Expense, ₱305,000
Rent Expense, ₱117,000
Utilities Expense ₱165,000

How much is the net income or loss of FDNACCT during the year 2022?
₱121,000
2. During the first year of operation of FDNACCT, the following information were made available for the
preparation of the Statement of Changes in Owner’s Equity for the year ending December 31, 2022:
Beginning Capital, ₱230,000
Owner’s Drawing, ₱102,000
Net Income during the year, ₱430,000
Additional Investment, ₱223,000

How much is the amount of ending capital to be presented in the Statement of Changes in Owner’s
Equity for the year ending December 31, 2022?
₱781,000

3. FDNACCT started operating in 2022. Below is the alphabetical partial list of the company’s adjusted
balances as of year-end December 31, 2022:

Accounts Payable ₱ 24,530

Accounts Receivable 223,200
Accrued Interest Income 12,110
Mortgage Payable 200,000
Prepaid Insurance Expense 34,900
Salaries and Wages Payable 25,140
Unearned Service Income 85,150

How much is the total current liabilities of the company?

₱134,820

4. On September 1, 2022, Faith D. Nakpil began FDN Accounting Services (FDNACCT) with an initial
investment of ₱60,725, and on September 30, her records showed the following account balances:

Accounts payable, ₱8,000

Accounts receivable, ₱16,500
Cash, ₱27,000
Accounting Fees Income, ₱86,000
Notes payable, ₱26,000
Office furniture, ₱42,250
Rent expense, ₱12,000
Salaries expense, ₱15,000
Telephone expense, ₱10,500

How much is the total assets as of September 30, 2022?

₱85,750

5. As of September 30, 2022, FDNACCT shows the following account balances:

Accounts payable, ₱25,000
Accounts receivable, ₱75,000
Cash, ₱66,000
Furniture and fixtures, ₱97,000
Office equipment, ₱101,000
Office supplies, ₱14,000
Prepaid expense, ₱23,000

How much is the current assets as of September 30, 2022?

₱178,000

6. The following selected statement of financial statement items are shown for FDNACCT.

Current assets ₱200,000

Noncurrent assets ₱700,000
Current liabilities ₱200,000
Noncurrent liabilities ?
Equity, end ₱300,000

How much is the non-current liabilities?

₱400,000
7. During the year, FDNACCT reported net income of ₱38,000 while the owner made additional
investments in the form cash of ₱50,000 and an old laptop which was previously purchased for
₱55,000. The laptop, at the time of investment, had a fair market value of ₱20,000. If the ending
equity balance is ₱430,000, how much was the equity balance at the start of the year?
₱322,000

8. Faith D. Nakpil opened her accounting business with ₱80,000 cash and ₱40,000 worth of office
equipment and supplies. During the first year of operations, the business generated revenues of
₱60,000 from clients and expenses totaled ₱44,000. Faith also took back some of the office
supplies she initially brought worth ₱2,000, because her daughter needed it for a school project.
How much should be recorded as equity at the end of the year?
₱134,000

9. If assets increased by ₱60,000, and liabilities decreased by ₱40,000, then how much is the
change in equity? Write if it’s an increase or decrease on the answer sheet and worksheet.
₱100,000 increase

10. FDNACCT received the following in the month of August 2023:

₱30,000 for accounting services provided in July 2023.
₱80,000 for accounting services provided in August 2023.
₱50,000 for accounting services to be provided in September 2023.

It also provided accounting services amounting to ₱70,000 in August 2023, the collection of which
will be in October 2023.

How much is the revenue for the month of August 2023?

₱150,000

11. Faith D. Nakpil Accounting Services provided the following information at the end of its first six
months of operation:

Accounting Services rendered ₱1,600,000

Interest income earned from client’s promissory note 25,000
Payment for the office space rental for six months 110,000
Payment for the salaries of employees for six months 196,000
Payment of the office electricity bill for six months 124,500
Payment of the internet bill in the resident of Faith Nakpil, the owner 56,000

How much expenses should be recorded by the company for the six-month period?
₱430,500

12. At the end of year 2022, Faith D. Nakpil's capital account increased by ₱168,000. During 2022, she
made an additional investment of ₱57,000 but took from the business an equipment with a fair
market value of ₱30,000 but purchased at a cost amounting to ₱43,000. Expenses for 2022 totalled
₱490,000. How much is the net income or net loss for 2022? Write if it’s a net income or net
loss on the answer sheet and worksheet.
Net Income ₱154,000

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