Formative Assessment 2 Vergara, Joann M. "A Dream doesn't become reality through magic; it takes sweat, determination and hardwork" 1. What is the value of A? P16,000 2. What is the value of B? P32,000 3. What is the value of C? P100,000 4. What is the value of D? P32,000 5. What is the value of E? P102,000 6. What is the value of F? P108,000 7. In a firm that uses special journals, the collection of sums on account from credit customers is recorded in the cash payments journal cash receipts journal sales journal purchases journal 8. To find the balance due from an individual customer, the accountant would refer to the sales journal the Sales account in the general ledger the accounts receivable subsidiary ledger the Accounts Receivable account in the general ledger 9. A concept that states that all the components of a complete set of financial statement are interrelated Entity Accounting Process Concept of Articulation Principle of Fair Presentation 10. An important purpose of closing entries is to transfer the net income or loss to owner’s capital account set permanent account balances to zero to begin the next period update the nominal accounts at year end help achieve the goals of the matching principle 11. At the beginning of the year, the assets of MM Services were P495,765 and its owner’s equity was P257,321. During the year, assets increases by P123,456 and liabilities increased by P25,699. What was the owner’s equity at the end of the year? P355,078 12. Real Losers, a diet magazine, collected P360,000 in subscription revenue in May. Each subscriber will receive an issue of the magazine for each of the next 12 months, beginning with the June issue. The company uses the accrual method of accounting. What is the balance in Unearned subscription revenue on December 31? P150,000 13. These are accounting information users who are interested in information that enables them to determine whether their loans, and the interest attaching to them, will be paid when due. General public Shareholders Customers Lenders 14. A work sheet is useful for all except of the following? recording transactions from source documents recording adjusting entries recording closing entries preparing financial statements 15. The purpose of ledger is to Chronologically record the day-to-day transactions Keep a record of documentation to support each transaction Maintain a separate account for each asset, liability, etc. Make sure that all assets, liabilities, etc., have normal balances at all times 16. P150,000 17. Midnight Corporation’s interest revenue for 2019 was P39,300. Accrued interest receivable on December 31, 2019 was P6,825 and P5,625 on December 31, 2011. The cash received for interest during 2019 was? P38,100 18. On April 1, 2018, Mugiwara Co. purchased a building for P100,000,000. The building has an estimated life of 50 years. 9 months depreciation was taken on the year of purchase and the book value of the building on December 31,2023, after depreciation adjusting entry is P90,512,500.Using straight line depreciation, solve for the salvage value P17,500,000 19. On August 3, 2018, Pogi Traders Purchased from a supplier merchandise with a list price of P50,000, subject to a trade discount of 15%. The goods were purchased on terms 2/10,1/15,n/30, FOB Destination. Pogi paid P2,500 transportation costs. On August 7, Pogi returned merchandise with a list price of P10,000. On August 14, Pogi paid the amount due. The amount paid on August 14 is. P31,160 20. P15,970 21. a) b) c) d) Adjustments are often prepared After the statement of financial position date but dated as of that date Before the statement of financial position date and dated after that date After the statement of financial position date and dated after that date Before the statement of financial position date but dated as of that date 22. P450,000 23. P3,600 24. What is the overall objective of accounting? To provide the information that the managers of an economic entity need to control the operations. To provide information that the creditors can use in deciding whether to grant loans to an entity. To measure the periodic income of the economic entity. To provide quantitative financial information about an entity that is useful in making economic decision 25. Adjusting entries involve Only real accounts Only nominal accounts Only capital accounts At least one real and one nominal account 26. Which of the following best describes the term “liability”? An excess of equity over current assets Resources to meet financial commitments when due The residual interest in the assets of the entity after deducting all of the liabilities A present obligation arising from past event 27. The proper sequence for the steps in the accounting cycle is a follows a) Analyze and record transactions, post transaction to the ledger, prepare trial balance, prepare financial statements, journalize closing entries, analyze adjustment data and prepare adjusting entries b) Prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transaction to the ledger c) Prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger, prepare trial balance, analyze adjustment data, prepare adjusting entries d) Analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger 28. The purchase of equipment on account with down payment Will increase asset and decrease a liability Will increase asset and increase a liability Will decrease owner’s equity Will decrease asset and decrease liability 29. The Maxim Company acquired a building for $500,000. Maxim had the building appraised, and found that the building was easily worth $575,000. The seller had paid $300,000 for the building 6 years ago. Which accounting principle would require Maxim to record the building on its records at $500,000? Monetary unit assumption Going-concern assumption Cost principle Business entity assumption Revenue recognition principle 30. If Tim Jones, the owner of Jones Hardware proprietorship, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to: Debit Salary Expense and credit Cash Debit Tim Jones, Salary and credit Cash Debit Cash and credit Tim Jones, Withdrawals Debit Tim Jones, Withdrawals and credit Cash Debit Automobiles and credit Cash 31. The chart of accounts is designed to Alphabetize the accounts to make reading easier for its financial statement users Analyze the accounts and organize them in order of dollar amount to simplify the accounting information for users Meet the information needs of a company and other financial statement users Summarize the transactions and determine their ending balances 32. On January 10, GNS Repair Service extended an offer of P6,000,000 for land located at De Venecia Highway that had been priced earlier for sale at P7,200,000. On January 25, GNS Repair Service accepted the seller’s counter offer P6,600,000. How much should GNS Repair Service record the land? P6,600,000 33. The accountant for Dolan Construction Company mistakenly recorded a P2,000 purchase of supplies on account as a P20,000 purchase. He debited Supplies and credited Accounts Payable for P20,000. How much would this error cause the trial balance to be out of balance? The debit column is higher by P18,000 The debit column is lower by P18,000 The debit column is higher by P20,000 The debit column is lower by P20,000 The balance of both debit and credit columns is equal 34. Beginning capital was P150,000. Withdrawals were P360,000. The owner made additional investments during year of P900,000. The ending capital balance was P1,350,000. What was the net income or net loss for the period? Net income, P840,000 Net income, P660,000 Net loss, P660,000 Net income, P450,000 35. Decreases in equity that represent costs of assets or services used to earn revenues are called: Liabilities Equity Withdrawals Expenses Owner’s Investment 36. What is the amount of revenue for 2018 of Company A? P3,950,000 37. What is the equity amount on December 31, 2018 of Company B? 5,800,000 38. What is the liability amount on December 31, 2018 of Company B? P3,200,000 39. Calculate the amount of Owner’s Investment for Company C during 2018? P1,780,000 40. Calculate the amount of Assets for Company D on December 31, 2018? P13,710,000 41. When goods are shipped FOB destination and the seller pays the transportation charges, the buyer makes no journal entry for the transportation. does not take a discount. journalizes a reduction for the cost of the merchandise. journalizes a reimbursement to the seller. 42. Black Company sold Red Company merchandise on account FOB shipping point, 2/10, net 30, for 10,000. Black prepaid the 200 shipping charge. Which of the following entries does Black make to record this sale? Accounts Receivable-Red, debit 10,400; Sales, credit 10,400 Accounts Receivable-Red, debit 10,000; Sales, credit 10,000 Accounts Receivable-Red, debit 10,000; Sales, credit 10,000, and Transportation Out, debit 200; Cash, credit 200 Accounts Receivable-Red, debit 10,000; Sales, credit 10,000, and Accounts Receivable-Red, debit 200; Cash, credit 200 43. A chart of accounts for a merchandising business usually requires more accounts than does the chart of accounts for a service business is standardized by the FASB for all merchandising businesses is the same as the chart of accounts for a service business does not have a Cost of Merchandise Sold account if a perpetual inventory system is used 44. Robles Co. sells 1,000 of inventory to Salas Co.for cash. Robles paid 650 for the merchandise. Under a perpetual inventory system, the following journal entry(ies) would be recorded. Accounts Receivable 1,000 Dr, Sales 1,000 Cr, Cost of Merchandise Sold 650 Dr, Merchandise Inventory 650 Cr. Cash 1,000 Dr, Sales 1,000 Cr Cash 1,000 Dr, Sales 1,000 Cr, Cost of Merchandise Sold 650 Dr, Merchandise Inventory 650 Cr. Cash 1,000 Dr, Merchandise Inventory 650 Cr 45. Based on the following information, what would be recorded as purchases discount if the invoice is paid within the discount period? 1.5,000 of merchandise inventory was ordered on April 2, 20152. 2,000 of this merchandise was received on April 5, 2015 3.On April 6, 2015, an invoice dated April 4, 2015, with terms of 2/10, net 30 for 2,150 which included a 150 prepaid freight cost, was received. 4.On April 10, 2015, 500 of the merchandise was returned to the seller. 100 33 43 30 46. Which of the following items would affect the cost of merchandise inventory acquired during the period? quantity discounts cash discounts freight ln all of the above 47. If title to merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are consigned n/30 FOB shipping point FOB destination 48. If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are n/30 Option 2 Option 3 consigned 49. If the merchandise costs 4,000, insurance in transit costs 200, tariff costs 50, processing the purchase order by the purchasing department costs P35, and the company receiving dock personnel cost 15, what is the total cost charged to the merchandise? P4,250 50. When the perpetual inventory system is used, the inventory sold is debited to csupplies expense cost of merchandise sold merchandise inventory sales 51. Which of the following items should not be included in the cost of ending merchandise inventory? units on consignment purchased units in transit, shipped FOB destination units on hand in the warehouse both (a) and (c) 52. 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 25,250 and 21,825, respectively. What is the amount of net income or net loss for the period? ( if negative, put dash sign eg -1,234) P3,425 53. Total sales for a year are P30,000 which includes cash sales of P5,000. The beginning and ending balances of accounts receivable are P10,000 and P15,000 respectively. How much cash were received from customers, including cash sales? P25,000 54. On August 3, 2013, Pogi Traders purchased from a supplier merchandise with a list price of P50,000, subject to a trade discount of 15%. The goods were purchased on terms 2/10, 1/15, n/30, FOB Destination. Pogi paid P2,500 transportation costs. On August 7, Pogi returned merchandise with a list price of P10,000. On August 14, Pogi paid the amount due. The amount paid on August 14 is. P31,160 55. A company sold merchandise for P350 that cost P221. The entry to record the cost of the merchandise sold would be a: debit to sales and a credit to cash for P350. debit to cash and a credit to sales for P350. debit to cost of goods sold and a credit to inventory for P221. debit to inventory for P221 and a credit to cost of goods sold for P221.
