LEVEL 1 - CERTIFIED BOOKKEEPER
ASSESSMENT EXAM
(Batch April 2021)
NAME: ____________________________________________________________________
INSTRUCTIONS: Read each item carefully. Select the correct/best answer for each of the
following questions. Test yourself by the answering each question within 3 minutes.
1. Which of the following statements is correct?
A. When the debit total and the credit total of an account are equal, the account is said to
be an open account.
B. When the debit total and the credit total of an account are not equal, the account is said
to be a closed account.
C. The difference between the debit and credit of an account is said to be the account
balance.
D. If the debit total of an account is greater than its credit total, the account is said to be a
deficit.
2. Dated checks issued but not yet paid by the bank is called
A. Dishonored checks
C. Post dated checks
B. Cancelled checks
D. Outstanding checks
3. Selected accounts of Paubaya Company after adjusting entries appearing in the trial
balance are show below:
Cash
Accounts receivable
Notes receivable
Prepaid expenses
Accounts payable
Sales
Salaries expense
Freight- out
What kind of trial balance is above?
A. Trial Balance of Balances
B. Post-closing Trial Balances
Debit
P 300,000
124,000
80,000
15,000
55,000
Credit
P 150,000
44,000
20,000
110,000
1,240,000
78,000
5,000
C. Trial Balance of Totals
D. Preliminary Trial Balance
4. When a net loss has occurred, the income summary account is
A. Debited and the owner’s capital is credited.
B. Credited and the owner’s capital is debited.
C. Debited and the owner’s capital is credited.
D. Credited and the owner’s capital is debited.
5. How does failure to record accrued revenue distort the financial reports?
A. It understates revenue, net income, and current assets
B. It understates net income, stockholders’ equity, and current liabilities
C. It overstates revenue, stockholders’ equity, and current liabilities
D. It understates current assets and overstates stockholders’ equity
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6. Arrange the following functions of accounting in a sequential manner.
1. Classifying
2. Recording
3. Interpreting
4. Summarizing
A. 2,1,3,4
B. 2,1,4,3
C. 1,2,4,3
D. 1,2,3,4
7. The type of transaction that would appear in the sales journal would be
A. Sale of merchandise for cash
B. Purchase of merchandise for cash
C. Sale of merchandise in exchange for an office equipment
D. Sale of merchandise on account.
8. To record the sale of goods for cash in a perpetual inventory system:
A. only one journal entry is necessary to record cost of goods sold and reduction of inventory.
B. only one journal entry is necessary to record the receipt of cash and the sales revenue.
C. two journal entries are necessary: one to record the receipt of cash and sales revenue,
and one to record the cost of goods sold and reduction of inventory.
D. two journal entries are necessary: one to record the receipt of cash and reduction of
inventory, and one to record the cost of goods sold and sales revenue.
9. The steps in the accounting cycle for a merchandising company are the same as those in a
service company except:
A. an additional adjusting journal entry for inventory may be needed in a merchandising
company.
B. closing journal entries are not required for a merchandising company.
C. a post-closing trial balance is not required for a merchandising company.
D. a multiple-step income statement is required for a merchandising company.
10. Of the following questions, which one would not be answered by the statement of cash
flows?
A. Where did the cash come from during the period?
B. What was the cash used for during the period?
C. Were all the cash expenditures of benefit to the company during the period?
D. What was the change in the cash balance during the period?
11. In a statement of cash flows (using indirect approach for operating activities) an increase in
inventories should be presented as a(n)
A. Outflow of cash.
C. Inflow and outflow of cash.
B. Addition to net income.
D. Deduction from net income.
12. In determining cost of goods sold in a periodic system:
A. purchase discounts are deducted from net purchases.
B. freight-out is added to net purchases.
C. purchase returns and allowances are deducted from net purchases.
D. freight-in is added to net purchases.
13. Which of the following is an appropriate reconciling item to the balance per bank in a
bank reconciliation?
A. Bank service charge.
C. Deposit in transit.
B. Bank interest.
D. Chargeback for NSF check.
14. Accounts receivable less Allowance for bad debts equals ______________.
A. Net book value
C. Net appraised value
B. Net realizable value
D. Carrying amount
15. Which of the following accounts is a liability?
A. Deferred expenses
B. Accrued income
C. Prepaid expenses
D. Accrued expenses
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16. Which of the following is not a function of accounting?
A. Interpreting
C. Reporting
B. Budgeting
D. Bookkeeping
17. Internal users of accounting information would not include ________.
A. Managers
C. Employees
B. Creditors
D. Officers
18. This deals with the determination of the fairness of the accounting reports and whether they
are in accordance with generally accepted accounting principles.
A. Cost Accounting
C. Auditing
B. Management Accounting
D. Financial Accounting
19. If the unearned interest is credited in the adjusting entry, which of the following will be
affected?
A. A capital account
C. An asset account
B. A liability account
D. A nominal account
20. Which of the following transactions will result in the increase and decrease in liability?
A. Borrowed money from the bank.
B. Request for an extension of the date of payment.
C. Payment of loan by installment.
D. Issued a promissory note in payment of a liability (accounts payable)
21. What accounts will be reflected in the post-closing trial balance?
A. Real and nominal accounts with balances
B. Nominal accounts with balances
C. Real accounts with balances
D. All accounts with adjustment.
22. Assume that the term of shipment is FOB Destination, Freight Collect. Who should shoulder
the freight and who will pay?
A. Should shoulder: Seller & Will pay: Seller
B. Should shoulder: Buyer & Will pay: Buyer
C. Should shoulder: Seller & Will pay: Buyer
D. Should shoulder: Buyer & Will pay: Seller
23. Assume that the term of shipment is FOB Shipping Point, Freight Collect. Who should
shoulder the freight and who will pay?
A. Should shoulder: Seller & Will pay: Seller
B. Should shoulder: Buyer & Will pay: Buyer
C. Should shoulder: Seller & Will pay: Buyer
D. Should shoulder: Buyer & Will pay: Seller
24. Assume that the term of shipment is FOB Shipping Point, Freight Prepaid. Who should
shoulder the freight and who will pay?
A. Should shoulder: Seller & Will pay: Seller
B. Should shoulder: Buyer & Will pay: Buyer
C. Should shoulder: Seller & Will pay: Buyer
D. Should shoulder: Buyer & Will pay: Seller
25. How many of the following statements is/are FALSE?
1. An increase in revenue is on the credit side hence a decrease in expense is also on
the credit side.
2. A balanced trial balance means that the recording is free from errors.
3. A simple entry has only one debit and credit while a compound entry has two or more
debits and credits.
4. Tangible assets have values, but intangible assets have no values.
A. 4
C. 2
B. 3
D. 1
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26. Which of the following journal entries can be eliminated?
A. Correcting entry
C. Opening entry
B. Closing entry
D. Adjusting entry
27. Who is the head of the Accounting Department?
A. Treasurer
C. Chief Accountant
B. Bookkeeper
D. Controller
28. The cost of office equipment less accumulated depreciation is called:
A. Net realizable value
C. Carrying amount
B. Amortized value
D. Liquidation value
29. Which of the following statements is incorrect concerning the adjusted trial balance?
A. An adjusted trial balance proves the equality of the total debit balances and the total credit
balances in the ledger after all adjustments are made.
B. The adjusted trial balance provides the primary basis for the preparation of financial
statements.
C. The adjusted trial balance lists the account balances segregated by assets and liabilities.
D. The adjusted trial balance is prepared after the adjusting entries have been journalized
and posted.
30. If the total debit column exceeds the total credit column of the income statement columns on
a worksheet, then the company has:
A. earned net income for the period.
B. an error because debits do not equal credits.
C. suffered a net loss for the period.
D. to make an adjusting entry.
31. On March 1 of the current year, Modernate Company acquired a machine costing P650,000
with an estimated useful life of 15 years with salvage value of P50,000. The end of the fiscal
year is July 31 of the current year. How much depreciation is to be charged on July 31 of the
current year?
A. P16,667
C. P40,000
B. P36,667
D. P13,333
32. SINAVAC Corporation has an outstanding 60-day 6% note receivable amounting to P15,000
dated December 1 of the current year. The company is using the calendar year in preparing
its financial statements. What account should be credited and what is the amount?
A. Interest income, P900
C. Unearned interest income, P75
B. Interest income, P75
D. Accrued interest income, P75
33. The trial balance of Jeong Company had accounts with the following normal balances: Cash
P5,000, Service Revenue P85,000, Salaries and Wages Payable P4,000, Salaries and
Wages Expense P40,000, Rent Expense P10,000, Owner’s Capital P42,000, Owner’s
Drawings P15,000, and Equipment P61,000. In preparing a trial balance, the total in the debit
column is:
A. P131,000.
C. P 91,000.
B. P216,000.
D. P116,000.
34. Walsh Retailers purchased merchandise with a list price of P50,000, subject to trade discounts
of 20% and 10%, with no cash discounts allowable. Walsh should record the cost of this
merchandise as
A. P35,000.
C. P36,000.
B. P39,000.
D. P50,000.
35. At January 1, 2020, Buckingham Inc. had accounts receivable P71,500. At December 31,
2020, accounts receivable is P53,800. Sales for 2020 total P412,000. What are
Buckingham’s 2020 cash receipts from customers?
A. P394,300
C. P465,800
B. P429,700
D. P412,000
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36. At the start of the year, the total assets of the business is P 250,000, and its liabilities was
P85,000. At the end of the year, the total assets is valued at P 320,000 and the residual
claim of the owner is P 190,000. How much is the increase/decrease of liabilities during the
year?
A. Decrease P 35,000
C. Decrease P 45,000
B. Increase P 35,000
D. Increase P 45,000
37. Wentworth Ltd. had January 1 and December 31 balances as follows:
Inventory
Accounts payable
1/1/20
P93,000
62,000
12/31/20
P103,000
76,000
For 2020, cost of goods sold was P519,000. What are Wentworth’s 2020 cash payments to
suppliers?
A. P543,000
C. P523,000
B. P515,000
D. P519,000
38. Meyer Corporation reports:
Cash provided by operating activities
Cash used by investing activities
Cash provided by financing activities
Beginning cash balance
P250,000
110,000
140,000
70,000
What is Meyer’s ending cash balance?
A. P280,000.
C. P350,000.
B. P500,000.
D. P570,000.
39. During 2020 the DVD Company had a net income of P50,000. In addition, selected accounts
showed the following changes:
Accounts Receivable
Accounts Payable
Building
Depreciation Expense
Long-term Notes Payable
P3,000 increase
1,000 increase
4,000 decrease
1,500 increase
8,000 increase
What was the amount of cash provided by operating activities?
A. P49,500
C. P50,000
B. P51,500
D. P59,500
40. The owner started the business with P 1,500,000 capital. At the end of the year, the total
value of claims of the creditors is P 850,000 and the owner’s equity is 110% of the liabilities
of the business. How much is the total assets of the year?
A. P 1,622,727
C. P 2,350,000
B. P 1,785,000
D. P 2,435,000
41. The Accounts Receivable account of Ruth Company has a beginning balance of P 30,000.
During the year, Ruth earned income of P 150,000, 60% of which are for cash. 30% of all
receivables were collected, how much is the ending balance of Accounts Receivable?
A. P 72,000
C. P 36,000
B. P 63,000
D. P 27,000
42. Sammy Company reported net sales of P300,000, P330,000, and P360,000 in the years,
2019, 2020, and 2021, respectively. If 2019 is the base year, what is the trend percentage
for 2021?
A. 77%.
C. 120%.
B. 108%.
D. 130%.
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43. During 2020, Band Co. purchased P960,000 of inventory. The cost of goods sold for 2020
was P900,000, and the ending inventory at December 31, 2020 was P180,000. What was
the inventory turnover for 2020?
A. 6.4
C. 6.0
B. 5.3
D. 5.0
44. The trial balance of A. Wiencek Company at December 31, 2020, includes these accounts:
Beginning Inventory P19,500; Purchases P149,000; Sales Revenue P190,000; Freight-In
P5,000; Sales Returns and Allowances P3,000; Freight-Out P1,000; and Purchase Returns
and Allowances P2,000. The ending inventory is P23,000.
How much is the Cost of Goods Sold for the year ended December 31, 2020?
A. P148,500
C. P146,500
B. P138,500
D. P143,500
45. Popoy Company provided the following information for the current year:
Beginning inventory, P400,000
Freight-in, P300,000
Purchase returns, P900,000
Ending inventory P500,000
Selling expenses, P1,250,000
Sales discount, P250,000
The cost of goods sold is six times the selling expenses.
What is the amount of gross purchases?
A. P6,500,000
B. P8,000,000
C. P6,700,000
D. P8,200,000
46. Naruto Corp.'s trial balance reflected the following account balances at December 31, 2020:
Accounts receivable (net)
Notes receivable due 2021
Accumulated depreciation on equipment and furniture
Cash in bank
Inventory
Equipment
Patent
Prepaid expenses
Accrue income
P24,000
6,000
15,000
11,000
30,000
25,000
4,000
2,000
18,000
In Naruto's December 31, 2020 statement of financial position, the current assets total is
A. P91,000.
C. P82,000.
B. P77,000.
D. P73,000.
47. Based on the following selected account balances appearing in the trial balance of Highway
Repair Company as of December 31, 2020:
Cash
P 20,000
Loan payable
12,000
Office equipment
60,000
Unearned rentals
5,000
Accrued salaries
25,000
Juan, Drawing
8,000
Repair income
123,000
Prepaid advertising
10,000
Rent expense
15,000
Juan, Capital
135,000
Accrued interest income
1,000
Accounts receivable
70,000
How much is the total of the debit balances?
A. P114,000
B. P184,000
C. P159,000
D. P183,000
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48. Based on the following selected accounts provided to you by the Chief Accountant of Tacloban
Traders:
Accrued interest income
P 4,600
Accounts receivable
38,000
Accrued interest expense
2,500
Prepaid rent
5,000
Unearned interest
1,400
Allowance for bad debts
5,400
Accumulated depreciation
10,000
Freight in
2,000
Freight out
1,500
Purchase returns and allowances
1,400
Purchase discount
2,600
Sales returns and allowances
7,300
Sales discount
3,700
Account payable
12,000
How much is the total of the credit balances?
A. P35,300
B. P37,400
C. P39,900
D. P33,900
49. In the unadjusted trial balance of its worksheet for the year ended December 31, 2020, Knox
Company reported Equipment of P120,000. The year-end adjusting entries require an
adjustment of P15,000 for depreciation expense for the equipment. After the adjusted trial
balance is completed, what amount should be shown in the financial statement columns?
A. A debit of P105,000 for Equipment in the balance sheet column.
B. A credit of P15,000 for Depreciation Expense—Equipment in the income statement
column.
C. A debit of P120,000 for Equipment in the balance sheet column.
D. A debit of P15,000 for Accumulated Depreciation—Equipment in the balance sheet
column.
50. Gross billings for merchandise sold by Lang Company to its customers last year amounted to
P15,720,000; sales returns and allowances were P370,000, sales discounts were P175,000,
and freight-out was P140,000. Net sales last year for Lang Company were
A. P15,720,000.
C. P15,175,000.
B. P15,350,000.
D. P15,035,000.
51. An item of merchandise with a list price of P100 was purchased with a trade discount of 40%
and credit terms of 2/10, n/30. If the vendor is paid within the discount period, the journal entry
to record the payment would be:
A. Purchases, dr., P100.00; Purchase Discounts, cr., P42.00; Cash, cr., P58.00
B. Accounts Payable, dr., P60.00; Purchase Discounts, cr., P1.20; Cash, cr., P58.80
C. Accounts Payable, dr., P100.00; Purchase Discounts, cr., P42.00; Cash, cr., P58.00
D. Accounts Payable, dr., P40.00; Purchase Discounts, cr., P.80; Cash, cr., P39.20
52. Based on the following audited financial statements of MARS Truckers at the end of
December 31, 2020:
Trucking service fees collected
P 32,000
Trucking service fees uncollected
18,000
Expenses paid
27,000
Expenses unpaid
2,000
Non-cash expenses
1,000
Total assets
180,000
Total liabilities
25,000
Using the accrual basis of accounting, how much is the net income?
A. P23,000
C. P20,000
B. P21,000
D. P 5,000
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53. You examined the details of the Cash general ledger account to determine the cash inflows
and outflow for the period.
July 1
Investment of the owner
Cash
July 1 Taxes & licenses
P 500,000
3 Cash sales
13
15
20
29
30
31
82,000
Loan
Collection of accounts
Purchase returns
Rental received
Cash sales
Sale of old equipment
P 1,000
2 Freight
on
the
equipment
4 Rent expense
7 Cash purchases
9 Salaries
11 Drawing
12 Sales returns
15 Payment of account
22 Insurance
29 Partial payment of the
loan
200,000
42,000
6,000
5,000
30,000
3,000
2,000
5,000
25,000
21,000
20,000
6,000
15,000
4,000
50,000
Based on the above information, how much is the net cash flow from financing activities?
A. P630,000
C. P680,000
B. P650,000
D. P700,000
54. Using the same information in No. 53, how much is the net cash flow from investing activities?
A. P 2,000
C. P 1,000
B. P(2,000)
D. P(1,000)
55. Based on the following post-closing trial balance of Curiosity Corporation on June 30, the end
of its fiscal year.
Notes payable
Cash
Unearned rental income
Unused supplies
Accounts receivable
Allowance for bad debts
P 25,000
50,000
5,000
1,500
12,000
Accrued insurance expense
Office equipment
Accumulated depreciation –
Office equipment
Furniture
Accumulated depreciation –
Furniture
P 10,000
80,000
8,000
40,000
2,000
2,000
If the owner’s drawing is P100,000 and the beginning owner’s equity is P185,000, how much
is the net profit?
A. P40,500
C. P44,500
B. P42,000
D. P46,500
56. Using the same information in No. 55, how much is the total assets?
A. P176,500
C. P169,500
B. P181,500
D. P171,500
57. For Mortenson Company, the following information is available:
Cost of goods sold
Sales discounts
Sales returns
Freight-out
Income tax expense
Operating expenses
Sales
P 60,000
2,000
1,000
3,000
6,000
23,000
100,000
In Mortenson’s income statement, gross profit
A. should be reported at P37,000
B. should be reported at P38,000.
C. should be reported at P9,000.
D. should be reported at P34,000.
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58. Reggae Company provided you with the unadjusted selected accounts on December 31,
2020.
Sales
Less: Sales returns
Net sales
Accounts receivable
Less: Allowance for bad debts
Net realizable value
P 850,000
50,000
P 800,000
P
P
740,000
120,000
620,000
Beginning inventory
Ending inventory
45,000
60,000
Freight in
Freight out
12,000
20,000
If bad debts are estimated to be 10% of accounts receivable, what is the adjusted balance of
the Allowance for bad debts account?
A. P74,000
C. P85,000
B. P62,000
D. P80,000
59. Based on the following adjusted trial balance of Leyte Traders on December 31, 2020, the
end of the accounting period:
Cash
Notes receivable
Accounts receivable
Allowance for bad debts
Merchandise inventory, January 1
Furniture and fixtures
Accumulated depreciation – Furniture & Fixtures
Office Equipment
Accumulated depreciation – Office Equipment
Notes payable
Accounts payable
Mac Curry, Capital
Mac Curry, Drawing
Sales
Sales returns
Sales discount
Purchases
Freight in
Purchase returns
Purchase discount
Salaries expense
Rent expense
Insurance expense
Office supplies expense
Rental income
P
Debit
67,075
70,000
176,500
5,400
60,900
34,100
3,100
15,500
1,500
20,000
94,750
265,000
9,500
572,875
11,000
6,400
390,750
5,415
3,630
6,885
99,550
24,000
5,250
2,200
Additional information: Merchandise inventory, December 31, P76,000.
How much is the net income?
A. P63,975
B. P53,925
C. P58,925
D. P48,925
60. Using the same information in No. 59, how much is the total assets?
A. P427,375
C. P492,175
B. P427,395
D. P429,175
********** Nothing follows **********
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Credit
5,000