3RD QUARTER EXAMS WEEK 10

1.There are common account titles between assets and liabilities.

True False The correct answer is 'True'. MY ANSWER IS FALSE, THERE ARE NONE ☹

2. Losses are outflows that result from the main activity of the business.

True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

3. Owner's equity represents the right of the owner over the resources of the firm.

True False The correct answer is 'True'.

4. Cash withdrawal of an owner for personal use falls in what cash flow category?

a. Financing b. Assessing c. Investing d. Operating The correct answer is: Investing

5. Merchandising business are charging fees for rendered services.

True False The correct answer is 'False'.

6. Accrual basis of accounting is a basic accounting principle that states that income shall only be
recognized when cash is received, and expenses shall only be recorded when cash is paid.

True False The correct answer is 'False'.

7. Cash flows are categorized into three types: operating, investing, and financing activities.

True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

8. The following are cash flow transactions under the direct method except

a. Cash paid to creditors b. Cash receipts from customers c. Income taxes paid d. Depreciation of old
building The correct answer is: Cash paid to creditors

9. The cost accountant handles Management Accounting.

True False The correct answer is 'False'.

10. Account form is more commonly used form of an SFP.

True False The correct answer is 'True'.

11. Cash on hand is a current asset.

True False The correct answer is 'True'.

12. It is a voluntary association of at least 15 persons having a common bond of interest for the
purpose of generating capital from among themselves through a systematic and continuous savings
program in order to grant loans to each other at reasonable rates of interest.

a. partnership b. cooperative c. corporation d. single proprietorship The correct answer is: single
proprietorship

13. GAAP is Generally Applicable Accounting Principles.

True False The correct answer is 'False'.

14. Services businesses offer products.

True False The correct answer is 'False'.

15. Net loss indicates that the business is doing well.

True False The correct answer is 'False'.

16. Cash basis accounting relies entirely on the payment and receipt of cash.

True False The correct answer is 'True'.

17. Sole proprietorships mostly managed by their owners.

True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

18. Stockholders are the owners of a corporation.

True False The correct answer is 'False'.

19. Manufacturing business converts raw materials to finished goods.

True False The correct answer is 'True'.

20. Accrual basis of accounting records income when earned regardless of when cash is received.

True False The correct answer is 'True'.

21. Operating expenses and operating income or operating loss are items which can be found in an
income statement prepared in a multi-step approach.

True False The correct answer is 'False'.

22. SFP is an acronym for Statement of Financial Position, which is also known as the Balance Sheet

True False The correct answer is 'True'.

23. Sole proprietorships mostly managed by their owners.

True False The correct answer is 'False'.

24. The acquisition and disposal of long-term assets, including investments not considered cash
equivalents are parts of an investing activities.

True False The correct answer is 'True'.

25. The Calendar year ends on January 01.

True False The correct answer is 'True'.

26. Residual asset is the result of combining liabilities and equity.

True False The correct answer is 'False'.

27. In cash basis accounting, income shall only be recognized when cash is received, and expenses
shall only be recorded when cash is paid.

True False The correct answer is 'True'.

28. Current assets are expected to be used after 12 months.

True False The correct answer is 'False'.

29. The following are cash flow transactions under the direct method except

a. Depreciation of old building b. Cash receipts from customers c. Income taxes paid d. Cash paid to
creditors The correct answer is: Cash paid to creditors

30. Owner's equity usually consists of the owner's investment and the earned profit less any
withdrawals made during a given period.

True False The correct answer is 'True'.

31. Owner's Equity is to sole proprietorship as Capital is to corporation.

True False The correct answer is 'False'.

32. Property, plant, and equipment are assets.

True False The correct answer is 'True'.

33. The firm can create as many capital accounts as there are owners in a corporation.

True False The correct answer is 'True'.

34. Accounting is defined in part as the art of ____________, ___________, and ____________ in a
significant manner and in terms of money, transactions and events.

a. analyzing, evaluating, assessing b. journalizing, synthesizing, reporting c. processing, computing,

finalizing d. recording, classifying, summarizing

The correct answer is: recording, classifying, summarizing

35. Cash basis accounting is not acceptable in the accounting industry though we need to understand
this in order to prepare our cash flow statement.

True False The correct answer is 'True'.

36. Cash withdrawal of an owner for personal use falls in what cash flow category?

a. Assessing b. Financing c. Operating d. Investing The correct answer is: Investing

37. Cash and cash equivalents are noncurrent assets.

True False The correct answer is 'True'. MY ANSWER IS FALSE- CASH & CASH EQUIVALENTS ARE
CURRENT ASSETS, BUT IN OED IT IS TRUE ☹

38. The following are the advantages of forming a partnership except Minimal regulatory
requirements than corporation.

a. Exempt from paying corporate tax b. more capital from partners c. Can exist for a period of 50 yrs

The correct answer is: Can exist for a period of 50 yrs

39. If the firm has been operating in the past year, the beginning capital of the current year is the
same as the ending capital of the previous year.

True False The correct answer is 'False'. MY ANSWER IS TRUE BUT IN OED FALSE. ☹

40. CPA means Certified Public Accountant.

True False The correct answer is 'True'.

41. Cash receipts from customers is P200,000, cash paid to suppliers is P10,000 and cash paid to
employees is P25,000, how much is the net cash from operating activities.

a. P175,000 b. P190,000 c. Cannot be determined from the data given d. P165,000 Correct

The correct answer is: P165,000

42. Gross profit is P150,000, total selling expenses is P39,000, and total general and administrative
expenses cost P52,000. Compute for the operating income.

a. Cannot be determined from the given data b. P59,000 Correct c. P163,000 d. P241,000

The correct answer is: P59,000

43. It is a voluntary association of at least 15 persons having a common bond of interest for the
purpose of generating capital from among themselves through a systematic and continuous savings
program in order to grant loans to each other at reasonable rates of interest.

a. cooperative b. single proprietorship c. partnership d. corporation

The correct answer is: single proprietorship MY ANSWER IS COOPERATIVE ☹

44. Services businesses offer products.

True False The correct answer is 'False'.

45. Financing activities are the common transactions happening in the organization.

True False The correct answer is 'False'.

46. The following are examples of non-current assets, except-Property, plant and equipment.

a. Accounts Receivable b. Long-term investment c. Intangible asset

The correct answer is: Accounts Receivable MY ANSWER IS LONG TERM INVESTMENT ☹

47. In the statement of changes in equity of a sole proprietor, this is deducted from the beginning
capital to arrive at the ending capital

a. investment b. Net profit c. None of the choices d. withdrawal The correct answer is: withdrawal

48. The cash in a financing activity mostly involve current assets or income and expense accounts

True False The correct answer is 'True'.

49. Withdrawals or drawings are resources of the firm which were taken by the owner for personal
use.

True False The correct answer is 'True'.

50. This is derived from the income statement and is also added to the beginning capital and
additional investments done during the year.

a. withdrawal b. investment c. Net profit d. None of the choices The correct answer is: investment

51. Investments made by the owner may represent the original investment made at the start of
business, and any additional investments thereafter.

True False The correct answer is 'True'.

52. Cash flows are categorized into three types; these activities does not determine the purpose for
which the cash has been used.

True False The correct answer is 'True'.

53. In this principle, it is assumed that the business owners or managers are separate from the
business enterprise.

a. Going concern principle b. Dual effect principle c. Business entity principle d. matching principle

The correct answer is: Business entity principle

54. If the beginning capital of Mrs. Castro is P200,000 and she made an additional investment during
the year of P100,000 with a net profit of P52,000, how much is the ending capital?

a. P252,000 b. P300,000 c. P248,000 d. P352,000 The correct answer is: P352,000

55. Operating activities may be presented using either the direct method or indirect method.

True False The correct answer is 'True'.

56.Increase in assets is recorded as a Debit.

True False The correct answer is 'True'.

57. The owner's equity is also called capital, net assets, or net worth.

True False The correct answer is 'True'.

58. Capital is also known as a residual asset.

True False The correct answer is 'False'.

59. A mortgage payable is a noncurrent liability.

True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

60. Merchandising business are charging fees for rendered services.

True False The correct answer is 'False'.

61. Revenues are also known as income.

True False The correct answer is 'True'.

62. Cash basis accounting relies entirely on the payment and receipt of cash.

True False The correct answer is 'True'.

63. Stockholders are the owners of a corporation.

True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

64. Net sales is P450,000, sales discounts is P35,000, and sales returns and allowances is P15,000.
Compute for the gross sales.

a. Cannot be determined from the given data b. 500,000 c. P430,000 d. P400,000

The correct answer is: Cannot be determined from the given data

65. Operating expenses and operating income or operating loss are items which can be found in an
income statement prepared in a multi-step approach.

True False The correct answer is 'False'. MY ANSWER IS TRUE ☹

66. Owner's equity usually consists of the owner's investment and the earned profit less any
withdrawals made during a given period.

True False The correct answer is 'True'.

67. Among all the activities, only financing activities have different ways of being presented.

True False The correct answer is 'True'.

68. Beginning inventory is P50,000, net cost of purchases is P125,000, and ending inventory is
P35,000. Compute for the cost of goods sold.

a. Cannot be determined from the given data b. P210,000 c. P110,000 d. P140,000

The correct answer is: P140,000

69. If additional investment of the owner is P650,000 and payment of long-term loan to the bank is
P700,000, how much is the net cash increase or decrease from financing activities?

a. Increase of P650,000 b. Decrease of P50,000 Correct c. Increase of P50,000 d. Decrease of

P700,000 The correct answer is: Decrease of P50,000

70. Land is a current asset.

True False The correct answer is 'True'. My answer is FALSE ☹

71. Cash and cash equivalents are current assets.

True False The correct answer is 'True'.

72. Residual asset is the result of combining liabilities and equity.

True False The correct answer is 'False'.

73. Liabilities are present obligations arising from past events.

True False The correct answer is 'True'.

74. The acquisition and disposal of long-term assets, including investments not considered cash
equivalents are parts of an investing activities.

True False The correct answer is 'True'.

75. Cash flows are categorized into three types; these activities does not determine the purpose for
which the cash has been used.

True False The correct answer is 'True'.