FABM Quiz 2 Set A - 2 pts each – 50 points

I. Supply the answer II. Multiple choice

Find the missing amount in these different scenarios regarding the
accounting equation: 16. Assets to be sold, consumed or realized as part of the
A. 1 – 5 entity’s normal operating cycle are non-current assets
a b c D a. true
b. false
Assets - Year-ending
210,000 400,000 4.? 140,000
2019 current assets = 12 months or normal operating cycle, whichever is
Liabilities - Year- longer
1. ? 30% 60% 90,000
ending 2019
17. In recording transactions
Equity - Year-ending
X X 40,000 X a. The word debit means “increase” and the word credit
2019
means “decrease” – depends on the normal balance
Equity - at the start of b. Assets, expenses, and drawing accounts are debited
40,000 2. ? 10,000 5.?
the year for increases – normal balance is debit
Income during the c. Liabilities, revenue, and drawing accounts are debited
100,000 40,000 3. ? 100,000
year for increases
Expense during the d. Assets, expenses, and capital accounts are debited for
110,000 80,000 20,000 50,000
year increases

Solution 18. Of the following items, which one should be

classified as current asset
Equity at the start of the year plus income/revenue during the year a. trade receivable from sale of an inventory normally
minus expenses during the year equals equity at the end of the year. collectible in 13 months – normal operating cycle
Afterwards, use accounting equation formula b. cash designated for payment of a liability that is due
1. 160,000 in 18 months – cash is current, but restricted to pay a
2. 320,000 non-current liability so this is a non current asset
3. 50,000 c. A deposit on an equipment ordered, delivery of which
4. 100,000 will be made within six months
5. 0
19. A chart of accounts is
a. a flowchart of all transactions
b. an accounting procedure manual
B. 6 - 11 Dec-18 Dec-19 Dec-20 c. a journal
Assets: d. a list of all account titles
Current Assets 170,000 6. ? X 20. Another term for equity is net liability
Non-Current Assets 600,000 500,000 500,000 a. True
Liability b. False
Current Liabilities 80,000 7. ? 9. ? 21. Which of the following statements is true?
Non-Current Liabilities 370,000 230,000 300,000 i. An entity may debit a cash when they sell an asset.
ii. The normal balance of a loss is a credit
Equity 320,000 8. ? 10 ? a. i only – loss is an expense account. Normal balance is
Working Capital 90,000 20,000 X debit. Remember it decreases equity
b. ii only
During 2019, the business sold a land valued at P100,000 for c. both i and ii
P70,000. No other transaction occured d. neither i nor ii
22. Income is recorded in the same manner as assets
During 2020, the business has a net income of 50,000 from its
a. True
operations. In addition, the owner withdraw P40,000 cash of his
b. False
investment to the Business.
23. If revenue was P100,000, expenses were P75,000
11. How much is the net change in the business’ working capital and withdrawal was P20,000, the amount of net income
from 2019 to 2020? (Please indicate if increase or decrease) or net loss would be
a. P90,000 net income
Solution b. P25,000 net income
c. P25,000 net loss
6. 170,000 + 70,000 (proceeds/cash received from sale of land) = d. P15,000 net income – A withdrawal is part of the
240,000 = current asset computation to get the ending balance of equity,
7-8. Total asset = 240,000 + 500,000 = 740,000. Total equity = however, it is not related in the computation of net
320,000 – 30,000 (loss from the sale of land valued at P100,000) = income or net loss. Net income is computed as
290,000. Total liabilities = 740,000 – 290,000 = 450,000. Current Revenue/Income – expenses.
liability = 450,000 – 230,000 = 220,000. Or Working capital of
20,000 deducted from current assets of 240,000 24. Which of the following is a liability owed to the
9. CA = 240,000 (CA 2019) + 50,000 (partner of income from business?
operations in a double entry bookkeeping is either cash or AR, both a. money which the business has borrowed and has not
are current assets) – 40,000 (cash withdrawal – cash is current yet paid
asset) = 250,000 b. cash which will be used to pay the business’ liabilities
10. 250,000 + 500,000 – 450,000 (no movement in liab) = 300,000. c. purchase made by the business on account
 11. = WC 2020 = 250,000 – 150,000 (450,000 – 300,000) = d. sales made by the business on account – when we sell
100,000. 100,000 minus 20,000 = increase of 80,000 we get a receivable. The buyer will have a liability that
needs to be paid to us
10.
C. 12 25. Additional investment minus the withdrawals is
Total assets increased by P90,000 while total liabilities decreased equal to the profit or net income
by P30,000 for 2019. How much was the change in equity for a. true
2019? (indicate also if decrease or increase) b. false – again investment and/or withdrawals is
not related to the computation of net income.
Solution
A = L + E / 100,000 = 50,000 + 50,000 (assumed amount at the
beginning)
A = 100,000 + 90,000 = 190,000
L = 50,000 – 30,000 = 20,000
E = 50,000 + X = 170,000; X = 120,000

Or 90,000 + 30,000 = 120,000

D. 13
A sole proprietor’s initial investment to UST Catering is P100,000.
UST Catering’s revenue and expenses for the period amounted to
P70,000 and P20,000, respectively. During the year, the owner
invested an additional P50,000 in a different business and sold UST
catering’s service vehicle at a loss of P20,000. How much is the value
of the Owner’s equity of UST catering at the end of the period?

Solution = E beg + Income – Expenses = E end

100,000 + 70,000 – 20,000 – 20,000 = 130,000 (Include the loss on

sale of UST catering services because it is owned by the business.
In set B do not include since what was sold is the owner’s personal
car)

E.
14. Total cash payments made by the business for the period
amounted to P400,000 as follows:
Supplies consumed 100,000
Water usage by the business 50,000
Salaries and wages of workers 50,000
Machine purchased for business used 200,000

How much is the total asset?

Solution
Total assets is 200,000 – machine purchased
In Set B total expenses is 200,000 also

*total assets as a result of the expenditure. Do not include

400,000 cash payment
 FABM Quiz 2 Set B – 2 pts each – 50 points
I. Supply the answer II. Multiple choice
Find the missing amount in these different scenarios regarding the 16. In recording transactions
accounting equation: a. The word debit means “increase” and the word credit
A. 1 – 5 means “decrease”
a b c D b. Assets, expenses, and drawing accounts are debited for
Assets - Year- increases
200,000 140,000 4.? 400,000 c. Liabilities, revenue, and drawing accounts are debited
ending 2019
Liabilities - Year- for increases
1. ? 90,000 40% 30% d. Assets, expenses, and capital accounts are debited for
ending 2019
increases
Equity - Year-
X X 60,000 X
ending 2019 17. Assets to be sold, consumed or realized as part of the
Equity - at the
50,000 2.? 40,000 5. ? entity’s normal operating cycle are non-current assets
start of the year a. true
Income during the b. false
100,000 100,000 100,000 40,000
year
Expense during 18. Of the following items, which one should be classified
110,000 50,000 3. ? 80,000 as current asset
the year
a. trade receivable from sale of an inventory normally
collectible in 13 months
B. 6 - 11 Dec-18 Dec-19 Dec-20 b. cash designated for payment of a liability that is due in
Assets: 18 months
Current Assets 170,000 6. ? X c. A deposit on an equipment ordered, delivery of which
will be made within six months
Non-Current Assets 600,000 500,000 500,000
Liability 19. A chart of accounts is
a. a flowchart of all transactions
Current Liabilities 80,000 7. ? 9. ? b. an accounting procedure manual
Non-Current Liabilities 370,000 230,000 300,000 c. a journal
Equity 320,000 8. ? 10 ? d. a list of all account titles

Working Capital 90,000 20,000 X 20. Another term for equity is net assets
a. True
During 2019, the business sold a land valued at P100,000 for P70,000. No b. False
other transaction occured
21. Which of the following statements is true?
i. An entity should always debit a cash when they sell an
During 2020, the business has a net income of 50,000 from its operations. In
asset.
addition, the owner withdraw P40,000 cash of his investment to the
ii. The normal balance of a loss is a credit
Business.
a. i only
b. ii only
11. How much is the net change in the business’ working capital from 2018
c. both i and ii
to 2020? (Please indicate if increase or decrease)
d. neither i nor ii
C. 12 22. Income is recorded in the same manner as assets
If total assets decreased by P25,000 and total owner’s equity increased by a. True
P105,000 during the year, how much is the ending balance of liabilities b. False
assuming its beginning balance is P130,000?
23. If revenue was P90,000, expenses were P75,000 and
D. 13 withdrawal was P20,000, the amount of net income or net
A sole proprietor’s initial investment to ABM Catering is P100,000. ABM loss would be
Catering’s revenue and expenses for the period amounted to P70,000 and a. P90,000 net income
P20,000, respectively. During the year, the owner invested an additional b. P5,000 net loss
P50,000 in a different business and sold his personal car to ABM Catering at c. P75,000 net loss
a loss of P20,000. How much is the value of the Owner’s equity of ABM d. P15,000 net income
catering at the end of the period?
24. Which of the following is a liability owed to the
E. business?
14. Total cash payments made by the business for the period amounted to a. money which the business has borrowed and has not yet
P400,000 as follows: paid
Supplies consumed 100,000 b. cash which will be used to pay the business’ liabilities
c. sales made by the business on account
Water usage by the business 50,000
d. purchase made by the business on account
Salaries and wages of workers 50,000
Machine purchased for business used 200,000 25. Additional investment minus the withdrawals is equal
to the profit or net income
How much is the total expense? a. true
b. false