CHAPTER 5

Question 1

The three books of accounts are the journal, ledger and T-account.

Answer 1

False

Question 2

The ledger is called the “books of original entries.”

Answer 2

False

Question 3

Journals can be classified into General Journal and Special Journal. Special journals are used to record transactions of a similar nature. Those that cannot be recorded in the special journals are recorded in the general journal.

Answer 3

True

Question 4

Entity A has total accounts receivable of Php12M. This information is most likely to have been taken from the General Journal.

Answer 4

True

Question 5

Of Entity A’s total accounts receivable of Php12M, Php4.8M is due from Entity B. This information is most likely to have been taken from the Special Journal.

Answer 5

False

Question 6

An account that necessarily needs a breakdown is called a controlling account.

Answer 6

True

Question 7

The normal balance of an asset or expense account is debit, while the normal balance of a liability, equity or income account is credit.

Answer 7

True

Question 8

Combining a debit amount with a debit amount results to addition.

Answer 8

True

Question 9

The system of recording used in financial reporting is called multiple-enty system.

Answer 9

False

Question 10

Every transaction has a two-fold effect on values. This concept is called “matching”.

Answer 10

False

Question 11

Debit is simply the left side, while credit is the right ride, of an account.

Answer 11

True

Question 12

When recording business transactions, you see to it that for every peso that you debit, there is a corresponding peso that you credit. You are applying the concept of equilibrium.

Answer 12

True

Question 13

If you want to increase the balance of a liability account, you will debit it.

Answer 13

False

Question 14

Under the double-entry system, sometimes a business transaction is recorded throught a debit alone or a credit alone.

Answer 14

False

Question 15

Your general ledger shows total notes payable of Php10M. You only have two bank loans - one from Bank A and the other one from Bank B. If the loan from Bank A has a balance of Php4M, the loan from Bank B must be Php8M.

Answer 15

False

Question 16

The balance of an account is simply the difference between the total debits and total credits in that account.

Answer 16

True

Question 17

This morning, you had cash of Php100. During the day, you collected accounts receivable of Php20 from your friend and you spent Php70 for transportation, meals and utilities expenses. The ending balance of your cash is Php190.

Answer 17

False

Question 18

The cash collection from your friend in #17 above is recorded in your personal books of accounts as a credit to cash.

Answer 18

False

Question 19

The collection in #17 above will increase your accounts receivable from your friend.

Answer 19

False

Question 20

If you are a liability and your mama tells you that she will debit you, this means that she will either decrease your allowance or put you up for adoption.

Answer 20

True