CHAPTER 5

Question 1

You have a business. Your business will have which of the following books of accounts?
1. Journal
2. Ledger
3. Scratchpad
4. 1 and 2

Answer 1

4
1 and 2

Question 2

You have a business. When recording business transactions, you will record them first
1. in the Ledger.
2. in the Journal.
3. on your phone’s reminder app.
4. on a scrap paper.

Answer 2

2
in the Journal.

Question 3

You have a business. You have various credit customers, including Ms. Oh Tang and Mr. Pah Lista. If you want to know how much Ms. Oh Tang owes you, you will refer to the
1. General ledger.
2. Subsidiary ledger.
3. Special journal.
4. reminder app.

Answer 3

2
Subsidiary ledger.

Question 4

You have a business. If you want to know the total amount that your credit customers owe you, you will refer to the
1. General ledger.
2. Subsidiary ledger.
3. General journal.
4. Google.

Answer 4

1
General ledger.

Question 5

You have a business. Your business purchases inventory and issues a promissory note to pay for the purchase price after 30 days. This transaction is most likely to be recorded in the
1. Purchases journal.
2. Sales journal.
3. Notes journal.
4. General journal.

Answer 5

4
General journal.

Question 6

You have a business. You will record each business transaction
1. in at least two parts - debit and credit.
2. in equal amounts of debit and credit.
3. using at least two accounts.
4. all of these.

Answer 6

4
all of these.

Question 7

You have a business. If you want to increase an asset account, what should you do?
1. Debit that account
2. Credit that account
3. Double that account
4. any of these

Answer 7

1
Debit that account

Question 8

You have a business. Your bookkeeper is confused on the rules of debits and credits. Which one of the following would you advise him/her?
1. Assets, liabilities and equity have normal debit balances.
2. To combine a credit amount with another credit amount means you subtract.
3. The normal balance of an account determines the side in which the account is decreased.
4. The normal balance of a contra account is the opposite of its related account.

Answer 8

4
The normal balance of a contra account is the opposite of its related account.

Question 9

You have a business. Mr. Cell, a supplier, has an account receivable from your business. This means that your business
1. has an account payable to Mr. Cell.
2. has a note payable to Mr. Cell.
3. sells goods to Mr. Cell.
4. likes Mr. Cell.

Answer 9

1
has an account payable to Mr. Cell.

Question 10

You have a business. Your business sells goods to Ms. Vai, on account. If Ms. Vai subsequently pays her account, you will record this transaction in the
1. Sales journal.
2. Purchases journal.
3. Cash disbursements journal.
4. Cash receipts journal.

Answer 10

4
Cash receipts journal.

Question 11

Which of the following is not one of the essential parts of a general journal?
1. Date column
2. Account titles column
3. Debit and credit columns
4. Running balance column

Answer 11

4
Running balance column

Question 12

Debit and credit equals
1. debit.
2. credit.
3. kupit.
4. te difference between the two amounts.

Answer 12

4
the difference between the two amounts.

Question 13

Imagine facing a mirror with both your arms raised sideways to shoulder level.

Your left arm is
1. debit.
2. credit.
3. clean and bright.
4. good to see.

Answer 13

1
debit.

Question 14

Imagine facing a mirror with both your arms raised sideways to shoulder level.

If you were an asset, how would you be increased?
1. through my left arm
2. through my right arm
3. through my toes
4. through my forehead

Answer 14

1
through my left arm

Question 15

Imagine facing a mirror with both your arms raised sideways to shoulder level.

If you were a liability, how would you be decreased?
1. through my left arm
2. through my right arm
3. by bending my knees
4. by sitting down

Answer 15

1
through my left arm

Question 16

Imagine facing a mirror with both your arms raised sideways to shoulder level.

If you kick your right foot to touch your right hand, what happens?
1. Addition
2. Subtraction
3. Multiplication
4. Sorry, I can’t

Answer 16

1
Addition

Question 17

Imagine facing a mirror with both your arms raised sideways to shoulder level.

If you clap your hands, what happends?
1. Addition
2. Subtraction
3. Division
4. There would be sound.

Answer 17

2
Subtraction

Question 18

An account title with the word “receivable” or “prepaid” in it is most likely to be
1. an asset account.
2. a liability account.
3. an income account.
4. an expense account.

Answer 18

1
an asset account.

Question 19

If you debit this account, its balance will be decreased.
1. Cash
2. Accounts receivable
3. Accounts payable
4. Ownwer’s drawings

Answer 19

3
Accounts payable

Question 20

All of the following accounts are increased by a debit except
1. Accounts receivable
2. Owner’s drawings
3. Bad debts expense
4. Accumulated depreciation

Answer 20

4
Accoumulated depreciation

Question 21

You are selling “puto.” Your classmate told you, “Friend, can I buy one? I will pay tomorrow.” You said, “Sure, catch!” Which of the following accounts is increased, and how is that account increased?
1. Accounts receivable, Debit
2. Notes receivable, Debit
3. Cash, Debit
4. Accounts receivable, Credit

Answer 21

1
Accounts receivable, Debit

Question 22

Assuming your “puto”business uses special journals, where will you record the transaction in #21?
1. Sales journal
2. Cash receipts journal
3. General journal
4. On my palm

Answer 22

1
Sales journal

Question 23

Your accounts payable ledger shows the following amounts: Php1,000 (beg. bal., Cr.); Php800 (Cr.); Php200 (Dr.); and Php100 (Dr.). How much is ending balance of your accounts payable?
1. 2,100
2. 1,800
3. 1,500
4. 0

Answer 23

3
1,500

Question 24

It’s the mid-term exams. However, you were not able to sell enough “puto” to pay your tuition fee. Your school required you to write a promissory note so that you can obtain an exam permit. In your personal accounting reccord, which of the following accounts is increased, and how is that account increased?
1. Notes payable, Debit
2. Notes receivable, Credit
3. Cash, Debit
4. Notes payable, Credit

Answer 24

4
Notes payable, Credit

Question 25

Before the final exams, the government awarded you a procurement contract of Php10B worth of “putos.” You are now big time. You are even planning to put up your own school! One sunny day, your classmate told you, “Friend, can I borrow Php100K? I will pay you after we graduate in college.” You said, “Sure, here you go, ka-ching!” Which of the following correctly relates to the transaction with your friend?
Account increased/ Type of Account/ Transaction recorded in
1. Cash/ Asset/ Sales journal
2. Receivable/ Asset/ Cash receipts journal
3. Payable/ Liability/ Cash disbursements journal
4. Receivable/ Asset/ Cash disbursement journal

Answer 25

4
Receivable/ Asset/ Cash disbursement journal

Question 26

The effects on the accounts of a recorded transaction are classified in the
1. Journal.
2. Ledger.
3. Log book.
4. Financial statements.

Answer 26

1
Journal.

Question 27

Which of the following accounts is increased through debit?
1. Accumulated depreciation
2. Owner’s equity
3. Cash
4. Accounts payable

Answer 27

3
Cash

Question 28

Accounts receivable is decreased through a
1. debit.
2. credit.
3. calculator.
4. strict diet and exercise.

Answer 28

2
credit.

Question 29

What is the normal balance of the “Owner’s drawings” account?
1. debit.
2. credit.
3. a little bit leaning to the right.
4. zero.

Answer 29

1
debit.

Question 30

The right side of an account is called
1. debit.
2. credit.
3. the correct side.
4. the wrong side.

Answer 30

2
credit.

Question 31

To credit an account means
1. to increase that account.
2. to decrease that account.
3. either 1 or 2 depending on the normal balance of the account.
4. any of these depending on the accountant’s mood.

Answer 31

3
either 1 or 2 depending on the normal balance of the account.

Question 32

Which of the following accounts has an abnormal balance?
1. Cash Php1,000 (Dr.)
2. Accounts payable Php3,000 (Cr.)
3. Accounts receivable Php5,000 (Cr.)
4. All these accounts look fine to me

Answer 32

3
Accounts receivable Php5,000 (Cr.)

Question 33

Your “Equipment” account has a balance of Php100,000 and the related “Accumulated depreciation - Equipment” account has a balance of Php40,000. The equipment’s carrying amount in the financial statements is
1. Php40,000.
2. Php60,000.
3. Php80,000.
4. Php100,000.

Answer 33

2
Php60,000.

Question 34

You opened up a business. You provided Php10M cash to your business as the initial capital. To record this transaction, which of the following accounts will you credit?
1. Cash
2. Owner’s equity
3. Accounts receivable
4. Accounts payable

Answer 34

2
Owner’s equity

Question 35

To record the transaction, in #34 above, which of the following accounts will you debit?
1. Cash
2. Owner’s equity
3. Accounts receivable
4. Accounts payable

Answer 35

1
Cash

Question 36

Your business purchased hoods that will be held for sale in the ordinary course of business activities, on cash basis. To record this transaction, which of the following accounts will you debit?
1. Cash
2. Owner’s equity
3. Accounts payable
4. Inventory

Answer 36

4
Inventory

Question 37

To record the transaction in #36 above, which of the following accounts will you credit?
1. Cash
2. Owner’s equity
3. Accounts payable
4. Inventory

Answer 37

1
Cash

Question 38

What if the purchase in #36 above was made on account, rather than on cash basis, what account will you credit?
1. Cash
2. Owner’s equity
3. Accounts payable
4. Inventory

Answer 38

3
Accounts payable

Question 39

Your business sells goods on account. To record this transaction, which of the following will you debit?
1. Cash
2. Sales
3. Accounts receivable
4. Accounts payable

Answer 39

3
Accounts recevable

Question 40

Your business subsequently collects the price in #39 above. To record the collection, which of the following accounts will you credit?
1. Cash
2. Sales
3. Accounts receivable
4. Accounts payable

Answer 40

3
Accounts receivable