Quiz 1

Question 1

The purpose of the notes to financial statements is

A. to provide the necessary disclosures required by PFRSs.

B. to correct improper financial statement presentation.

C. to provide recognition of amount not included in the total of the financial statements.

D. to present management’s responses to auditor comments

Answer 1

A. to provide the necessary disclosures required by PFRSs.

Question 2

The worksheet:

A. lays the groundwork for formal financial statements preparation.

B. is a fundamental financial statement.

C. provides details necessary for full disclosure and the preparation of footnotes.

D. is prepared at the end of each operating cycle

Answer 2

A. lays the groundwork for formal financial statements preparation.

Question 3

At the end of the current accounting period, Jezreel Company failed to record utilities consumed during the
period. Jezreel will be billed for the utilities during the next accounting period. As a result, current period assets, liabilities,
equity and income, respectively, are:

A. Overstated, Overstated, Correct, Correct

B. Correct, Understated, Overstated, Overstated

C. Overstated, Understated, Overstated, Overstated

D. Overstated, Understated, Correct, Correct

Answer 3

B. Correct, Understated, Overstated, Overstated

Question 4

In preparing a worksheet, a net loss would be computed and entered in the:

A. debit column of the income statement column of the worksheet.

B. credit column of the income statement column of the worksheet.

C. in the debit column of the adjusted trial balance.

D. in the credit column of the statement of financial position column of the worksheet.

Answer 4

B. credit column of the income statement column of the worksheet.

Question 5

Under the income approach to adjusting entries, the receipt of ₱ 15,000 of Unearned Revenue would be
recorded by debiting Cash. What account should be credited?
A. Cash
B. Revenue
C. Unearned Revenue
D. Prepaid Revenue

Answer 5

B. Revenue

Question 6

The difference between the totals of debit and credit columns of the adjusted trial balance columns on a
worksheet:

A. is the amount of net income or loss

B. is not unusual when preparing the worksheet

C. indicates there is an error on the worksheet

D. is the net difference between revenues, expenses and drawing

Answer 6

C. indicates there is an error on the worksheet

Question 7

Cuso Co. purchased equipment on January 1, 2022, at a total invoice cost of ₱400,000. The equipment has an
estimated salvage value of ₱10,000 and an estimated useful life of 5 years. The amount of accumulated depreciation on
December 31, 2023, if the straight-line depreciation is used is:
A. ₱ 78,000
B. ₱ 80,000
C. ₱ 156,000
D. ₱ 160,000

Answer 7

C. ₱ 156,000

Question 8

Correl Company purchased equipment, and the following costs were incurred:
Cash price ₱ 24,000
Sales taxes 1,200
Insurance during transit 200
Installation and testing 400
What amount should be recorded as the cost of equipment?
A. ₱ 24,000
B. ₱ 25,200
C. ₱ 25,400
D. ₱ 25,800

Answer 8

D. ₱ 25,800

Question 9

A. Increase in asset; increase in liabilities
B. Increase in one asset; decrease in another asset
C. Decrease in assets; decrease in owner’s equity
D. Increase in one owner’s equity; decrease in another owner’s equity account
E. Decrease in owner’s equity; increase in liabilities

1. July 1 Mr. Ramie Runico, borrowed from the bank ₱ 300,000 to start a tailoring business.
2. July 5 Mr. Runico then purchased a sewing machine that he will use for 5 years for cash, ₱ 40000.
3. July 10 His son was hospitalized, so he took some cash from the business, ₱ 10,000.
4. July 13 His electric bill for ₱ 3,000 became due, but he did not have the cash so he signed a promissory
   note with VECO that he will pay after 30 days.
5. July 18 Weekly salaries of the sewers he hired amounted to ₱ 5,000. He issued a check for such payment.
6. July 22 Threads, needles and cutters were purchased for cash at ₱300.

Answer 9

1. A
2. B
3. C
4. E
5. C
6. B