1. Which of the following has a a.

Accounts receivable
positive effect on owner’s equity? b. Cash
a. Revenue c. Advances from customers
b. Expenses d. Prepaid checks
c. Net loss 8. The amount billed to customers for
d. None of the above services made on account is
2. The person or company to whom a debited to
certain amount of cash is owned by a. Accounts receivable
the business payable at a future b. Cash
date c. Service income
a. Debtor d. Unearned service income
b. Owner 9. Six month rent received but not yet
c. Creditor earned is recorded as
d. None of the above a. Prepaid rent
3. An increase in an expense account b. Accrued rent
a. Increases the owner’s equity c. Unearned rent
b. Increases the assets d. Rent income
c. Decreases the liabilities 10. An invoice received from a
d. Decreases the owner’s equity supplier for supplies purchased is
4. Services rendered to a client on recorded as
account will a. Accounts receivable
a. Increase owner’s equity b. Supplies income
b. Decrease owner’s equity c. Accounts payable
c. Decrease the assets d. None of the above
d. Decrease the liabilities 11. Note bearing 10% percent interest
5. Which of the following already earned but still uncollected.
transactions will give rise to a The interest is recorded as
revenue? a. Interest receivable
a. Collection of an account b. Interest expense
receivable from a customer c. Prepaid interest
b. Cash received as proceeds from d. None of the above
a bank loan 12. Power books received a 20%
c. Rendition of services to a commission from C&E publishing
customer on account house although it has not yet sold
d. Payment of liability the books. The commission
6. Which of the following is an received will be recorded as
expense? a. Commission receivable
a. Payment of a liability b. Unearned commissions
b. Payment of worker’s salaries c. Accrued commissions
c. Payment of the liability of the d. Earned commissions
owner 13. The cost of money borrowed to
d. Cash withdrawal of the owner finance business operations is
7. Checks received from customers recorded as
are recorded as a debit to a. Interest income
 b. Accrued expense b. Accounts receivable and
c. Interest expense accounts payable
d. Prepaid rent c. Accounts payable and cash
14. The cost allocated to the expiration d. Accounts payable and owner’s
of certain assets due to wear and capital
tear is recorded as e. Accounts receivable and
a. Depreciation expense owner’s capital
b. Accrued expense f. None of the above
c. Allowance for bad debts 19. Assume that Multi-time paid
d. Prepaid expense expenses amounting to 500,000,
15. When an owner issued a personal how does this transaction affect its
checking account in payment of the accounting equation?
business liability this is recorded as a. Decrease both assets and
a. Owner’s drawing liabilities
b. Net income b. Decrease both assets and
c. Net loss owner’s equity
d. Owner’s capital c. Increases assets and decreases
16. When an owner uses the business liabilities
funds to pay for his own personal d. Decreases assets and increase
debt, this is recorded as liabilities
a. Owner’s drawing e. No effect on the accounting
b. Net income equation
c. Net loss f. None of the above
d. Owner’s capital 20. Considering the overall effects of
17. Multi-time is a store that sells transactions 12 and 14, what is
clocks and watches of various Multi-time’s net income or net
brands. Multi-time sold clocks and loss?
watches for P880,000 to shoe mart a. Net income of 880,000
department store on account. What b. Net loss of 500,000
would be the effect of this c. Net income of 380,000
transaction to the accounting d. Net loss of 380,000
equation of multi-time? e. Neither a net income or net loss
a. Increase both liabilities and f. Cannot be determined from the
owner’s equity by P880,000 given data
b. Increase both assets and
liabilities by P880,000
c. Increase both assets and
owner’s equity by 880,000
d. Increase asset but subsequently
decrease it by the same amount
e. None of the above
18. Refer item no.12, what accounts
are affected by the credit card?
a. Accounts receivable and cash
1. A two-column schedule listing the 7. Forms serving as evidences of
names and the debit or credit transactions which are used as
balance of all accounts in the sources in recording these
ledger transactions
a. Balance sheet a. Books
b. Income statement b. Accounts
c. Statement of owner’s equity c. Entries
d. Trial balance d. Business documents
2. An entry with more than one debit 8. The arrangement of accounts in the
accounts and/or more than one ledger and trial balance
credit accounts a. Chronological
a. Single entry b. Alphabetical
b. Compound entry c. Financial statement order
c. Double entry d. By amount
d. None of the above 9. A listing of all account titles used
3. The sequence of accounting steps by a company
performed during an accounting a. Chart of accounts
period b. Trial balance
a. Accounting cycle c. Income statement
b. Recording cycle d. Journal
c. Adjusting cycle 10. A list of accounts in the general
d. Periodic cycle ledger with their respective debit
4. A form of record used to show and credit balances.
additions and deduction of each a. Journal
individual asset, liability, capital, b. Chart of accounts
revenue, and expenses c. Trial balance
a. Journal d. Financial statements
b. Trial balance 11. Which of the ff. statements
c. Account regarding a trial balance is not
d. Financial statement correct?
5. This is prepared every time a a. A trial balance is a proof that
transaction is made all transactions have been
a. Journal entry correctly recorded, posted, and
b. Account summarized.
c. Financial statement b. A trial balance proves the
d. Trial balance equality of the debits and
6. The process of transferring credits.
information from the book of c. A trial balance is useful in
original entry to the book of final preparing the financial
entry statement
a. Recording d. A trial balance should always
b. Posting be balanced.
c. Journalizing 12. Posting is the process of
d. Adjusting
 a. Adding the debit and credit d. By amount
column of the journal 17. This process is the copying of
b. Recording entries in the journal amounts from the journal to the
c. Transferring information from ledger.
journal to ledger a. Recording
d. Verifying the amounts recorded b. Journalizing
in the ledger c. Posting
13. Which of the following is a d. Adjusting
transaction? 18. The normal balance of an account
a. An agreement to be the appears on
exclusive supplier of a a. The side of the account where
company we record increases
b. A phone call from a customer b. The side of an account where
inquiring the price of goods we record decreases
c. Sale of land on account c. Neither side of an account
d. None of the above d. All of the above
14. The following are characteristics of e. None of the above
double entry accounting except. 19. A transaction that debits or credits
a. It recognizes the dual effects of more than two accounts at the same
an event time requires a
b. Every event affects at least two a. Single entry
accounts b. Compound entry
c. It is based on the concept of c. Posting entry
giving something and receiving d. Ledger entry
something in return e. Adjusting entry
d. All of the above 20. All the information for each
e. None of the above account can be found in the
15. The following is true about the T a. Journal
account except: b. Ledger
a. The term gets its name from the c. Trial balance
capital letter T. d. All of the above
b. The vertical line in the letter 21. It is recorded holding all the
divides the account into two accounts
sides that is, the debit and the a. Journal
credit b. Ledger
c. The debit and the credit on both c. Trial balance
sides can be interchanged d. None of the above
d. All of the above 22. Arrow store purchased equipment
e. None of the above in the amount of 100,000. Terms of
16. Transactions in the general journal 20% cash, 30% through 60 day
are recorded in what order? 10% note, and the balance on
a. Chronological account. The journal entry to
b. Alphabetical record the transaction is
c. By account a. Equipment 20,000
 Notes receivable 30,000 instead issued a note for the
Accounts receivable 50,000 balance, the journal entry would be
Accounts payable 100,000 a. Note payable 50,000
b. Equipment 100,000 Accounts payable 50,000
Notes Payable 30,000 b. Accounts payable 50,000
Accounts Payable 50,000 Note payable 50,000
Cash 20,000 c. Note receivable 50,000
c. Equipment 100,000 Accounts receivable 50,000
Notes Receivable 30,000 d. Accounts receivable 50,000
Accounts Receivable 50,000 Note receivable 50,000
Cash 20,000
d. Accounts Payable 50,000
Notes Payable 30,000
Cash 20,000
Equipment 100,000
23. The entry to record the payment of
the note and the interest after 60
days is as follows:
a. Note payable 30,000
Interest expense 500
Cash 30,500
b. Note receivable 30,000
Interest income 500
Cash 30,500
c. Accounts payable 30,000
Interest expense 500
Cash 30,500
d. Accounts payable 30,000
Interest expense 500
Note payable 30,500
24. The entry to record the payment of
the balance of arrow store on the
equipment is
a. Accounts payable 50,000
Note payable 50,000
b. Accounts payable 50,000
Note payable 50,000
c. Accounts payable 50,000
Cash 50,000
d. Note payable 50,000
Cash 50,000
25. If arrow did not pay the remaining
balance for the equipment but