3TAY1112

JPIA Finals E-Review: ACTBAS1

Theory Questions 1. Which of the following is incorrect regarding a trial balance? a) A trial balance uncovers errors in journalizing and posting b) It proves the mathematical equity of debits and credits after posting c) It proves all transactions have been recorded d) A trial balance is useful in the preparation of financial statements Answer: C. It proves all transactions have been recorded Input VAT is the value-added tax due from or paid by a VAT-registered entity in the course of its business on importation of goods or local purchase of goods and services, including the lease or use of property from another VAT-registered entity. Answer: False Which two steps in the accounting cycle are aided by the preparation of the worksheet? a) analyze source documents and preparing financial statements b) posting journal entries and adjusting the accounts c) journalizing transactions and closing the accounts d) adjusting the accounts and preparing financial statements Answer: D. Adjusting the accounts and preparing financial statements Going concern assumption means that the accounting entity is viewed as continuing in operation infinitely in the absence of evidence to the contrary. Answer: False Performing services on account will have the following effects on the components of the basic accounting equation: a) increase liabilities and increase owners equity. b) increase assets and increase liabilities. c) increase assets and decrease owners equity. d) increase assets and increase owners equity. Answer: D. increase assets and increase owners equity The cost principle states that: a) only transaction data capable of being expressed in terms of money be included in the accounting records. b) assets should be recorded at their cost. c) assets should be initially recorded at cost and adjusted when the market value changes. d) assets should be stated in a common unit of measure. Answer: B. Assets should be recorded at their cost

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No journal entry is made for hiring an employee with a salary of P50,000 per month. Answer: True The time period assumption states that: a) revenue should be recognized in the accounting period in which it is earned. b) the fiscal year should correspond with the calendar year. c) expenses should be matched with revenues. d) the economic life of a business can be divided into artificial time periods. Answer: D. The economic life of a business can be divided into artificial time periods. Which of the following statements about the accrual basis of accounting is true? a) Events that change a companys financial statements are recorded in the periods in which cash is received. b) Revenue is not recognized in the period in which it is earned. c) Revenue is recorded only when cash is received, and expense is recorded only when cash is paid. d) this basis is in accordance with generally accepted accounting principles. Answer: This basis is in accordance with generally accepted accounting principles

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Problem Solving 1. Weekly wages of the employees of Damon Company for a five-day work week total P30,000 payable on Fridays. December 31 is a Wednesday. How much additional salaries expense must be recorded at year end? Daily salary (30000/5) P6000 Days worked for the year x 3 Additional Salaries Expense P18000

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Compute for the ending capital of Phineas Company using the following information: Capital, January 1 P95,000 Net Income during the year 40,000 Additional Investments of Phineas 7,000 Personal drawings by Phineas 12,000 Capital, January 1 Net Income during the year Additional Investments of Phineas Personal drawings by Phineas Capital, December 31 P95,000 40,000 7,000 (12,000) P130000

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The balance of Allowance for Doubtful Accounts before adjustment at the end of the period is $400 debit. Based on an analysis of Accounts Receivable, it was estimated that $9,000 would become uncollectible. Determine the uncollectible accounts expense for the year. Allowance balance-debit P400

Required allowance Uncollectible Accounts Expense 4.

9000 P9400

Apple Companys beginning capital balance is P156,000. The owner withdrew P5,000 cash for her personal use and invested additional funds equal to twice the amount of her net income for the period. How much was Apple Companys net income if the company had an ending capital of P196,000? Ending Capital P 196,000 Beginning Capital (156,000) Drawing 5,000 Subtotal P 45,000 Divide 3 Net Income P 15,000 Orange Company reported a net income of P35,000 for the period ended 2011. During that year, Orange was able to sell its equipment, with an original cost of P80,000, for P20,000. The equipment had a carrying value of P5,000 at the time it was sold. If Oranges total revenue was thrice the amount of its gain on sale of equipment, how much was deducted from it to get a net income of P35,000? Gain on Sale of Equipment (20,000-5,000) P 15,000 Multiply 3 Total Revenue P 45,000 Net Income (35,000) Operating Expenses p 10,000

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Strawberry Company has assets worth P350,000 and liabilities amounting to P200,000 as at year end. Its beginning capital was P75,000. During that year, the owner took home some supplies costing P55,000 for personal use. If Strawberry incurred expenses amounting to P80,000, how much was she able to earn during that year? Note: Strawberry does not have any additional contributions to the business. Ending Capital (350,000-200,000) P 150,000 Beginning Capital (75,000) Drawing 55,000 Expenses 80,000 Earnings P 210,000