FDNACCT Finals Review

1.       A common business transaction that would NOT affect the amount of owners’ equity is

• A.      Signing a note payable to purchase equipment

  
  

• B.       Payment of property taxes

• C.       Billing of customers for services rendered

• D.      Owners’ withdrawal of cash

2.       The owner brought in his old personal van to be used as the delivery equipment of the business as an additional investment. The old van was originally bought for P 800,000, with a carrying value of P 320,000. The van is now valued at P 200,000 by a third-party car re-seller. What would be part of the journal entry for this transaction?

• A.      Debit Equipment P 800,000

  
  

• B.      Debit Equipment P 200,000

• C.       Credit Owner’s Capital P 800,000

• D.      Debit Equipment P350,000

4.       The normal balances of Doubtful Accounts Expense and its related Allowance for Doubtful Accounts are ___.

• A.      credit and debit respectively

  
  

• B.      debit and credit respectively

• C.       both debit

          

•    D.   both credit

5.       Purchasing supplies for cash _____.

• A.      decreases both assets and liabilities

  
  

• B.       increases both assets and liabilities

• C.       does not affect total assets

• D.      increases assets and decrease liabilities

6.       At the beginning of the year, the liabilities of Caltex Service station amounted to P120,000, but it decreased by P50,000 during the year. The assets increased by P160,000 during the year and at the end of the year amounted to P360,000. The owner’s equity at the start of the year is _____.

• A.      P160,000

  
  

• B.      P80,000

• C.       P240,000

• D.      P260,000

Which of the following will you expect to find in a statement of owner’s equity?

• A.      Cash balance, end of year

• B.       Revenues and expenses

• C.       Owner’s contributions and withdrawals

• D.      Liabilities due to creditors

Which statement does NOT correctly describe net income?

• A.      It appears in the income statement.

  
  

• B.     It appears in the statement of owner’s equity.

• C.       It affects the balance sheet.

• D.      It is the excess of expenses over revenues.

A credit is either an increase or a decrease. It _____.

• A.      increases expenses

• B.       decreases liabilities

• C.       increases income

• D. decreases capital

The unadjusted trial balance shows supplies of P1,350. If P350 are on hand at the end of the accounting period, the adjusting entry is

• A.     DR Supplies                    350

   CR Supplies Expense           350

• B.      DR Supplies                    1,000

  CR Supplies Expense           1,000

• C.       DR Supplies Expense     350

  CR Supplies                          350

• D.      DR Supplies Expense    1,000
  CR Supplies                          1,000

The journal entry to record the sale of merchandise on account for P27,500 with freight of P1,250 under freight terms FOB destination point, collect is:

• A.      Debit Accounts Receivable 26,250; Debit freight out 1,250; Credit Sales 27,500

• B.       Debit Accounts Receivable 27,500; credit Sales 27,500

• C.       Debit Purchases 27,500; debit Freight In 1,250; credit Accounts Payable 28,750

• D.      Debit Purchases  27,500; credit Accounts   Payable  27,500