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MIDTERM EXAMINATION

Basic Accounting 1
SET B

I.
1. Which users need financial information to help them determine whether they should buy, hold
or sell their interest in an enterprise?
a. The public c. Government
b. Investors d. Customers

2. If a user wants to know whether an enterprise is making a profit or not, he/she must have a
copy of which statement?
a. Balance Sheet c. Cash Flow Statement
b. Notes to the FS d. Income Statement

3. Which of the following elements of financial statement can be found in Balance Sheet?
a. Revenue c. Expenses
b. Net Income d. Liability

4. This is the residual interest in the assets of the enterprise after deducting all its liabilities?
a. Equity c. Accounts Payable
b. Cash d. Revenue

5. A present obligation of the enterprise arising from past events, the settlement of which is
expected to result in an outflow from the enterprise resources embodying economic benefits.
a. Cash Flow c. Liability
b. Capital d. Withdrawals

6. Ariana Grabe, proprietress, maintains two bank accounts: one in her personal name, and the
other in the name of her business, Grabe Music School. Which of the following concepts would
be violated if Ariana includes both accounts as part of the assets of the business?
a. Accrual Concept c. Entity Concept
b. Going Concern Concept d. EJK Concept

7. Debits
a. Decrease assets and expenses and increase liabilities, revenue, and capital.
b. Increase assets and decrease expenses, liabilities, revenue, and capital.
c. Increase assets and expenses and decrease liabilities, revenue and capita.
d. Increase assets and capital and decrease liabilities, expenses, and revenue.
8. This is the primary reason for doing a business:
a. To have something to brag to colleagues
b. To have something to do during leisure time
c. To gain profit
d. To have amazing profile in facebook

9. The following are the basic forms of business organization, except?


a. Sole proprietorship
b. Co-ownership
c. Partnership
d. Corporation

10. As a minimum, how many individuals are required to form the following?
a. Corporation = Five Partnership = Five
b. Corporation = Two Partnership = Two
c. Corporation = Five Partnership = Two
d. Corporation = Two Partnership = Five

11. The purpose of accounting is to provide primarily:


a. Qualitative information
b. Quantitative information
c. Innovative Information
d. Political Information

12. Which accounting process is the recognition or non-recognition of business activities as


accountable events?
a. Communicating c. Recording
b. Identifying d. Measuring

13. How long is the traditional accounting period?


a. 30 days c. 6 months
b. 90 days d. 12 months

14. The resources owned or controlled by the enterprise as a result of past events and from which
future economic benefits are expected to flow to the enterprise.
a. Capital c. Liability
b. Income d. Asset

15. Which of the following is the basic accounting equation?


a. Assets = Liabilities x Capital
b. Assets - Liabilities = Capital
c. Assets + Liabilities = Capital
d. Assets = Liabilities + Capital

II.
16 30. Required: For each transaction, indicate whether the Assets (A), Liabilities (L) or Capital (C)
increased (+), decreased (-) or did not change (0) by placing the appropriate sign in the
appropriate column.

A L C
16. Collected Accounts Receivable in full
17. Paid cash to owner for personal use
18. Paid cash to settle accounts
19. Received bills for utilities to be paid next month
20. Billed customers for services performed
21. Returned supplies purchased on account
22. Exchange equipment to other equipment, same value
23. Received cash as additional investment
24. Paid Salaries for September
25. Purchased supplies on account
26. Acquired equipment on credit
27. Charged customers for services made on account
28. Purchased supplies in cash
29. Rendered services to cash customers
30. Paid cash for rent on office space

III.
Dyantin Titer is a singer and started a business, Celina Co., as a shift of his career. The transactions and
accounts for the business are as follows:

a. Paid 12,000 salaries of not so beautiful office assistant


b. Settled in full the 4,500 balance for the fax machine
c. Received 8,000 for services performed
d. Performed services for 12,000 on credit
e. Paid 1,350 for the monthly telephone bill
f. Paid 2,400 for the electric and water bills
g. Collected 2,000 from clients on account
h. Dyastin withdraw 8,000 of cash to date Myles Cyprus
i. Invested 150,000 of cash to start his own business
j. Paid 6,000 for one months rent
k. Bought office furniture for 20,000 in cash
l. Received delivery of McCherry laptop computer, 58,000. Paid 50% down, balance due in 30
days.
m. Performed services for 12,000 cash
n. Performed services for 10,800 on credit
o. Acquired fax machine for 7,500; paid 3,000 in cash, balance due in 10 days
p. Received 5,400 from clients on account

1. With the aid of T-accounts, record the transactions listed above. Use the following accounts:
Cash Dyanstin Titer, Withdrawal
Accounts Receivable Dyanstin Titer, Capital
Office Furniture Revenue
Office Equipment Expense
Accounts Payable

2. Determine the balances of the T-accounts.