Colegio de San Gabriel Arcangel

PACUCOA Accredited Level 1

Recognized by CHED, DepEd, and TESDA
Area E, Sapang Palay, City of San Jose del Monte, Bulacan

Practice Exam
Part 1

1. Several accounting tasks are described in the following section. In which area of accounting does each task
belong? Your answer could be any of the following:
External Auditing Management Advisory Services
Income Tax Services Financial Accounting
Management Accounting Internal Auditing

a. Examination of the accounting records and system for the purpose of rendering an opinion.
b. Planning the business transactions in order to legally minimize taxes.
c. Computing the cost of production of the finished goods.
d. Reviewing the efficiency of the business enterprise’s operations.
e. Preparing the report for the purpose of getting a bank loan.
f. Recommending certain policies to solve certain problems.
g. Review the financial reports that will be submitted to the SEC.
h. Undertaking a feasibility study for the management.
i. Recording of day-to-day business transactions.
j. Preparation of financial budget.

2. Identify the quality or concept that is being described in each of the following given statements. For some
numbers, you need to fill in the blank. Your answer could be any of the following:
Comparability Going-concern assumption or continuity assumption
Costs vs. benefits Monetary concept
Neutrality Ultraconservatism
Prudence or conservatism Material
Prudence Matching concept
Relevance Representational faithfulness
Reliability Concept of equality of value received and value given up
Understandability Periodicity concept

a. To exercise care and moderation in situations of uncertainty or in situations when there is the presence of two
or more equally acceptable alternatives.
b. To be free from bias is to practice _________.
c. Consistency in the application of methods is needed to have this quality.
d. Information has this quality if it has predictive value and/or feedback value.
e. The benefits derived from the gathered information must be greater than the costs of gathering, organizing,
and providing the information.
f. To have this quality, financial information must be neutral and verifiable.
g. The use of terms that are vague should be avoided to have this quality.
h. Also known by the term conservatism.
i. If the information is significant or important, that information is said to be _________.
j. What is the term used for excessive conservatism?
k. The business enterprise will continue to exist indefinitely, unless there are signs that will indicate otherwise.
l. The financial data represent what they intend to represent.
m. Under this concept, it is assumed that peso values can be assigned to the business transactions, and that
changes in the purchasing power of the peso are not important enough to be taken up in the books.
n. It is assumed that for every value received, there is a corresponding equal value parted with.
o. For the purpose of preparing timely reports, it is assumed that the life of the business can be divided into
reporting periods.

1
 Colegio de San Gabriel Arcangel
PACUCOA Accredited Level 1
Recognized by CHED, DepEd, and TESDA
Area E, Sapang Palay, City of San Jose del Monte, Bulacan

p. Net income or profit is equal to earned income minus incurred expenses.

ASSETS = LIABILITIES + EQUITY

3. The fundamental accounting equation is: .
Restate the given formula to be able to compute for the liabilities and the equity.

4. Study this given equation very well:

Original investment + Additional investments + Profit during the
reporting period – Personal withdrawals = Equity of the owner as of the
end of the reporting period

Based on the above formula, prepare an equation to compute for the following:
a. Original investment or equity of the owners as of the beginning of the period.
b. Additional investments.
c. Profit of the period.
d. Personal withdrawals.

5. Study this given formula very well:

Total income – Total expenses = Profit or loss of the period

Based on the given formula, compute for:

a. Income during the period.
b. Expenses during the period.

6. In which financial statement or statements will you find each given item? Your answer or answers could be any of
the following:
Income statement
Balance sheet
Statement of cash flows
Statement of changes in owner’s equity
As part of heading of financial statement of Balance sheet
As part of heading of financial statement of Income statement, Statement of changes in
owner’s equity, or Statement of cash flows

a. Service revenues
b. Depreciation – Machinery
c. As of December 31, 2018
d. Notes payable
e. Profit for the period
f. James Garcia, Drawing
g. Total liabilities
h. Salaries and wages
i. Salaries and wages payable
j. Loss due to fire
k. For the year ended December 31, 2018
l. Funds provided by investing activities
m. Cash balance at the end of the period
n. Mortgage payable
o. Total assets
p. James Garcia, Capital, end.
2
 Colegio de San Gabriel Arcangel
PACUCOA Accredited Level 1
Recognized by CHED, DepEd, and TESDA
Area E, Sapang Palay, City of San Jose del Monte, Bulacan

q. Interest receivable
r. Payment of mortgage payable
s. Building
t. Proceeds from sale of land
u. Rent
v. Rent paid
w. Collection from customers
x. Provision for income tax
y. Unsold merchandise

7. Compute for the unknown in each given case.

Case 1 Case 2 Case 3
Assets 100,000 350,750 ?
Liabilities 45,500 ? 232,750
Owner’s Equity ? 210,320 522,325

8. Compute for the unknown in each given case.

Case 1 Case 2 Case 3
Income (revenues and gains) 850,450 950,320 ?
Expenses and losses 887,454 ? 450,450
Profit (loss) ? (125,750) (45,350)

9. Compute for the unknown in each given case.

Case 1 Case 2 Case 3 Case 4 Case 5

Owner’s equity, beginning 100,000 325,444 245,850 150,653 ?
Additional investment 75,000 50,000 80,000 ? 20,000
Withdrawals for personal 60,000 120,000 ? 90,000 120,000
use
Profit (loss) 75,375 ? (98,750) (85,344) 95,750
Owner’s equity, ending ? 275,350 180,200 190,691 325,750

10. Based on the following business transactions, identify the item received and the corresponding item given up.

a. Bought furniture on cash basis.

b. Bought machinery on credit basis.
c. Paid the seller for the machinery bought earlier on credit basis.
d. Paid the telephone bill.
e. Professional services were rendered by the business to clients on cash basis.
f. Professional services were rendered by the business to clients on credit basis.
g. Cash was collected from the customers or clients to apply on their open account.
h. The proprietor, Antonio Castro, increased his investment in the business in the form of cash.
i. The business got a loan from the bank.
j. The building of the business burned down.
k. The business collected rent income.

Prepared by:

Mr. Rodel E. Cahilig

Instructor

3
 Colegio de San Gabriel Arcangel
PACUCOA Accredited Level 1
Recognized by CHED, DepEd, and TESDA
Area E, Sapang Palay, City of San Jose del Monte, Bulacan

Practice Exam
Part 2

1. Indicate the effects of the following independent transactions on the different accounting elements. Express your
answers in terms of the “Debit” and “Credit”.

2.