4.1 Written Test

TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY

National Assessment

for

Bookkeeping NC III

WRITTEN TEST

HCSBKP307-0609 Bookkeeping NC III

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BOOKKEEPING NC III

WRITTEN TEST INSTRUCTIONS: DO NOT WRITE ANYTHING ON THIS TEST BOOKLET. Write your answers on the answer sheet provided. You may use the back page of your answer sheet for your scratch work. You have one (1) hour to complete this test, but if you can finish it earlier you may hand in your Answer Sheet and Test Booklet to your Assessor. This is a MULTIPLE CHOICE type of test. Write only the letter that corresponds to your choice on the space provided on the answer sheet. Use CAPITAL LETTERS only Below is a sample question and answer box to assist you in writing your answers correctly. EXAMPLE: MULTIPLE CHOICE What is NOT included as a step in the accounting cycle? A. B. C. D.

posting closing entries. preparing financial statements. journalizing the transactions. preparing a work sheet.

Preparing a worksheet is the correct answer, so write D on the answer sheet provided.

IMPORTANT: DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

HCSBKP307-0609 Bookkeeping NC III

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TEST BEGINS HERE 1.

What is the effect of performing services on account on the basic accounting equation? A. B. C. D.

2.

As of December 31, 2006 Stonewall Company has assets of P3,500 and owner's equity of P2,000. What are the liabilities for Stonewall Company as of December 31, 2006? A. B. C. D.

3.

C. D.

In its simplest form, an account consists of two parts An account is an individual accounting record of increases and decreases in specific asset, liability, and owner's equity items. There are separate accounts for specific assets and liabilities but only one account for owner's equity items. The left side of an account is the credit or decrease side

What are debits? A. B. C. D.

5.

P 2,500 P 2,000 P 1,500 P 1,000

Which of the following statements about an account is TRUE? A. B.

4.

Increase assets and decrease owner’s equity Increase assets and increase owner’s equity Increase assets and increase liabilities Increase liabilities and increase owner’s equity

Debits increase both assets and liabilities Debits decrease both assets and liabilities Debits increase assets and decrease liabilities Debits decrease assets and increase liabilities

What is the nature of the revenue account? A. B. C. D.

HCSBKP307-0609 Bookkeeping NC III

Revenue account is increased by debits Revenue account is decreased by credits Revenue account has a normal balance of a debit Revenue account is increased by credits

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6.

Which of the following statements about a journal is FALSE? A. It is not a book of original entry B. It provides a chronological record of transactions C. It helps to locate errors because the debit and credit amounts for each entry can be readily compared. D. It discloses in one place the complete effect of a transaction

7.

The trial balance shows Supplies P1,350 and Supplies Expense P0. If P600 of supplies are on hand at the end of the period, what is the adjusting entry? A. B. C. D.

8.

What is a ledger? A. B. C. D.

9.

Ledger contains only asset and liability accounts Ledger shows accounts in alphabetical order. Ledger a collection of the entire group of accounts maintained by an entity. Ledger is a book of original entry

What is Posting? A. B. C. D.

10.

Dr. Supplies P750 Cr. Supplies Expense P750 Dr. Supplies P600 Cr. Supplies Expense P600 Dr. Supplies Expense P750 Cr. Supplies P750 Dr. Supplies Expense P600 Cr. Supplies on P600

Posting normally occurs before journalizing Posting transfers ledger transaction data to the journal Posting is an optional step in the recording process Posting transfers journal entries to ledger accounts

What account will have a zero balance after closing entries have been journalized and posted? A. B. C. D.

HCSBKP307-0609 Bookkeeping NC III

Service Revenue Allowance for Bad Debts Prepaid Insurance Accumulated Depreciation

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11.

What SALES accounts have a normal debit balance? A. B. C. D.

12.

When are postings from the purchase journal to the subsidiary ledger made? A. B. C. D.

13.

C. D.

Trial Balance is a list of accounts with their balances at a given time Trial Balance proves the mathematical accuracy of journalized transactions. Trial Balance will not balance if a correct journal entry is posted twice Trial Balance proves that all transactions have been recorded

When is the trial balance is NOT in balance? A. B. C. D.

15.

yearly monthly weekly daily

What is a trial balance? A. B.

14.

Sales Discounts Sales Returns and Allowances Both A and B Neither A nor B

Trial Balance will not balance if a correct journal entry is posted twice Trial Balance will not balance if the purchase of supplies on account is debited to Supplies and credited to Cash. Trial Balance will not balance if a P100 cash drawing by the owner is debited to Owner's Drawing for P1,000 and credited to Cash for P100. Trial Balance will not balance if a P450 payment on account is debited to Accounts Payable for P45 and credited to Cash for P45.

Which of the following statements is INCORRECT? A. B. C. D.

HCSBKP307-0609 Bookkeeping NC III

The work sheet is essentially a working tool of the accountant The work sheet is distributed to management and other interested parties. The work sheet cannot be used as a basis for posting to ledger accounts Financial statements can be prepared directly from the work sheet before journalizing and posting the adjusting entries

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16.

What types of accounts will appear in the post closing trial balance? A. B. C. D.

17.

What is an adjusted trial balance? A. B. C. D.

18.

assets exceed liabilities assets exceed revenues expenses exceed revenues revenues exceed expenses

E. On the last day of the period, Jim Alas Company buys a P9,000 machine on credit. What financial statement/s will be affected by this transaction? A. B. C. D.

20.

Trial Balance after journal entries have been prepared First Trial Balance Trial Balance after adjusting entries are journalized and posted Trial Balance after closing entries have been journalized and posted

Which of the following statements is TRUE regarding net income? A. B. C. D.

19.

Permanent (real) accounts Temporary accounts Accounts shown in the income statement columns of a work sheet Nominal Accounts

income statement only balance sheet only income statement and statement of changes in equity only income statement, statement of changes in equity only, and balance sheet

What is the financial statement that reports assets, liabilities, and owner's equity? A. B. C. D.

HCSBKP307-0609 Bookkeeping NC III

income statement statement of changes in equity balance sheet statement of cash flow

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21.

How assets are usually classified in a balance sheet? A. B. C. D.

22.

How are current assets listed on the balance sheet? A. B. C. D.

23.

Safeguard Assets Prevent fraud Produce correct financial statements Deter employee dishonesty

What is NOT included as part of physical controls? A. B. C. D.

25.

By liquidity By importance By longevity By alphabetizing

Internal control is used in an entity to enhance the accuracy and reliability of its accounting records. What else is another purpose of internal control from the list provided below? A. B. C. D.

24.

current assets; long-term assets; property, plant, and equipment; and intangible assets. current assets; long-term assets; property, plant, and equipment; and other assets. current assets; long-term assets; tangible and intangible assets. Current assets and non-current assets

Safes and vaults to store cash Independent bank reconciliation Locked warehouses for inventories Bank safety deposit boxes for important papers

Which of the following items in a cash drawer at November 30 is NOT considered Cash? A. B. C. D.

HCSBKP307-0609 Bookkeeping NC III

Money Orders Coins and currency Check from a customer dated December 1 Check from a customer dated November 28

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26.

What principle of internal control is used when prenumbered checks are used whenever cash is disbursed? A. B. C. D.

27.

What principle of internal control is used when an entity permits only designated personnel to handle cash receipts A. B. C. D.

28.

Paid-in capital in excess of par value. Common stock. Paid-in capital in excess of stated value. Paid-in capital from treasury stock.

What is Retained Earnings? A. B. C. D.

30.

Establishment of responsibility Segregation of Duties. Physical, mechanical, and electronic controls Document procedures

Which of the following is not reported under additional paid-in capital? A. B. C. D.

29.

Establishment of responsibility Segregation of Duties. Physical, mechanical, and electronic controls Document procedures

a subdivision of paid-in capital. net income retained in the corporation. reported as an expense in the income statement. closed to capital stock.

What body issues the Philippine Accounting Standards? A. B. C. D.

HCSBKP307-0609 Bookkeeping NC III

Philippine Accounting Standards Board. Philippine Accounting Standards Committee. Accounting Standards Council Financial Reporting Standards Council

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31.

What is Full Disclosure? A. B. C. D.

32.

What is the primary criterion by which accounting information can be judged? A. B. C. D.

33.

valuation. cost allocation. cash accumulation. appraisal.

MM Company purchased equipment on January 1, 2005, at a total invoice cost of P400,000. The equipment has an estimated salvage value of P10,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2006, if the straight-line method of depreciation is used?

A. B. C. D. 35.

consistency. predictive value. decision-usefulness. comparability.

What is Depreciation ? A. B. C. D.

34.

financial statements should disclose all assets at their cost. financial statements should disclose only those events that can be measured in pesos. financial statements should disclose all events and circumstances that would matter to users of financial statements. financial statements should not be relied on unless an auditor has expressed an unqualified opinion on them.

P160,000. P156,000. P 80,000. P 78,000.

Blinka Retailers accepted P50,000 of Citibank VISA credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Blinka Retailers will include a credit to Sales of P50,000 and what are the debit account title/s and amount/s?

A. B. C. D. HCSBKP307-0609 Bookkeeping NC III

Cash P48,000 and Service Charge Expense P2,000 Accounts Receivable P48,000 and Service Charge Expense P2,000 Cash P50,000 Accounts Receivable P50,000 8

36.

BB Company on June 15 sells merchandise on account to Chaz Co. for P1,000, terms 2/10, n/30. On June 20, Chaz Co. returns merchandise worth P300 to BB Company. On June 24, payment is received from Chaz Co. for the balance due. What is the amount of cash received? A. B. C. D.

37.

Which of the following represent techniques used by the financial analyst? A. B. C. D.

38.

Trend analysis is also known as horizontal analysis. Shows changes between years in both dollar and percentage form. It is simple to identify trends by looking at the raw data alone Trend percentages often relate several years of financial data in terms of a base year.

What is the financial statement that shows both peso and percentages in the report ? A. B. C. D.

40.

Peso and percentage changes on financial statements. Common-size statements. Ratios. All of the above

Which is NOT included as part of Trend analysis ? A. B. C. D.

39.

P700. P686. P680. None of the above.

A balance sheet. A common-size statement. A proportional financial statement. A relative statement of equity.

Which of the following is representative of vertical analysis? A. B. C. D.

HCSBKP307-0609 Bookkeeping NC III

Vertical analysis in the income statement causes all accounts to be related as a percentage of net income. Vertical analysis in the balance sheet causes all accounts to be related as a percentage of total assets. Percentages used in vertical analysis make identifying trends difficult. Percentages can be used in the balance sheet without being associated with the numbers they represent.

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41.

The income statement for Nadeen, Inc. shows income before income taxes P700,000, income tax expense P210,000, and net income P490,000. If Nadeen has 100,000 shares of common stock outstanding throughout the year, what is earnings per share? A. B. C. D.

42.

Which of the following is incorrect concerning subsidiary ledgers? A. B. C. D.

43.

C. D.

The sales discount column is included in the cash receipts journal. The purchases journal records all purchases of merchandise whether for cash or on account. The cash receipts journal records sales on account. Merchandise returned by the buyer is recorded by the seller in the purchases journal.

Which statement is incorrect regarding the general journal? A. B. C. D.

45.

The purchases ledger is a common subsidiary ledger for creditor accounts. The accounts receivable ledger is a subsidiary ledger. A subsidiary ledger is a group of accounts with a common characteristic. An advantage of the subsidiary ledger is that it permits a division of labor in posting.

Which of the following statements is correct? A. B.

44.

P7.00. P4.90. P2.10. No correct answer is given.

Only transactions that cannot be entered in a special journal are recorded in the general journal. Dual postings are always required in the general journal. The general journal may be used to record acceptance of a note receivable in payment of an account receivable. Correcting, adjusting, and closing entries are made in the general journal.

When are special journals used? A. B. C. D.

HCSBKP307-0609 Bookkeeping NC III

all purchase transactions are recorded in the purchases journal. all cash received, except from cash sales, is recorded in the cash receipts journal. all cash disbursements are recorded in the cash payments journal. a general journal is not necessary. 10

46.

Which of the following should not be included in the physical inventory of a company?

A. B. C. D.

47.

Which sales accounts have normally have a debit balance? A. B. C. D.

48.

gross profit. cost of goods sold. a sales revenue section. investing activities section.

What is gross profit, if sales revenues are P400,000, cost of goods sold is P310,000, and operating expenses are P60,000? A. B. C. D.

50.

Sales Discounts. Sales Returns and Allowances. both (a) and (b). neither (a) nor (b).

Which item is NOT shown in a multiple-step income statement? A. B. C. D.

49.

Goods held on consignment from another company. Goods shipped on consignment to another company. Goods in transit from another company shipped FOB shipping point. None of the above.

P400,000. P340,000 .P90,000. P30,000.

What is cost of goods sold: A. B. C. D.

HCSBKP307-0609 Bookkeeping NC III

purchase discounts are deducted from net purchases. freight-out is added to net purchases. purchase returns and allowances are deducted from net purchases freight-in is added to net purchases.

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