ACT 211 Quiz 1: Integrated Accounting Fundamentals (35 Points)

This document presents the solutions to a 35-point quiz, designated as Quiz 1, for the ACT 211 course, which focuses on integrated accounting fundamentals. The quiz covers a range of topics including the accounting environment, conceptual framework, and transaction analysis. Questions assess understanding of basic accounting assumptions, financial statement characteristics, the accounting cycle, and the recognition of assets and liabilities. Specific questions involve calculating owner's equity, net income/loss, and the impact of various transactions on financial statements. The quiz also tests knowledge of revenue recognition principles and the application of the accounting equation. Solutions are provided for each question, offering a comprehensive review of core accounting concepts. This resource is designed to help students prepare for similar assessments and reinforce their understanding of introductory accounting principles.

Quiz 1 - Integrated Accounting
Fundamentals - ACT 211(35
Points)
Accounting Environment, Framework and Transaction Analysis
1.Which basic assumption may not be followed when an entity in
bankruptcy prepares financial statements?
(1 Point)
Economic Entity Assumption
Going Concern Assumption
Time Period Assumption
Monetary Unit Assumption
2.The financial statements that are prepared for the business are
separate and distinct from the financial statements of the owners.
(1 Point)
Going concern Assumption
Matching principle
Economic (Business) Entity Assumption
Accounting Period Assumption
3.Which is not an important characteristic of the financial statements
that accountants currently prepare?
(1 Point)
The information in financial statements is expressed in units of money
adjusted for changing purchasing power.
Financial statements articulate (coherent) with one another.
The information in financial statements can be justified only if the benefits
exceeds cost.
The information in financial statements is summarized and classified to help
meet users’ needs.
4.What is the authoritative status of the Conceptual Framework?
(1 Point)
The Conceptual framework has the highest level of authority.
In the absence of standard or an interpretation that specifically applies to a
transaction, the Conceptual Framework shall be followed.

In the absence of a standard or an interpretation that specifically applies to a
transaction, management shall consider the applicability of the Conceptual
Framework in developing and applying an accounting policy that results in
information that is relevant and reliable.
The Conceptual Framework applies only when the International Accounting
Standards Board develops new or revised standards.
5.What is the effect if an entity collected in full an account receivable?
(1 Point)
Total assets will increase
Total assets will decrease
Total assets will not be affected
Equity will increase
6.Which of the following steps in the accounting cycle are listed in
logical order?
(1 Point)
Post the journal entries to the ledger accounts, prepare a worksheet, and
then take a trial balance.
Journalize the closing entries, post the closing entries, and then take a post-
closing trial balance.
Prepare the earnings statement, prepare the statement of financial position,
and then prepare a worksheet.
Post the closing entries, take a post-closing trial balance, then journalize a
closing entry.
7.Allen Nature Trip, travel agency, purchased equipment for P 120,000,
made a down payment of P 50,000 and signed a note for the balance.
This transaction will
(1 Point)
increase in total assets by 120,000
not affect owner’s equity
increases total liabilities by P 50,000
all of the above choices are correct.
Solution:
Entries:
Equipment 120,000
Cash 50,000
Notes payable 70,000

8.To test the equality of the debits and credits, the accountant
prepares periodically a
(1 Point)
T account
Journal
Trial balance
Ledger
9.Which of the following condition is necessary for the recognition of
an asset?
(1 Point)
It is probable that future economic benefits will flow to the enterprise and
the cost of the asset can be measured accurately.
The cost of the asset can be measured reliably.
It is probable that future economic benefits will flow to the enterprise and
the cost of the asset can be measured reliably.
It is probable that future economic benefits will flow to the enterprise and
the asset is paid for.
10.These are accounts that must always be closed every accounting
period.
(1 Point)
Revenues
Expenses
Depreciation Expense
All of the above
11.At the beginning of the year, the liabilities of Petron Services
Station amounted to P 120,000 but it decreased by P 50,000 during the
year. The assets increased by P 160,000 during the year and at the
end of the year amounted to P 360,000. The owner’s equity at the start
of the year is.
(1 Point)
1,060,000
80,000
240,000
260,000
200,000

Solution:
Beginning of the year:
200,000 = 120,000 + 80,000
End of the year:
360,000 = 70,000 + 290,000
12.The assets of the business at the start of the month is P 1,000,000
and the owner’s equity is P 800,000. Equipment worth P 500,000 were
purchased during the month of which only P 150,000 were paid for. At
the end of the month, owner’s equity will become
(1 Point)
550,000
1,150,000
800,000
1,000,000
Solution:
1,000,000 = 200,000 + 800,000
500,000
(150,000) = 350,000
1,350,000 = 550,000 + 800,000
13.The information given below appears in the financial records at the
end of the year of “The Spa” which is a health, beauty and fitness
center.
Cash P 95,000 Accounts Payable P 150,000
Accounts Receivable 70,000 Furniture and Equipment 75,000
Land 150,000 Utilities Payable 55,000
Supplies 15,000 Building 500,000
What was the owner’s equity at the end of the year?
INSTRUCTION: In writing your answer, no need to write peso sign and
centavos. If your answer, for instance, is two hundred thousand, simply
write in the "Enter Your Answer" box as 200,000.
(1 Point)
Correct answers: 700,000

Solutions:
Assets = Liabilities + Capital
905,000 = 205,000 + 700,000
14.The information given below appears in the financial records at the
end of the year of “The Spa” which is a health, beauty and fitness
center.
Cash P 95,000 Accounts Payable P 150,000
Accounts Receivable 70,000 Furniture and Equipment 75,000
Land 150,000 Utilities Payable 55,000
Supplies 15,000 Building 500,000
If the owner’s capital at the start of the year was P 400,000, no
additional investments nor withdrawals were made, how much was net
income or loss for the year?
INSTRUCTION: In writing your answer, no need to write peso sign and
centavos. If your answer, for instance, is two hundred thousand, simply
write in the "Enter Your Answer" box as 200,000.
(1 Point)
Correct answers: 300,000
Solutions:
Capital beginning of the year 400,000
Capital ending of the year (700,000)
Net loss 300,000
15.The information given below appears in the financial records at the
end of the year of “The Spa” which is a health, beauty and fitness
center.
Cash P 95,000 Accounts Payable P 150,000
Accounts Receivable 70,000 Furniture and Equipment 75,000
Land 150,000 Utilities Payable 55,000
Supplies 15,000 Building 500,000
If owner’s capital at the start of the year was P 400,000 and the owner
made a P 10,000 cash withdrawal during the year, how much was net
income or loss for the year?

INSTRUCTION: In writing your answer, no need to write peso sign and
centavos. If your answer, for instance, is two hundred thousand, simply
write in the "Enter Your Answer" box as 200,000.
(1 Point)
Correct answers: 310,000
Solutions:
Beginning capital 400,000
Net income 310,000
Total 710,000
Withdrawal (10,000)
Ending capital 700,000
16.The information given below appears in the financial records at the
end of the year of “The Spa” which is a health, beauty and fitness
center.
Cash P 95,000 Accounts Payable P 150,000
Accounts Receivable 70,000 Furniture and Equipment 75,000
Land 150,000 Utilities Payable 55,000
Supplies 15,000 Building 500,000
If owner’s capital at the start of the year was P 400,000 and he made
an additional investment of P 150,000 and cash drawings of P 10,000
during the year, how much was net income or loss for the year?
INSTRUCTION: In writing your answer, no need to write peso sign and
centavos. If your answer, for instance, is two hundred thousand, simply
write in the "Enter Your Answer" box as 200,000.
(1 Point)
Correct answers: 160,000
Solutions:
Beg. Capital 400,000
Investment 150,000
Net Income 160,000
Withdrawal (10,000)
Capital ending 700,000
17.Comparison of the balance sheet of De Guzman and Associates at
the end of 2016 with its balance sheet at the end of 2015 showed a
decrease in total assets of P 69,000 and owner’s equity by P 15,000.
The change in liabilities during the year was

(1 Point)
Increase of P 84,000
Decrease of P 84,000
Decrease of P 54,000
Increase of P 54,000
Solution:
Assets = Liabilities + Capital
(69,000) = X + (15,000)
(69,000) + 15,000 = X
(54,000) = X
18.Chris Company had total assets of P 20,000,000 and shareholder’s
equity of P 15,000,000 on January 1. During the year, assets increased
by P 3,000,000 and liabilities decreased by P 1,000,000. Tung
Company should report what amount of shareholder’s equity on
December 31?
(1 Point)
P 18,000,000
P 17,000,000
P 19,000,000
P 16,000,000
Solution:
A = L + C
20,000,000 = 5,000,000 + 15,000,000
23,000,000 = 4,000,000 + 19,000,000
19.Which of the following transactions will increase the owner’s equity?
(1 Point)
Withdrawal for personal use
Payment of rent during the period
Service rendered to the client on account basis
Collection from a client to apply on his open balance
20.For Questions 20 - 24
Jasper Cyril started his own computer shop business. He invested

P200,000 as his capital and borrowed additional P70,000 to finance the
needs of the business. He bought Furniture and fixtures worth P84,000
in cash. Rent Expense for the month is P8,000 and utilities Expense
(Electric, water, internet) amounting to P7,000 were paid. He also
bought supplies worth P120,000 in cash – half of this was used. Cash
sales for the month amounts to P70,000. Before the month ends, He
paid 50% for his liability. He withdraw P30,000 for his personal needs.
How much is the ending balance of Cash?
(1 Point)
86,000
56,000
116,000
91,000
21.How much is the Net Income / (Net Loss)?
(1 Point)
(65,000)
55,000
3,000
(5,000)
22.How much the ending balance of his Capital?
(1 Point)
165,000
173,000
225,000
105,000
23.How much is the total Assets?
(1 Point)
230,000
260,000
200,000
235,000

24.Did Jasper Cyril operate his business profitably for his first month of
operation?
(1 Point)
Yes
No
25.Realization of revenue principle recognizes revenue when it is
collected.
(1 Point)
True
False
26.The accounts in the statement of financial position are the real
values while income statement accounts are only temporary or
nominal values.
(1 Point)
True
False
27.The financial structure may be stated in the following accounting
equation, except
(1 Point)
Assets = Claims of Creditors and Owners
Assets - Creditor's Claims = Owner's Equity
Assets = Liabilities
Assets = Owner's Equity
28.One of these features is not applicable for an asset
(1 Point)
It is a thing of value owned by the business
It may have physical form (tangible) or may represent a right (intangible)
Benefit for this has already been received
This is expected to have a long life
29.The owner's equity account contains two major components:
(1 Point)
owner's capital and loan due to BPI
owner's drawing and owner's capital
owner's drawing and loan due to BPI

owner's capital and bank deposits
30.The accountant submitted audited financial statements to the
stakeholders duly certified by an independent CPA that these in
conformity with generally accepted accounting principles. It follows the
qualitative characteristics of
(1 Point)
reliability
neutrality
objectivity
relevance
31.The company assets are P 12,000,000 of which 1/3 represents
owner's equity. How much is the total liabilities?
(1 Point)
P 6M
P 3M
P 8M
P 4M
Solution:
A = L + C
12,000,000 = 2/3 + 1/3
12,000,000 x 2/3 = 8M
32.A transaction cause a P 10,000 decrease in total assets. This could
have been due to an/an
(1 Point)
payment of a loan
purchase of equipment on account
cash investment made by the owner
purchase of equipment for cash
33.An accounting concept that disallows the presentation of the
personal assets and liabilities of the owner in the balance sheet of the
owner's business.
(1 Point)
Cost
Entity
Accounting equation

objectivity
34.Purchasing supplies for cash
(1 Point)
decrease both assets and liabilities
increase both assets and liabilities
does not affect total assets
increase assets and decreases liabilities
35.A customer brought his car to your repair shop and after the work
was done he made a cash payment of P 15,000 representing 50% of
the repair bill and then issued a note for the balance of P 15,000
promising to pay after one month. The accountant immediately
recorded P 30,000 as revenue of the repair shop. This supports the
principle of
(1 Point)
Matching
Accrual
Cost
Objectivity