Fundamentals of Accountancy,

Business and Management 2

It helps to determine transactions that must be recorded to update or
correct the depositor's accounting records and to determine the actual
amount of the cash deposit balance at the end of the month.

Bank Reconciliation Statement

These are receipts by the depositor that reached the bank too late to
appear in the bank statement for the current month.
Deposits in transit

These are adjustments in the unadjusted book balance.

Outstanding checks

These are adjustments in the unadjusted bank balance.

Deposits in transit and outstanding checks

Freight in refers to costs incurred in transporting inventory that are

sold.

True
Inventory is a tangible product.
True

FOB shipping point means that if the good is lost or damaged while in
transit, such shall be borne by the buyer.

True

A manufacturing business does not need to alter completely the

materials they purchased before selling it to the public.

FALSE

Purchases, unlike sales, does not have discounts.

FALSE

These are issued and recorded by the depositor but not yet presented
to the bank for encashment.
Outstanding checks

These are usually representing fees for handling small accounts.

Service Charges
These are caused by timing differences and errors committed by the
depositor or the bank.

Differences in the Cash in Bank and the Current Account

Inventory is exclusive only to merchandising business.

FALSE

Other miscellaneous bank charges like fees for printing checks, handling
collections of notes receivable, and processing NSF checks falls under
________________.

Service charges

Freight refers to costs incurred for transportation,

True

A reconciliation statement is prepared ________.

Monthly

When should depositors prepare a bank reconciliation?

Every month

Purchase have discount.

True

These are caused by timing differences and errors committed by the

depositor or the bank.

Differences in the Cash in Bank and the Current Account

A merchandising business needs to alter completely the materials they

purchased before selling it to the public.
False

The depositor will keep _____________.

An asset

Freight refers to costs incurred for transportation.

True
Freight out is included in the cost of goods.
False

Credit and debit memoranda are _______________________.

Adjustments in the unadjusted book balance.

The balances between the Cash in Bank and the Current Account-
Depositor accounts _______________.
Seldom equal

The balances between the Cash in Bank and the Current Account-
Depositor accounts are always _____________
Either A or C

Dealers of cars, retail shops, and sari-sari stores are examples of

manufacturing business.
False

It is an internal control tool that helps the company identify and check
for irregularities in their cash in bank.
Bank reconciliation
Service business have tangible products.
False

When should depositors prepare a bank reconciliation?

Every month

Inventory is a tangible product.

True

The balances shown in the bank statement and in the accounting

records are ________________________.
Adjusted and corrected

FOB destination retains the ownership with the seller until the goods
reach the destination.
True

This account shows the balance at the beginning of the month, the
deposits and other additions (credits), the checks paid and other
deductions (debits) during the month, and the ending balance.
Current Account
Other miscellaneous bank charges like fees for printing checks, handling
collections of notes receivable, and processing NSF checks falls under
__________________.
Service chargers

A merchandisingg business has two different systems in accounting for

their sales and purchases.
True

The bank on the other hand keeps record of the depositor's

transactions in a _____________.
Current Account

Freight in is included as part of the total cost of inventory purchased.

True

The most common tax rate system is ______________.

Progressive

These are taxes imposed on specified goods manufactured or produced

in the Philippines.
Excise Tax
FOB shipping point means that if the good is lost or damaged while in
transit, such shall be borne by the buyer.
True

These are usually representing fees for handling small accounts.

Service Charges

BIR Form 0605 is known as _________________________.

Payment form

It is the most common business tax in the country.

Value-Added Tax

This type of tax is also a common transaction in accounting.

Value Added-Tax

It is the one recorded by the seller upon the sale of the good or service.
Output Tax

A reconciliation statement is prepared __________.

Monthly
A merchandising business has two different systems in accounting for
their sales and purchases.
True

These are receipts by the depositor that reached the bank too late to
appear in the bank statement for the current month.
Deposits in transit

Excise tax is a form of ________________

Business Tax

Value-added taxes fall under _________________.

Business Tax

Inventory is a tangible product.

True

The balances between the Cash in Bank and the Current Account-
Depositor accounts are always _____________
Undetermined
VAT in the Philippines is set to how many percent?
12

A type of tax system wherein the government imposes higher taxes on

higher earnings.
Progressive

Tax imposed on the privilege to sell products and services are called
Value-Added Tax

Service business have tangible products.

True

These are caused by timing differences and errors committed by the

depositor or the bank.
Differences in the Cash in Bank and the Current Account

The most common tax rate system is ______________.

Progressive

1. The period covered by the prepared financial statements:

= D. Cannot be longer than 12 months. Or A. Cannot be shorter. (Di ko
sure.)

2. Which of the following would NOT be a current asset? = Land.

3. Blend Foods purchased a two-year fire and extended coverage

insurance policy on August 1, 2015, and charged the P4,200 premium to
Insurance expense. At its December 31, 2015, year-end, Bland Foods
would record which of the following adjusting entries? = Prepaid
insurance 3,325
Insurance expense 3,325

4. Unearned revenues is what type of account? = Liability

5. Posting references indicate: = B. The destinations of the postings.

Or C. Both sources and destinations of the postings. (Dito ata ako
nagkamali.)

6. An item NOT generally classified as a current liability is: = Accounts

payable.

7. The net income of a reporting period is equal to: = Income –

Expenses.
8. Which of the following transactions would increase Cash and cash
equivalents and increase Non-current liabilities? = Bank loan.

9. The accounting elements in the balance sheet include: = Assets,

liabilities and equity.
10. The debts which are to be repaid within a short period (year or less)
are known as? = Current liabilities.

11. The assets that can be converted into cash within a short period (1
year or less) are known as? = Current assets.

12. The long-term assets that have no physical existence but are right
that have value is known as: = Intangible assets.

13. Which trial balance lists all the business accounts before year-end
adjusting journal entries are made. = Unadjusted trial balance.

14. A transaction is first recorded in a record called? = Journal.

15. Books of accounts include: = Journals and Ledgers.

16. The residual equity over the assets of a business enterprise is also
called. = Net assets.

17. All of these are done in the pre-recording phase of the accounting
cycle, EXCEPT? =Journalizing.
18. The account of a supplier would be found in: = Purchases ledger.

19. At the end of an accounting period, adjusting journal entries are

made to: = Bring the accounts up to date.

20. A transaction that involves an increase in an asset and a decrease in a

liability would not affect the equality of the fundamental accounting equation.
= False.

23. The page number of the journal in which the information was taken from is placed in
the folio or reference column of the ledger.
True

Vertical analysis is also known as static analysis as it only looks at financial statement
information one period at a time.
True

To total is to ___________.

Foot

Vertical analysis is the comparison of a company's financial statements from one period
to another (e.g. annually, quarterly).

False

Vertical analysis, as compared to horizontal, confines itself in a period of time and

compares its components with a base item in the financial statement.
True

It is the most common type of deposit account.

Savings Account

Journalizing is the ___________ step in the accounting cycle.

2nd

The financial analysis is the comparison of a company's financial statements from one
period to another.

Horizontal analysis

To test a company's ability to meet its short term-debt payments.

Current ratio

This type of analytical technique is considered "static".

Vertical Analysis

The normal balance of accounts receivable is credit.

True

Vertical analysis makes use of common size financial statements to convert each
financial statement item to its base year.

True

The following are the common types of transactions that may conduct in the bank
except:
Investing

Credit is on the _________ side of the T-account.

Right

The dates of the transactions could be

Written in a chronological order

On September 1, 2016, Mr. Bruno invested P100,000 to open up a barber shop, what is
the entry to record the transaction?

dr Mr. Bruno, Capital cr Cash

It makes use of common size financial statements to convert each financial statement
item to its base year.
Vertical analysis

Horizontal analysis only looks at financial statement information one period at a time.
Vertical analysis is the comparison of a company's financial statements from one period
to another.
Both statements are false

Posting is the _______ step in the accounting process.

3rd

What do you call the process of getting the difference between the totals of the debits
and credits?

Footing

Internal and external users depend on the _________________ in order to make sound
decisions for the business.
Select one:
a.
Financial statements

These are used to asses' financial information.

Financial statement

What should be done first?

Prepare the unadjusted trial balance

When do we prepare the unadjusted trial balance?

After posting
Purchases account is only seen in the periodic inventory system.

False

The cost of goods sold determines the value of the inventory that was sold for the year.

Select one:

True

The unadjusted trial balance is the key in the preparation of financial statements.

False

A bank statement is a document that is issued _____________ by the bank.

Upon request

The entry to record the 1 month expired portion of the insurance paid in advance is?

dr insurance expense cr prepaid insurance

It is considered as the key in the preparation of financial statements.

Balance Sheet

This number can be found at the right upper portion of the general ledger which is special
to a particular account.
Account number

The adjusted trial balance is the last report prepared before the ____________ is made.

financial statement

This column of the general ledger describes what the transaction is all about.

Explanation

The normal balance of the following accounts are debit except:

Accrued salaries

The entry to record the salary that has accrued?

dr cash cr salary payable

A statement of account is issued ____________ by the bank.

Monthly

______________refers to how easily can an individual convert an asset into cash.

Liquidity