Bookkeeping Quiz No. 1

Direction: Choose the letter of the correct answer.

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BASIC ACCOUNTING TERMS

ASSETS. These are the economic resources that are owned by the business and are expected to benefit future operations.

Cash - includes money and any medium of exchange acceptable by bank for deposit such as coins, checks and money order.

Accounts Receivable – due from customers for services rendered on account or sales make on credit.

Notes Receivable – due from customers evidenced by a written promise to pay a definite sum of money for a specified period of time.

Supplies – includes all types of supplies or more specifically as Office Supplies for bond paper, duplicating paper, ribbons and ink for computer, paper clips, and many more; Store Supplies for paper or plastic bags, wrapping papers, packing tape, string or straw and many more; Cleaning Supplies for soap, disinfectant, floor maps, floor polishing and many more.

Prepaid Expenses – these are prepayments of future expenses like prepaid rent, prepaid insurance (normally insurance premium is paid in advance for six months or one year) and other item of expenses paid in advance.

Office Equipment - include computers, printers, check writers, duplicating machines, desk calculators, and other electronically operated equipment.

Furniture and Fixtures – includes office table and chairs, filling cabinets, computer tables, shelves and paintings.

Building – such as office building, warehouse, factory building, store building and other structures used in business.

Building Improvements – improvements done on buildings and offices.

Land - land owned and being used in business.

LIABILITIES.  These are financial obligation or debts of the enterprise.

Accounts Payable – for the cost of purchases on credit.

Notes Payable – for liabilities evidenced by a written promised to pay a specific amount of money in the future.

SSS Premium Payable – for contributions of employer and employee to be remitted to the Social Security System.

WHT Payable – for taxes withheld from salaries of employees to be remitted to the Bureau of Internal Revenue.

Vat Payable – due to Bureau of Internal Revenue representing 12% tax on purchases/sales.

Unearned Revenue – Advance payments by customers for services to be rendered in the future.

OWNER’S EQUITY OR CAPITAL. This represents owner’s claims on the assets of the business. Owner’s equity is also residual equity because the owner get only what is left after the creditors have been satisfied in full.  This account includes the original investment by the owner, additional investment, personal withdrawal, revenues earned and costs and expenses incurred to match the revenues.

Source:
Fundamentals of Accounting P-1 (Accounting for service, Merchandising and Manufacturing)

By: Gloria Ardaniel Rante