FUNDAMENTALS OF ACCOUNTING | Assessment

Part 1: Account Classification

Instructions: For each item, classify the account as one of the following: Asset (A), Liability (L), Owner's
Equity (OE), Revenue (R), or Expense (E). Write the appropriate abbreviation in the space provided.

_____ 1. Cash​ _____ 6. Wages Expense​

_____ 2. Accounts Payable _____ 7. Office Furniture​
_____ 3. Service Revenue​ _____ 8. Taxes and Licenses​
_____ 4. Supplies​ _____ 9. Nasha, Withdrawals​
_____ 5. Messkoh, Capital​ _____ 10. Accounts Receivable

Part 2: Effects on the Accounting Equation

Instructions: Fill in the table with the effect of each transaction on Assets, Liabilities, and Owner’s Equity.
Use “+” for increase, “–” for decrease, “+/–” if both increase and decrease.

Transaction Assets Liabilities Owner’s Equity

1. The owner starts the business with cash

2. Purchased office equipment on account

3. Paid utility bill in cash

4. Performed services for cash

5. Borrowed cash from the bank

6. Bought supplies using cash

7. Paid salaries

8. Performed services on credit

9. Paid for supplies bought on account

10. Owner withdrew cash for personal use

Part 3: The Accounting Equation in Action

Instructions: Use the accounting equation (Assets = Liabilities + Owner’s Equity) to solve the
following.

1.​ Frieren received ₱213,000 in cash on hand from Himmel. However, it was accompanied by an accounts
payable of ₱70,000. Using the accounting equation, compute Frieren’s Owner’s Equity.

2.​ Jinshi reports an Owner’s Equity of ₱170,000 and an outstanding expense amounting to ₱88,000.
Determine the total assets of Jinshi based on the accounting equation.

3.​ Maomao received ₱424,000 in cash in bank from Jinshi. Her Owner’s Equity is ₱300,505. Compute the
amount of Maomao’s liabilities.

4.​ Elfie currently has ₱721,201 cash in bank. She is expected to settle a rent payable of ₱23,000 tomorrow.
Using the accounting principle, how much is her Owner’s Equity after paying her rent?

Prepared by: Management Society 2025–2026

FUNDAMENTALS OF ACCOUNTING | Assessment

Part 4: True or False

Instructions: Write TRUE or FALSE for each statement.

_____ 1. In every financial transaction, the accounting equation must remain balanced, even when
revenues are earned or expenses are incurred.
_____ 2. An increase in expenses is also an increase in the equity of a business.
_____ 3. Supplies are considered liabilities when purchased on credit.
_____ 4. Service Revenue increases both assets and owner’s equity.
_____ 5. Wages Payable is reported as a current asset on the balance sheet because it represents an
amount owed to employees.
_____ 6. Owner withdrawals reduce total assets without affecting Owner’s Equity.
_____ 7. Accounts Receivable increases when services are rendered on credit.​
_____ 8. Journalizing transactions is the first step in the accounting cycle.​
_____ 9. Liabilities represent what the business owns.​
_____ 10. The expanded accounting equation is:
Assets = Liabilities + Owner's Capital – Owner's Withdrawals + Revenues – Expenses.​

Part 5: Practical Application – Accounting Cycle Problem

Scenario: Marie Villanueva, interior designer, launched her business “M.V. Designs” on December 1, 2024.
Below are the December transactions.
Date Transaction

Dec 1 Invested P150,000 cash in the business.

Dec 3 Paid rent for December, P8,000.

Dec 5 Purchased office supplies on account, P5,000.

Dec 7 Bought office furniture for P40,000 (P15,000 cash, remainder on account).

Dec 10 Provided services for cash, P18,000.

Dec 15 Paid P2,500 for the supplies purchased.

Dec 18 Paid employee wages, P6,000.

Dec 22 Billed clients for services, P25,000.

Dec 27 Received P10,000 from billed clients.

Dec 30 Withdrew P5,000 for personal use.

Instructions:

1.​ Journalize the transactions. ●​Office Furniture ●​Rent Expense

(104) (501)​
2.​ Post to the ledger accounts:​ ●​Accounts Payable ●​Supplies Expense
(201) (502)​
●​Cash (101)​ ●​Villanueva,
Withdrawals (302)​ ●​Villanueva, Capital ●​Wages Expense
●​Accounts (301) (503)
Receivable (102)​ ●​Service Revenue
(401)​ 3.​ Prepare an Unadjusted Trial Balance as of
●​Supplies (103) December 31, 2024.
Prepared by: Management Society 2025–2026
FUNDAMENTALS OF ACCOUNTING | Assessment

I.​ Journal
Date Particulars with Explanation P.R. Debit Credit

Prepared by: Management Society 2025–2026

FUNDAMENTALS OF ACCOUNTING | Assessment

II.​ Ledger Accounts

Account 101: Cash

Date Particular Debit Credit Balance

Account 102: Accounts Receivable

Date Particular Debit Credit Balance

Account 103: Supplies

Date Particular Debit Credit Balance

Account 104: Office Furniture

Date Particular Debit Credit Balance

Prepared by: Management Society 2025–2026

FUNDAMENTALS OF ACCOUNTING | Assessment

Account 201: Accounts Payable

Date Particular Debit Credit Balance

Account 301: Villanueva, Capital

Date Particular Debit Credit Balance

Account 302: Villanueva, Withdrawals

Date Particular Debit Credit Balance

Account 401: Service Revenue

Date Particular Debit Credit Balance

Account 501: Rent Expense

Date Particular Debit Credit Balance

Prepared by: Management Society 2025–2026

FUNDAMENTALS OF ACCOUNTING | Assessment

Account 502: Supplies Expense

Date Particular Debit Credit Balance

Account 503: Wages Expense

Date Particular Debit Credit Balance

III.​ Unadjusted Trial Balance

_____________________________
_____________________________
_____________________________

Account No. Account Title Debit Credit

TOTAL:

Prepared by: Management Society 2025–2026

FUNDAMENTALS OF ACCOUNTING | Assessment Answer Key

Part 1: Account Classification

Instructions: For each item, classify the account as one of the following: Asset (A), Liability (L), Owner's
Equity (OE), Revenue (R), or Expense (E). Write the appropriate abbreviation in the space provided.

__A__ 1. Cash​ __E__ 6. Wages Expense​

__L__ 2. Accounts Payable __A__ 7. Office Furniture​
__R__ 3. Service Revenue​ __E__ 8. Taxes and Licenses​
__A__ 4. Supplies​ __OE_ 9. Nasha, Withdrawals​
__OE__ 5. Messkoh, Capital​ __A__ 10. Accounts Receivable

Part 2: Effects on the Accounting Equation

Instructions: Fill in the table with the effect of each transaction on Assets, Liabilities, and Owner’s Equity.
Use “+” for increase, “–” for decrease, “+/-” if both increase and decrease.

Transaction Assets Liabilities Owner’s Equity

1. Owner starts the business with cash + +

2. Purchased office equipment on account + +

3. Paid utility bill in cash – –

4. Performed services for cash + +

5. Borrowed cash from the bank + +

6. Bought supplies using cash +/–

7. Paid salaries – –

8. Performed services on credit + +

9. Paid for supplies bought on account – –

10. Owner withdrew cash for personal use – –

Part 3: The Accounting Equation in Action

Instructions: Use the accounting equation (Assets = Liabilities + Owner’s Equity) to solve the
following.

1.​ Frieren received ₱213,000 in cash on hand from Himmel. However, it was accompanied by an accounts
payable of ₱70,000. Using the accounting equation, compute Frieren’s Owner’s Equity.

Owner’s Equity = Assets – Liabilities

Asset: Cash On Hand = ₱213,000

Liability: Accounts Payable = ₱70,000
Owner’s Equity = ₱213,000 - ₱70,000 = ₱143,000

Prepared by: Management Society 2025–2026

FUNDAMENTALS OF ACCOUNTING | Assessment Answer Key

2.​ Jinshi reports an Owner’s Equity of ₱170,000 and an outstanding expense amounting to ₱88,000.
Determine the total assets of Jinshi based on the accounting equation.​

Assets = Liabilities – Owner’s Equity

Owner’s Equity = ₱170,000

Liabilities: Outstanding Expense = ₱88,000
Assets = ₱88,000 + ₱170,000 = ₱258,000

3.​ Maomao received ₱424,000 in cash in bank from Jinshi. Her Owner’s Equity is ₱300,505. Compute the
amount of Maomao’s liabilities.

Liabilities = Assets + Owner’s Equity

​
Assets: Cash at Bank = ₱424,000
Owner’s Equity = ₱300,505
Liabilities = ₱424,000 - ₱300,505 = ₱123,495

4.​ Elfie currently has ₱721,201 cash in bank. She is expected to settle a rent payable of ₱23,000 tomorrow.
Using the accounting principle, how much is her Owner’s Equity after paying her rent?

​ Owner’s Equity = Assets + Liabilities

​
Assets: Cash at Bank = ₱721,201
Liability: Rent Payable = ₱23,000
Owner’s Equity = ₱721,201 - ₱23,000 = ₱698, 201

Part 4: True or False

Instructions: Write TRUE or FALSE for each statement.

TRUE 1. In every financial transaction, the accounting equation must remain balanced, even when
revenues are earned or expenses are incurred.
FALSE 2. An increase in expenses is also an increase in the equity of a business.
TRUE 3. Supplies are considered liabilities when purchased on credit.
TRUE 4. Service Revenue increases both assets and owner’s equity.
FALSE 5. Wages Payable is reported as a current asset on the balance sheet because it represents an
amount owed to employees.
FALSE 6. Owner withdrawals reduce total assets without affecting Owner’s Equity.
TRUE 7. Accounts Receivable increases when services are rendered on credit.
FALSE 8. Journalizing transactions is the first step in the accounting cycle.
FALSE 9. Liabilities represent what the business owns.
TRUE 10. The expanded accounting equation is:
Assets = Liabilities + Owner's Capital – Owner's Withdrawals + Revenues – Expenses.

Prepared by: Management Society 2025–2026

FUNDAMENTALS OF ACCOUNTING | Assessment Answer Key

Part 5: Practical Application – Accounting Cycle Problem

Scenario: Marie Villanueva, interior designer, launched her business on December 1, 2024. Below are the
December transactions.

Date Transaction

Dec 1 Invested P150,000 cash in the business.

Dec 3 Paid rent for December, P8,000.

Dec 5 Purchased office supplies on account, P5,000.

Dec 7 Bought office furniture for P40,000 (P15,000 cash, remainder on account).

Dec 10 Provided services for cash, P18,000.

Dec 15 Paid P2,500 for the supplies purchased.

Dec 18 Paid employee wages, P6,000.

Dec 22 Billed clients for services, P25,000.

Dec 27 Received P10,000 from billed clients.

Dec 30 Withdrew P5,000 for personal use.

Instructions:

1.​ Journalize the transactions. ●​Office Furniture ●​Rent Expense

(104) (501)​
2.​ Post to the ledger accounts:​ ●​Accounts Payable ●​Supplies Expense
(201) (502)​
●​Cash (101)​ ●​Villanueva,
Withdrawals (302)​ ●​Villanueva, Capital ●​Wages Expense
●​Accounts (301) (503)
Receivable (102)​ ●​Service Revenue
(401)​ 3.​ Prepare an Unadjusted Trial Balance as of
●​Supplies (103) December 31, 2024.

I.​ Journal

Date Particulars with Explanation P.R. Debit Credit

2024

Dec 1 Cash 101 150,000

Villanueva, Capital 301 150,000

Owner’s investment

3 Rent Expense 501 8,000

Cash 101 8,000

Prepared by: Management Society 2025–2026
FUNDAMENTALS OF ACCOUNTING | Assessment Answer Key

Rent paid for December

5 Supplies 103 5,000

Accounts Payable 201 5,000

Supplies purchased on account

7 Office Furniture 104 40,000

Cash 101 15,000

Accounts Payable (P40,000 - P15,000) 201 25,000

Furniture purchased; part cash, part credit

10 Cash 101 18,000

Service Revenue 401 18,000

Services rendered for cash

15 Accounts Payabale 201 2,500

Cash 101 2,500

Partial payment on supplies

18 Wages Expense 503 6,000

Cash 101 6,000

Payment of employee wages

22 Accounts Receivable 102 25,000

Service Revenue 401 25,000

Services billed to clients

27 Cash 101 10,000

Accounts Receivable 102 10,000

Collection from clients

30 Villanueva, Withdrawals 302 5,000

Cash 101 5,000

Owner’s withdrawal

II.​ Ledger Accounts

Account 101: Cash

Date Particular Debit Credit Balance

Dec 1, Owner’s Investment 150,000 150,000

2024

3 Rent paid for December 8,000 142,000

Prepared by: Management Society 2025–2026

FUNDAMENTALS OF ACCOUNTING | Assessment Answer Key

7 Furniture downpayment 15,000 127,000

10 Service Revenue 18,000 145,000

15 Supplies downpayment 2,500 142,500

18 Payment of wages 6,000 136,500

27 Collection from clients 10,000 146,500

30 Owner’s withdrawals 5,000 141,500

Account 102: Accounts Receivable

Date Particular Debit Credit Balance

Dec 22, Billed clients 25,000 25,000

2024

27 Collection received 10,000 15,000

Account 103: Supplies

Date Particular Debit Credit Balance

Dec 5, Supplies purchased 5,000 5,000

2024

Account 104: Office Furniture

Date Particular Debit Credit Balance

Dec 7, Furniture purchased 40,000 40,000

2024

Account 201: Accounts Payable

Date Particular Debit Credit Balance

Dec 5, Supplies purchased 5,000 5,000

2024

7 Furniture purchased 25,000 30,000

15 Paid partially to the supplier 2,500 27,500

Account 301: Villanueva, Capital

Date Particular Debit Credit Balance

Dec 1, Owner’s investment 150,000 150,000

2024

Prepared by: Management Society 2025–2026

FUNDAMENTALS OF ACCOUNTING | Assessment Answer Key

Account 302: Villanueva, Withdrawals

Date Particular Debit Credit Balance

Dec 30, Owner’s withdrawal 5,000 5,000

2024

Account 401: Service Revenue

Date Particular Debit Credit Balance

Dec 10, Cash service rendered 18,000 18,000

2024

22 Billed service to client 25,000 43,000

Account 501: Rent Expense

Date Particular Debit Credit Balance

Dec 3, Rent paid 8,000 8,000

2024

Account 502: Supplies Expense

Date Particular Debit Credit Balance

Account 503: Wages Expense

Date Particular Debit Credit Balance

Dec 18, Wages paid 6,000 6,000

2024

III.​ Unadjusted Trial Balance

M.V. Designs
Unadjusted Trial Balance
December 31, 2024

Account No. Account Title Debit Credit

101 Cash $141,500

102 Accounts Receivable 15,000

103 Supplies 5,000

104 Office Furniture 40,000

Prepared by: Management Society 2025–2026

FUNDAMENTALS OF ACCOUNTING | Assessment Answer Key

201 Accounts Payable $27,500

301 Villanueva, Capital 150,000

302 Villanueva, Withdrawals 5,000

401 Service Revenue 43,000

501 Rent Expense 8,000

503 Wages Expense 6,000

TOTAL: $220,500 $220,500

Prepared by: Management Society 2025–2026