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REVIEW PROGRAM
SECOND QUIZ

1. Which of the following statements is incorrect?

a. Account is the basic storage of information in accounting.
b. Posting is the process of classifying the effects of recorded events on the accounts.
c. Recording is the accounting process in which financial statements are prepared.
d. Accounting affects all economic organizations, whether private entity or government entity
and whether profit-oriented or non-profit organization.

2. Accounting has been given various definitions, which of the following is not one of those
definitions
a. Accounting is a service activity. Its function is to provide quantitative information, primarily
financial in nature, about economic entities that is intended to be useful in making economic
decisions.
b. Accounting is the art of recording, classifying, and summarizing in a significant manner and
in terms of money, transactions and events which are, in part of at least, of a financial
character and interpreting the results thereof.
c. Accounting is a systematic process of objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the degree of
correspondence between these assertions and established criteria and communicating the
results to interested users.
d. Accounting is the process of identifying, measuring, and communicating economic
information to permit informed judgment and decisions by users of information.

3. Under the accrual basis of accounting,

a. income is recorded only when cash is received and expenses are recorded only when cash is
paid.
b. liabilities, owner's capital, and drawings all have normal credit balances.
c. all real accounts have normal debit balances.
d. income is recorded in the period it is earned and expense is recorded in the period it is
incurred, irrespective of when cash is received or paid.

4. The branch of accounting that deals with providing financial information to external decision
makers is
a. Public accounting.
b. Government accounting.
c. Financial accounting.
d. Managerial accounting.

5. Financial accounting applies to which of the following:

a. Businesses
b. Non-profit organizations
c. Governments
d. All of the above

6. External users of general-purpose financial statements include all of the following except

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 a. Creditors
b. Investors
c. Owners who are directly involved in managing the business
d. Lenders

7. The official accounting standard setting body in the Philippines is the

a. Accounting Standards Committee (ASC).
b. Financial Reporting Standards Council (FRSC).
c. Bureau of Internal Revenue (BIR).
d. Financial Accounting Standards Board (FASB).

8. The output of an accounting system is (are)

a. theaccountable events.
b. recording, classifying and summarizing.
c. accounting reports.
d. accountant.

9. In which of the following instances is the going concern assumption valid?

a. The business expects to stop its operations and liquidate all of its assets in the near term.
b. The business is mandated by the government to shut down its operations because of
violations of the law.
c. The business is in financial difficulty and does not have any other choice but to end its
operations.
d. The business has a history of profitable operations and does not expect to end its operations
in the foreseeable future.

10. Which of the following is one of the fundamental qualitative characteristics?

a. Relevance
b. Comparability
c. Timeliness
d. Understandability

11. Which of the following is not one of the enhancing qualitative characteristics?
a. Comparability
b. Faithful representation
c. Verifiability
d. Understandability

12. Mr. Van owns a butcher shop, a restaurant, and a catering business. Separate financial
statements are prepared for each business independent of the other businesses. What accounting
principle or assumption is being applied in this situation?
a. Time period assumption
b. Separate entity assumption
c. Full-disclosure principle
d. Matching

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13. A business exported goods and collected the sale price in U.S. dollars. When financial statements
are prepared, the business translates the dollars into pesos. The business is applying which of
the following accounting principles?
a. Stable monetary unit
b. Going concern
c. Matching
d. Materiality

14. A business acquires inventory and records it as an asset. When the inventory is sold, the
business recognizes the cost as an expense. This is an application of which of the following
accounting principles?
a. Stable monetary unit
b. Going concern
c. Matching
d. Materiality

15. While making a delivery, the driver of Fastrac Courier collided with another vehicle causing
both property damage and personal injury. The party sued Fastrac for damages which could
exceed Fastrac's insurance coverage. Existence of the lawsuit was reported in the notes to
Fastrac's financial statements. What accounting principle, assumption or constraint is being
applied in this situation?
a. Full-disclosure principle
b. Conservatism constraint
c. Matching principle
d. Unit-of-measure assumption

16. When uncertainty exists, the convention of conservatism or prudence uses estimates of a
conservative nature in an attempt to ensure which of the following?
a. Assets, income, liabilities, and expenses are not overstated
b. Assets, income, liabilities, and expenses are not understated
c. Assets and income are not understated; liabilities and expenses are not overstated
d. Assets and income are not overstated; liabilities and expenses are not understated

17. Under this concept, the life of the business is divided into series of reporting periods. Thus,
businesses normally prepare financial statements at least annually.
a. Time period
b. Conservatism constraint
c. Matching principle
d. Unit-of-measure assumption

18. Under this concept, the cost of processing and communicating information should not exceed
the benefits to be derived from it.
a. Time period
b. Conservatism
c. Materiality
d. Cost-benefit

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19. Which accounting principle charges low-cost capital items such as waste baskets directly to an
expense?
a. The historical cost principle
b. The materiality principle
c. The expense recognition principle
d. The matching principle

20. Which of the following is a result of applying the prudence or conservatism principle?
a. Assets are minimized and liabilities are minimized.
b. Assets are minimized and liabilities are maximized.
c. Revenues are minimized and expenses are minimized.
d. Revenues are maximized and liabilities are maximized.

21. This government regulatory body is tasked with regulating corporations, including
partnerships. It requires corporations and partnerships to file audited financial statements.
a. Securities and Exchange Commission
b. Cooperative Development Authority
c. Department of Trade and Industry
d. Department of Corporations and Partnerships

22. The process of identifying, measuring, analyzing, and communicating financial information
needed by management to plan, evaluate, and control an organization’s operations is called
a. financial accounting.
b. tax accounting.
c. management accounting.
d. auditing.

23. Accounting is often called the "language of business" because  

a. it is easy to understand.
b. it is fundamental to the communication of financial information.
c. all business owners have a good understanding of accounting principles.
d. accountants in many companies share financial information.

24. The most common form of business organization is  

a. corporation.
b. sole proprietorship.
c. partnership.
d. cell phone stand.

25. Sole proprietorship businesses are registered with the

a. Securities and Exchange Commission.
b. Cooperative Development Authority.
c. Department of Trade and Industry.
d. Department of Public Works and Highways.

26. What is the primary purpose of accounting?

a. To count money.
b. To provide accounts.

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c. To provide information that is intended to be useful in making economic decisions.

d. To produce accountants.

27. It refers to information that is expressed in numbers, quantities, or units.

a. Financial information
b. Qualitative information
c. Quantitative information
d. All of these

28. Entity A purchased inventories for ₱100,000. Entity A expects to sell the inventories for ₱120,000
and therefore records the inventories at ₱120,000 rather than at ₱100,000. Which of the following
accounting principles is violated?
a. Matching
b. Relevance
c. Historical cost
d. Materiality

29. Accounting isa body of knowledge which has been systematically gathered, classified and
organized.
a. Accounting as a practical art
b. Accounting as the language of business
c. Accounting as a social science
d. Accounting as an information system

30. Which of the following statements is most likely to be incorrect?

a. Accounting is an indispensable tool for a business manager.
b. A business manager is tasked in motivating and guiding employees.
c. Fra Luca Pacioli is considered the daddy of modern accounting.
d. General purpose financial statements, the subject matter of financial accounting, are those
that cater to all the needs of both external and internal users.

31. An advantage of a sole proprietorship business is

a. you are the boss and you keep all the profits.
b. greater capital compared to the other forms of business organization.
c. it is generally exempt from taxes.
d. it has an unlimited life.

32. Which of the following is not a service business?

a. Accounting firm
b. Hospital
c. Bank
d. Bakery

33. Which of the following is most likely not considered a merchandising business?
a. Pharmacy
b. Rice wholesaler
c. Movie theater
d. Department store

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34. Which of the following is not considered a manufacturing business?
a. Banco de Oro
b. Toyota
c. Apple
d. San Miguel Pure Foods

35. Which of the following is an advantage of a service business?

a. You can take advantage of price fluctuations by increasing your stocks of goods when prices
temporarily go down.
b. Lower cost of quality.
c. You don’t need to worry about inventory costs, warehousing and distribution costs.
d. You have a high growth potential because you can tap into a wider market and can produce
in large quantities.

36. Which of the following is a disadvantage of a manufacturing business?

a. You can have a better pricing policy because you can mass-produce goods.
b. You may not need to have a strategically located retail store to display your products
because you can sell directly to wholesalers rather than to end consumers.
c. You have the opportunity to establish a brand that could last longer than your lifetime.
d. You need a high start-up capital.

37. The accounting standards in the Philippines are called

a. Pinoy Financial Reporting Standards (PFRSs)
b. Generally Acceptable Accounting Pinoy (GAAP)
c. Philippine Financial Reporting Standards (PFRSs)
d. Financial Reporting Standards Council (FRSC)

38. Which of the following does not form part of the accounting standards used in the Philippines?
a. Philippine Financial Reporting Standards (PFRSs)
b. Philippine Accounting Standards (PASs)
c. Interpretations
d. Philippine Auditing Practice Statements

39. Mr. Juan Batumbakal is an accountant in the Philippines while Mr. John Stonesteelis an
accountant in a foreign country that uses the International Financial Reporting Standards. Which
of the following statements is correct?
a. Mr. John’s accounting standardsare superior to those of Mr. Juan’s.
b. Mr. John is more intelligent than Mr. Juan because Mr. John uses better accounting
standards.
c. Mr. Juanis an inferior accountant compared to Mr. John because Mr. John is a foreigner and
Filipinos give higher regard to foreigners compared to their fellow countrymen.
d. Mr. Juan and Mr. John use essentially the same accounting standards.

40. This type of business organization has the tendency to become monopolistic. It can hamper a
country’s development by restricting the entrance of other smaller businesses but with much
better products to the market; thereby, leaving members of the society with no other choice but
to buy the inferior products of those monopolistic businesses.

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a. Cooperative
b. Sole proprietorship
c. Partnership
d. Corporation

41. The process of providing financial information to external decision makers is referred to as:
a. Public accounting.
b. Government accounting.
c. Financial accounting.
d. Managerial accounting.

42. This account is used to record payments received from customers prior to the delivery of goods
or rendering of services.
a. Accrued income
b. Unearned income
c. Prepaid asset
d. Accounts receivable

43. A chart of accounts is

a. a listing of all accounts and their balances.
b. a subsidiary ledger.
c. a special journal.
d. a listing of all account titles.

44. How is profit or loss calculated?

a. It is the difference between net assets at the beginning and end of the accounting period
irrespective of transactions with owners.
b. It is the difference between net liabilities at the beginning and end of the accounting period.
c. It is the difference between assets and liabilities.
d. It is the difference between income and expenses.

45. AlingNena’s Sari-sari Store’s total sales during the period were ₱100M. Of that amount, ₱60M
was on credit. If the total business expenses were ₱70M, how much is the profit (loss)?
a. 30M
b. (30M)
c. 10M
d. (10M)

46. The beginning equity is ₱5,000. If total income for the period is ₱8,000 while total expenses are
₱6,000, how much is the ending balance of equity?
a. 7,000
b. 5,000
c. 3,000
d. 1,000

47. The endingequityis ₱9,000. If total income for the period is ₱5,000 while total expenses are
₱8,000, how much is the beginning balance of equity?
a. 12,000

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 b. 9,000
c. 6,000
d. 0

48. If the beginningequityis ₱50,000 while the ending equity is ₱70,000, how much is the profit (loss)
for the period?
a. 20,000
b. (20,000)
c. 10,000
d. (10,000)

49. Entity A’s total assets, liabilities and equity were ₱10,000, ₱7,000 and ₱3,000, respectively, at the
beginningof the period. During the period, total liabilities decreased by ₱4,000 while profit was
₱5,000. How much is the ending total assets of Entity A?
a. 12,000
b. 11,000
c. 9,000
d. 7,000

50. At the start of the period, a business has total assets of ₱500,000 and total liabilities of ₱300,000.
During the period, the business earned total income of ₱1,000,000 and total expenses of ₱640,000.
No additional investments or withdrawals were made by the owner. Total assets at the end of
the period were ₱830,000. How much is the total liabilities at the end of the period?
a. 280,000
b. 270,000
c. 260,000
d. 240,000

51. The generally accepted accounting principles (GAAP) in the Philippines are represented by the
PFRSs which are issued by
a. Pinoy Accounting Standards
b. KapisananngmgaKontadorsa Pilipinas
c. Financial Reporting Standards Council
d. International Accounting Standards Board

52. Which of the following assumptions means that money is the common denominator of economic
activity and provides an appropriate basis for accounting measurement and analysis?
a. Going concern
b. Periodicity
c. Stable monetary unit
d. Economic entity

53. This branch of accounting focuses on catering to the information needs of internal users.
a. Management accounting
b. Financial accounting
c. Auditing
d. External accounting

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54. You want to put up a business – a pizza parlor. However, you have this dilemma – you do not
want to put up the business alone but you also do not want to enter into business deals with
people you do not trust. At the most, you are only willing to accept one other individual to help
you put up your pizza business. You have in mind your best friend who is more than willing to
contribute resources in putting up the business. She is very excited about your business proposal
and even changed her Facebook status to “self-employed.” She just texted you that she is willing
to quit her day job in order to help you put up the pizza business. What type of business
organization best suits your need?
a. Sole proprietorship
b. Partnership
c. Corporation
d. Cooperative

55. The following are decisions made by internal users except

a. To analyze the profitability of product lines
b. To impose taxes
c. To decide whether to continue or discontinue product lines
d. To decide whether to build new production facilities

56. MangKulas Company sells “balut,” “penoy,” “taho,” and barbeque. At the same time,
MangKulas Company also offers spa, manicure, pedicure, and armpit hair removal to its
customers. MangKulas Company is referred to as a
a. high breed business.
b. hybrid business.
c. complicated business.
d. hard-working business.

57. A person who is engaged in business is called

a. a boss.
b. an entrepreneur.
c. Chinese.
d. all of these

58. This refers to information that is expressed in words or descriptive form.

a. Qualitative information
b. Financial information
c. Quantitative information
d. Information System

59. The communicating process of accounting includes all of the following except
a. Recording
b. Summarizing
c. Classifying
d. Controlling

60. Which of the following best describes the basic purpose of accounting?
a. To provide information about a reporting entity that is useful in making economic decisions.

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 b. To provide all the information needed by management in managing the operations of a
reporting entity.
c. To provide information that the creditors can use in deciding whether to make additional
loans.
d. To provide accountants something to do.

61. An event is considered an accountable event if

a. it has an effect on the assets, liabilities, equity, income or expenses of the entity.
b. it cannot be measured reliably.
c. it cannot be expressed in terms of a unit of measure.
d. it involves sociological and psychological matters.

62. Which of the following is not a characteristic of an asset?

a. It is expected to provide future economic benefits.
b. It is a resource controlled by the entity.
c. It causes an outflow of economic benefits when it is settled.
d. It has resulted from a past event.

63. It is the left side of an account.

a. Debit
b. Credit
c. Date
d. Account title

64. It is a record of the increases and decreases in a specific item of asset, liability, equity, income or
expense.
a. Journal
b. Account
c. Accountant
d. Notes

65. Which of the following is not a balance sheet account?

a. Cash
b. Accounts payable
c. Owner’s drawings
d. Salaries expense

66. These are assigned to each account to facilitate recording, cross-referencing, and retrieval of
information.
a. Account titles
b. Account numbers
c. Mobile numbers
d. Hashtags

67. Entity A’s equipment was lost due to theft. How will Entity A record this event?
a. Recognize the carrying amount of the lost equipment as gain.
b. Charge the carrying amount of the lost equipment as loss.
c. Go to the police station and record the event in the police officer’s logbook.

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d. This event is not recorded.

68. Entity A has an interest-bearing note payable. At the end of the period, Entity A would most
probably recognize which of the following?
a. Interest income
b. Interest expense
c. Gain
d. Bad debts expense

69. This represents the value of inventories that have been sold during the accounting period.
a. Interest Expense
b. Travel expense
c. Rent expense
d. Cost of sales

70. This account is used to record sales on credit.

a. Accounts receivable
b. Accounts receivable
c. Cash
d. Cost of sales

71. This account is used to record the cost of purchased goods that are intended for resale.
a. Building
b. Inventory
c. Accounts receivable
d. Owner’s capital

72. The business acquires equipment. The business allocates the equipment’s cost over the
equipment’s useful life, instead of expensing it right away. The portion of the equipment’s cost
that is expensed during the period is recorded as
a. Bad debts expense.
b. Equipment.
c. Allowance for bad debts.
d. Depreciation expense.

73. This account is used when a business purchases inventory on account (on credit).
a. Cash
b. Accounts receivable
c. Accounts payable
d. Prepaid supplies

74. Payments to employees as compensation for the services they have rendered during a period are
recorded in this account.
a. Rent expense
b. Cost of sales or Cost of goods sold
c. Freight-out
d. Salaries expense

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75. This account is used to record the investments of the business owner to the business.
a. Owner’s capital
b. Owner’s drawings
c. Salaries expense
d. Loss

76. Revenues earned from rendering services are recorded in this account.
a. Sales
b. Service fees
c. Interest income
d. Gains

77. Which of the following would result to income of ₱320,000?

a. Total expenses of ₱280,000 and loss of ₱40,000
b. Total expenses of ₱360,000 and profit of ₱40,000
c. Total expenses of ₱220,000 and loss of ₱100,000
d. Total expenses of ₱360,000 and loss of ₱40,000

78. Which of the following would result to total expenses of ₱480,000?

a. Total income of ₱360,000 and profit ₱120,000
b. Total income of ₱580,000 and loss of ₱100,000
c. Total income of ₱630,000 and profit of ₱150,000
d. Total income of ₱630,000 and loss of ₱150,000

79. A business has total assets, liabilities, and equity of ₱10,000, ₱7,000 and ₱3,000, respectively, at
the beginningof the period. During the period, total liabilities decreased to ₱4,000 while profit
was ₱5,000. How much is the ending total assets?
a. 12,000
b. 11,000
c. 9,000
d. 7,000

80. The mother of accounting is

a. Fra Luka Gaga
b. Accountant Mama
c. Mrs. Pacioli
d. None of these

“He will have no fear of bad news; his heart is steadfast, trusting in the Lord. His heart is secure, he will have
no fear; in the end he will look in triumph on his foes.”
(Psalm 112:7-8)

- END -

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