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Accounting Quiz

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Activity 1

True or False. Read the following items below and analyzes whether the statement is correct or incorrect.
Write the word TRUE if the statement is correct and write FALSE if the statement is incorrect. (1 point
each)
1. All events and transactions of an entity are recognized the books of accounts.
2. The accounting process of assigning numbers, commonly in monetary term, to the economic
transactions and events is referred to as classifying.
3. The basic purpose of accounting is to provide information about economic activities intended to be
useful in making economic decision.
4. Financial accounting is the branch of accounting that focuses on general purpose reports of
financial position and operating results known as the financial statements.
5. General purpose financial statements are those statements that cater to the common and specific
needs of a wide range of external users.
6. The financial statements are the only source of information when making economic decisions.
7. All information presented in the financial statements are sourced from the accounting records of
the entity.
8. Entity A’s accounting period starts on July 1 and ends on June 30 of the following year. Entity A
uses a fiscal year period.
9. Once promulgated, accounting standards are never changed.
10. The entity’s management is responsible for the selection of appropriate accounting policies, not the
accountant.

Answers
1. FALSE
2. FALSE
3. TRUE
4. TRUE
5. FALSE
6. TRUE
7. TRUE
8. TRUE
9. TRUE
10. TRUE
11. TRUE

QUIZ 1
MULTIPLE CHOICE: Read carefully the items below and choose the letter of the correct answer. (1piont
each)
1. It refers to the process of incorporating the effects of an accountable event in the statement of
financial position or the statement of profit or loss and other comprehensive income through a journal
entry.
a. Realization c. Recognition
b. Derecognition d. Posting

2. All of the following are events considered as exchange or reciprocal transfer, except
a. Purchase of investment in equity securities
b. Sale of equipment for non-interest bearing note
c. Subscription of the entity’s own equity instrument (i.e., contributions by owners)
d. Exchange of a note payable for an account payable
e. Borrowing of money from a bank

3. All of the following are events considered nonreciprocal transfers, except


a. Declaration of cash dividends d. Imposition of fines
b. Declaration of stock dividends e. Theft
c. Payment of accounts payable

4. These are events involving an entity and another external party.


a. External events c. Transactions
b. Internal events d. Life events

5. It is the accounting process of assigning numbers, commonly in monetary terms, to the economic
transactions and events.
a. Analyzing c. Classifying
b. Measuring d. Interpreting

6. What is the basic purpose of accounting?


a. To provide quantitative financial information about economic activities.
b. To provide all information that users need in making economic decisions.
c. To provide qualitative financial information about economic activities intended to be useful in
making economic decisions.
d. To provide quantitative financial information about economic activities intended to be useful in
making economic decisions.

7. Accounting provides which type of information?


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

8. General purpose financial statements are


a. Those statements that cater to the common and specific needs of a wide range of external users.
b. Those statements that cater to the common needs of a wide range of external users and internal
users.
c. Those statements that cater to the common needs of a limited range of external users.
d. Those statements that cater to the common needs of a wide range of external users.

9. External users are those


a. Who do have the authority to demand financial reports tailored to their specific needs.
b. Who do not have the authority to demand financial reports tailored to their common needs.
c. Who do not have the authority to demand financial reports tailored to their specific needs.
d. Who belong to countries other than the domicile country of the reporting entity

10. The primary objective of financial reporting is to provide


a. Information about economic resources, claims to these resources, and changes in them.
b. Information useful for investment and credit decisions.
c. Information useful in predicting future cash flows.
d. All of these

11. Which of the following statements is false?


a. Accountable events are those that have an effect in an entity's assets, liabilities, equity, income or
expenses.
b. The term “recognition” as used in accounting refers to the process of incorporating the effects of an
accountable event in the statement of financial position or the statement of profit or loss and other
comprehensive income through a memo entry.
c. External events are those that involve the reporting entity and an external party.
d. The Board of Accountancy consists of a chairperson and six members.

12. Which of the following statements is true?


a. In current practice, accounting provides only quantitative information that is useful in making
economic decisions.
b. External users are those who do not have the authority to demand financial reports tailored to their
specific needs.
c. Under the stable monetary unit assumption, the owners of the business and the business are
viewed as a single reporting entity. Therefore, the personal transactions of the owners are recorded
in the books of accounts.
d. The practice of accountancy in the Philippines is regulated under R.A. 9892.

13. Which of the following statements correctly refer to the accounting process?
I. Measuring is the accounting process of analyzing business activities as to whether or not they will
be recognized in the books.
II. Recognition refers to the process of including the effects of an event in the totals of the statement
of financial position or the statement of profit or loss and other comprehensive income through
memo entries.
III. Disclosure of events in the notes to financial statement without including their effect in the totals of
the statement of financial position or statement of profit or loss and other comprehensive income is
not an application of the recognition principle.
IV. An accountable event is an event that has an effect on the assets, liabilities or equity of an entity
and its effect can be measured reliably.
V. Sociological and psychological matters are within the scope of accounting.
a. I, II, III, IV and V
b. I, II, III and IV
c. IV
d. III and IV

14. Which of the following statements is true?


I. Loss from theft is classified as a nonreciprocal transfer.
II. Internal events are changes in economic resources by actions of other entities that do not involve
transfers of resources and obligations.
III. Nonreciprocal transfers involve the transfer of resources in only one direction, either from an entity
to other entities or from other entities to the entity.
IV. Internal events are sudden, substantial, unanticipated reductions in resources not caused by other
entities.
V. Fire, earthquake and flood are examples of accountable events classified as internal events. a. I, II,
III and V
b. I, III and V
c. II, III, IV and V
d. I, III, IV and V

15. Asset measurements in conventional financial statements


a. Are confined to historical cost.
b. Are confined to historical cost and current cost.
c. Reflect several financial attributes.
d. Do not reflect output values.

16. During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in
accordance with which basic accounting concept?
a. Cost/benefit constraint c. Conservatism constraint
b. Periodicity assumption d. Matching principle

17. What accounting concept justifies the use of accruals and deferrals?
a. Going concern assumption c. Consistency characteristic
b. Materiality constraint d. Monetary unit assumption

18. The assumption that a business enterprise will not be sold or liquidated in the near future is known as
the
a. Economic entity assumption. c. Conservatism assumption.
b. Monetary unit assumption. d. Going concern.

19. Valuing assets at their liquidation values rather than their cost is inconsistent with the
a. Periodicity assumption. c. Materiality constraint.
b. Matching principle. d. Historical cost principle.

20. When products or other assets are exchanged for cash or claims for cash, they are said to be
a. Allocated. c. Recognized.
b. Realized. d. Earned.

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