3rd Quarter - BUS4 Blank
3rd Quarter - BUS4 Blank
1. 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.
2. 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.
3. The branch of accounting that deals with providing financial information to external decision makers is
a. Public accounting. c. Financial Accounting
b. Government accounting. d. Managerial Accounting
4. Financial accounting applies to which of the following:
a. Businesses c. Governments
b. Non-profit organizations d. All of These
5. External users of general-purpose financial statements include all of the following except
a. Creditors c. Managing Owners
b. Investors d. Lenders
6. The output of an accounting system is (are)
a. Accountable events. c. Accounting Reports
b. Recording, classifying and summarizing. d. Accountant
7. 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.
8. Which of the following is one of the fundamental qualitative characteristics?
a. Relevance c. Timeliness
b. Comparability d. Understandability
9. Which of the following is not one of the enhancing qualitative characteristics?
a. Comparability c. Verifiability
b. Faithful representation d. Understandability
10. 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?
20. 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. c. Management Accounting
b. Tax accounting. d. Auditing
21. 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.
22. The most common form of business organization is
a. Corporation b. Sole proprietorship c. Partnership d. Cellphone Stand
23. Sole proprietorship businesses are registered with the
a. Securities and Exchange Commission. c. Department of Trade and Industry
b. Cooperative Development Authority. D. Department of Public Works and Highways
24. What is the primary purpose of accounting?
a. To count money.
b. To provide accounts.
c. To provide information that is intended to be useful in making economic decisions.
d. To produce accountants.
25. It refers to information that is expressed in numbers, quantities, or units.
a. Financial information c. Quantitative information
b. Qualitative information d. All of these.
26. 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
27. Accounting is a body of knowledge which has been systematically gathered, classified and organized.
a. Accounting as a practical art c. Accounting as a social science
b. Accounting as the language of business d. Accounting as information system
28. 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.
29. 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.
30. Which of the following is not a service business?
a. Accounting firm b. Hospital c. Bank d. Bakery
31. Which of the following is most likely not considered a merchandising business?
a. Pharmacy b. Rice Wholesaler c. Movie Theater d. Department Store
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.
42. Aling Nena’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)
43. 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
44. The ending equity is ₱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 b. 9,000 c. 6,000 d. 0
45. If the beginning equity is ₱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)
46. Entity A’s total assets, liabilities and equity were ₱10,000, ₱7,000 and ₱3,000, respectively, at the beginning of
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
47. 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
48. 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 Unity d. Economic Entity
49. This branch of accounting focuses on catering to the information needs of internal users.
a. Management accounting c. Auditing
b. Financial accounting d. External Accounting
50. 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 c. Corporation
b. Partnership d. Cooperative
51. 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
52. Mang Kulas Company sells “balut,” “penoy,” “taho,” and barbeque. At the same time, Mang Kulas Company also
offers spa, manicure, pedicure, and armpit hair removal to its customers. Mang Kulas Company is referred to as
a
a. High breed business. c. Complicated business
b. Hybrid business. d. Hard-working business
53. A person who is engaged in business is called
a. A boss b. Entrepreneur c. Chinese d. All of these
54. This refers to information that is expressed in words or descriptive form.
a. Qualitative information c. Quantitative information
b. Financial information d. Information System
55. The communicating process of accounting includes all of the following except
a. Recording b. Summarizing c. Classifying d. Controlling
56. 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.
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.
57. 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.
58. 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.
59. It is the left side of an account.
a. Debit b. Credit c. Date d. Account Title
60. 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
61. Which of the following is not a balance sheet account?
a. Cash b. Accounts Payable c. Owner’s Drawings d. Salaries Expense
62. 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. Hash tags
63. 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.
d. This event is not recorded.
64. 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
65. 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
66. This account is used to record sales on credit.
a. Accounts receivable b. Accounts Payable c. Cash d. Cost of Sales
67. This account is used to record the cost of purchased goods that are intended for resale.
a. Building b. Inventory c. Accounts Receivable d. Capital
68. 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
69. This account is used when a business purchases inventory on account (on credit).
a. Cash b. Accounts Receivable c. Accounts Payable d. Prepaid Supplies
70. 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 c. Freight Out d. Salaries Expense
71. This account is used to record the investments of the business owner to the business.
a. Owner’s capital b. Drawings c. Salaries Expense d. Loss
72. Revenues earned from rendering services are recorded in this account.
a. Sales b. Service Fees c. Interest Income d. Gains
“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)