Quiz - 1 - Overview of Accounting-Printing

I-Overview of Accounting
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 c. IV
b. I, II, III and 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 c. II, III, IV and V
b. I, III 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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I-Overview of Accounting

1. It refers to the process of incorporating the effects of an accountable event in the

a. purchase of investment in equity securities

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

a. declaration of cash dividends d. imposition of fines

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

5. It is the accounting process of assigning numbers, commonly in monetary terms, to

6. What is the basic purpose of accounting?

7. Accounting provides which type of information?

8. General purpose financial statements are

9. External users are those

10. The primary objective of financial reporting is to provide

11. Which of the following statements is false?

12. Which of the following statements is true?

14. Which of the following statements is true?

15. Asset measurements in conventional financial statements

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