1.

Financial Accounting – The field of accounting that deals with recording the
transactions and preparing the financial statements in accordance with the
Generally Accepted Accounting Principles
2. Cost Accounting – The field of accounting used in manufacturing industry used
internally to assess a company’s operations in producing a product and how this
could be best managed.
3. Tax Accounting – The field of accounting that deals with the study of laws and
regulations to help the business comply with the requirements of a taxing
authority.
4. Tax Avoidance – The legal means accountants observe to reduce taxes due to
the government.
5. The following are internal users of financial information: employees, partners,
stockholders, managers
6. The financial statements that are of interest to bankers and financial institutions:
Balance Sheet, Income Statement, Capital Statement, Cash flow Statement
7. The inventor of accounting in the early times was Fra. Luca Pacioli.
8. The title of the early book in record keeping was Particularis de Computis et
Scripturis.
9. Users of accounting information regarding uses of different economic resources,
estimates future sales, review new business opportunities include: Owners and
Managers
10. Prospective investors are stakeholders interested in the income performance of
a business for them to be able to make informed decision before making
investments in a business.
11. Economy entity assumption – This principle follows that a business has a
separate personality with its owner/owners.
12. Time period assumption – Principle that sets short intervals to report the
complex and ongoing activities of a business.
13. Going Concern – This principle assumes that a business will continue to exist
long enough to carry out its objectives and commitments and will not be
liquidated in the foreseeable future.
14. Revenue recognition – This principle states the income would be recognized
as soon as a product has been sold or services been rendered regardless
when payment has been received.
15. In the Philippines, the practice of accountancy is governed and supervised
by: Professional Regulation Commission
16. Going Concern – This principle allows a business to defer some of its prepaid
expenses until future accounting periods.
17. Materiality – Depending on the size of the company, financial statements usually
shows amounts rounded to the nearest hundred or nearest thousand or even
nearest million pesos.
18. Which financial statement provides information on the net worth of a
business? – Balance Sheet
19. Which of following represents the equity of creditors in a financial
statement: Liabilities
20. The following given assets are classified as current assets: accounts
receivables, inventories, office supplies, prepaid insurance
21. The following given assets are classified as intangible assets: Trademark,
franchise, goodwill, copyrights
22. Which of the following is not considered non-operating assets? Merchandise
inventories
23. Current Liabilities – These are liabilities that needs to be paid within a
short period of time and is a key component in evaluating a company's
liquidity.

TRUE OR FALSE
24. (a) Ownership in a single proprietorship business is shown by showing the
name of the owner followed by the word capital.
(b) The extent of ownership in a corporation by a stockholder is
determined by the number of shares of stock owned by the stockholder.
• BOTH STATEMENTS ARE TRUE
25. (a) A partnership business is composed by 2 but not more than 5 persons
who contribute money or property with the intention of dividing profits among
themselves.
(b) A corporation is organized by 5 or more persons has a personality
separate and distinct from its owners.
• STATEMENT A is FALSE; STATEMENT B is TRUE
26. (a) A merchandising business is one that buys and sells a product without
changing it's form at a price higher than the purchase price. (b)
A manufacturing business buys product with the intention of converting and
selling them as a new or different product.
• BOTH STATEMENTS ARE TRUE
27. (a) Income are economic benefits to a business resulting to an increase in asset
and increase in capital other than from investment of owners.
(b) When goods had been delivered or services had been rendered but since
no cash had been received from customers, revenue recognition is deferred.
• STATEMENT A is TRUE; STATEMENT B is FALSE
28. (a) A corporation will submit the Articles of Incorporation with the SEC for
approval of its capitalization. (b)
As the corporation has a separate legal existence from the owner, its' life is
unlimited
• BOTH STATEMENTS ARE TRUE
29. (a) In a limited partnership, all partners has limited liabilities.
(b) In a partnership, all partners share in the distribution of profits but not in the
distribution of losses.
• STATEMENT A is FALSE; STATEMENT B is TRUE
30. (a) The Articles of Co-Partnership is a contract among partners and contains
all agreements pertaining to the operations of the business.
(b) While the partnership is a separate legal entity, the life of the business is
limited.
• BOTH STATEMENTS ARE TRUE
1. Which of the following transactions may not cause an increase in cash?
a. Sale of goods for cash
b. Cash withdrawal by the owner for personal use
c. Receipt of proceeds on a loan from the bank
d. Collection of accounts from a customer
2. The revenue/gain will be recorded from the following transactions except:
a. Rendering service on account
b. Sale of goods for cash
c. Selling of land at higher than the purchase price
d. Cash receipt from collection of accounts from a customer
3. Which of the following transactions will not affect capital?
a. Receipt of investment from the owner
b. Net loss from operations recognized at the end of the accounting period
c. Cash payment to creditors
d. Cash withdrawal by the owner for personal use
4. Accounts Payable will not be affected by which of the following?
a. Receipt of a utility bill for the month but will be paid early next month.
b. Purchase of goods on account
c. Cash payment to creditors on account
d. Cash receipt from debtors on account
5. Expenses will be recorded in all of the following except:
a. Cash withdrawal by the owner for personal use
b. Payment for taxes and licenses
c. Receipt of the bill for delivery service from Grab delivers to be paid next month
d. Cash paid for salaries and wages of personnel
6. Which of the following effects of business transaction is not possible?
a. Increase in asset = Increase in capital
b. Increase in asset = Decrease in liability
c. Decrease in asset = Increase in another asset
d. Decrease in capital = increase in liability
7. Purchase of equipment by giving partial cash as down payment and the balance on
account will:
a. Increase an asset, decrease an asset, increase a liability
b. Decrease an asset, increase a liability
c. Increase an asset, decrease an asset, increase capital
d. Increase a liability, decrease capital, decrease cash
8. When accounts had been collected from debtors, it will:
a. Increase the asset cash and decrease the liability accounts payable
b. Decrease the liability accounts payable and decrease the asset cash
c. Increase the asset cash and decrease the asset account receivable
d. Increase the asset cash and increase the asset account receivable
9. An invoice issued by a business showing “COD” in the terms of payment for a sale
transaction means:
a. The customer will pay in cash the amount of goods upon receipt
b. The business will pay in cash the amount of goods upon delivery
 c. The customer can pay the amount shown in the invoice at a later date
d. The business can pay the amount shown in the invoice at a later date
10. An original copy of the official receipt received for a transaction means that:
a. Cash was received from a customer
b. Cash was received from a creditor
c. Cash was paid to a customer for sale of goods
d. Cash was paid to a creditor for payment of account
11. On May 3, Ms. Whoolah Ann Mo invested cash, P450, 000- display cases and shelves
P150, 000- to her business Ano Tea Ito.
a. + A Cash 450, 000; +A Store Supplies 150, 000; +C WAM, Capital 600, 000
b. + A Cash 600, 000; +C WAM, Capital 600, 000
c. + A Cash 450, 000; +C WAM, Capital 450, 000
d. + A Cash 450, 000; + A Store equipments 150, 000; +C WAM, Capital 600, 000
12. Bought sugar, creamers, flavors, tea, coffee for cash P50, 0000-
a. -A Cash 50, 0000; -A Store supplies 50, 000
b. -A Cash 50, 000; +A Store supplies 50, 000
c. -A Cash 50, 000; -C Store supplies 50, 000
d. None of the above
13. Bought a freezer, dispensers, mixer P100, 000- paying P40, 000 down payment and the
balance in two equal installments every 30th of the month.
a. + A Shop equipment 100, 000; -A Cash 40, 000; +L Accounts Payable 60,000
b. + A Shop equipment 40, 000; - A Cash 40, 000
c. + A Shop equipment 100, 000; -A Cash 40, 000; -C Accounts Payable 60, 000
d. -A Cash 40, 000; +A Accounts Payable 60, 000; +C Shop equipment 100, 000
14. Cash sales for the week P75, 000-
a. +A Cash 75, 000; +C WAM, Capital 75, 000
b. +A Cash 75, 000; +C Sales 75, 000
c. -A Cash 75, 000; -C WAM, Capital 75, 000
d. None of the above
15. Paid taxes and licenses P5,000-, posters and signboard P5, 000 for cash
a. +A Cash 5, 000; -C Taxes and Licenses expense 5, 000
b. -A Cash 5, 000; +L Taxes and Licenses expense 5, 000; +L Advertising expenses 5,
000
c. -C Taxes & Licenses expenses 5, 000; -C Advertising expense; -A Cash 10, 000
d. None of the above
16. Billed a client for drinks delivered within the week, P10, 000
a. +A Cash 10, 000; -A Sales 5, 000
b. +C Sales 10, 000; +L Accounts payable 10, 000
c. +C Sales 10, 000; +A Accounts receivable 10, 000
d. No effect
17. Paid the amount due this end of month (Refer to #13)
18. Collected from a customer the amount due in #16.
a. -A Accounts receivable 10, 000; +A Cash 10, 000
b. -L Accounts payable 10, 000; -A Cash 10, 000
c. +A Cash 10, 000; +C Sales 10, 000
d. Nothing to record
19. Received electric bill for the month to be paid early next month, P8, 500
a. -C Utility expense 8, 500; +L Accounts payable
b. -A Cash 8, 500; +L Accounts payable 8, 500
c. -C Utility expense 8, 500; -A Cash 8, 500
d. Recording shall be made next month when payment is made
20. The owner withdraws P20, 000 cash for personal use.
a. -C WAM Expenses 20, 000; -A Cash 20, 000
b. -A Cash 20, 000; - L WAM Payable 20, 000
c. -A Cash 20, 000; -C Sales 20, 000
d. -A Cash 20, 000; -C WAM Drawing 20, 000