FORBES COLLEGE, INC.

LEGAZPI CITY
2nd SEMESTER ACADEMIC YEAR 2022 – 2023

PRELIMINARY EXAMINATION
PRINCIPLE OF ACCOUNTING

Name: _____________________ Course/Year: ________ Date: ________ Score: __

I. TRUE OR FALSE. Write TRUE if the statement is correct or FALSE if is incorrect.

________________ 1. Recording of repetitive exchanges was the start of accounting.

________________ 2. The oldest evidence of accounting practice is the “stone tablet” of
Mesopotamia which contains commercial transactions.
________________ 3. The “Massari Ledgers of Commune of Genoa” is a perfect double-entry
form of journal entries.
________________ 4. The double - entry bookkeeping in which debits were written over credits
was first used in Florence.
________________ 5. Under venetian double-entry system, the memorandum books is the
record of original entry.
________________ 6. The present ledger posting is the modern adoption of the Vietnam
accounting system.
________________ 7. Napoleon Bonaparte is the father or accounting system.
________________ 8. The industrial revolution introduces during the era of global industrial
economy.
________________ 9. In general, the salary code uses market value while the Napoleonic Code
uses historical cost as the basis of evaluation.
________________ 10. The first income tax law was introduced by China at the rate of 10% of
profit.
________________ 11. The journal entry which is currently used in recording transactions s
derived from the Florentine Approach or record keeping.
________________ 12. Consolidation gives rise to a new corporate organization.
________________ 13. Accounting is not a product of socio-cultural conditions because it is a
product economic condition.
________________ 14. The ledger is a simplifier T - account.
________________ 15. The accounting records are used as proofs of the existence of business
transactions.
________________ 16. Luca Picioli, being the father of modern accounting, is a CPA.
________________ 17. The first graduated income tax system was first introduced by the USA.
________________ 18. All the record-keeping of business transaction uses double entry
bookkeeping.
________________ 19. Accounting is an art and a perfect science.
________________ 20. The culmination of accounting service is the preparation of financial
report.
________________ 21. Accounting serves as an information system for business purposes.
________________ 22. Accounting internal control protects the assets of the business.
________________ 23. Accounting shows the financial statements users the true picture of
business financial condition.
________________ 24. Auditing is the critical part of accounting and it answer the question
“why?”.
________________ 25. Accounting is a service activity.
________________ 26. Auditing is performed before financial accounting stats.
________________ 27. Accounting is involved in providing goods and services.
________________ 28. Profitability answers the question regarding the increase of equity as a
result of business operations.
_______________ 29. The primary objective of accounting is to asset the financial health of the
business.
_______________ 30. Auditing usually answers the question “why?” regarding the information
reports in the financial reports.

II. MULTIPLE CHOICE. Encircle the letter that correspond the best answer.
1. This system of recording transaction is based on the principle of balance, except.
a. Double entry.
b. Dual aspect.
c. Bilateral transaction.
d. Debit and credit.
2. The present Ledger Posting is the modern adaptation of the
a. Montauban method
b. Venetian method
c. Mesopotamian method
d. Florentine method
3. Luca Pacioli, the father of modern accounting is
a. A mathematician
b. A merchant
c. An accountant
d. A priest
4. This period gave attention to accounting for mass production and fixed asset.
a. French revolution
b. Industrial revolution
c. International business
d. Global industrial economy
5. What accounting valuation was introduced by the Napoleonic Commercial Code?
a. Market value method
b. Historical cost method
c. Ledger book
d. Investor’s Record Book
6. In the Summa de Arithmetica of Luca Pacioli, the following important books
were introduced, except
 a. Memorandum book
b. Journal Book
c. Ledger Book
d. Investor’s Record Book
7. He believe that the chart of accounts contains relevant dynamic information
affecting the economic flight of an enterprise.
a. Luca Pacioli
b. Jacques Savary
c. Eugen Schmalenbach
d. Emperor Wang Mang
8. This principle of accounting valuation is founded on the theory that the
momentary unit is always stable.
a. Historical cost
b. Market value
c. Price level
d. Replacement cost
9. Which of the following is not include in the summa de arithmetica of Pacioli?
a. Memorandum book
b. Journal book
c. Ledger book
d. Trial balance book
10. This commercial Code is used historical cost as the basis of valuation.
a. Savary Commercial code
b. Napoleon Commercial Code
c. France Civil Law in 1804
d. France Code of Commerce in 1807
11. Which of the following users of financial information is perceived to be most
important user in a macro-user orient accounting system?
a. Government Agencies
b. International Financial Market
c. Investor
d. Creditors
12. This field of accounting was born due to the infusion of CPA’s in the practice of
accounting.
a. Tax accounting
b. Internal Revenue Accounting
c. Tax Advisory Accounting
d. Business Tax Accounting
13. This is believed to be the most complex and controversial areas of accounting
because each one is unique and must be evaluated in terms of its economic
substance, irrespective of legal forms.
a. Merger
b. Consolidation
c. Business combination
d. Partnership dissolution
14. This agency of the Philippine government requirements financial reports to
ensure compliance of national taxes.
a. SEC
b. BSF
c. LGU
d. BIR
15. Which of the following is not an appropriate description of accounting?
a. Accounting is an information system
b. Accounting is an exact science and art
c. Accounting is the language of business
d. Accounting is a process that leads to understandable information
16. The following information is provided by the basic accounting reports, except
a. Interpreting
b. Measuring
c. Communicating
d. Identifying
17. Which of the accounting process comes first ahead of the others?
a. Profitability
b. Measuring
c. Communicating
d. Identifying

18. The statement of financial condition reports the following, except

a) Profitability
b) Measuring
c) Communicating
d) Identifying
19. The following are the external users of general purpose financial statements,
except
a)