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FDNACCT - Quiz #1 - Answer Key - Set B
FDNACCT - Quiz #1 - Answer Key - Set B
AY 2022-24 Term 1
Quiz #1
SET B
TEST I. TRUE OR FALSE
2. Owners of business firms are the only people who need accounting information.
FALSE
Owners are not the only users who need accounting information.
3. Free from error states that information in financial statements cannot be selected or presented in a
way to favor one set of interested parties over another.
FALSE
Neutrality
4. The cost-benefit test dictates that, in certain circumstances, it is permissible to avoid full
compliance with an accounting principle when the cost of doing so exceeds the benefits.
TRUE
5. Accrual assumes that revenue is reported when it’s earned, regardless of when collection is
actually received while expense is reported when it’s incurred, regardless of when payment is
actually made.
TRUE
6. The modifying constraint concerning the monetary or financial significance of an item in relation to
the particular monetary or financial situation of which it is a part is called Transparency.
FALSE
Materiality instead of transparency
7. When a business is organized as a sole proprietorship, the owner may combine his personal
financial information with the business financial information given that he is the same person who
owns the business.
FALSE
Entity - Should not combine personal financial information with business financial information
8. The Statement of Financial Position will arrange current assets according to magnitude, with the
highest amount presented first.
FALSE
Liquidity
9. The ability of a company to generate profits for a given period is known as its financial position.
FALSE
Financial performance.
10. The Statement of Owner's Equity is prepared before the Statement of Financial Position so that
the ending capital balance is available.
TRUE
1. According to this organization, accounting is defined as the art of recording, classifying and
summarizing in a significant manner and in terms of money, transactions and events that are, in
part at least, of a financial character, and interpreting the results thereof.
A. Accounting Standards Council (ASC)
B. Philippine Institute of Certified Public Accountants (PICPA)
C. American Accounting Association (AAA)
D. American Institute of Certified Public Accountants (AICPA)
2. Deals with the review of financial statements to assess its compliance to accounting rules and
principles.
A. Auditing
B. Financial accounting
C. Management accounting
D. Tax accounting
3. This type of business provides services to customers and charges fees in exchange.
A. Sole Proprietorship
B. Manufacturing
C. Merchandising
D. Service
4. A qualitative characteristic that states that information should be dependable, free from error, and
free from bias.
A. Faithful representation
B. Trustworthiness
C. Reliability
D. Verifiability
5. Which principle requires important facts that would have an effect on an investor's decisions be
included in the financial statements?
A. Full disclosure principle
B. Historical cost basis principle
C. Matching principle
D. Revenue recognition principle
6. Which of the following assumes that a firm will continue to operate indefinitely without any
evidence to the contrary?
A. Going concern assumption
B. Monetary unit assumption
C. Periodicity of income assumption
D. Separate economic entity assumption
8. The stable monetary unit assumption states that in times of currency appreciation or depreciation,
A. all fluctuations in currency value should be reflected in the books of accounts of the company.
B. any fluctuations in currency value will not be reflected in the books of the company.
C. only fluctuations in currency value that are disadvantageous to the company should be reflected.
D. only fluctuations in currency value that are advantageous to the company should be reflected.
10. A present economic resource controlled by the entity as a result of past events, and are expected
to be realized to cash within one year or the normal operating cycle of the business, whichever is
longer.
A. Assets
B. Liabilities
C. Current Assets
D. Current Liabilities
TEST III. PROBLEM SOLVING
1. FDN Accounting Services reports the following income and expenses accounts in its business records for
the year ending December 31, 2022:
Accounting Revenues, ₱900,000
Transportation Expense, ₱130,000
Supplies Expense, ₱70,000
Interest Income, ₱5,000
Salaries Expense, ₱305,000
Rent Expense, ₱117,000
Utilities Expense ₱165,000
How much is the net income or loss of FDNACCT during the year 2022?
₱118,000
2. During the first year of operation of FDNACCT, the following information were made available for the
preparation of the Statement of Changes in Owner’s Equity for the year ending December 31, 2022:
Beginning Capital, ₱230,000
Owner’s Drawing, ₱102,000
Net Income during the year, ₱510,000
Additional Investment, ₱223,000
How much is the amount of ending capital to be presented in the Statement of Changes in Owner’s
Equity for the year ending December 31, 2022?
₱861,000
4. FDNACCT started operating in 2022. Below is the alphabetical partial list of the company’s adjusted
balances as of year-end December 31, 2022:
5. On September 1, 2022, Faith D. Nakpil began FDN Accounting Services (FDNACCT) with an initial
investment of ₱60,725, and on September 30, her records showed the following account balances:
8. During the year, FDNACCT reported net income of ₱38,000 while the owner made additional
investments in the form cash of ₱50,000 and an old laptop which was previously purchased for
₱55,000. The laptop, at the time of investment, had a fair market value of ₱20,000. If the ending
equity balance is ₱430,000, how much was the equity balance at the start of the year?
₱ 322,000
9. Faith D. Nakpil opened her accounting business with ₱80,000 cash and ₱40,000 worth of office
equipment and supplies. During the first year of operations, the business generated revenues of
₱60,000 from clients and expenses totaled ₱44,000. Faith also took back some of the office
supplies she initially brought worth ₱2,000, because her daughter needed it for a school project.
How much should be recorded as equity at the end of the year?
₱ 134,000
10. If assets increased by ₱60,000, and liabilities decreased by ₱40,000, then how much is the
change in equity? Write if it’s an increase or decrease on the answer sheet and worksheet.
₱100,000 increase
It also provided accounting services amounting to ₱70,000 in August 2023, the collection of which
will be in October 2023.
12. Faith D. Nakpil Accounting Services provided the following information at the end of its first six
months of operation:
How much expenses should be recorded by the company for the six-month period?
₱430,500
--END OF EXAMINATION--