Long Quiz

1. Which of the following statement best describes accounting

a. It is a process by which useful information is generated.
b. Provide objective information about a reporting entity that is intended to be useful to
interested users
c. It is the process of identifying, recording and communicating financial information that
is useful in making economic decisions.
d. One of the hardest course
2. This branch of accounting deals with the preparation of general purpose financial statements.
a. General accounting
b. Management accounting
c. Financial accounting
d. Auditing
3. This concept states that transactions and events must be accounted for in accordance with their
economic substance and rather than merely their legal form.
a. Relevance
b. Verifiability
c. Substance over form
d. Form over substance
4. You own a fish ball business. When you get fish ball from your business for your personal
consumption, you pay for it, even though you are the business owner. You are applying which of
the following accounting concepts?
a. Cost-benefit
b. Separate entity
c. Going concern
d. Fishy business
5. ABC Co. is a car dealer. It buys cars from companies like Toyota, Mitsubishi and Ford and resells
the cars to end consumers. What type of a business is ABC Co. according to the type of activity it
undertakes?
a. Corporation
b. Partnership
c. Merchandising
d. Manufacturing
6. This type of business organization is created by a contractual agreement between two or more
individuals.
a. Corporation
b. Cooperative
c. Partnership
d. Sole proprietorship
7. What type of information needs of users do general purpose financial statements cater to?
a. Common needs
b. Specific needs
c. a and b
d. caring needs
8. These are guidelines that accountants follow when recording and communicating accounting
information.
a. Accounting concepts and principles
b. Accounting laws and regulations
c. Accounting memos and guidelines
d. Accounting walkthrough, guides and cheats
9. He is considered the father of modern accounting.
a. Fra Luca Pacioli
b. Fra Lucca Pacioli
c. Fra Lucas Pociali
d. Fra Luca Luca
10. When was the first systematic record keeping dealing with “double entry recording system”
evolve?
a. 1949
b. 1994
c. 1494
d. 1449
11. Which of the following is not an external users of a financial information
a. Investors
b. Managerial personnel
c. Non-managerial employees
d. Lenders
12. Which of the following are the fundamental qualitative characteristics. Of useful financial
information?
I. Relevance
II. Reliability
III. Faithful representation
IV. Materiality
a. I and II
b. I and III
c. II, III and IV
d. I, III and IV
13. It is the form of business organization that provides the highest degree of continuity.
a. Sole proprietorship
b. Partnership
c. Cooperative
d. Corporation
14. Sole proprietorship businesses are registered with the
a. DTI
b. SEC
c. CDA
d. All of these
15. When making judgments and estimates under conditions of uncertainty, the accountant
chooses the potentially unfavorable outcome over the favorable one. This concept refers to
 a. Separate entity
b. Going concern
c. Prudence/Conservatism
d. Materiality
16. Information has this qualitative characteristic of two different users could reach a general
agreement as to what the information intends to represent.
a. Relevance
b. Faithful representation
c. Comparability
d. Verifiability
17. Under this qualitative characteristic, it provides a true, correct and complete depiction of what it
intends to represent
a. Relevance
b. Faithful representation
c. Comparability
d. Understandability
18. You acquired goods with normal selling price of P10,000 at a discounted price of P8,000. You
recorded the goods at P8,000. You are applying which of the following concepts?
a. Discounted price concept
b. Materiality
c. Historical cost
d. Accrual basis
19. These qualitative characteristics relate to the content or substance of financial information.
a. Fundamental qualitative characteristics
b. Enhancing qualitative characteristics
c. Relevance characteristics
d. Completeness characteristics
20. Under this concept, some costs are initially recognized as assets and charged as expenses only
when the related revenue is recognized.
a. Accrual basis
b. Matching
c. Historical cost concept
d. Time period

TEST II. Journal Entries

You are an owner of a service business. The following were the business transactions during the
period of July 20x1

July 2 The business owner invests P200,000 cash to the business.

July 3 The business obtains a loan of P600,000.
July 5 The business purchases equipment worth P450,000 for cash.
July 10 The business pays advanced rent of P20,000.
July 12 The business purchases inventory worth P500,000 on account.
July 17 The business sells goods costing P80,000 for P200,000 on cash basis.
July 20 The business sells goods for P400,000 on account. The cost of the
goods sold is P150,000.
July 23 The business pays accounts payable of P400,000.
July 27 The business owner withdraws P10,000 from the business.
July 30 The business pays interest expense of P15,000.