Department of Education

Division of Cebu province

Usmad National High School
Usmad, Argao, Cebu

First Summative Test

Name:________________________________ Date:_______________ Score:________

A. Multiple Choice

Direction: Choose carefully the letter that best describes your answer.

1. Which of the following is a correct listing of the steps in the accounting process?
A. identifying, recording, communicating
B. identifying, segregating, communicating
C. segregating, recording, verifying
2. Who signed the royal charter for the Institute of Accountants in Glasgow.
A. Luca Pacioli C. Phoenician
B. Queen Victoria D. Egyptian Traders
3. Which among the steps in the accounting process is most important?
A. Identifying C. Communicating
B. Recording D. All are equally important.
4. Which of the following business transactions is not financial in nature?
A. Company A borrowed money from a bank to buy additional equipment.
B. Company B hired employees.
C. Company C sold P10,000 worth of inventories.
D. Company D paid its hired employees for the month of November.
5. Which of the following statements is NOT correct?
A. Luca Pacioli is considered the father of modern accounting.
B. Today, accounting rules and standards are available to help accountants practice
their profession.
C. In 2006, the Philippines fully complied with the IFRS.
D. Phoenicians invented an alphabet with accounting to avoid being cheated by
Egyptians in their trading.
6. Accountants communicate the summarized results of all company financial events to
interested parties to help them in ________.
A. making relevant decisions C. selling products
B. choosing job applicants D. extending the life of the business
7. One of the features of accounting is that it is concerned with financial information and
transactions. Which of the following is not similar in meaning with the underlined phrase?
A. economic information C. money matters
B. material information D. managerial information
8. Accounting is a service activity. Its function is to provide quantitative information,
primarily financial in nature, about economic entities, that is intended to be useful in
making __________ decisions.
 A. Qualitative B. Economic C. Informative D. Legislative
9. Creditors, government, potential investors and _________ are examples of external
users
A. Managers B. Stockholders C. Customers D. Employees
10. They are individuals/organizations who/which does not manage or work for a company
but use its financial information.
A. Internal users B. External users C. Local users D. Foreign users
11. The personal assets of the owner of a company will not appear on the company's
balance sheet because of which principle/guideline?
A. Cost B. Economic Entity C. Monetary Unit D. Periodicity
12. Which principle/guideline requires the company's financial statements to have footnotes
containing information that is important to users of the financial statements?
A. Conservatism B. Economic Entity C. Full Disclosure D. Monetary Unit
13. Accountants might recognize losses but not gains in certain situations. For example, the
company might write down the cost of inventory, but will not write up the cost of
inventory. Which principle/guideline is associated with this action?
A. Conservatism B. Materiality C.Monetary Unit D. Full Disclosure
14. Which of the following is NOT an external user of accounting information?
A. Creditors B. Government C. Employees D. Management
15. Which of the following accounting processes comes first of the others?
A. Communicating B. Identifying C. Interpreting D. Measuring

B. TRUE or FALSE

Directions : Write the word True if the statement is correct otherwise write the word False in
the space provided and underline the word/s that make the statement incorrect.

_______16. There are four (4) phases of accounting which are found in the definition
given by the AICPA namely: recording, classifying, summarizing, and
interpreting.
_______17. 14th Century was the beginning of Modern Accounting in Europe and
America.
_______18. Accounting deals with Economic information and transactions.
_______19. Interpreting is the phase of accounting wherein only the owner uses
financial statements to make an economic decision.
_______20. External users are stakeholders like owners/stockholders.
_______21. Internal users include management, employees, and creditors.
_______22. The Father of Accountants is Luca Pacioli.
_______23. Prospective investors are considered internal users.
_______24. Bookkeeping is not part of accounting.
_______25. Accounting is a service activity wherein its function is to provide qualitatively
Information.
 C. Directions: Accounting principles. Indicate which principles are violated. Write your analysis on the line

provided.

1. The owner-manager bought a computer for personal use. The invoice was given to the accountant who recorded it as an asset of the business.

____________________________________________________________________________
2. The statement of financial position of a company included an equipment purchased from Japan for 350,000 yen. It was reported at that amount in
the statement of financial position while all the other assets were reported in Philippine pesos.

____________________________________________________________________________
3. Purchased a hammer at a cost of PHP500. This was recorded as an asset and expense to decrease its value by PHP50 per year for 10 years.

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4. No financial statements were prepared by Michael Go for his business. He explained that he will prepare the statements when he closes the
business, which he predicts to take place after 20 years.

____________________________________________________________________________
5. Aside from owning a shoe store, Albert operates a canteen. The assets of the canteen are reported in the statement of financial position of the shoe
store.

____________________________________________________________________________
D. Instructions: Using the graphic below. Write at least four frequently asked questions by Internal Users. Write your answer on the lines

provided

______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

E. ESSAY
1. Do you think that non-financial information is still useful in the accounting process? Why
or why not?

2. Give concrete examples of how you can use accounting in your daily lives.

3. Do you agree: that “Accounting is vital to the success of a business?” Explain.