ACCTG 103 SEATWORK NO.

1 (MidTerm) – SET A

Directions: Select “A” if the statement is True. Select “B” if the statement is False

1. On Day 1, a customer buys goods from Entity A and promised to pay the sale price on Day 30.
Entity A recognizes sales revenue on Day 1 rather than on Day 30. This is an application of
accounting concept of accrual basis.
2. The entity should recognize an asset for land received from a donation.
3. To meet the objectives of general purpose financial reporting, the Standard sometimes contains
requirements that depart from the Conceptual Framework.
4. Under the cost-benefit concept, the cost of processing and communicating information should
exceed the benefits derived from it.
5. All information presented in the financial statements sourced from the accounting records of the
entity.
6. Entity A enters into a purchase commitment with Entity B (a seller). Entity A has already paid the
purchase price while Entity B did not yet deliver the goods. Entity A’s combined right and
obligation changes to a liability.
7. Information has this qualitative characteristics of comparability if different, knowledgeable and
independent observers could reach a consensus, although not necessarily complete agreement, that
a particular depiction is a faithful representation.
8. Revenue may result from a decrease in liability from primary operations.
9. An increase in the carrying amount of an asset could not possibly result in the recognition of an
expense.
10. Mr. Mwa, CPA, is a professor in a university where he teaches mainly home economics, music and
physical education. Those subjects require that the teacher must be awesome. Mr. Mwa is also
frequently invited as a judge in beauty pageants and singing contests and as a referee in mixed
martial arts competitions. Mr. Mwa is considered to be practicing accountancy in academe sector.
11. General-purpose financial statements are prepared primarily for the use of external users.
12. Fulfillment value is the absolute amount of cash expected for the payment of liability.
13. Under the financial capital concept, net income occurs when the nominal amount of net assets at
year-end increased.
14. Entity A determined that a previously recognized asset no longer meets the definition of an asset.
Accordingly, Entity A removed the carrying amount of the asset from the statement of financial
position and recognized it as an expense. Entity A is applying the recognition principle.
15. Entity A values its fixed assets at their historical costs and does not restate them for changes in the
purchasing power of the Philippines pesos due to inflation. Entity A is applying the accounting
concept of prudence.
16. Measuring an asset at historical cost will always result in the same carrying amount of the asset
from period to period.
17. The Conceptual Framework and the Standards specify a uniform quantitative threshold for
materiality.
18. A company can have a liability even if the amount of obligation is unknown.
19. An asset should be recognized for an equipment that the entity intends to, and is very certain, to
acquire in the future.
20. Asset measurements in financial statements are confined to historical cost and current cost.
 ACCTG 103 SEATWORK NO. 1 (MidTerm) – SET B

Directions: Select “A” if the statement is True. Select “B” if the statement is False

1. An asset should be recognized for an equipment that the entity intends to, and is very certain, to
acquire in the future.
2. Asset measurements in financial statements are confined to historical cost and current cost.
3. Fulfillment value is the absolute amount of cash expected for the payment of liability.
4. Mr. Mwa, CPA, is a professor in a university where he teaches mainly home economics, music and
physical education. Those subjects require that the teacher must be awesome. Mr. Mwa is also
frequently invited as a judge in beauty pageants and singing contests and as a referee in mixed
martial arts competitions. Mr. Mwa is considered to be practicing accountancy in academe sector.
5. A company can have a liability even if the amount of obligation is unknown.
6. General-purpose financial statements are prepared primarily for the use of external users.
7. On Day 1, a customer buys goods from Entity A and promised to pay the sale price on Day 30.
Entity A recognizes sales revenue on Day 1 rather than on Day 30. This is an application of
accounting concept of accrual basis.
8. The Conceptual Framework and the Standards specify a uniform quantitative threshold for
materiality.
9. To meet the objectives of general purpose financial reporting, the Standard sometimes contains
requirements that depart from the Conceptual Framework.
10. Under the cost-benefit concept, the cost of processing and communicating information should
exceed the benefits derived from it.
11. Entity A determined that a previously recognized asset no longer meets the definition of an asset.
Accordingly, Entity A removed the carrying amount of the asset from the statement of financial
position and recognized it as an expense. Entity A is applying the recognition principle.
12. Revenue may result from a decrease in liability from primary operations.
13. The entity should recognize an asset for land received from a donation.
14. Under the financial capital concept, net income occurs when the nominal amount of net assets at
year-end increased.
15. An increase in the carrying amount of an asset could not possibly result in the recognition of an
expense.
16. Entity A values its fixed assets at their historical costs and does not restate them for changes in the
purchasing power of the Philippines pesos due to inflation. Entity A is applying the accounting
concept of prudence.
17. Information has this qualitative characteristics of comparability if different, knowledgeable and
independent observers could reach a consensus, although not necessarily complete agreement, that
a particular depiction is a faithful representation.
18. All information presented in the financial statements sourced from the accounting records of the
entity.
19. Entity A enters into a purchase commitment with Entity B (a seller). Entity A has already paid the
purchase price while Entity B did not yet deliver the goods. Entity A’s combined right and
obligation changes to a liability.
20. Measuring an asset at historical cost will always result in the same carrying amount of the asset
from period to period.