TRUE OR FLASE TRUE – Accounting was already existent when Egypt's great

pyramids were built.

TRUE – A management accounting system incorporates all types
of financial and non-financial information from a wide range of FALSE – The accounting records of the sole proprietorship
sources. include the proprietors personal financial records.

TRUE – Cost accounting makes use of data from the cost books of TRUE – Non-profit organizations need similar financial
account in providing information for managerial planning and information as businesses.
control.
FALSE – Classification of financial data is achieved through the
FALSE – Management accounting is concerned with the supply of preparation of financial statements.
information to owners of an entity while financial accounting to
managers. TRUE – Most enterprises adopt a financial concept of capital in
preparing their financial statements.
TRUE – Internal auditors perform routine tasks and undertake
detailed checking of the entity's accounting records. TRUE – Authoritative bodies may develop standards for certain
types of transactions on the basis of logic in the absence of clearly
FALSE – Bookkeeping procedures usually start when the basic defined practices.
data have been entered in the books of account and the accuracy of
each entry has been tested. TRUE – Government agencies require financial information from
the enterprises as part of their regulatory function.
TRUE – Accounting has evolved in response to the social and
economic needs of society. TRUE – The accounting process for all three types of business
organizations is generally the same.
FALSE – A CPA's practice is limited to the practice of public
accountancy and practice in commerce/industry, in FALSE – An accounting principle has relevance to the extent that
education/academe and in government. it can be implemented without undue complexity or cost.

FALSE – Learning accounting is like learning a new language in FALSE – Recognition is the process of determining the monetary
the sense that words used in accounting mean the same as they are amounts at which the elements of the financial statements are to be
used in everyday, non-accounting sense.  recognized.

FALSE – Double-entry bookkeeping is a discovery of science. TRUE – The elements directly related to the measurement of
financial position in the balance sheet are assets, liabilities and
TRUE – It is during the industrial revolution when corporations equity.
emerged thus spurring the new development of accounting.
FALSE – Recording and classifying are done in journals while
FALSE – Financial accounting information is for the exclusive summarizing is done in general ledgers.
benefit of the owners of an entity.
FALSE – Manufacturing companies purchase goods that are ready
FALSE – Accounting principles become generally accepted even for sale and then sell these to customers.
with little support from relevant parties interested in the financial
statements. TRUE – If each entity made up its own accounting rules, there
could be no basis for comparing the earnings and financial position
TRUE – One reason why one should study accounting is to ensure of different firms. 
that he follows legal requirements.
FALSE – Objectivity means that accountant must be truthful in all
TRUE – Statements and interpretations issued by the Accounting professional undertakings and business relationships. 
Standards Council (ASC)/Financial Reporting Standards Council
(FRSC) represent generally accepted accounting principles in the FALSE – Integrity means that accountant must not allow bias or
Philippines.  undue influence on his professional judgment. 

TRUE – Some entities are required by law to publish information TRUE – The work of auditors begin after the work of financial
about their affairs. accountants are completed. 

FALSE – Corporate external auditors are appointed by the TRUE – Summarization of financial data is achieved through the
management. preparation of financial statements or financial reports. 

TRUE – In the whole society, there is a need for credibility in FALSE – Periodicity concept means that financial reporting are
information and information systems. only done annually.

TRUE – The code of ethics is equally valid for all professional TRUE – Stable monetary unit concept states that fluctuations in
accountants. purchasing power and inflation should be ignored in comparing
financial statements from different periods. 
TRUE – The abundance of accounting applications proves how
information technology has revolutionized accounting. FALSE – Historical cost concept means that acquired assets are
initially recorded at actual cost and adjusted later based on current
market value. 
FALSE – Revenue recognition principle states that revenues are - Understandability
recognized when cash is received.
9. If a business is not being sold or closed, the amounts reported in
TRUE – GAAP requires that relevant information that would the accounts for assets used in the business operations are based on
affect user's interpretation must be disclosed in the financial the cost of the assets. This practice is justified by
statements. 
- Going Concern
TRUE – Materiality may depend on the amount of an item in
relation to total assets or size of company.  10. The cost of properties acquired by a business are maintained in
accordance with what principle?
TRUE – Consistency principle means that accounting methods
used from period to period are the same to achieve comparability. - Cost Principle

TRUE – Timeliness is important in the preparation of financial 11. They encompass the conventions, rules and procedures
statements that will be used in financial planning and decision- necessary to define what is the accepted accounting practice. 
making. 
- Generally accepted accounting principles
FALSE – Going concern means that the entity will end its
operations few years from now. 12. Accountants don't recognize the value of the peso changes over
time. This concept is called the
FALSE – Criteria for general acceptance of accounting principles
are relevance, integrity and objectivity. - Stable monetary unit concept

FALSE – Conservatism principle means that the accounting 13. Which users need financial information to enable them to
method which has the most favorable effect on the financial determine whether their loans and the related interest will be paid
statements is adapted.  when due?

- Lenders

1. It is the capacity of information to make a difference in decision 14. This principle requires relevant, complete or sufficient
by helping users evaluate past, present or future events, or information that will form part of financial statements for decision
confirming, or correcting their past evaluation.  making purposes. 

- Relevance - Adequate disclosure

2. Those who lend money or deliver goods and services before 15. A professional accountant should be fair and should not allow
being paid is called prejudice or bias, conflict of interest or influence of others to
override his judgement.
- Creditors
- Objectivity
3. Transactions or events are recognized when they are earned or
incurred and not as when cash is received or paid. 16. A profession whose members collect and summarize financial
data, and present information so users may take effective decisions.
- Accrual
- Accountancy
4. It is the ability to bring together for the purpose of noting
similarities and dissimilarities.  17. The checking of prepared accounts and the reporting on them is
called
- Comparability
- Auditing
5. It is the result of the standard of adequate disclosure. 
18. A professional accountant should be straightforward and honest
- Completeness in performing professional services.

6. The financial accounting information is directed toward the - Integrity

common needs of users and is independent of presumptions about
particular needs and desires of specific users. 19. Its mandate is to supervise, control and regulate the practice of
accountancy in the Philippines
- Neutrality
- Board of Accountancy (BOA)/Professional Regulation
7. Financial reports communicated after an accounting decision has Commission (PRC)
been made defeat the purpose of which characteristic?
20. Setting financial objectives, making plans, obtaining finance
- Timeliness and safeguarding the financial resources of the entity

8. The financial information must be comprehensible or intellegible - Financial Management

if it is to be useful.
 
1. Revenue from the sale of goods in the normal course of business 9. Over a period of time, if total assets increase by P270,000 and
is reported as part of the earning in the period when: total liabilities increase by P70,000, then owner’s equity will be
increased by
- The sale is made - 200,000

2. An example of an asset is:

- Machinery owned by the firm

- Money owed by the firm to one of its suppliers for goods

purchased. 10. Another way of stating the accounting equation is
- An overdrawn bank balance. - Owner’s Equity + Assets = Liabilities
- The capital of the firm.
- Assets + Liabilities = Owner’s Equity
3. Which of the following statements is correct? - Assets = Liabilities – Owner’s Equity

- To record an increase in any given asset account, that account - Assets – Liabilities = Owner’s Equity
must be debited.  - Assets = Owner’s Equity – Liabilities

- To record a decrease in capital, the capital account must be 11. The company collected in full an account receivable.
credited. Considering this transaction alone,
 
- To record an increase in any given liability account, that account - Total assets will remain the same.
must be debited.
12. When a business entity received payment before delivering
-  To record a decrease in any given liability account, that account goods, the Unearned Revenue account is
must be credited.
4. The income statement reports - Credited

- Results of operations for a specific period 13. Switch is famous for being an innovative gaming console. At
the end of a recent year, Nintendo’s total assets added up to P381
5. Suppose your business has cash of P50,000, receivables of
million, and owners’ equity was P264 million. How much were
P60,000, and furniture and fixtures totaling P200,000. The store
Nintendo’s liabilities?
owes P80,000 on account and has a P100,000 note payable. How
much is the equity? - P117,000

- P130,000 14. Assume that Nintendo sold Switches to a department store on

account for P50,000. How would this transaction affect the
6. Which is false concerning the rules of debit and credit?
accounting equation?
- The left side of an account is always the debit side and the right
- Increase both assets and owners’ equity by P50,000.
side is always the credit side.
15. Which parts of the accounting equation does a sale on account
- The word “debit” means to increase and the word “credit” means
affect?
to decrease.
- Accounts Receivable and Owner, Capital
- Increases in assets and expenses are debit entries, and increases in
liabilities, equity, and revenues are credit entries. 16. Assume that Nintendo paid expenses totaling P35,000. How
does this transaction affect the accounting equation?
- The normal balance of any account appears on the side for
recording increases. - Decreases assets and increases liabilities

7. Withdrawals by the proprietor has all of the following effects 17. Considering the overall effects of transaction 17 and 19 on
except Nintendo, what is the profit or loss?

- Reduction of cash balance. - Profit of P15,000

- Reduction of owner’s equity. 18. A business received P6,000 cash from charge customers to
apply on account. The effect of the transaction is
- Reduction of profit for the period.
- Increase in asset, decrease in asset
- Reduction of total assets.
19. Which of the following is a form of Revenue
8. The purchase of an asset on account will  
- A cash purchase invoice
- Increase total assets and increase total liabilities.
- A check paying a mortgage
- A credit purchase invoice
- Credit sales to charge customers - Equity is P1,050,000
  - Current liabilities is P400,000
- Total liabilities and equity equal P2,000,000
20. The expectation of a future payment from a customer for goods - Non-current liabilities is P450,000
sold is
10. Any event that brings to it a transfer of something of value
- Notes Receivable between two entities and causes change in the pattern of assets or
liabilities of the business, is called a/an

- Transaction
1. Which financial statement's structure is closest to that of the
11. ________ refers to a process or part of a process that has a
basic accounting equation?
particular time and place of occurrence.
- Statement of Financial Position
- Event
2. Which financial statement will allow you to determine the gross
margin for a retailer or manufacturer? 12. By amortizing in the financial statements, a business spread the
cost of non-current assets over the accounting periods that benefit
- Statement of Comprehensive Income from their use.

3. In the heading of a balance sheet, what is the date indicated?  - Accumulated Depreciation
-  A point in time 13. Which three of the following sets of items are presented on the
same side of the trial balance?
4. Which of the following would appear as a current asset on the
balance sheet? A. Sales, commission received and income accruals
B. Current assets, cost of sales and freight expense
- Goodwill C. Capital, accrued liabilities and other operating expenses
D. Sundry expenses, prepayments and receivables
- Service van
- A, B and D
- Interest on loan to clients
14. Transactions that do not result in a change in the organization’s
- Increase in the value of land
cash.
5. At the end of the year, XYZ Company has the following
balances: Current Assets = P155,000 including allowance for - Credit transaction
doubtful accounts of P5,000; Non-current Assets = P245,000;
Current Liabilities = P40,000. What is the amount of total 15. Roberto Alba Consulting Firm received P10,000 in December
liabilities and equity? for services it will perform in the following month. Roberto Alba
- P400,000 uses the accrual basis of accounting. In December, Roberto Alba
debited Cash for P10,000. What will be the other account involved
6. At the end of the year, ABC Corporation has the following
balances: Current Assets = P460,000 excluding allowance for in the December accounting entry prepared by Roberto Alba?
doubtful accounts of P5,000 and sales returns and allowances of
P5,000; Non-current Assets = P650,000; Current Liabilities = - Unearned Revenues
P140,000 and Non-current liabilities = P235,000. What is the
balance of equity account? 16. When an owner draws P20,000 from a sole proprietorship, the
asset Cash decreases by P20,000. What is the other effect on the
- P725,000
balance sheet?
7. On January 1, 2020, Sarah Locson put up her events’ business.
She invested P200,000 cash and service vehicle which she bought - Debit - Withdrawal
for cash two years ago costing P500,000 with depreciation expense
for the year of P20,000 and accumulated depreciation, beginning of
P20,000. What is the amount of Sarah Locson, Capital in the books
of the business at December 31, 2020?
- P660,000 17. Sunshine Company pays salary of employees every 10th and
25th of the month. On December 22, Sunshine Company hired
8. ________________ are companies that sell consumer goods that Susana Torres as Bookkeeper to begin working on December 26 at
are produced by other companies. a daily salary of P400. December 30 and 31 are regular holidays.
In the balance sheet of December 31 what amount and account will
- Retail companies
the salary of Susana Torres be reflected as credit?

- Cr. Salary Payable P1,600

9. Juan Dela Cruz Janitorial Services has assets totaling P2,000,000
18. Unearned revenue will appear on the balance sheet under which
and liabilities totaling P850,000. Which of the following statements
heading/classification?
may be true?
- Current liabilities
 19. The accounting equation 7. A tool used to help bookkeepers and accountants complete the
accounting cycle.
- Shows the claims on the entity's assets by both the creditors and
owner. - Accounting Worksheet

20. This account records long-term debt of the business entity for 8. Entries made to transfer temporary account balances to
which it has pledged certain assets as security. permanent accounts.

- Mortgage Payable - Closing entries

21. Withdrawals by the proprietor has all of the following effects 9. Accounts with balances that are carried over to future years.
except 
- Permanent accounts
- reduction of of profit for the period
10. The expectation of a future payment from a customer for
22. Revenues should be recognized when services rendered or goods sold is

- they are earned - Accounts Receivable

23. Obligations which are expected to be liquidated through the use 11. A source document in accounting is 
of existing current assets or the creation of other current liabilities
are called - The origin of information that is recorded in the books of
accounts
- Current liabilities
12. Credit memoranda are issued when

1. Arrange the following items in the order of the accounting cycle.

  -Goods are returned to the seller by the purchaser.

A. Record transactions into the books of original entry 13. This account records long-term debt of the business entity for
which it has pledged certain assets as security
B. Make period-end adjustments

C. Prepare financial statements - Mortgage Payable

D. Post transactions to the general ledger 14. The document issued with a sale is

- (A) - (D) - (B) - (C) - Recorded by the seller as a sales invoice.

2. After a business transaction has occurred, entries are recorded in 15. When a business entity receives payment before delivering
the goods, the Unearned Revenue account is 

- General Journal - Credited

3. Which trial balance lists all the business accounts before year- 16. Without the use of the trial balance,
end adjusting journal entries are made?
- Inequality between debits and credits cannot be determined.
- Unadjusted Trial Balance
17. Withdrawals by the proprietor has all of the following effects
4. Entries that are made at the end of a period to correct accounts except
before financial statements are prepared.
- reduction of cash balance
- Adjusting entries
- reduction of total assets
5. Which of the following is/are the purpose(s) of preparing a trial
balance? - reduction of owner's equity
A.  Prevent fraud
- reduction of profit for the period
B.  Ensure equality of debit and credit balances among the journal
entry 18. A person who wants to determine the balance of a particular
account should refer to the
C.  Detect errors in the ledger.
- Ledger
- B and C only
19. When a customer buys services on credit, the contract is
6. This trial balance is created after adjusting journal entries have regarded as complete when
been recorded.
- The services are rendered.
- Adjusted Trial Balance
20. Which of the following has the primary responsibility for the
preparation and reliability of information in the financial
statements?
  
- Management

21. When a payment is made to a supplier for goods previously  

purchased on account, the debit is to
 
-  A liability account
 
1. On October 1, 2020, Dr. Johnny Ledesma paid P24,000 to renew
its insurance policy for two years. On December 31, 2020, Dr.  
Ledesma’s unadjusted trial balance showed a balance of P1,000 for
prepaid insurance and P32,000 for insurance expense. What
amounts should be reported for prepaid insurance and insurance  
expense in Dr. Ledesma’s year end financial statements?      
 
- Prepaid Insurance P21,000 and Insurance Expense P12,000
 
2. The recording of an expense could result in a corresponding
increase in  
- Liability   
 
3. Office supplies were P9,000 at the end of January and P12,000
at the end of February. During the month of February, Office
Supplies Expense equaled P4,000. How much cash was paid for
office supplies during February?

- P7,000  

4. At the beginning of the fiscal year, ABC Company paid a 3-year

insurance premium of P360,000. At the end of the fiscal year  

- P120,000 should be treated as expenses.  

 
5. Which of the following is an example of an accrual?
 
- Interest on investments
 

6. Which of following transactions will not result in the recognition  

of an expense?  

- Interest on investments  

 
7. Salaries Payable were P7,000 at the end of September and
P5,600 at the end of October. Salaries expense for October was
 
P36,000. How much cash was paid for salaries during October?

- P37,400  

 
8. At the beginning of 2019, XYC Company purchased a fire
insurance policy covering a building for a period of two years. The
premium of P24,000 was paid in cash. At the end of the year, the
company will reduce prepaid insurance for the policy by  

- P12,000  

 
9. Salaries and wages that are recorded as expense at year-end but
remain unpaid are  

 
- Accrued expense

10. If as of Dec. 31, 2019, the rent of P20,000 for December had  

not been recorded or paid, the adjusting entry would include a  

 
- Debit to Rent Expense