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Sta. Filomena, Dipolog City

Test I - Multiple Choice:
1. Which of the following is not a qualification of an applicant for the CPA
licensure examination?
a. He/she is of good moral character.
b. He/she is at least 21 years of age.
c. He/she is a Filipino citizen
d. He/she is a holder of the degree of Bachelor of Science in
2. The members of the Professional Regulatory Board of Accountancy
shall be appointed by the
a. Association of CPAs in Public Practice
b. Professional Regulation Commission
c. Philippine Institute of CPAs
d. President of the Philippines
3. The chairman of the Philippine Financial Reporting Standards Council
(PFRSC) must have been or presently a
a. A senior accounting practitioner
b. A member of PICPA
c. A member of the Board of Accountancy
d. A chairman of the Professional Regulation Commission
4. What do you call the approved statements of the International
Accounting Standards Board (IASB)?
a. International Accounting Standards
b. International financial reporting standards
c. International Financial Statements
d. None of the above
5. Due to the creation of FRSC, the Accounting Standards Councils
Statement of Financial Accounting Standards (SFAS) are now renamed
a. Philippine Accounting Standards
b. International Accounting Standards
c. PICPA Standards
d. Standards of Reporting
6. A conditioned candidate, shall take an examination in the remaining
subjectsa. Within 2 years from the preceding examination
b. 2 years from the last day of release.
c. 2 years after date the review course started
d. No need to take the exam as already considered passed.
7. How many calendar days that the Board of Accountancy shall submit to
the Professional Regulatory Commission the ratings that the candidate
obtained during the board exam?
a. 8 calendar days
b. 9 calendar days
c. 10 calendar days
d. 11 calendar days
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8. The Board of Accountancy shall elect a Vice-Chairman from among its
members for the term ofa. 1 year

b. 2 years
c. 3 years
d. 4 years
9. The Board of Accountancy shall be composed of a chairman and how
many members?
a. 3 members
b. 5 members
c. 6 members
d. 7 members
The CPA Board Examination covers how many subjects?
a. 6 subjects
b. 7 subjects
c. 8 subjects
d. 9 subjects
When was the year that accountancy profession was first
recognized through the passing of accountancy law?
a. 1920
b. 1923
c. 1945
d. 1975
It is in this field of professional practice where CPAs are
considered as independent entity vested with freedom to exercise his
own judgment and impartiality of the reports he prepared
a. Government Accounting
b. Management Accounting
c. Private Accounting
d. Public Accounting
Many accountants are employed in business enterprise as chief
accountant or comptroller. Said accountants are engaged in
a. General Accounting
b. Government Accounting
c. Private Accounting
d. Public Accounting
The accredited national organization of CPAs isa. Association of CPAs in Commerce and Industry.
b. Association of CPAs in Education
c. Government Association of CPAs
d. Philippine Institute of CPAs
Nowadays, business establishments are obliged by law to keep
business records for
a. Accounting purpose
b. Tax purpose
c. General purpose
d. Decision making purpose
What is considered as the life-blood of a nation?
a. Taxes
b. Government
c. Projects
d. Society
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Are uniform sets of accounting rules, procedures, practices and
standards that are followed in preparing financial statements
a. Accounting assumptions
b. Accounting fundamentals
c. Accounting theories
d. Generally accepted accounting principles
The principle that draws controversy, but are used by
accountants because of its reliability
a. Cost principle
c. Objectivity principle
b. Matching principle
d. Materiality principle


These are called components of Statement of Financial Position

a. Accounting Values
c. Liabilities and Owners
b. Assets and Liabilities
d. Revenue and Expense
Which of the following are synonymous to owners equity, capital
and net worth?
a. Capital structure
c. Partners Equity
b. Proprietary interest
d. All of these
These are called components of an income statement
a. Revenue and Losses
c. Revenue and Gains
b. Revenue and Expenses
d. All of these
A person who borrows money from a bank to start with a
business and treats his borrowings as capital rather than liability is
under what concept?
a. Business Entity Concept
c. Time period Concept
b. Going Concern Concept
d. Proprietary Theory
Under business entity concept, when a person starts with a
business for the first time, his borrowed capital will be treated as
a. Ca[ital investment
c. Both Capital and Liability
b. Liability of the business to bank
d. Personal Asset
The accounting method and procedures should be applied on a
uniform basis from period to period to achieve comparability in the
financial statements
a. Consistency principle
c. Materiality principle
b. Objectivity principle
d. matching principle
A principle that calls for the proper matching of revenue and
expenses for fair reporting of financial statement?
a. Matching
c. Materiality
b. Consistency
d. objectivity
What principle in accounting that requires financial statements
should be free from any material misstatement?
a. Adequate disclosure
c. Neutrality
b. Consistency
d. Objectivity
When a P200 waste basket with an estimated life of 1 year was
charged to expense at the time of purchase, this is an application of
a. Matching principle
c. Materiality principle
b. Cost principle
d. Consistency principle
A financial statement which directly relates to the measurements
of financial position of an enterprise as of a given date
a. Balance sheet
c. Statement of Changes in
b. Income Statement
d. All of these
This represents the claim of the creditors over the assets of the
a. Owners equity
c. Expenses
b. Liabilities
d. revenue
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The residual interest in the assets of the enterprise after
deducting all the liabilities
a. Owners equity
c. Gains
b. Liabilities
d. Assets
The excess of revenues over costs and expenses
a. Profit
c. Expenditures
b. Loss
d. Break-even
The business continue a life of existence and it will continue to
operate for an indefinite period of time
a. Continuity or going concern
c. time-period assumption
b. Periodicity concept
d. all of the above

Financial statements are prepared on a quarterly basis. The
quarterly report coversa. One month
c. six months
b. Three months
d. twelve months
The financial report that are prepared in less than a yeara. Interim financial statement
c. Annual Financial Statement
b. Quarterly financial statement
d. General Purpose
An accounting period begin on January 1 and will end on
December 31 of the same year.
a. Fiscal year
c. Calendar year
b. Leap year
d. Natural Business Year
Which of the following item is not an underlying assumption in
financial accounting?
a. Going concern
c. Entity concept
b. Periodicity
d. Matching
Accrued expense has a semblance of
a. Accounts payable
c. Prepaid Expense
b. Accounts receivable
d. Deferred Expense
Accrued income has a semblance of
a. Unearned income
c. Pre-collected income
b. Accounts receivable
d. Deferred income
Prepaid expense is not an
a. Expired cost or expense
c. Unexpired cost
b. Asset
d. none of these
Pre-collected income account is normallya. An income earned
c. Unexpired cost
b. A liability incurred
d. An expense recognized
An accrued expense adjustments would require a
a. Debit to liability and credit expense
b. Debit to expense and credit to liability
c. Debit to asset and credit liability
d. Debit to expense and credit owners equity.
An accrued income adjustment would require aa. Debit to liability and credit to expense
b. Debit to asset and credit to income.
c. Debit to income and credit to liability
d. Debit to income and credit asset.
Accrued interest income account is being presented asa. An income account
c. An asset account
b. A liability account
d. An owners equity account.
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Under expense method of recording prepayment, the account
credited is alwaysa. Account receivable
c. Cash
b. Prepaid expense account
d. Accounts payable
If no adjusting entry is prepared on prepayment of expense using
the nominal approach, expense account will
a. Be understated
b. Be overstated
c. Not affected
d. None of these
All of the following adjustments based on estimate, except
a. Accrual
b. Depreciation
c. Uncollectible accounts
d. Amortization
All of the following are adjustments not based on estimates,


Accrual of income
Provision for depreciation
What is the possible effect in Statement of Financial Position if
recording of depreciation expense is omitted?
a. Net income is overstated
b. Depreciation expense is understated
c. Non-current asset section is overstated
d. Non-current asset section is understated
The assets that are needed to be replaced because they can no
longer meet the required production due to growth in business, the
assets are said to bea. For sale
b. Obsolete
c. Fully depreciated
d. Terminated
A machine costing P350,000 was purchased on account with a
given term. If upon payment, a 20% discount was availed, the credit
entry will include
a. Cash of P280,000 and machine of P70,000.
b. Cash of P280,000 and purchase discount of P70,000.
c. Accounts payable of P280,000 and machine of P70,000.
d. Machine of P280,000 and purchase discount of P70,000.
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