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1. The following are examples of companies engaged primarily in the merchandising business, except:
A. Robinsons Department Store
B. Aling Tinay Sari-Sari Store
C. Winston Hardware
D. Allaina Dental Clinic

2. This is the most dominant legal form of business organization in the Philippines today:
A. Partnership
B. Corporation
C. Service Business
D. Sole proprietorship

3. Which of the following is considered by accountants to be a separate entity from its owners?
A. Sole proprietorship
B. Partnership
C. Corporation
D. All of the above

4. The following are similarities between a corporation and a partnership, except:
A. A juridical personality separate and distinct from the owners.
B. Can be organized only where there is a law organizing its existence
C. Composed of an aggregate of individuals
D. Governed primarily by the Civil Code of the Philippines

5. The group of users of accounting information charged with achieving the goals of a business is its
A. Investors
B. Creditors
C. Management
D. Auditors

6. A primary user of accounting information with a direct financial interest in the business is a
A. Creditor
B. Taxing authority
C. Regulatory agency
D. Labor union

7. Which of the following is not true?
A. Accounting is not exact Science
B. Accounting is the language of business
C. Accounting is a communication tool that is useful to both internal and external decision makers.
D. Accounting is useful only to people-oriented organizations

8. A primary user of accounting information with an indirect financial interest in a business is
A. A financial adviser
B. Management
C. An investor
D. A creditor

9. The following are classifications of business organizations, except:
A. Service, distribution, production
B. Proprietorship, partnership, corporation, and cooperative
C. Owners, workers, government
D. Separate, affiliate, consolidated

10. A business established to bridge the time, distance, volume, and price of goods from the producer to the
consumers is called as
A. Service

I. Partnership B. Governments and their agencies D. A. I only B. Borrowers C. Lenders D.000 B. An association of two or more persons who bind themselves to contribute to a common fund money. B.000. These users are interested in information that enables them to assess whether their loans. customers. P100. Corporation C. Lenders and other creditors B. I and III only D.000. Creditor with long term contracts with the entity 15. and property and agreed to distribute the profit among themselves. These users are interested in information about the profitability and stability of the entity in order to assess the ability of entity to provide remuneration.000. Existing and potential investors. The public C. II and III 14. Trade creditors D.001 to P15. The “primary users” of financial information include I. retirement benefits and employment opportunities. P3. Board of Directors B. Customers 16. Distribution D. A. I and II only C. These users require information on risk and return provided by their investment. Employees 17.001 and above 13. Merchandising 11. Existing and potential lenders and other creditors. III. Which of the following is an internal user of an entity’s financial information? A. Owners .000 C. governments and their agencies and the public. Holder of the entity’s bonds D. A.000 D. P1 to P3. Shareholder in the entity C. Investors B.000. and other amounts owing to them will be paid when due. Employees C. Customers B. The Department of Trade and Industry classifies medium-sized enterprises as those with assets ranging in: A. skills.000.001 to P100. A. II. the related interest thereon. Cooperative D. A. User group such as employee. P15. Manufacturing C.000. Publicly accountable entities 12.

The same as accounting D. government regulatory agencies. Bookkeeping is: A. Governments and their agencies C. Less broad in scope than accounting B. customers. Which statement is correct in relation to information needs? I. Governments and their agencies B. determine taxation policies and provide a basis for national statistics. Investors 23. Which users need financial information to help them determine whether they should buy. Government D. Trade unions D. The management is also interested in financial information but it need not rely on general purpose financial reports because it can access additional information internally. Employees D. Customers B. The public B. Information that meets the needs of specified primary user. A. such as management. such as employees. These users are interested in information in order to regulate the activities of an entity. Customers B. Both I and II D.18. The public 24. Department of Finance 20. These users need information on trends and recent developments where an entity makes a substantial contribution to the local economy providing employment and using local suppliers. Customers C. Government and its agencies C. A. Investors B. These users are interested in information about the continuance of an entity. Neither I nor II Financial Information 22. hold or sell their interests in an enterprise? A. I only B. Employees C. A. Private entities 21. Bureau of Internal revenue D. Broader in scope than accounting C. retirement benefits and employment opportunities? A. Not related to accounting . especially when they have a long-term involvement with or are dependent on the entity. Major organization of users C. II. and the public. Which users need financial information to enable them to assess the ability of the enterprise to provide remuneration. A. II only C. is likely to meet the needs of other users. Finance entities D. Suppliers 19.

Legislators of the country D. standards of recognition. income and expenses? A. principles. Based on this given situation. liabilities.25. Basic accounting assumptions B. A businessman owns an advertising company and a printing business. which concept supports the idea that there are three separate persons with separate assets. Accounting is a service activity its function is to provide quantitative information. Managers of a business entity C. The procedural element of accounting is A. Auditing B. Qualitative characteristics C. Which of the following is not an external decision maker? A. To provide information that the creditors of an economic entity can use in deciding whether to make additional loans to the entity C. A body of rules. policies. primarily financial nature. Matching concept D. The International Accounting Standards Board was formed to A. Qualitative objectives 30. Develop worldwide accounting standards C. To provide quantitative financial information about a business enterprise that is useful in making rational economic decision 29. Business entity principle C. Establish accounting standards for multinational entities D. The basic purpose of accounting is A. about economic entities. Enforce IFRS in foreign countries B. Generally accepted accounting principles D. Concept of equality of value received and value given up 1. and measurement methods which has been developed and is accepted by the members of the accounting profession and the data users is called A. Periodicity principle B. Accounting C. Present stockholder B. that is intended to be useful in making economic decisions . Bookkeeping D. Develop accounting standards for countries that do not have their own standard setting bodies 28. Managerial accounting 27. To provide the information that the managers of an economic entity need to control its operations B. To measure the periodic income of the economic entity D. Trade creditors 26.

Matched D. Realized C. Board of Accountancy 2. PFRS corresponding to International Financial reporting Standards (IFRS) B. What function does general ledger serve in accounting process A. Recording Accounting standards 6. FRSC 9. PICPA C. No. The Philippine Financial Reporting Standards (PFRS) collectively include A. The term "recognized" is synonymous with the term A. Reporting D. Philippine Accounting Standards Board (PASB) D. Accounting Standards Council (ASC) B. All of the above. AICPA Committee on Accounting Terminology C. It is the standard setting body in the Philippines. R. R. ASC B. 9298 D.A. Philippines Association of CPAs (PICPA) D. Classifying B. 3.A. Classifying B. R. Philippines Auditing Standard (PAS) corresponding to PAS C. Securities of Exchange and Commission (SEC) D. 9892 8. D. Recording 5. No. No. Summarizing C. To measure the periodic income of the economic entity D. C. To provide the information that the managers of an economic entity need to control its operations B. A. Recorded B. . Financial Reporting Standards Council (FRSC) 7. Philippines Interpretations corresponding to IFRIC and SIC interpretations and interpretations developed by PIC. R. What function do accounting journals serve in the accounting process A. Auditing and Assurance Standards Council (AASC) C. It is the body authorized by the law to promulgate rules and regulations affecting practice of the accountancy profession in the Philippines A. A. No. The basic purpose of accounting is A. Board of Accountancy (BOA) B.A. Reporting D. To provide information that the creditors of an economic entity can use in deciding whether to make additional loans to the entity. 9928 C. 9128 B. Allocated 4. Summarizing C. To provide quantitative financial information about an entity that is useful in making rational economic decision.A. What is the law regulating the practice of Accountancy in the Philippines A.

financial information C. Internal audit 14. C. Going concern and periodicity D. Entity concept and periodicity Branches of Accounting 17. whether they be in public practice. senior accounting practitioner C. Education B. On a periodic basis. Specialized reports for income tax computation and recognition D. the accountant is required by owners to prepare reports containing financial information on the status and performance of the business. A.10. The Accountant C. Professional Regulatory Commission D. The Company's Management D. Commerce and Industry C. industry. accounting professor 15. General purpose report on changes in stock prices and future estimates of market position . The measurement stage of accounting is accomplished by A. Public Practice D. processing data 12. General purpose reports on financial position and financial performance B. known as ________ are prepared. The Philippines SEC B. Financial Reporting Standards Council 16. Financial accounting is concerned with A. Information is obtained from the accounting records and reports. financial plans D. The are four sectors in the practice of accountancy in the Philippines. A. The Professional Regulatory Board of Accountancy C. This accounting organization aims to promulgate and improve accounting standards that will constitute GAAP in the Philippines. The Company's Independent Auditor 11. recording data D. storing data. financial statements 13. reporting to decision makers. A. Who is the primarily responsible for the financial statements? A. public sector or education. Specialized reports for inventory management and control C. Which is not a sector of the said profession? A. Accrual basis and going concern B. audit associate B. professional accountant D. B. The FRCS Framework for the Preparation and Presentation of Financial Statements mentions the following underlying assumptions: A. Philippine Institute of Certified Public Accountant B. annual reports B. Accrual basis and the entity concept C. This refers to those who hold a valid certificate issued by the Boards of Accountancy.

D. a financial statement showing revenues earned by the enterprise. B. Management consulting C. The financial accounting process is guided by A. product costing. Managerial accounting is the area of accounting that emphasizes A. C. business policies. Reporting financial information to external users. the information needs of statement users. A. Variance analysis Financial Statements 25. Assurance services B. Managerial accounting B. Cost accounting D. A. Financial accounting is the area of accounting that emphasizes reporting to A. B. D. B. . a financial statement showing the cash inflows and outflows for an accounting period. Reporting to the SEC. compilation D. enterprise management. This is the traditional service rendered by CPAs in public practice. Developing accounting information for use within an entity. Auditing 24. and the resulting net income or net loss. Cost accounting D. Financial accounting C. Managerial accounting B. Financial statements to be used primarily by management 19. Internal auditors. liabilities. budgeting. Regulator bodies. B. Audit services D. 26. 21. This involves providing services to clients on matters of accounting. This is the branch of accounting that is concerned primarily with the provision of information for internal users. The statement of cash flows is A. C. A. agreed upon audit procedures 22. the expenses incurred in earning the revenues. General purpose financial statements to be used by parties both internal and external to the entity D. C. a financial statement that reports the assets. broad operating principles of accounting. finance.18. Management. C. General purpose financial statements to be used by parties internal to the entity only B. A. Financial accounting C. Creditors and investors. Combining accounting knowledge with an expertise in data processing. Financial Accounting can be broadly defined as the area of accounting that prepares A. and equity of an enterprise on a specific date. D. the firm’s chart of accounts. Financial statements to be used by the inventors only C. This is the branch of accounting that is concerned primarily with the preparation of general purpose financial statements. 20. organization procedures. another name for the statement of financial position. independent audit C. Auditing 23. and the conduct of operations. D. management consultancy B.

Statement of Financial Condition D. Assets C. C. Equity Qualitative Characteristics 29. Statement of Profit or Loss B. Liabilities D. Faithful presentation B. maintains two bank accounts: one in his personal name. 12 months 33. 90 days C. care should be taken such that A. the life of the enterprise is divided into shorter periods of equal length. Neutrality D. Both a and b D. and owner’s equity of the business as of a given date. It is assumed that the enterprise has neither the intention nor the need to liquidate or curtail materially the scale of its operations. This is the inclusion of a degree of caution in the exercise of judgement needed in making the estimates required under the conditions uncertainty. . Revenue and expenses B. liabilities. Assets or income are not overstated.27. A. Accrual basis B. There is no violation 32. Which of the following concepts would be violated if AFB includes both accounts as part of the assets of the business? A. This is the financial statement that shows the assets. Assets or income are not understated. Going concern concept D. A. Both a and b D. A. Neither a nor b 31. and the other in the name of his business. Under this basis. Accrual basis B. Accrual concept B. Entity concept C. A. How long is the traditional accounting period? A. Statement of Cash Flows C. B. Neither a nor b 30. and liabilities or expenses are not overstated. An enterprise is assumed to be going concern and will continue in operation for the foreseeable future. 30 days B. the AFB Pawn Shop. Going concern C. Going concern C. Assets or income are not understated. Under prudence. AFB. Substance over form C. Prudence 34. Statement of Changes in Equity 28. a proprietor. and liabilities or expenses are not understated. 180 days D. the effects of transactions and other events are recognized when they occur and they are recorded in the accounting records and reported in the financial statements and the periods to which they relate. and liabilities or expenses are not understated. For accounting purposes. Which does not belong to the group? A.

monetary unit 40. For this purpose users are: I. diregards adjusting entries at the end of the period. at the latest acceptable time. The needs of the users of the information. B. B. An order for goods has been received from a customer. D. any changes in those policies and the effects of such changes. Tbe financial statements should be stated in terms of a common financial denominator. Accrual basis of accounting A. Income is recognized when A. 35. D. 38. When it influences the economic decision of users by helping them evaluate past. Reporting on management’s stewardship. C. is not acceptable under GAAP. leads to the reporting of more complete and more accurate information. Neither I or 2 42. B. Under the revenue recognition principle. A. A. revenue is recorded A. B. 41. C. accrual B. time period D. 36. and the future economis benefits can be measured reliably. D. going concern C. Information has the quality of relevance: I. II only C. after it has been earned. II. Which of the following characteristics relate to the fundamental qualitative presentation of financial statements? A B C D Relevance Yes Yes No Yes Reliability Yes Yes No No Faithful representation No No Yes Yes Comparability Yes No Yes No 39. at the end of the accounting period. Informed of the accounting policies employed. 37. Assumed to have reasonable knowledge of business economic activities and accounting: and willingness to study the information with reasonable diligence. An essential quality of the information provided in financial statements is that it is readily understandable by the users. and liabilities or expenses are not overstated. . International Financial Reporting Standards. Both I and II D. present and future events or confirming or correcting their past evaluations. D. I only B. Assets or income are not overstated. It is probable that future economic benefits will flow from the enterprise. The objectives of financial reporting are based on A. D. at the earliest time possible. results in higher income than cash basis accounting. The need for conservatism. A request for services has been received from a client. C. It is probable that future economic benefits will flow from the enterprise. C.

Qualitative characteristics are broad classes of financial effects of transactions and other events . relevance B. information must be relevant the decision making needs of users C. To be reliable. the information must represent faithfully the transactions and other events it either purports to represent or could reasonably be expected to represent. Both I and II D. reliability C. A. The impact on earnings is greater than 10 % C. The information should be accounted for in accordance with their substance and economic reality and not merely legal form D. An item would be considered material or therefore would be disclosed in the financial statements if A. When information about two different entities engage in the same industry has been prepared and presented in similar manner. Which statement is incorrect concerning reliability? A. Accounting procedures are adopted with smooth net income and make results consistent between years B. Classification C. The information in financial statements must be within the bounds of materiality and cost. Neither I nor II 43. The expected benefits of disclosure exceed the additional costs B. What are the characteristics of financial information? A. The commission or misstatement of the amount would make a difference to the users 46. Identification 49. the information exhibits the qualitative characteristics of A. Verifiability B. II. Gains and losses are shown separately on the income statement C. The information in financial statements must be within the bounds of materiality and cost B. Which statement is incorrect concerning relevance? A. Expenditures are reported as expenses and netted against revenue in the period in which they are paid 47. The FRSC definition of materiality is met D. Financial information exhibits consistency when A. such that assets or income are overstated and liabilities or expenses are understated 45. Qualitative characteristics are attributes that make information provided in financial statements useful to users B. Consistency D. To be useful. The predictive and confirmatory roles of information are not interrelated 44. C. Conservation D. Information about financial position and past performance is frequently used as basis in predicting future financial position and performance and other matters such as dividend and wage payment and ability of entity to meet its financial commitments as they fall due D. When it is free from material error and bias and can be depended upon by users to represent faithfully that which purports to represent or could reasonably expected to represent. Comparability 48. The principle of objectivity includes the concept of A. B. the same accounting treatment each period D. Prudence is the inclusion of a degree of caution in the exercise of judgment needed in making an estimate required under conditions of uncertainty. I only B. II only C. Accounting entities give similar events.

Completeness and neutrality B. Completeness and free from error. Materiality is dependent on professional judgment because no threshold limit is defines in the Conceptual Framework. C. 56. timelessness and materiality. Freedom from material error. Inclusion of a degree of caution. D. Qualitative characteristics measure the extent to which an entity has complied with all relevant standards and interpretations 50. C. Information is material if its omission or misstatement could influence the economic decisions that users make on the basis of the financial information about the entities. neutrality and free from error. A. Completeness. Neutrality . Comprehensibility to users. Relevance and reliability D. I only. C. 55. Predictive value and confirmatory value and materiality. D. Influence on the economic decisions of users. B. Materiality depends on the relative size of the item or error judged in the particular circumstances of its omission or misstatement. 53. B. Completeness. II. faithful representation and materiality C. 52. Completeness D. Relevance and faithful representation B. Predictive value and confirmatory value. Which statement is incorrect concerning materiality? A. Neither I nor II. C. D. Faithful representation and materiality 51. The capacity of the information to make a difference in the decision made by users. Free from error C. C. B. Predictive value and confirmatory value and timelessness. The ingredient of faithful representation are A. What is the meaning of “relevance”? I. C. free from error and conservation. Predictive value and confirmatory value. D. 54. Materiality is fundamental qualitative characteristic rather than a threshold or cut-off point in determining useful information. Which of the following qualitative characteristics of financial information requires that information shall not be biased in favour of one group of users to the detriment of others? A. D. Which of the following description of “faithful representation” in relation to information in financial statements? A. Qualitative characteristics are non-qualitative aspects of entity’s financial position and performance and changes in financial position D. The ingredients of relevant financial information are A. The Financial reports represent economic phenomena or transaction in words and numbers. neutrality. II only. B. Both I and II. The “Fundamental Qualitative” characteristics are: A. Relevance. Relevance B.

Which of the following is not a career path of an accountant in the education sector? A. manager. Partner. Substance over form C. It is the exercise of care an caution in dealing with uncertainties in measurement so as not to overstate assets and income and not to understate liabilities and expenses. No. executive partner D. Dean B. Neutrality Professional opportunities 59. the economic substance shall prevail. Junior auditor. managing partner. A. Accounting aide. Relevance D. Faculty member C. senior auditor. managing partner C. Which of the following does not relate to career path in public accounting? A. President 61. managing partner B.10 8 9 C OP M R CPO AAC URE SI SE SOS& NA& ENF CAO FLN EYT CSRTIASS T . 7 EXEMPLIFICATION Writing WritingTask TaskNo. advisor. Prudence C. Vice-president for Academic affairs 60. supervisor. Assistant. vice-president. president. manager.57. A. Partner B. Faithful representation D. Completeness B. chairman of the board Writing Task No. Chief financial officer C. 5 DESCRIPTION Writing Task No. Vice-president for Acadamecs D. Completeness 58. National treasurer D. partner. In the event of conflict between the economic substance of a transaction and its legal form. Form over substance B. An example of career opportunities in commerce and industry A. 6 DEFINITION Writing Task No.