3rd Quarter - BUS4 Blank

Date Prepared: 01/08/2020
ASIA SOURCE iCOLLEGE

No. of Items: 75
4|F Gate 3 Plaza, Western Bicutan, Taguig City
EXAM PERIOD 3rd QUARTER
SUBJECT TITLE BUS4
COURSE/SECTION ABM2A
INSTRUCTOR KRISTOFFER IAN A. BARREDO
1. Accounting has been given various definitions, which of the following is not one of those definitions
a. 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 economic decisions.
b. Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of
money, transactions and events which are, in part of at least, of a financial character and interpreting the
results thereof.
c. Accounting is a systematic process of objectively obtaining and evaluating evidence regarding assertions
about economic actions and events to ascertain the degree of correspondence between these assertions
and established criteria and communicating the results to interested users.
d. Accounting is the process of identifying, measuring, and communicating economic information to permit
informed judgment and decisions by users of information.
2. Under the accrual basis of accounting,
a. Income is recorded only when cash is received and expenses are recorded only when cash is paid.
b. Liabilities, owner's capital, and drawings all have normal credit balances.
c. All real accounts have normal debit balances.
d. Income is recorded in the period it is earned and expense is recorded in the period it is incurred,
irrespective of when cash is received or paid.
3. The branch of accounting that deals with providing financial information to external decision makers is
a. Public accounting. c. Financial Accounting
b. Government accounting. d. Managerial Accounting
4. Financial accounting applies to which of the following:
a. Businesses c. Governments
b. Non-profit organizations d. All of These
5. External users of general-purpose financial statements include all of the following except
a. Creditors c. Managing Owners
b. Investors d. Lenders
6. The output of an accounting system is (are)
a. Accountable events. c. Accounting Reports
b. Recording, classifying and summarizing. d. Accountant
7. In which of the following instances is the going concern assumption valid?
a. The business expects to stop its operations and liquidate all of its assets in the near term.
b. The business is mandated by the government to shut down its operations because of violations of the law.
c. The business is in financial difficulty and does not have any other choice but to end its operations.
d. The business has a history of profitable operations and does not expect to end its operations in the
foreseeable future.
8. Which of the following is one of the fundamental qualitative characteristics?
a. Relevance c. Timeliness
b. Comparability d. Understandability
9. Which of the following is not one of the enhancing qualitative characteristics?
a. Comparability c. Verifiability
b. Faithful representation d. Understandability
10. Mr. Van owns a butcher shop, a restaurant, and a catering business. Separate financial statements are prepared
for each business independent of the other businesses. What accounting principle or assumption is being
applied in this situation?
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a. Time period assumption c. Full Disclosure Principle

b. Separate entity assumption d. Matching
11. A business exported goods and collected the sale price in U.S. dollars. When financial statements are prepared,
the business translates the dollars into pesos. The business is applying which of the following accounting
principles?
a. Stable monetary unit c. Matching
b. Going concern d. Materiality
12. A business acquires inventory and records it as an asset. When the inventory is sold, the business recognizes
the cost as an expense. This is an application of which of the following accounting principles?
a. Stable monetary unit c. Matching
b. Going concern d. Materiality
13. While making a delivery, the driver of Fastrac Courier collided with another vehicle causing both property
damage and personal injury. The party sued Fastrac for damages which could exceed Fastrac's insurance
coverage. Existence of the lawsuit was reported in the notes to Fastrac's financial statements. What
accounting principle, assumption or constraint is being applied in this situation?
a. Full-disclosure principle c. Matching Principle
b. Conservatism constraint d. Unit of measure assumption
14. When uncertainty exists, the convention of conservatism or prudence uses estimates of a conservative nature
in an attempt to ensure which of the following?
a. Assets, income, liabilities, and expenses are not overstated
b. Assets, income, liabilities, and expenses are not understated
c. Assets and income are not understated; liabilities and expenses are not overstated
d. Assets and income are not overstated; liabilities and expenses are not understated
15. Under this concept, the life of the business is divided into series of reporting periods. Thus, businesses
normally prepare financial statements at least annually.
a. Time period c. Matching Principle
b. Conservatism constraint d. Unit of Measure assumption
16. Under this concept, the cost of processing and communicating information should not exceed the benefits to
be derived from it.
a. Time period b. Conservatism c. Materiality d. Cost - Benefit
17. Which accounting principle charges low-cost capital items such as waste baskets directly to an expense?
a. The historical cost principle c. Expense Recognition Principle
b. The materiality principle d. Matching Principle
18. Which of the following is a result of applying the prudence or conservatism principle?
a. Assets are minimized and liabilities are minimized.
b. Assets are minimized and liabilities are maximized.
c. Revenues are minimized and expenses are minimized.
d. Revenues are maximized and liabilities are maximized.
19. This government regulatory body is tasked with regulating corporations, including partnerships. It requires
corporations and partnerships to file audited financial statements.
a. Securities and Exchange Commission
b. Cooperative Development Authority
c. Department of Trade and Industry
d. Department of Corporations and Partnerships

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20. The process of identifying, measuring, analyzing, and communicating financial information needed by
management to plan, evaluate, and control an organization’s operations is called
a. Financial accounting. c. Management Accounting
b. Tax accounting. d. Auditing
21. Accounting is often called the "language of business" because
a. It is easy to understand.
b. It is fundamental to the communication of financial information.
c. All business owners have a good understanding of accounting principles.
d. Accountants in many companies share financial information.
22. The most common form of business organization is
a. Corporation b. Sole proprietorship c. Partnership d. Cellphone Stand
23. Sole proprietorship businesses are registered with the
a. Securities and Exchange Commission. c. Department of Trade and Industry
b. Cooperative Development Authority. D. Department of Public Works and Highways
24. What is the primary purpose of accounting?
a. To count money.
b. To provide accounts.
c. To provide information that is intended to be useful in making economic decisions.
d. To produce accountants.
25. It refers to information that is expressed in numbers, quantities, or units.
a. Financial information c. Quantitative information
b. Qualitative information d. All of these.
26. Entity A purchased inventories for ₱100,000. Entity A expects to sell the inventories for ₱120,000 and
therefore records the inventories at ₱120,000 rather than at ₱100,000. Which of the following accounting
principles is violated?
a. Matching b. Relevance c. Historical Cost d. Materiality
27. Accounting is a body of knowledge which has been systematically gathered, classified and organized.
a. Accounting as a practical art c. Accounting as a social science
b. Accounting as the language of business d. Accounting as information system
28. Which of the following statements is most likely to be incorrect?
a. Accounting is an indispensable tool for a business manager.
b. A business manager is tasked in motivating and guiding employees.
c. Fra Luca Pacioli is considered the daddy of modern accounting.
d. General purpose financial statements, the subject matter of financial accounting, are those that cater to
all the needs of both external and internal users.
29. An advantage of a sole proprietorship business is
a. You are the boss and you keep all the profits.
b. Greater capital compared to the other forms of business organization.
c. It is generally exempt from taxes.
d. It has an unlimited life.
30. Which of the following is not a service business?
a. Accounting firm b. Hospital c. Bank d. Bakery
31. Which of the following is most likely not considered a merchandising business?
a. Pharmacy b. Rice Wholesaler c. Movie Theater d. Department Store

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32. Which of the following is not considered a manufacturing business?

a. Banco de Oro c. Apple
b. Toyota d. San Miguel Purefoods
33. Which of the following is an advantage of a service business?
a. You can take advantage of price fluctuations by increasing your stocks of goods when prices temporarily go
down.
b. Lower cost of quality.
c. You don’t need to worry about inventory costs, warehousing and distribution costs.
d. You have a high growth potential because you can tap into a wider market and can produce in large
quantities.
34. Which of the following is a disadvantage of a manufacturing business?
a. You can have a better pricing policy because you can mass-produce goods.
b. You may not need to have a strategically located retail store to display your products because you can sell
directly to wholesalers rather than to end consumers.
c. You have the opportunity to establish a brand that could last longer than your lifetime.
d. You need a high start-up capital.
35. Mr. Juan Batumbakal is an accountant in the Philippines while Mr. John Stonesteel is an accountant in a foreign
country that uses the International Financial Reporting Standards. Which of the following statements is
correct?
a. Mr. John’s accounting standards are superior to those of Mr. Juan’s.
b. Mr. John is more intelligent than Mr. Juan because Mr. John uses better accounting standards.
c. Mr. Juan is an inferior accountant compared to Mr. John because Mr. John is a foreigner and Filipinos give
higher regard to foreigners compared to their fellow countrymen.
d. Mr. Juan and Mr. John use essentially the same accounting standards.
36. This type of business organization has the tendency to become monopolistic. It can hamper a country’s
development by restricting the entrance of other smaller businesses but with much better products to the
market; thereby, leaving members of the society with no other choice but to buy the inferior products of those
monopolistic businesses.
a. Cooperative c. Partnership
b. Sole proprietorship d. Corporation
37. The mother of accounting is
a. Fra Luka Gaga c. Mami Siopao
b. Accountant Mama d. None of These
38. The process of providing financial information to external decision makers is referred to as:
a. Public accounting. c. Financial Accounting
b. Government accounting. d. Managerial Accounting
39. This account is used to record payments received from customers prior to the delivery of goods or rendering
of services.
a. Accrued income c. Prepaid Asset
b. Unearned income d. Accounts Receivable
40. A chart of accounts is
a. A listing of all accounts and their balances. c. A special journal
b. A subsidiary ledger. d. Listing of All Account Titles
41. How is profit or loss calculated?

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a. It is the difference between net assets at the beginning and end of the accounting period irrespective of
transactions with owners.
b. It is the difference between net liabilities at the beginning and end of the accounting period.
c. It is the difference between assets and liabilities.
d. It is the difference between income and expenses.
42. Aling Nena’s Sari-sari Store’s total sales during the period were ₱100M. Of that amount, ₱60M was on credit.
If the total business expenses were ₱70M, how much is the profit (loss)?
a. 30M b. (30M) c. 10M d. (10m)
43. The beginning equity is ₱5,000. If total income for the period is ₱8,000 while total expenses are ₱6,000, how
much is the ending balance of equity?
a. 7,000 b. 5,000 c. 3,000 d. 1,000
44. The ending equity is ₱9,000. If total income for the period is ₱5,000 while total expenses are ₱8,000, how
much is the beginning balance of equity?
a. 12,000 b. 9,000 c. 6,000 d. 0
45. If the beginning equity is ₱50,000 while the ending equity is ₱70,000, how much is the profit (loss) for the
period?
a. 20,000 b. (20,000) c. 10,000 d. (10,000)
46. Entity A’s total assets, liabilities and equity were ₱10,000, ₱7,000 and ₱3,000, respectively, at the beginning of
the period. During the period, total liabilities decreased by ₱4,000 while profit was ₱5,000. How much is the
ending total assets of Entity A?
a. 12,000 b. 11,000 c. 9,000 d. 7,000
47. At the start of the period, a business has total assets of ₱500,000 and total liabilities of ₱300,000. During the
period, the business earned total income of ₱1,000,000 and total expenses of ₱640,000. No additional
investments or withdrawals were made by the owner. Total assets at the end of the period were ₱830,000. How
much is the total liabilities at the end of the period?
a. 280,000 b. 270,000 c. 260,000 d. 240,000
48. Which of the following assumptions means that money is the common denominator of economic activity and
provides an appropriate basis for accounting measurement and analysis?
a. Going concern b. Periodicity c. Stable Monetary Unity d. Economic Entity
49. This branch of accounting focuses on catering to the information needs of internal users.
a. Management accounting c. Auditing
b. Financial accounting d. External Accounting
50. You want to put up a business – a pizza parlor. However, you have this dilemma – you do not want to put up the
business alone but you also do not want to enter into business deals with people you do not trust. At the most,
you are only willing to accept one other individual to help you put up your pizza business. You have in mind your
best friend who is more than willing to contribute resources in putting up the business. She is very excited
about your business proposal and even changed her Facebook status to “self-employed.” She just texted you
that she is willing to quit her day job in order to help you put up the pizza business. What type of business
organization best suits your need?
a. Sole proprietorship c. Corporation
b. Partnership d. Cooperative
51. The following are decisions made by internal users except
a. To analyze the profitability of product lines

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b. To impose taxes
c. To decide whether to continue or discontinue product lines
d. To decide whether to build new production facilities
52. Mang Kulas Company sells “balut,” “penoy,” “taho,” and barbeque. At the same time, Mang Kulas Company also
offers spa, manicure, pedicure, and armpit hair removal to its customers. Mang Kulas Company is referred to as
a
a. High breed business. c. Complicated business
b. Hybrid business. d. Hard-working business
53. A person who is engaged in business is called
a. A boss b. Entrepreneur c. Chinese d. All of these
54. This refers to information that is expressed in words or descriptive form.
a. Qualitative information c. Quantitative information
b. Financial information d. Information System
55. The communicating process of accounting includes all of the following except
a. Recording b. Summarizing c. Classifying d. Controlling
56. Which of the following best describes the basic purpose of accounting?
a. To provide information about a reporting entity that is useful in making economic decisions.
b. To provide all the information needed by management in managing the operations of a reporting entity.
c. To provide information that the creditors can use in deciding whether to make additional loans.
d. To provide accountants something to do.
57. An event is considered an accountable event if
a. It has an effect on the assets, liabilities, equity, income or expenses of the entity.
b. It cannot be measured reliably.
c. It cannot be expressed in terms of a unit of measure.
d. It involves sociological and psychological matters.
58. Which of the following is not a characteristic of an asset?
a. It is expected to provide future economic benefits.
b. It is a resource controlled by the entity.
c. It causes an outflow of economic benefits when it is settled.
d. It has resulted from a past event.
59. It is the left side of an account.
a. Debit b. Credit c. Date d. Account Title
60. It is a record of the increases and decreases in a specific item of asset, liability, equity, income or expense.
a. Journal b. Account c. Accountant d. Notes
61. Which of the following is not a balance sheet account?
a. Cash b. Accounts Payable c. Owner’s Drawings d. Salaries Expense
62. These are assigned to each account to facilitate recording, cross-referencing, and retrieval of information.
a. Account titles b. Account Numbers c. Mobile Numbers d. Hash tags
63. Entity A’s equipment was lost due to theft. How will Entity A record this event?
a. Recognize the carrying amount of the lost equipment as gain.
b. Charge the carrying amount of the lost equipment as loss.
c. Go to the police station and record the event in the police officer’s logbook.
d. This event is not recorded.

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64. Entity A has an interest-bearing note payable. At the end of the period, Entity A would most probably
recognize which of the following?
a. Interest income b. Interest Expense c. Gain d. Bad Debts Expense
65. This represents the value of inventories that have been sold during the accounting period.
a. Interest Expense b. Travel Expense c. Rent Expense d. Cost of Sales
66. This account is used to record sales on credit.
a. Accounts receivable b. Accounts Payable c. Cash d. Cost of Sales
67. This account is used to record the cost of purchased goods that are intended for resale.
a. Building b. Inventory c. Accounts Receivable d. Capital
68. The business acquires equipment. The business allocates the equipment’s cost over the equipment’s useful life,
instead of expensing it right away. The portion of the equipment’s cost that is expensed during the period is
recorded as
a. Bad debts expense b. Equipment c. Allowance for Bad Debts d. Depreciation Expense
69. This account is used when a business purchases inventory on account (on credit).
a. Cash b. Accounts Receivable c. Accounts Payable d. Prepaid Supplies
70. Payments to employees as compensation for the services they have rendered during a period are recorded in
this account.
a. Rent expense b. Cost of Sales c. Freight Out d. Salaries Expense
71. This account is used to record the investments of the business owner to the business.
a. Owner’s capital b. Drawings c. Salaries Expense d. Loss
72. Revenues earned from rendering services are recorded in this account.
a. Sales b. Service Fees c. Interest Income d. Gains
73. Which of the following would result to income of ₱320,000?

a. Total expenses of ₱280,000 and loss of ₱40,000
b. Total expenses of ₱360,000 and profit of ₱40,000
c. Total expenses of ₱220,000 and loss of ₱100,000
d. Total expenses of ₱360,000 and loss of ₱40,000
74. Which of the following would result to total expenses of ₱480,000?
a. Total income of ₱360,000 and profit ₱120,000
b. Total income of ₱580,000 and loss of ₱100,000
c. Total income of ₱630,000 and profit of ₱150,000
d. Total income of ₱630,000 and loss of ₱150,000
75. A business has total assets, liabilities, and equity of ₱10,000, ₱7,000 and ₱3,000, respectively, at the beginning
of the period. During the period, total liabilities decreased to ₱4,000 while profit was ₱5,000. How much is the
ending total assets?
a. 12,000 b. 11,000 c. 9,000 d. 7,000
“He will have no fear of bad news; his heart is steadfast, trusting in the Lord. His heart is secure, he will have no fear; in the end he will look in
triumph on his foes.”
(Psalm 112:7-8)

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Date Prepared: 01/08/2020

ASIA SOURCE iCOLLEGE

ASIA SOURCE COLLEGE OF ARTS AND TECHNOLOGY 1|Page

a. Time period assumption c. Full Disclosure Principle

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32. Which of the following is not considered a manufacturing business?

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73. Which of the following would result to income of ₱320,000?

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