Multiple Choice.

Read the following statements carefully and choose the letter of the correct
answer.

1. Which of the following is NOT a step in the accounting process?

a. Identification
b. Communication
c. Recording
d. Verification
2. Which of the following is NOT a relevant economic event?
a. An agent who attended to the concern of a complaining customer.
b. Randy, manager of ABC Company, who sold an abandoned building of his company.
c. Company Y which borrowed ₱5M from a bank due to tight financial conditions.
d. Company Z which paid its employees their salaries for the month of January.
3. Which of the following does NOT show one of the main functions of accounting?
a. Fred prepared a report to be submitted to the taxing authorities.
b. John recorded the purchase of an equipment in the accounting books immediately
after purchase.
c. Jason prepares financial reports monthly for the company’s stakeholders.
d. Joseph canvassed the price of a sewing machine to be used in the company’s
operations.
4. Which of the following statements describes the accounting process?
a. It involves identifying relevant economic events.
b. Recording economic events is an essential part of the accounting process.
c. The accounting process is not complete if the financial information is not
communicated to interested users.
d. All of the above
5. Which is the most important step in the accounting process?
a. Identification
b. Recording
c. Communication
d. All steps are equally important
6. Who is considered as the father of modern accounting?
a. Queen Victoria
b. Luca Pacioli
c. Augustus
d. Suetonius
7. Which order of events correctly portrays the history of accounting?
a. Early development in Mesopotamia – Development in the Roman Empire –
Dissemination of double-entry bookkeeping in the fourteenth century Italy – Signing
of charter by Queen Victoria – Formation of accounting standards such as PAS and
PFRS.
b. Development in the Roman Empire – Early Development in Mesopotamia -
Dissemination of double-entry bookkeeping in the fourteenth century Italy – Signing
of charter by Queen Victoria – Formation of accounting standards such as PAS and
PFRS.
c. Early development in Mesopotamia – Development in the Roman Empire –
Dissemination of double-entry bookkeeping in the fourteenth century Italy–
Formation of accounting standards such as PAS and PFRS – Signing of charter by
Queen Victoria.
d. Early development in Mesopotamia – Development in the Roman Empire – Signing
of charter by Queen Victoria – Dissemination of double-entry bookkeeping in the
fourteenth century Italy –Formation of accounting standards such as PAS and PFRS.
8. Which nature of accounting best emphasizes that accounting is not the objective?
a. Accounting is an art.
b. Accounting deals with financial information and transactions.
c. Accounting is a means not an end.
d. Accounting is a process.
9. Jamie, the chief accountant of Company X, is preparing for a meeting with the top
management. This meeting is done monthly to evaluate the performance of the company.
Which step of the accounting process is most likely being done?
a. Recording
b. Communication
c. Identification
d. Classification
10. Which of the following is mostly used by accountants in communicating the results of
operations to outside parties?
a. Performance memos
b. Bulletin board postings
c. Public announcements of the results of operations
d. Financial statements
11. What profession does NOT use accounting information at all?
a. Entrepreneurs
b. Economists
c. Government officials
d. None of the above
12. Who is the person responsible for the process of identifying, recording, and communicating
economic events of an organization?
a. Manager
b. Accountant
c. Bookkeeper
d. Treasurer
13. Which of the following is false?
a. The accounting process consists of identifying economic events, recording these
events, and communicating these events to external users only.
b. The accounting process consists of identifying economic events, recording these
events, and communicating these events to internal and external users only.
c. The accounting process consists of identifying economic events, recording these
events, and communicating these events to internal users only.
d. A and c only
14. The history of accounting covers a very long period. Which of the following statements
regarding the history of accounting is NOT correct?
a. PAS and PFRS are the standards followed by accountants in performing their
profession in the present day.
b. It is believed that accounting was being used as early as the days of the ancient
Mesopotamia.
c. During the fourteenth century Italy, the use of the single-entry bookkeeping became
widespread due to the work of Luca Pacioli.
d. The modern profession of chartered accountants originated in Scotland.
15. Which of the following can be considered as a relevant economic event?
a. A meeting of the top management was held in the discussion room last month.
b. The company received advance payments from its customers.
c. Meralco announced that it will increase energy prices by the end of the month.
d. GMA network signed a contract with Kris Aquino.
16. Statement I – Accounting only involves financial information in the recording process.
Statement II – There are three principal activities in the accounting process.
a. Both statements are true.
b. Only statement I is true.
c. Only statement II is true.
d. Both statements are false.
17. Statement I – Double-entry bookkeeping involves a debit and a credit for every transaction.
Statement II – The recording of the economic events also involves the classifying of such
events.
a. Both statements are true.
b. Only statement I is true.
c. Only statement II is true.
d. Both statements are false.
18. Statement I – Accounting is used by all types of businesses, even not-for-profit organizations
such as charitable institutions.
Statement II – Government agencies have no use for accounting.
a. Both statements are true.
b. Only statement I is true.
c. Only statement II is true.
d. Both statements are false.
19. Statement I – Keeping a chronological diary of events is part of the recording aspect of
accounting.
Statement II – Preparing accounting reports is part of the communication aspect of
accounting.
a. Both statements are true.
b. Only statement I is true.
c. Only statement II is true.
d. Both statements are false.
20. Statement I – Accounting helps managers and owners of businesses in decision-making.
Statement II – Accounting reports and/or financial statements need not be presented in a
standardized way.
a. Both statements are true.
b. Only statement I is true.
c. Only statement II is true.
d. Both statements are false.