Program and Year: BSA 1 WEEK 2 ACC 101 – FINANCIAL ACCOUNTING AND REPORTING

Modified TRUE/FALSE. Indicate whether the statement is true or false. Write TRUE if the statement is
correct otherwise, write the incorrect word/s or phrase/s that make/s the statement wrong and write
the correct word/s or phrase/s to make the statement correct. Example: INCORRECT WORD/S OR
PHRASE/S - CORRECT WORD/S OR PHRASE/S.

1. An example of a business stakeholder is the government.

 TRUE
2. Primary users of accounting information are accountants.
 ACCOUNTANTS - INTERNAL AND EXTERNAL USERS
3. Accounting is thought to be the "language of business" because business information is
communicated to stakeholders.
 STAKEHOLDERS – INTERNAL AND EXTERNAL USERS OF INFORMATION
4. The role of accounting is to provide many different users with financial information to make
economic decisions.
 TRUE
5. A business stakeholder is a person or entity that has an economic interest in the company.
 TRUE
6. The primary role of accounting is to determine the amount of taxes a business will be required
to pay to taxing entities.
 ACCOUNTING - TAX ACCOUNTING
7. Stakeholders use only accounting reports as the source of information to base all of their
business decisions.
 USE ONLY ACCOUNTING REPORTS - ALSO USE EXTERNAL SOURCES
8. Accounting reports are designed with the information needs of the stakeholders in mind.
 TRUE
9. Managerial accounting information is used by external and internal users equally.
 EXTERNAL ANG INTERNAL USERS EQUALLY - INTERNAL USERS ONLY
10. Financial accounting provides information to all the business stakeholders, while the main focus
for managerial accounting is to provide information to the management.
 TRUE
11. A business is an organization that provides goods or services to their customers in exchange for
money or other items of value.
 TRUE
12. Profits are the difference between the amounts received from customers and the amounts paid
to provide the goods or services.
 TRUE

13. Manufacturing and merchandising companies are similar because they purchase products from
other companies to sell to their customers.
  SIMILAR BECAUSE THEY PURCHASE PRODUCTS FROM OTHER COMPANIES TO SELL TO
THEIR CUSTOMERS - DIFFERENT BECAUSE MANUFACTURING BUYS RAW MATERIALS
AND PROCESSES THEM INTO FINAL PRODUCTS WHILE MERCHENDISING PURCHASE
PRODUCTS FROM OTHER COMPANIES TO SELL TO THEIR CUSTOMERS
14. The International Accounting Standards Board (IASB) is the authoritative body that has primary
responsibility for developing accounting principles.
 TRUE
15. The cost concept is the basis for entering the exchange price into the accounting records.
 TRUE
16. Without the cost concept, accounting reports would become unstable and unreliable.
 TRUE
17. The unit of measurement concept requires that economic data be recorded in a common unit
of measurement.
 TRUE
18. If a building is appraised for $90,000, offered for sale at $95,000, and the buyer pays $85,000
cash for it, the buyer would record the building at $90,000.
 $90,000 - $85,000
19. GAAP stands for General Accepted Accounting Protocols.
 GENERAL ACCEPTED ACCOUNTING PRINCIPLES - GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
20. The accounting equation can be expressed as Assets - Liabilities = Stockholders' Equity.
Accounting is a process of identifying, recording and communicating information that is useful in
making decisions.
 ASSETS-LIABILITIES=STOCKHOLDER’S EQUITY - ASSETS=LIABILITIES+OWNER’S EQUITY
21. Only accountable events are recorded in the books of accounts.
 TRUE
22. Non-accountable events are those that affects the assets, liabilities, equity, income and
expenses of a business.
 NON-ACCOUNTABLE EVENTS - ACCOUNTABLE EVENTS
23. Sociological and psychological matters are within the scope of accounting.
 WITHIN THE SCOPE OF ACCOUNTING - NOT INCLUDED/NOT RECOGNIZED IN
ACCOUNTING
24. The basic purpose of accounting is to provide information.
 TRUE
25. Accounting provides only quantitative information.
 ONLY QUANTITATIVE INFORMATION - QUANTITATIVE, QUALITATIVE, AND FINANCIAL
INFORMATION
26. Bookkeeping and accounting are the same.
 THE SAME - NOT THE SAME/DIFFERENT FROM EACH OTHER

27. In contrast to accounting, bookkeeping does not end in recording but rather extends to
communicating the information processed, including the interpretation of the significance
thereof.
  IN CONTRAST TO ACCOUNTING, BOOKKEEPING - IN CONTRAST TO BOOKKEPING,
ACCOUNTING
28. Financial information is both quantitative and qualitative information.
 TRUE
29. Qualitative information is expressed in numbers and words.
 NUMBERS AND WORDS - WORDS OR DESCRIPTIVE FORM
30. All business transactions are recorded in the accounting records.
 TRUE
31. Financial accounting focuses on general purpose and specific purpose financial statements.
 GENERAL PURPOSE AND SPECIFIC PUPOSE FINANCIAL STATEMENT - GENERAL PURPOSE
FINANCIAL STATEMENT
32. General purpose financial statements are those statements that cater to the common needs of a
wide range of internal users.
 TRUE
33. The rank and file employees of a reporting entity are considered internal users of the financial
statements.
 TRUE
34. Cost accounting is the branch of accounting that deals with the examination of financial
statements.
 COST ACCOUNTING - FINANCIAL ACCOUNTING
35. The government is exempt in preparing its own financial statements.
 EXEMPT - NOT EXEMPTED/ALSO INCLUDED
36. Tax accounting involves preparation of tax returns, tax advice and financial statements.
 TRUE
37. Users of FS who are not directly involved in managing the reporting entity are considered
external users which includes the Board of Directors as stockholders.
 WHICH INCLUDES THE BOAD OF DIRECTORS AS STOCKHOLDERS - WHICH INCLUDES
POTENTIAL AND EXISTING INVESTORS, LENDERS, GOVERNMENT AGENCIES, ETC. AS
STOCKHOLDERS
38. The decision on whether to invest to an entity is most likely an internal user’s decision.
 INTERNAL USER’S DECISION - EXTERNAL USER’S DECISION
39. The preparation of general-purpose financial statement is addressed mainly by managerial
accounting.
 MANAGERIAL ACCOUNTING - FINANCIAL ACCOUNTING
40. The most common form of a business organization is sole proprietorship which can be taxed
differently from its owner.
 WHICH CAN BE TAXED DIFFERENTLY FROM ITS OWNER - IN WHICH THE TAX IS NOT
SEPARATE FROM ITS OWNER