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Accounting Prelim - True or False

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Accounting Prelim - True or False
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True
 Various decision-makers depend upon the financial reports
of an organization. Thus, financial statements are the
responsibility of the management.
True
Accounting has evolved in response to the
social and economic needs of society.
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Tags related to this set
Accounting
Intermediate Accounting 1
Terms in this set (90)
OriginalAlphabetical
True
Various decision-makers depend upon the financial reports of an organization. Thus, financial
statements are the responsibility of the management.
True
Accounting has evolved in response to the social and economic needs of society.
False
The basic summary device of accounting is Journal.
True
The set of guidelines and procedures that constitute acceptable accounting practice at a given
time is GAAP.
False
Free from error means being perfectly accurate in all aspects.
False
If the business has ₱150,000 worth of assets and a liability of ₱50,000, the net worth is
₱200,000.
True
In deciding where an item or an aggregate of items is material, the nature and size of the item
are evaluated together.
True
The owner is called a businessman after investing properties in the business; stockholders are
also businessman.
True
Accounting is an art that deals with the recording of business transactions to the books of
account. Art represents the manner of presenting the report and how to generate information.
False
Assets plus profit less drawings less liabilities equals closing capital.
True
The conceptual framework identifies primary users of financial statements to be the existing and
potential investors, lenders and other creditors.
True
Asset is a resource controlled by the enterprise as a result of past events and from which future
economic benefits are expected to flow to the enterprise.
False
Accounting is an exact science rather than art.
False
Expenses represent the cash paid for goods sold or services rendered in the process of
generating revenue.
False
For every transaction, there is at least one account affected.
True
Failure to record the adjusting entry for accrued salaries results in the current year's profit being
overstated.
False
As equipment is depreciated, its book value increases and it accumulated depreciation
increases.
True
An adjusting entry includes at least one balance sheet account and at least one income
statement account.
False
All decreases in owner's equity are a result of expenses.
True
Accounting periods should be of equal length to facilitate comparisons between periods.
True
Failure to record the adjusting entry for depreciation will overstate assets on the balance sheet.
False
The owner's personal withdrawals for the year cause a decrease in profit.
True
Relevance and faithful representation are the fundamental qualitative characteristics of useful
financial information.
True
RA 9298 is also known as the Philippine Accountancy Act of 2004.
False
Objectivity connotes relevance and trustworthiness.
False
The first step in the accounting cycle is the journalization. It is a process of recording business
transactions to the journal in chronological order.
False
A ledger is a collection of transactions.
False
The IFRS foundation produces IFRSs. The IFRS foundation is overseen by the IASB.
True
One of the objectives of the IFRS foundation is to bring about convergence of national
accounting standards and IFRSs.
False
The normal balance of any account refers to the side of account (debit|credit) where decreases
are recorded.
True
Business transactions are expressed in terms of money.
False
The concept of accounting is applicable only to the legal aspects of business organization.
True
Qualitative characteristics are the attributes that make the information provided in the financial
statements useful to users.
False
Cash from operations consists of cash proceeds from selling of old asset.
False
A recording error caused by the erroneous rearrangement of didgits, such as writing ₱627 as
₱672 is called transpotato.
False
The Board of Accountancy is the integrated national professional organization of the CPAs in
the Philippines.
False
Predictive and confirmatory value, timeliness, and materiality are the ingredients of relevant
financial information.
False
Expenses cause decreases in owner's equity and are recorded by credits.
True
Each partner is personally liable for any debit incurred by the partnership.
False
Internal auditor and external auditor can be one person exercising the same functions in the
same company.
False
In accordance with the adjusting entry for accrued salaries, all the accounts involved are
decreased.
True
An audit is the independent examination that ensures the fairness and reliability of the reports
that managements submits to users outside the business entity.
False
Historical Cost convention values all assets at their cost to the business, without any adjustment
for depreciation.
False
Not all financial transactions can be analyzed in terms of the basic accounting model.
True
In a partnership, an owner's equity account exists for each partner.
True
Historical cost convention fails to take account of changing price levels over time.
True
Partnership is not a separate entity from he partners themselves.
True
Assets less liabilities less opening capital plus drawings equals profit.
False
The sequence of account titles in a trial balance depends upon the size of the account
balances.
True
A business transaction is the occurrence of an event or of a condition that must be recorded.
False
Assets less liabilities less drawings equals opening capital plus profit.
True
Equipment is listed as an asset because it is used up in a relatively long period of time.
False
The basic summary device of accounting is the accounting equation.
False
Accounts that appear on the left side of the accounting equation usually have credit balances.
True
The entity is not a going concern if the management has the needs to liquidate the entity.
False
The IFRS interpretations committee is a forum for the IASB to consult with the outside world.
True
Income is increases in economic benefits during the accounting period that increases equity
which may have resulted from the sale of goods or rendering of services by the business.
False
Payment of a liability will not affect total assets but will cause total liabilities to decrease.
False
Accounting is a profession that should be guided by the code of ethics or by the professional
standards promulgated by PRC or BOA.
False
Income increases owner's equity and is recorded by a debit.
False
Consistency underlies the depreciation of assets over their useful lives.
False
Prepaid supplies expense account is not an asset account.
True
Ledger is a collection of account titles which compose of assets, liabilities, equity, income,
expense, and drawing.
False
Owner's equity is an excess of an entity's capital over its liabilities.
False
In the fundamental accounting equation, assets are added to liabilities.
False
One characteristic of a corporation is that its owners are personally liable for any losses incurred
by the business.
False
A cash acquisition of a laptop computer will cause total assets to increase.
True
The PRC is a government agency that regulates professionals in the Philippines. A CPA is also
a profession after passing government's examination conducted by PRC.
True
The account capital is used to record the investments of the owner, while the withdrawal of
capital is recorded using the owner's drawing account.
False
The effects of transactions and other events are recognized when they occur and not as cash or
its equivalent is received or paid, and they are recorded and reported in the financial statements
of the periods to which they relate is the concept of time period.
False
Liability, income, capital, and drawing accounts have the same credit normal balance account.
True
The benefits of financial reporting information must justify the costs of reporting that information.
True
To record the transaction, it requires a journal entry. Elements of a journal entry may include the
date, a credit and debit accounts and amounts, and finally a brief explanation to be recorded in
the ledger.
False
The corporate form of business organization emerged in Venice.
False
The Qualitative characteristics of financial information measure the extent to which an entity has
complied with all relevant standards and interpretation.
False
Cash can be invested, while non-cash asset cannot be invested.
True
According to the balance sheet equation, the assets of a business entity must always equal the
liabilities and owner's equity.
True
The entity concept states that each entity should be evaluated separately.
False
A withdrawal by the owner is recorded as a deduction from assets and an increase in expenses.
True
The accounting equation may be expressed as OE=A-L.
True
Generally accepted accounting principles encompasses the conventions, rules and procedures
necessary to define accepted accounting practice at a particular time.
True
An expense may be recognized and recorded although no cash outlay has been made.
False
Debit signifies increases while credit signifies decreases.
False
Partnership can normally transfer their partnership with ease.
False
RA 9268 is the law regulating the practice of accounting in the Philippines.
True
An accounting information system is the combination of personnel, records and procedures that
a business uses to meet its need for financial information.
True
The first step in analyzing a transaction is to determine what accounts are involved.
True
Partners are personally liable for the liabilities of the partnership if the partnership is unable to
pay.
True
General purpose financial statements are those financial statements prepared to meet the
common needs of users who are not in a position to require an entity to prepare reports tailored
to their particular information needs.
False
The purpose of financial statements is to provide information about the financial position,
performance and changes in the financial position of an entity that is useful to the wide range of
users in making financial economic decisions.
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