1. NOT a correct variation of basic 10.

ACCRUAL ACCOUNTING
accounting equation:
 Assets = Liabilities – Equity
2. NOT an essential element of an asset
 Must be owned by the business
3. NOT an essential element of liability
 Arising from a future event
4. EQUITY is
 payments and expenses are
credited and debited when earned or
incurred
11. Government agency that requires
businesses to file tax returns
 BIR
12. Basic accounting equation and its
expanded version

 Assets less liabilities  Assets = Liabilities + Equity

5. NOT a correct expanded basic
accounting equation
 Assets = Liabilities + Equity +
Income + Expenses
6. SEPARATE ENTITY CONCEPT
 always separately record the
transactions of a business and its
owners
 Assets = Liabilities + Common Stock
+ Retained Earnings – Dividends +
Revenues – Expenses
13. Effect of revenue or income to equity
 Owner’s equity increases
14. Effect if expenses exceed revenue or
income
 Net loss

7. HISTORICAL COST CONCEPT 15. External users of accounting

information
 Every transaction of the business
should be recorded at is historical  Lenders
cost and not at its market price  Shareholders governments
 Consumer groups
8. GOING CONCERN
 External auditors
 Continuing in operation for the  Customers
foreseeable future 16. Internal users of accounting
9. MATCHING PRINCIPLE information

 accounting concept that dictates that  Managers

companies report expenses at the  Officers
same time as the revenues they are  Internal auditors
related to  Sales staff
 revenues and any related expenses  Budget officers
be recognized together in the same  Controllers
reporting period
17. CREDITOR

 a person or institution whom money

is owned
18. DEBTOR 26. Subsidiary Ledger

 a person or institution that owes a  A ledger used to record detailed

sum of money data for a general ledger account
with many individual subaccounts
19. DTI
27. Management Accounting
 government agency responsible for
the registration of Sole  The area of accounting concerned
Proprietorship Business with preparing data for use by
managers within the organization
20. JOURNAL

 Initial book of accounts

21. SOURCE DOCUMENTS

 Checks
 Employees Earning Records
 Bills from Suppliers
 Purchase Orders
 Bank Statement
 Sales Tickets
22. Balance Sheet Account

 Used to sort and store transactions

involving company’s assets,
liabilities, and owner’s or
stockholder’s equity
23. Income Statement Account

 Reports a company’s financial

performance over a specific
accounting period
24. Primary purpose of preparing a Trial
Balance

 POSTING – the process of

transferring amounts from the
journal to the ledger amounts
 to classify transactions
 to prove that debits equals credits
25. Unadjusted Trial Balance

 a trial balance prepared before

adjusting entries are posted