Josh Adrian Greg S.

Mante
1BSTMACCO 001
MT Quiz #2
Test 1: True or False

1. True

2. True

3. True

4. False

5. True

6. False

7. False

8. False

9. True

10. True

11. True

12. False

13. False

14. False

15. True

Test 2: Define the Following:

1. Accounting

- is the process of recording financial transactions pertaining to a

business. The accounting process includes analyzing, recording, and
summarizing, financial transactions or events over an accounting
period, and reporting these transactions in the form of financial
statements (Income Statement, Balance Sheet, Capital Statement, and
Statement of Cash Flows) to the government’s regulatory, and tax
collecting agencies.

2. GAAP
- The Generally Accepted Accounting Principles or more well known as
GAAP are a set of standards that an accountant must strictly follow.
As the name implies, GAAP are principles accepted by the general
practitioners of accounting for it is: (1) founded from basic
accounting principles and guidelines, (2) they are the detailed issued
rules and standards by FASB and the Accounting Principles Board (ABP),
and (3) they are generally accepted in the industry’s practices.

3. Partnership

- In a Partnership, two or more people share ownership of a single

business. Like proprietorships, the law does not distinguish between
the business and its owners. The Partners should have a legal
agreement that sets forth how decisions will be made, profits will be
shared, disputes will be resolved, how future partners will be
admitted to the partnership, how partners can be bought out, or what
steps will be taken to dissolve the partnership when needed.

4. Conservatism

- The basic accounting principle of conservatism leads accountants to

anticipate or disclose losses, but it does not allow a similar action
for gains. For example, potential losses from lawsuits will be
reported on the financial statements or in the notes, but potential
gains will not be reported. Also, an accountant may write inventory
down to an amount that is lower than the original cost, but will not
write inventory up to an amount higher than the original cost

5. Business Entity Concept

- Business entity concept is one of the accounting concepts that

states that business and the owner are two separate entities and
therefore, should be considered separate from each other.

6. Journalization

- Journalizing is the practice of documenting a business transaction

in accounting records. Record-keeping, especially for accountants, is
a detail-oriented skill that requires commitment. Every business
transaction is recorded in a journal, also known as a Book of Original
Entry, in chronological order.

7. Balance Sheet
- A balance sheet is a statement of a business’s assets, liabilities,
and owner’s equity as of any given date. Typically, a balance sheet is
prepared at the end of set periods (e.g., every quarter; annually). A
balance sheet is comprised of two columns. The column on the left
lists the assets of the company. The column on the right lists the
liabilities and the owners’ equity.

8. Chart of Accounts

- The chart of accounts is a tool that lists all the financial

accounts included in the financial statements of a company. It
provides a way to categorize all of the financial transactions that a
company conducted during a specific accounting period.

9. Trial Balance

- It is a worksheet representing the report that has a balance of all

general ledger accounts of any firm for a given period. This balance
sheet is usually prepared at the end of the month. The trial sheet
ensures that the entries of any given company are mathematically
correct. Moreover, it also identifies the accurate balance of both
debit and credit entries based on the general ledger transactions.

10. Materiality

- Materiality is an accounting principle which states that all items

that are reasonably likely to impact investors’ decision-making must
be recorded or reported in detail in a business’s financial statements
using GAAP standards. Essentially, materiality is related to the
significance of information within a company’s financial statements.
If a transaction or business decision is significant enough to warrant
reporting to investors or other users of the financial statements,
that information is “material” to the business and cannot be omitted.

11. Business Transactions

- A business transaction is an economic event with a third party that

is recorded in an organization's accounting system. Such a transaction
must be measurable in money. Examples of business transactions are:
Buying insurance from an insurer. Buying inventory from a supplier.

12. Cash
- Cash is a current asset and is the first line-item on a company's
balance sheet. Cash is the most liquid type of asset and can be used
to easily purchase other assets.

13. Financial Statements

- Financial statements are written records that convey the business

activities and the financial performance of a company. Financial
statements are often audited by government agencies, accountants,
firms, etc. to ensure accuracy and for tax, financing, or investing
purposes. For-profit primary financial statements include the balance
sheet, income statement, statement of cash flow, and statement of
changes in equity.

14. Double Entry System

- Double-entry bookkeeping is a method of recording transactions

where for every business transaction, an entry is recorded in at least
two accounts as a debit or credit. In a double-entry system, the
amounts recorded as debits must be equal to the amounts recorded as
credits.

15. Historical Cost

- A historical cost is a measure of value used in accounting in which

the value of an asset on the balance sheet is recorded at its original
cost when acquired by the company. The historical cost method is used
for fixed assets in the United States under generally accepted
accounting principles (GAAP).

16. Intangible Asset

- An intangible asset is an identifiable non-monetary asset without

physical substance. Such an asset is identifiable when it is
separable, or when it arises from contractual or other legal rights.
Separable assets can be sold, transferred, licensed, etc.

17. Liabilities

- A liability is an obligation of a company that results in the

company’s future sacrifices of economic benefits to other entities or
businesses. A liability, like debt, can be an alternative to equity as
a source of a company’s financing. Moreover, some liabilities, such as
accounts payable or income taxes payable, are essential parts of day-
to-day business operations.

18. Compound Entry

- A compound journal entry is an entry involving more than two

accounts. In a compound journal entry, there are two or more debits,
credits, or both. Rather than making separate journal entries for the
same transaction, you can combine the debits and credits under one
entry.

19. Balance

- An account balance is the total amount of money available in a

financial account after all the debits and credits have been
calculated. It can also refer to the total amount of money that a
person or organization is due to pay to a third party, such as a
service provider.

20. Income Statements

- An income statement shows a company's revenues, expenses, and

profitability over a period of time. It is also sometimes called a
profit-and-loss (P&L) statement or an earnings statement. It shows
your: revenue from selling products or services.

Test 3: Matching Type (Answers Only)

1. Q

2. A

3. E

4. D

5. I

6. G

7. B

8. C

9. N
10. H

11. J

12. L

13. P

14. M

15. K

Test 4: Multiple choices

1. A

2. A

3. D

4. A

5. D

6. D

7. C

8. D

9. A

10. B

11. A

12. B

13. C

14. B

15. B

16. B

17. C

18. A

19. C
20. A

21. C

22. A

23. B

24. C

25. C

26. C

27. C

28. B

29. A

30. C