NAME: _________________________________________ ACC103 CONCEPTUAL FRAMEWORK &

COURSE & SECTION: ______________________________ ACCOUNTING STANDARDS

DATE & CLASS SCHEDULE:__________________________ LONG QUIZ # 1 SET B

TRUE OR FALSE. In your answer sheet, shade letter A if your answer is TRUE, shade letter B if your
answer is FALSE.

1. Changes in purchasing power are considered in preparing the financial statements. FALSE

2. Accounting is “the process of identifying, measuring, and converting economic information to permit
informed judgment and decisions by users of information.” TRUE

3. A creditor is a primary user of financial information interested in determining whether or not to

extend a loan to a business. TRUE
4. An information is material if its omission or misstatement could influence economic decisions. TRUE

5. Personal expenses of the owner should appear in the financial statements of the business. FALSE

6. Accounting records and statements are based on reliable data and supported by verifiable
documentation. TRUE

7. The basic purpose of accounting is to provide information about economic activities intended to be
useful in making management decisions. FALSE

8. Financial statements are normally prepared on the assumption that the reporting entity is a going
concern, meaning the entity has neither the intention nor the need to end its operations in the
foreseeable future. TRUE

9. Financial statements are prepared on the basis of accounting principles which are followed
consistently from one period to the next. TRUE

10. Revenue or income should be recognized only when the payment is received even when the goods
are not yet delivered or the services are not yet performed. FALSE

MULTIPLE CHOICE. Shade the letter of your answer in the answer sheet provided.

For questions 11-15, determine which element of the financial statement the given account title belongs
to.

11. Accounts Receivable

A. Asset C. Liability
B. Equity D. Expense

12. Salaries Payable

A. Equity C. Asset
B. Liability D. Expense

13. Accrued Expense

A. Liability C. Expense
B. Asset D. Income

14. Withdrawal
A. Expense C. Income
B. Asset D. Equity

15. Notes Payable

A. Expense C. Income
B. Liability D. Equity

16. When information about two different entities has been prepared and presented in a similar
manner, the information exhibits the characteristic of
A. relevance C. reliability
B. consistency D. comparability

17. Information is considered relevant when it

A. can be depended on to represent the economic conditions and events that it is intended to
represent.
B. is capable of making a difference in a decision.
C. is understandable by reasonably informed users of accounting information.
D. is verifiable and neutral.

18. The quality of information that gives assurance that it is reasonably free of error and bias and
provides a true, correct and complete depiction of what it purports to represent is
A. relevance C. faithful representation
B. verifiability D. neutrality

19. Information is neutral if it

A. provides benefits which are at least equal to the costs of its preparation.
B. can be compared with similar information.
C. has no impact on a decision maker.
D. is free from bias toward a predetermined result.

20. Which of the following is not an element that is directly related to the measurement of an entity’s
financial position?
A. Liability C. Income
B. Asset D. Equity

21. The revised Conceptual Framework defines an asset as

A. a resource controlled by the entity as a result of past events and from which future economic
benefits are expected to flow to the entity.
B. a present economic resource controlled by the entity as a result of past events. An economic
resource is a right that has the potential to produce economic benefits.
C. a physical object that can produce economic benefits for the entity.
D. All of these.

22. Papa Sakaba Review Center has assets of 400,000 and liabilities of 120,000.
A. Owner’s equity is 280,000 C. Owner’s equity is 520,000
B. Owner’s equity is 220,000 D. Owner’s equity can not be determined

23. At the beginning of the year, the asset of Lily Nissin Cleaning Services were 290,000 and its equity
was 180,000. During the year, assets increased by 80,000 and liabilities decreased by 30,000. What was
the owner’s equity by the end of the year?
A. 370,000 C. 80,000
B. 290,000 D. 110,000

24. Arang Kada Motor Shop has assets of 600,000 and owner’s equity which is 5X of its liability. How
much is its liability?
A. 250,000 C. 50,000
B. 500,000 D. 100,000

25. Lala Bahan Laudry Services has expenses of 150,000 and income of 290,000. What is its profit/loss?
A. 90,000 profit C. 140,000 profit
B. 140,000 loss D. 90,000 loss

26. Which accounting concept should be considered if the owner of a business takes goods from
inventory for his personal use?
A. going concern concept C. stable monetary unit concept
B. entity concept D. periodicity

27. Which of the following is an appropriate definition of accounting?

A. The measurement, processing, and communication of financial information about an identifiable
economic entity.
B. A means of recording transactions and keeping financial records.
C. The interconnected network of subsystems necessary to operate a business.
D. Electronic collection, organization and communication of vast amounts of information.
28. Which accounting process is the recognition or non-recognition of business activities as accountable
events?
A. Identifying C. Communicating
B. Recording D. Measuring

29. The concept of matching is best demonstrated by

A. not recognizing any expense unless some revenue is realized.
B. recognizing prepaid rent received as revenue.
C. associating effort with accomplishment.
D. establishing an allowance for possible market decline in inventory account.

30. Which of the following is correct under the double entry system?
A. asset amount must be equal to liability amount
B. the change in asset must be compensated by a change in liability
C. the change in debit side entry must be compensated by a change in credit side entry
D. an increase in asset must be compensated by a decrease in asset

31. Payment of insurance in advance gives rise to

A. prepaid expense C. unearned income
B. accrued income D. accrued expense

32. When a customer buys service on credit, the contract is regarded as complete when
A. the services are rendered C. the bill is presented
B. the cash payment is received D. the invoice is delivered

33. Which of the following accounts is classified differently from the others listed?
A. Prepaid Rent C. Cash
B. Accounts Receivable D. Owner’s Capital

34. The normal balance of an account is on the

A. side represented by decreases in the account balance
B. debit side of the account
C. side represented by increases in the account balance
D. credit side of the account

35. A chart of accounts is a (an)

A. journal C. flowchart of all transactions
B. list of names of all account titles D. accounting procedure manual

36. Which of the following is correct?

A. Furniture, Fixture & Equipment C. Furnitures, Fixtures & Equipment
B. Furniture, Fixtures & Equipments D. Furniture, Fixtures & Equipment

37. Which of the following is correct?

A. “What did I said?” C. “Has she cry?”
B. “Did she smiled?” D. “She did go?”

38. Which of the following is correct?

A. “She always keeps an open mind regardless of the situation.”
B. “She always keep an open mind regardless of the situation.”
C. “She always keeps an open mind irregardless of the situation.”
D. “She always keep an open mind irregardless of the situation.”

39. Which of the following is correct?

A. Witholding their opinions is not what millennials would do.
B. The informations listed in this piece of paper are deemed confidential.
C. The furniture she purchased sure does look elegant.
D. I gave a good fight but I lose.

40. Accounting is a service activity. Its function is to provide quantitative information primarily financial
in nature that is intended to be useful in
A. making economic decisions. C. determining the profit of an entity.
B. recording business transactions. D. balancing debit and credit entries.

41. Malunggay Services received 8,000 as advance payment for delivery services. The journal entry is
A. debit Prepaid Expense, credit Cash C. debit Cash, credit Unearned Income
B. debit Cash, credit Prepaid Expense D. debit Unearned Income, credit Cash

42. Patola Co. billed its customers 30,000 for catering services performed during a wedding. The journal
entry should be
A. debit Cash, credit Catering Income C. debit Accounts Receivable, credit Cash
B. debit Accounts Receivable, credit Catering Income D. debit Cash, credit Unearned Income

43. Ampalaya Company received cash for the tutorial services provided to its students. The journal
entry should be
A. debit Cash, credit Tutorial Revenue C. debit Accounts Receivable, credit Cash
B. debit Accounts Receivable, credit Tutorial Revenue D. debit Cash, credit Unearned Income

44. Kalabasa Services acquired service vehicle for 700,000. The journal entry should be
A. debit Cash, credit Service Vehicle C. debit Service Vehicle, credit Cash
B. debit Service Vehicle, credit Capital D. debit Capital, credit Service Vehicle

45. Kamatis Rentals invested 3,000,000 cash to the company. The journal entry should be
A. debit Cash, credit Capital C. debit Cash, credit Accounts Payable
B. debit Capital, credit Cash D. debit Capital, credit Withdrawal

46. What is the primary service of CPAs in public practice?

A. Auditing C. Managerial Accounting
B. Taxation D. Controllership

47. It is the body authorized by law to promulgate rules and regulations affecting the practice of the
accountancy profession in the Philippines.
A. Board of Accountancy C. Securities & Exchange Commission
B. Philippine Institute of Certified Public Accountants D. Financial Reporting Standard Council

48. Who is responsible for the preparation of the financial statements of a company?
I. The finance department
II. The board of directors
III. The external auditors

A. I only C. II only
B. I and II only D. I, II and III only

49. Which area of public accounting means the examination of financial statements by a CPA for the
purpose of expressing an opinion as to the fairness of the statements?
A. Management Advisory Services C. Taxation
B. Internal Audit D. External Audit

50. The Philippine Accountancy Act is also known as

A. RA 9928 C. RA 9892
B. RA 9289 D. RA 9298

END OF P1 LONG QUIZ