I. Multiple Choice. Choose your best answer.

_____1. Which of the following is not a basic component of financial statement?

a. Statement of Cash Flows c. Balance Sheet
b. Income Statement d. Statement of Changes in Cash
_____2. Economic activities relate to transactions that affect
a. Financial Position c. Cash Flows
b. Financial Performance d. All of the above
_____3. Which of the following is not an output of the accounting process?
a. Statement of Financial Position c. Income Statement
b. Notes To Financial Statement d. None of the above
_____4. Statement of Financial Position is also known as _______.
a. Balance Sheet c. Income Statement
b. Cash Flows d. None of the above
_____5. Which professional organization defines accounting as a service activity?
a. AACPA c. American Accounting Association
b. Certified Public Accounting d. Accounting Standards Council
_____6. Pacioli’s real name is ______________________.
a. Frater Luca Bartolomes Pacioli c. Frater Luca Bartholomew Pacioli
b. Frater Lucas Bartolomes Pacioli d. Father Luca Bartholomew Pabioli
_____7. There are three basic functions of accounting except:
a. To fulfill the stewardship function of the management (or owners)
b. To help interested users come up with informed decisions
c. To make sure that the financial statements are unbalanced
d. To support daily operations of the business.
_____8. The origins of accounting can be traced from the _____________ period.
a. Renaissance c. Jurassic
b. Prenaissance d. Romantic
_____9. It refers to the design of how something can be performed.
a. science c. study
b. art d. process
_____10. It is a process of identifying, measuring and communicating economic information to permit informed
judgment and decision by users of the information.
a. Accounting c. Mathematics
b. Bookkeeping d. None of the above

_____11. Confined with the recording of monetary transactions, which is one part of the accounting process.
a. Accounting c. Mathematics
b. Bookkeeping d. None of the above
_____12. Pacioli is known as the “ Father of ___________”.
a. Modern Technology c. Modern Hip-Hop
b. Modern Accounting d. None of the above.
_____13. Pacioli is an _______ monk.
a. Italian c. Filipino
b. German d. American
_____14. It focuses on accumulating manufacturing costs for financial reporting and decision-making purposes.
a. Tax Accounting c. Auditing
b. Cost Accounting d. Financial
______15. It is a system used in government offices to record and report financial transactions.

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 a. Tax Accounting c. Government Accounting
b. Financial Accounting d. Accounting Education
______16. It records daily transactions and preparing financial statements and related information.
a. Tax Accounting c. Government Accounting
b. Financial Accounting d. Accounting Education
______17. The branch of accounting that is primarily involved in the preparation of financial statements
a. Tax Accounting c. Government Accounting
b. Financial Accounting d. Accounting Education
______18. The following are branches of accounting, except
a. External Auditing c. Government Technology
b. Financial Accounting d. Accounting Education
______19. Auditing includes __________.
a. External and Eternal Auditing c. External and Internal Auditing
b. Internal and Closed Auditing d. None of the above
______20. CPA means _________________.
a. Certified Public Attorney c. Certified Private Accountant
b. Certified Property Accountant d. Certified Public Accountant
______21. AICPA means _____________.
a. American Institute of Certified Public Accountant
b. American Incorporated of Certified Public Accountant
c. American Institute of Certified Private Accountant
d. American Institute of Certified Public Association
______22. It refers to the interactions between business and other stakeholders.
a. Monkey Business c. Seller and Buyer
b. Business Transactions d. Accounting Information
______23. It provides a detailed collection and reporting of the expenses and revenues involved in a business or
company operations.
a. Saving c. Bookkeeping
b. Budgeting d. Accounting
______24. Users who make decisions that affect the internal operations of the company.
a. Accounting Users c. External Users
b. Internal Users d. None of the Above
______25. An internal users which they plan, organize and run the business.
a. Customers c. Labor Unions
b. Employees d. Managers

______26. The following are internal users except;

a. Customers c. Labor Unions
b. Employees d. Managers
______27. An internal user which provide the capital.
a. Customers c. Owners
b. Suppliers d. Managers
______28. They assess the company’s stability and profitability.
a. Customers c. Labor Unions
b. Employees d. Managers
______29. An user which make decisions based on the company’s financial information.
a. Accounting Users c. External Users
b. Internal Users d. None of the Above

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______30. They assess the credit worthiness and the capability of the business to pay its obligation including
the related interests on maturity date.
a. Potential Investors c. Customers
b. Potential Creditors d. Suppliers
______31. They need information to help them decide whether they should invest or not in the business.
a. Potential Investors c. Customers
b. Potential Creditors d. Suppliers
_______32. They are interested to know whether the business will continue to honor its product warranties.
a. Potential Investors c. Customers
b. Potential Creditors d. Suppliers
_______33. They use the financial statements of their customers to determine whether the debts owed to them
will be paid when due or whether the customers has enough funds or resources to pay the goods to be delivered.
a. Potential Investors c. Customers
b. Potential Creditors d. Suppliers
_______34. The following are external users except;
a. Academe c. Labor Unions
b. Potential Creditors d. Suppliers
_______35. A business organization that is owned by only one individual for the practice of trade and
profession.
a. Sole Proprietorship c. Cooperatives
b. Partnership d. Corporation
_______36. A business organization that is owned by two or more individuals pooling their resources
. a. Sole Proprietorship c. Cooperatives
b. Partnership d. Corporation
_______37. It is the simplest and least costly form of ownership among other forms of business.
a. Sole Proprietorship c. Cooperatives
b. Partnership d. Corporation
_______38. The following are advantages of sole proprietorship except;
a. Full control of operations c. Easy to start
b. Unlimited liability d. All profit go directly to the owner
_______39. Grocery store, repair shop and beauty parlor are example of ________________.
a. Sole Proprietorship c. Cooperatives
b. Partnership d. Corporation
_______40. The profit of this business organization is divided among the partners’ agreement.
a. Sole Proprietorship c. Cooperatives
b. Partnership d. Corporation

_______41. The written agreement between or among partners is called ___________.

a. articles of co-executive c. articles of co-agreements
b. articles of co-partnership d. none of the above
_______42. A type of partnership wherein each member has unlimited liability.
a. name of partnership c. place of business
b. names of partners d. logo of the business
_______43. A business organization which is required to have five to fifteen incorporators.
a. Sole Proprietorship c. Cooperatives
b. Partnership d. Corporation
_______44. An artificial being created by operation of law, having the right of succession and the powers,
attributes and properties expressly authorized by law or incidence to its existence.
a. Sole Proprietorship c. Cooperatives
b. Partnership d. Corporation

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_______45. The following are disadvantages of partnership except;
a. Unlimited liability c. Easy to form with proper agreements
b. Limited life d. High possibility of dispute
_______46. The following are business requirements for partnership except;
a. Register the business name with DTI
b. Secure a Barangay Permit
c. File articles of co-partnership in SEC
d. None of the above
_______47. The existence of the corporation is evidenced by articles of incorporation and by-laws that are duly
approved by ______.
a. SEC b. DTI c. BIR d. Barangay
_______48. The following are advantages of corporation except;
a. More sources of funds c. liability is limited
b. Easy to transfer ownership d. none of the above
_______49. A business organization that is owned by a group of individuals who also serve as benefactors to
the business endeavor.
a. Sole Proprietorship c. Cooperatives
b. Partnership d. Corporation
_______50. A cooperative usually requires at least ___ members to function.
a. 20 b. 10 c. 5 d. 15
_______51. GAAP refers to
a. General Accounting and Auditing Principles
b. Guidelines for Accountants, Accounting Procedures
c. General Association of Accounting Practitioners
d. Generally Accepted Accounting Principles
_______52. The accrual basis of accounting is based primarily on
a. conservatism and revenue realization c. consistency and matching
b. conservatism and matching d. revenue realization and matching
_______53. It assumes that all of the business transaction are separated from the business owner’s personal
transactions.
a. Accrual Basis Assumptions c. Going Concern Assumptions
b. Monetary Unit Assumptions d. Economic Entity Assumptions
_______54. PAS refers to
a. Philippine Accounting Standards c. Philippine Accounting Standardization
b. Philippine Auditing Standards d. Partnership and Accounting Standards

_______55. This principle requires that expenses be matches with revenues.

a. matching principles c. materiality principles
b. matching revenues d. revenue recognition
II. Indicate the type of business activity performed by the following firms. Write your answer on the space
provided before each number.

_________________1. Accounting office _________________11. Law firms

_________________2. Bag factory _________________12. Spa and Massage
_________________3. Beauty parlor _________________13. Repair shop
_________________4. Janitorial agency _________________14. hardware
_________________5. Pizza Hut _________________15. Drug store
_________________6. Book store _________________16. Food factory
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_________________7. Plastic factory _________________17. Garment Factories
_________________8. Dental clinic _________________18. bank
_________________9. Unilever Company _________________19. School
_________________10. Clothing boutique _________________20. Medical clinic

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