1. According to this organization, Accounting is a service activity.

a. AICPA
b. ASC
c. AAA
d. PICPA
2. This accounting process is the recognition or nonrecognition of business activities as
“accountable” events.
a. Identifying
b. Measuring
c. Communicating
d. Closing
3. Statement I: An event is accountable or quantifiable when it has an effect on assets, liabilities
and equity.
Statement II: Not all business activities are accountable
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.
4. Is any sudden and unanticipated loss from fire, flood, earthquake and other event ordinarily
termed as an act of God.
a. Divine Intervention
b. Loss
c. Casualty
d. Accident
5. Is the accounting process of assigning of peso amounts to the accountable economic
transactions and events.
a. Identifying
b. Measuring
c. Communicating
d. Closing
6. Statement I: Financial statements without monetary amounts would be largely unintelligible or
incomprehensible.
Statement II: Historical cost includes fair value, value in use, fulfillment value and current cost.
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.
7. Is the process of preparing and distributing accounting reports to potential users of accounting
information.
a. Identifying
b. Measuring
c. Communicating
d. Closing

1
8. Is the process of systematically maintaining a record of all economic business transactions after
they have been identified and measured.
a. Recording
b. Classifying
c. Summarizing
d. Auditing
9. Is a group of accounts which are systematically categorized into asset, liability, equity, revenue
and expense accounts.
a. Ledger
b. Journal
c. Worksheet
d. Financial Statement
10. Is the sorting of grouping of similar and interrelated economic transactions into their respective
classes.
a. Recording
b. Classifying
c. Summarizing
d. Auditing
11. Is the preparation of financial statements.
a. Recording
b. Classifying
c. Summarizing
d. Auditing
12. Statement I: Republic Act 9892 is the law regulating the practice of accountancy in the
Philippines.
Statement II: The Board of Accountancy is responsible for preparing and grading the Philippine
CPA examination.
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.
13. Statement I: A certificate of accreditation shall be issued to certified public accountants in public
practice only upon showing in accordance with rules and regulations promulgated by the Board
of Accountancy and approved by the Professional Regulation Commission that such registrant
has acquired a minimum of 2 years of meaningful experience in any areas of public practice
including taxation.
Statement II: The Professional Regulation Commission upon favorable recommendation of the
Board of Accountancy shall issue the Certificate of Registration to practice public accountancy
which shall be valid for 3 years and renewable every 2 years upon payment of required fees.
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.

2
14. Certified Public Accountants generally practice their profession in the following area/areas:
a. Public Accounting
b. Private Accounting
c. Government Accounting
d. All of the Above
15. Statement I: The field of public accounting or public accountancy is composed of individual
practitioners, small accounting firms and large multinational organizations that render
independent and expert financial services to the public.
Statement II: Public accountants usually offer three kinds of services, namely auditing, taxation
and management advisory services.
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.
16. Is the examination of financial statements by independent certified public accountant for the
purpose of expressing an opinion as the fairness with which the financial statements are
prepared.
a. Auditing
b. Taxation
c. Management Advisory Services
d. Education
17. Includes the preparation of annual income tax returns and determination of tax consequences
of certain proposed business endeavors.
a. Auditing
b. Taxation
c. Management Advisory Services
d. Education
18. The highest accounting officer in an entity.
a. Head Accountant
b. Controller
c. Chief Accountant
d. Senior Accountant
19. Encompasses the process of analyzing, classifying, summarizing and communicating all
transactions involving the receipt and disposition of government funds and property and
interpreting the results thereof.
a. Public Accounting
b. Private Accounting
c. Government Accounting
d. None of the above.
20. Statement I: Republic Act No. 10912 is the law mandating and strengthening the continuing
professional development program for all regulated professions, including the accountancy
profession.
Statement II: A CPA shall be permanently exempted from CPD requirements upon reaching the
age of 60 years old.

3
 a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.
21. Represent the rules, procedures, practice and standards followed in the preparation and
presentation of financial statements.
a. Philippine Financial Reporting Standards
b. Conceptual Framework
c. Philippine Constitution
d. Generally Accepted Accounting Principles
22. The following is a member of Financial Reporting Standards Council, except:
a. BIR
b. COA
c. SEC
d. None of the above.
23. Is a summary of the terms and concepts that underlie the preparation and presentation of
financial statements to external users.
a. Philippine Financial Reporting Standards
b. Conceptual Framework
c. Philippine Constitution
d. Generally Accepted Accounting Principles
24. Statement I: Nothing in the Conceptual Framework overrides any specific International Financial
Reporting Standards.
Statement II: In case where there is conflict, the requirements of the IFRS shall prevail over the
Conceptual Framework.
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.
25. The following are other users of financial statement, except:
a. Customer
b. Lender
c. Employees
d. Public
26. Which if the following is/are scope of Conceptual Framework?
a. Objective of Financial Reporting
b. Qualitative characteristics of useful financial information
c. Elements of Financial Statements
d. All of the above
27. It means that income is recognized when earned regardless of when received and expense is
recognized when incurred regardless of when paid.
a. Cash Basis Accounting
b. Accrual Accounting
c. Accrued Income

4
 d. Accrued Expense
28. Qualities or attributes that make financial accounting information useful to the users.
a. Qualitative Characteristics
b. Fundamental Qualitative Characteristics
c. Enhancing Qualitative Characteristics
d. Conceptual Framework
29. Statement I: The fundamental qualitative characteristics relate to the form or presentation of
financial information.
Statement II: The enhancing qualitative characteristics relate to the content or substance of
financial information.
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.
30. The statement of financial position is relevant in determining financial position, and the income
statement is relevant in determining performance.
a. Relevance
b. Materiality
c. Free from error
d. Faithful Representation
31. The earning per share information is more important than book value per share in determining
the attractiveness of investment.
a. Consistency
b. Comparability
c. Relevance
d. None of the above.
32. Statement I: Financial information has predictive value if it can be used as an input to processes
employed by users to predict future outcome.
Statement II: Financial information has confirmatory value if it provides feedback about previous
evaluations.
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true.
d. Both statements are false.
33. Is also known as the doctrine of convenience.
a. Relevance
b. Prudence
c. Completeness
d. Materiality
34. An error of 500,000 in the financial statements of a multinational entity may not be important
but may be so critical for a small entity.
a. Materiality
b. Accrual
c. Faithful Representation

5
 d. Relevance
35. Are the users to whom general purpose financial statements are primarily directed.
a. Users of Financial Reports
b. Certified Public Accountant
c. Primary Users
d. Other Users
36. It means that financial reports represent economic phenomena or transactions in words and in
numbers.
a. Faithful Representation
b. Completeness
c. Neutrality
d. Free from error
37. Requires that relevant information should be presented in a way that facilitates understanding
and avoids erroneous implication.
a. Faithful Representation
b. Completeness
c. Neutrality
d. Free from error
38. Is without bias in the preparation or presentation of financial information.
a. Faithful Representation
b. Completeness
c. Neutrality
d. Free from error
39. Is the exercise of care and caution when dealing with the uncertainties in the measurement
process such that assets or income are not overstated and liabilities or expenses are not
understated.
a. Conservatism
b. Prudence
c. Neutrality
d. Free from error
40. Means there are no errors or omissions in the description of the phenomenon or transaction.
a. Substance over form
b. Conservatism
c. Prudence
d. Free from error
41. Statement I: Substance over form is not a separate component of faithful representation
because it would be redundant.
Statement II: Faithful representation inherently represents the substance of an economic
phenomenon or transaction rather than merely representing the legal form.
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true
d. Both statements are false.

6
42. Means the ability to bring together for the purpose of noting points of likeness and difference.
a. Comparability
b. Consistency
c. Understandability
d. Verifiability
43. Means that financial information must be available or communicated early enough when a
decision is to be made.
a. Comparability
b. Consistency
c. Timeliness
d. Verifiability
44. Means that different knowledgeable and independent observers could reach consensus,
although not necessarily complete agreement, that a particular depiction is a faith
representation.
a. Faithful representation
b. Verifiability
c. Timeliness
d. Objectivity
45. Required that financial information must be comprehensible or intelligible if it is to be most
useful.
a. Comparability
b. Consistency
c. Understandability
d. Verifiability
46. This provide information about economic resources of the reporting entity, claims agains the
entity and changes in the economic resources and claims.
a. Accounting
b. Reports
c. Financial Statement
d. Conceptual Framework
47. The following are types of Financial Statements, except:
a. Consolidated financial statements
b. Unconsolidated financial statements
c. Combined financial statements
d. None of the above.
48. Are designed to provide information about the parent’s asset, liabilities, income and expenses
and not about those of the subsidiaries.
a. Consolidated financial statements
b. Unconsolidated financial statements
c. Combined financial statements
d. None of the above.

7
49. In the absence of evidence to the contrary, the accounting entity is viewed as continuing in
operation indefinitely.
a. Going Concern
b. Continuity Assumption
c. Both A and B.
d. None of the above.
50. This has two aspects namely quantifiability and stability of the peso.
a. Going Concern.
b. Accounting Entity
c. Time Period
d. Monetary Unit
51. Requires that the indefinite life of an entity is subdivided into accounting periods which are
usually of equal length for the purpose of preparing financial reports.
a. Going Concern.
b. Accounting Entity
c. Time Period
d. Monetary Unit
52. Is defined as present economic resource controlled by the entity as a result of past events.
a. Liabilities
b. Asset
c. Predictive Value
d. Conceptual Framework
53. Each business is viewed as an independent accounting entity.
a. Going Concern.
b. Accounting Entity
c. Time Period
d. Monetary Unit
54. Which of the following is an essential characteristic of asset?
a. The asset is a present economic resource.
b. The economic resource is a right that has the potential to produce economic benefits.
c. The new resource is controlled by the entity as a result of past events.
d. All of the above.
55. Which of the following is not an essential characteristic of liability?
a. The entity has an obligation.
b. The obligation is to transfer an economic resource.
c. The obligation is a present obligation that exists as a result of past event.
d. None of the above.
56. Is a duty or responsibility that an entity has no practical ability to avoid. It can either be legal or
constructive.
a. Asset
b. Liability
c. Obligation
d. Law

8
57. Is defined as present obligation of an entity to transfer an economic resource as a result of past
event.
a. Asset
b. Liability
c. Obligation
d. Law
58. Some costs are expensed by simply allocating them over the periods benefited.
a. Cause and effect association
b. Systematic and rational allocation
c. Immediate recognition
d. All of the above
59. Is defined as the removal of all or part of a recognized asset or liability from the statement of
financial position.
a. Identifying
b. Recognition
c. Derecognition
d. Measuring
60. Current Value includes the following except:
a. Fair Value
b. Value in Use
c. Historical Cost
d. Current Cost
61. It is defined as increases in assets or decreases in liabilities that result in increases in equity,
other than those relating to contributions from equity holders.
a. Income
b. Expense
c. Gain
d. None of the above.
62. It is defined as decreases in assets or increases in liabilities that result in decreases in equity,
other than those relating to distributions to equity holders.
a. Income
b. Expense
c. Gain
d. None of the above.
63. Is defined as the process of capturing for inclusion in the financial statements an item that
meets the definition of an asset, liability, equity, income, or expense.
a. Identifying
b. Recognition
c. Derecognition
d. Measuring

9
64. Is the present value of cash that an entity expects to transfer in paying or settling a liability.
a. Fair Value
b. Value in Use
c. Historical Cost
d. None of the above.
65. An asset is recognized immediately:
a. When an expenditure produces no future economic benefit.
b. When cost incurred does not qualify or ceases to qualify for recognition as an asset.
c. Both a and b.
d. None of the above.
66. Is a twelve-month period that ends on December 31.
a. Periodicity concept
b. Calendar year
c. Fiscal Year
d. Interim Reporting
67. Is the present value of the cash flows that an entity expects to derive from the use of an asset
and from the ultimate disposal.
a. Fair Value
b. Value in Use
c. Historical Cost
d. None of the above.
68. Statement I: Similar to historical cost, current cost is also based on the entry price or entry value
but reflects market condition on measurement date.
Statement II: The IASB did not mandate single measurement basis because the different
measurement bases could produce useful information under different circumstances.
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true
d. Both statements are false.
69. Obligations to transfer an economic resource include:
a. Obligation to pay cash
b. Obligation to deliver goods or noncash resources
c. Obligation to provide services at some future time.
d. All of the above.
70. Statement I: Revenue arises in the course of the ordinary regular activities and is referred to by
variety of different names including sales, fees, interest, dividends, royalties and rent.
Statement II: Gains represent other items that meet the definition of income and do not arise in
the course of ordinary regular activities.
a. Only statement I is true.
b. Only statement II is true.
c. Both statements are true
d. Both statements are false.

10
 71. How many members compose BOA?
a. 14
b. 15
c. 6
d. 7
72. Including the chairman, how many members compose FRSC?
a. 14
b. 15
c. 6
d. 7
73. IASB stands for:
a. Intercompany Accounting Standards Body
b. International Accounting Standard Board
c. International Act of Standards Board
d. International Accounting Standards Board
74. The following is a specific objective of financial reporting:
a. To provide information useful in making decisions about providing resources to the entity.
b. To provide information useful in assessing the cash flow prospects of the entity.
c. To provide information about entity resources, claims and changes in resources and claims.
d. None of the above.
75. Arise in the course of ordinary regular activities include cost of goods sold, wages and
depreciation.
a. Loss
b. Expense
c. Revenue
d. Gain

For items 76-85, provide the applicable accounting assumption:

76. The operations of a saving bank are being evaluated by Bangko Sentral ng Pilipinas. During the
investigation, the BSP has determined that numerous loans made by top management were
unwise and have seriously endangered the future of the saving bank.
a. Going Concern
b. Accounting Entity
c. Time Period
d. Monetary Unit
77. The parent entity in Manila has a subsidiary in Japan. The financial statements of the subsidiary
are translated to pesos for consolidation with the financial statements of the parent entity at
year end.
a. Going Concern
b. Accounting Entity
c. Time Period
d. Monetary Unit

11
78. An entity has experienced a drastic reduction in revenue by reason of along dry spell in area
where the entity grows its tobacco. The management decided to wait until next year and
present financial statements for a two-year period rather than prepare now the traditional
twelve-month financial statements.
a. Going Concern
b. Accounting Entity
c. Time Period
d. Monetary Unit
79. An accounting practitioner mixed personal accounting records with the records of the
accounting practice.
a. Going Concern
b. Accounting Entity
c. Time Period
d. Monetary Unit
80. A multinational entity published a complete set of financial statements at least once a year,
regardless of whether the financial results were good or bad.
a. Going Concern
b. Accounting Entity
c. Time Period
d. Monetary Unit
81. The financial statements shall be accompanied by notes to financial statement.
a. Relevance
b. Completeness
c. Understandability
d. Timeliness
82. The older the information, the less useful.
a. Relevance
b. Completeness
c. Understandability
d. Timeliness
83. In case of conflict between economic substance and legal form of a transaction, the economic
substance shall prevail.
a. Prudence
b. Substance over form
c. Faithful representation
d. Prudence
84. It requires users to have some knowledge of the complex economic activities of entities, the
accounting process, and the technical terminology in the statements.
a. Relevance
b. Completeness
c. Understandability
d. Timeliness

12
85. Checking the inputs to a model, formula or other technique and recalculating the inputs using
the same methodology
a. Verifiability
b. Understandability
c. Consistency
d. Free from error
86. These are the cash flows derived from the equity capital and borrowings of the entity.
a. Operating Activities
b. Investing Activities
c. Financing Activities
d. None of the above.
87. These are the cash flows derived primarily from the principal revenue producing activities of the
entity.
a. Operating Activities
b. Investing Activities
c. Financing Activities
d. None of the above.
88. These are the cash flows derived from the acquisition and disposal of long-term assets and other
investments not included in cash equivalent.
a. Operating Activities
b. Investing Activities
c. Financing Activities
d. None of the above.
89. The nominal accounts are extended to what section of the worksheet?
a. The statement of financial position section
b. The statement of comprehensive income section
c. Credit side of the statement of comprehensive income section
d. Debit side of the statement of comprehensive income section
90. The real accounts are extended to what section of the worksheet?
a. The statement of comprehensive income section
b. The statement of financial position
c. Debit side of the statement of financial position
d. Credit side of the statement of financial position
91. A statement of financial position which is patterned after the accounting equation, A = L + OE is
presented in horizontal order –
a. Natural Form
b. Account Form
c. Report Form
d. Functional Form

13
 92. A statement of financial position which shows the Asset followed by Liabilities and Owner’s
Equity in a vertical order –
a. Single-Step Form
b. Financial Position Form
c. Report Form
d. Account Form

The following account balances were taken from Cerdena Wine Factory, a client of Yves Joshua & Daa
Co. for the quarter ending March 31, 20B.

January 1 March 31

Raw Materials P120,000 P105,000

Work In Process 250,000 275,000
Finished Goods 170,000 290,000

Purchases – Raw Materials P 110,000

Freight – In 5,000
Direct Labor 308,000
Indirect Labor 45,000
Indirect Materials 65,000
Amortization of Trademark 50,000
Rent Expenses – Factory 25,000
Depreciation – Factory 40,000
Depreciation – Office 48,000

93. How much is direct materials?

a. 120,000
b. 130,000
c. 140,000
d. 150,000
e. Other answer please provide: ____________
94. How much is manufacturing overhead?
a. 225,000
b. 273,000
c. 576,000
d. 581,000
e. Other answer please provide: ____________
95. How much is cost of goods manufactured?
a. 638,000
b. 688,000
c. 690,000
d. 695,000
e. Other answer please provide: ____________
96. How much is cost of goods sold?
a. 518,000
b. 525,000

14
 c. 540,000
d. 550,000
e. Other answer please provide: ____________

The following information relating to cash transactions were taken from the books of Daa, CPA.

Cash and cash equivalents – January 1 3,000,000

Cash received from customers 12,000,000
Rent Received 1,000,000
Interest Received 1,500,000
Dividend Received 2,000,000
Cash Paid to Suppliers 8,000,000
Salaries Paid 2,900,000
Insurance Paid 100,000
Interest Paid 500,000
Income Tax Paid 2,500,000
Cash Paid for Land 2,000,000
Cash Received from Sale of Equipment 800,000
Cash Received from Sale of Investment 700,000
Cash Received from Issue of Shares 3,000,000
Cash Received from Bank Loan 4,500,000
Cash Paid for Dividends 3,500,000
Cash Paid for Treasury Shares 1,600,000

97. How much is the net cash provided by operating activities?

a. 3,000,000
b. 2,500,000
c. 500,000
d. 2,400,000
e. Other answer please provide: ____________
98. How much is the net cash used in investing activities?
a. 3,500,000
b. 500,000
c. 3,000,000
d. 2,000,000
e. Other answer please provide: ____________
99. How much is the net cash provided by financing activities?
a. 500,000
b. 2,400,000
c. 2,000,000
d. 3,000,000
100. How much is the cash and cash equivalents – December 31?
a. 7,000,000
b. 7,400,000
c. 6,300,000
d. 8,100,000
e. Other answer please provide: ____________

15