ACC 103 P2 LONG QUIZ

GENERAL INSTRUCTIONS: Select the best answer among the choices. Do not write anything with the questionnaire.
Put your answers on the separate answer sheet provided. NO ERASURES!

Part 1.
1. The underlying theme of the conceptual framework is
A. Decision usefulness.
B. Understandability
C. Faithful representation.
D. Comparability.
2. The objective of general-purpose financial reporting is to provide financial information about a reporting
entity to each of the following except
A. Potential equity investors.
B. Potential lenders.
C. Present investors.
D. All of these answers are correct.
3. The objective of general-purpose financial reporting is?
A. To provide financial information about the reporting entity that is useful to present and potential
equity investors, lenders, and other creditors in making decisions in their capacity as capital providers
B. To provide companies with the option to select information that favours one set of interested parties
over another
C. To provide users with financial information that implies total freedom from error.
D. To provide a metric for financial information used to determine when the boundary between two or
more entities should be disregarded and the entities considered to be a licensing arrangement.
4. Which of the following is a characteristic describing the fundamental quality of relevance?
A. Predictive value.
B. Neutrality.
C. Verifiability.
D. Understandability.
5. Which of the following statements is true?
a. In current practice, accounting provides only quantitative information that is useful in making economic
decisions.
b. External users are those who do not have the authority to demand financial reports tailored to their specific
needs.
c. Under the stable monetary unit assumption, the owners of the business and the business are viewed as a
single reporting entity. Therefore, the personal transactions of the owners are recorded in the books of accounts.
d. The practice of accountancy in the Philippines is regulated under R.A. 9892.
6. Which of the following statements correctly refer to the accounting process?
I. Measuring is the accounting process of analyzing business activities as to whether or not they will be recognized in the
books.
II. Recognition refers to the process of including the effects of an event in the totals of the statement of financial position
or the statement of profit or loss and other comprehensive income through memo entries.
III. Disclosure of events in the notes to financial statement without including their effect in the totals of the statement of
financial position or statement of profit or loss and other comprehensive income is not an application of the
recognition principle.
IV. An accountable event is an event that has an effect on the assets, liabilities or equity of an entity and its effect can be
measured reliably.
V. Sociological and psychological matters are within the scope of accounting.
a. I, II, III, IV and V
b. I, II, III and IV
c. IV
d. III and IV
7. Which of the following statements is true?
I.Loss from theft is classified as a nonreciprocal transfer.
II.Internal events are changes in economic resources by actions of other entities that do not involve transfers of resources
and obligations.
III.Nonreciprocal transfers involve the transfer of resources in only one direction, either from an entity to other entities or
from other entities to the entity.
IV.Internal events are sudden, substantial, unanticipated reductions in resources not caused by other entities.
V.Fire, earthquake and flood are examples of accountable events classified as internal events.
a. I, II, III and V
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b. I, III and V
c. II, III, IV and V
d. I, III, IV and V
8. When products or other assets are exchanged for cash or claims for cash, they are said to be
a. allocated.
b. realized.
c. recognized.
d. earned.
9. A prepaid expense can be best described as an amount that is
a. Paid and currently matched with revenues
b. Paid and not currently matched with revenues
c. Not paid and currently matched with revenues
d. Not paid and not currently matched with revenues
10. General purpose financial statements are
a. those statements that cater to the common and specific needs of a wide range of external users.
b. those statements that cater to the common needs of a wide range of external users and internal users.
c. those statements that cater to the common needs of a limited range of external users.
d. those statements that cater to the common needs of a wide range of external users.
11. The primary objective of financial reporting is to provide
a. information about economic resources, claims to these resources, and changes in them.
b. information useful for investment and credit decisions.
c. information useful in predicting future cash flows.
d. all of these
12. . Which of the following is/are false?
I. Proprietary theory emphasizes the importance of the balance sheet and is exemplified by the
equation “Assets – Liabilities = Capital”.
II. Fund Theory’s objective is the custody and administration of funds.
III. Residual Equity Theory is applied in the computation of book value per share and return on equity.
IV. Concept of articulation means that all of the components of a complete set of financial statements
are interrelated.
a. All are false. C. All are true except statement III.
b. All are true. D. All are false except statement IV.
13. How many members are there in FSRSC?
a. 15 b. 16 c.17 d.14
14. The following are the responsibilities of BOA, except
a. investigating violations of rules and regulations and issuing sanctions
b. issuing and renewing Certificates of Registration and Accreditation
c. ensuring all tertiary educational providers comply with policies and standards prescribed by the CHED
d. carrying out the fact-finding component of investigations
15. Which of the following is/are true?
I. In 1997, the Philippine Accounting Standards Council resolved to adopt the PAS and the PFRS.
II. In 2000, BSP has required all banks to follow PFRS.
III. In August 2006, the PIC was created.
IV. In 2006, ASC became the FRSC.
a. All are true b. II and III c. III and IV d. None of the statements.
16. Which of the following is correct?
a. The qualitative characteristics of useful information is in Chapter 3.
b. Measurement is right after the elements of the financial statements.
c. Financial statements and the reporting entity is in Chapter 2 right after the objective.
d. The elements of the financial statements is in Chapter 4.
e. Presentation and disclosure is in the 7th chapter.
f. Recognition and derecognition is in Chapter 6.

a. There are 3 false statements. c. All are false statements.

b. There are 2 true statements. d. There is a single true statement.`
17. The primary user’s decisions depend on the assessment of the entity’s
a. Profitability and Liquidity c. Profitability and management’s stewardship
b. future net cash flow and management’s stewardship d. future net cash flow and liquidity
18. Feljane’s Corporation prepares its financial statements in accordance with the generally accepted accounting
standards. This pertains to what specific qualitative characteristic?
a. Fundamental b. Enhancing c. Verifiability d. Faithful representation
19. These are enhancing qualitative characteristics, except
a. Verifiability b. Completeness c. Understandability d. Timeliness
20. What is the revised definition of asset?
ACC 103 P2 LONG QUIZ
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
privilege that has the probability to produce economic benefits.
c. A resource with economic value that an individual, corporation, or country owns or controls with the
expectation that it will provide a future benefit.
d. A present economic resource controlled by the entity as a result of past events. An economic resource is a
right that has the possibility to produce economic benefits
21. James enters into an irrevocable commitment with another party to acquire goods in the future, on credit.
The goods become obsolete before delivery and so James must pay a substantial amount. Does he acquire a
liability?
a. No, James has no present obligation
b. Yes, because James enters into an irrevocable commitment
c. Yes, because it becomes burdensome on James’ part
d. No, present obligation does not arise from future commitment.
22. . I. We close the real accounts.
II. We update the nominal accounts
a. True, True b. True, False c. False, True d. False, False
23. Which of the following is not one of the measurement bases used in accounting?
a. Historical cost b. Fair Value c. Present Value d. All of these are correct.
24. 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. Philippine Institute of Certified Public Accountants
b. Securities and Exchange Commission d. Financial Reporting Standards Council
25. Public interest entities are the following, except:
a. With total assets of more than 350Million and total liabilities of more than 250Million
b. Companies that hold primary licenses
c. Companies whose securities are traded in a public market.
d. Companies that are in the process of filing their financial statements for the purpose of issuing any class of
instruments in a public market.

Part 2. Shade A, if it is TRUE. Shade B, if it is false.

1. Reciprocal transfer is a transaction in that the party gives something but does not receive anything in
return and the other party receives something but does not give anything in return.
2. Payment of taxes is an example of non-reciprocal event.
3. Distribution to owners is a reciprocal event.
4. A company’s warehouse has been razed completely by fire because of a competitor company’s doing.
The event is an internal event other than transfer
5. Vandalism is an external event other than transfer.
6. The main office of the entity is located 3km away from the production of farm products thus the
production is an external event.
7. The cashier had defalcated a large amount of money from the entity’s treasury. This event is a non-
reciprocal event.
8. Retained earnings is valued by estimates. (by opinion dapat)
9. Cash measured at face amount is valued by fact.
10. Summarizing the processed information involves the computation of financial statement ratios.
11. As a social science, accounting is a body of knowledge which has been systematically gathered,
classified and organized.
12. Financial accounting is the systematic recording and analysis of the costs of materials, labor, and
overhead incident to the production.
13. The conceptual framework is concerned with general purpose financial reporting.
14. When there is a conflict between the standard and the conceptual framework, the framework shall
prevail.
15. General purpose accounting information is designed to meet the common needs of most statement
users.