EASY

FIRST YEAR STUDENTS ONLY

1. This is the basis of recording transactions
resulting into dual effect.
A. Journalizing

B. Bookkeeping

C. Single entry system

D. Double entry systems

2. What do you call the uniform procedure
needed to accomplish Accounting process?
A. Accounting cycle

B. Journalizing

C. Posting on a ledger

D. Transferring of journal balances to the ledger account

3. This summarizes the activities from where
cash was received or cash was paid.

A. Statement of Changes in Equity

B. Income Statement

C. Cash Flow Statement

D. Statement of Financial position

 4. It is a liability of a business arising from the
borrowing of an amount of money in a financial
institution.
A. Notes Payable

B. Accounts Payable

C. Unearned Revenue

D. Loans Payable
5. This is the result of an advanced payment made
by a customer for future services.

A. Service Income

B. Unearned Income

C. Revenue

D. Accrued Income
6. What do you call the list of accounts with their
balances which are found in the general ledger?
A. Permanent Account

B. Nominal Account

C. Trial Balance

D. Ledger
7. Which of the following is a different account?
A. Accrued Income

B. Deferred Income

C. Cash

D. Inventory
 8. What do you call the amount owed to others for
the expenses already incurred but have not yet been paid?

A. Deferred liability

B. Accounts payable

C. Accrued liability

D. Utilities payable
9. It is the process of transferring to a ledger the
information recorded in the journal.
A. Journalizing

B. Trial Balance

C. Posting

D. Accounting Cycle
 10. What is the book of final
entry?
A. Ledger

B. Journal

C. Trial Balance

D. Financial Statements
AVERA
GE
FIRST YEAR STUDENTS ONLY
1. The term revenue recognition conventionally refers
to:
A. the process of identifying transactions to be recorded as revenue in an
accounting period.

B. the process of measuring and relating revenue and expenses during the
period.

C. the earning process which gives rise to revenue realization.

D. the process of identifying those transactions that result in an inflow of

assets to the enterprise.
 2. Generally accepted accounting principles are:
A. usually established by the bureau of internal revenue.

B. the guidelines used to resolve ethical dilemmas experiencing in managing

business and corporation.

C. a set of standards and rules that are recognized as a general guide for
financial reporting.

D. fundamental truths that can be derived from the laws of nature.

 3. The purpose of accounting is:
A. to provide comprehensive reports on the debits and credits of a business
entity.

B. to provide comprehensive financial information about a business or other

economic entity.

C. To interpret the results of operations of a business entity and provide

quality decisions.

D. to classify the business transactions of a business entity.

4. Which of the following is an internal event?
A. Casualty loss

B. Exchange

C. Nonreciprocal transfer between the enterprise and its owners.

D. Nonreciprocal transfer between the enterprise and other

entities.
 5. In accounting, those standards and practices
that have won acceptance because of their logic
and proven usefulness are referred to as:
A. accounting dogmas

B. accounting procedures

C. accounting principles

D. accounting theories
DIFFICU
LT
FIRST YEAR STUDENTS ONLY
 1. The insurance premium of P36,000
dated September 31, 2018 was for 6
months. Under the asset method, what is
the adjusting entry at the end of the
year?
A. Dr Insurance Expense 18,000
Cr Prepaid Insurance 18,000

B. Dr Prepaid Insurance 18, 000

Cr Insurance Expense 18,000

C. Dr Prepaid Insurance 24,000

Cr insurance expense 24,000

D. Dr. Insurance Expense 24,000

Cr insurance expense 24,000
 2. EFG Company purchased supplies
worth P10,000 on Nov 1, 2018. At the
end of the period, only 2,000 are on
hand. What is the adjusting entry using
the expense method?
A. Supplies Expense 8,000
Prepaid Supplies 8,000

B. Prepaid Supplies 8,000

Supplies Expense 8,000

C. Supplies Expense 2,000

Prepaid Supplies 2,000

D. Prepaid Supplies 2,000

Supplies Expense 2,000
3. ABC company has a Loans Payable of P50,000 dated
November 1, 2018 with an annual interest of 12%. How
much is the interest expense at end of the year?
A. 6, 000

B. 12, 000

C. 500

D. 1,000
EASY
SECOND YEAR STUDENTS ONLY
1. It is the standard setting body in the Philippines at
the present time.
A. Accounting Standards Council

B. Financial Standards Reporting Council

C. Philippine Accounting Standard Board

D. Auditing and Assurance Standard Council

2. The most common financial attribute used in
measuring financial information is
A. Present Value

B. Realizable Value

C. Current Cost

D. Historical Cost
 3. What is the underlying theme of the
Conceptual Framework?

A. Comparability

B. Decision usefulness

C. Timeliness

D. Understandability
 4. Which user is interested to the accounting
information of a business for him to assess
whether their loans, and related interests to it, and
other amounts owing to them will be paid when
due?
A. Borrowers

B. Owners

C. Lenders

D. Trade creditors
5. What accounting concept justifies the usage of
accruals and deferrals?
A. Going concern

B. Materiality

C. Consistency

D. Economics Entity Concept

6. Among these qualitative characteristics, which best
describe the information that influences the economic
decisions of users?
A. Reliable

B. Prospective

C. Relevant

D. Understandable
7. It is also known as the residual interest of an entity.
A. Income

B. Equity

C. Assets

D. Retained Earnings
8. Financial reporting is concerned only with information
that is significant enough to affect evaluation or decision.

A. timeliness

B. materiality

C. cost and benefit

D. comparability
9. It is the ability to bring together for the purpose of
noting similarities and dissimilarities.

A. relevance

B. reliability

C. understandability

D. comparability
 10. A partnership is a(an)
i. Accounting entity
ii. Taxable Entity
A. i only

B. ii only

C. Neither i nor ii

D. Both i and ii
AVERA
GE
SECOND YEAR STUDENTS ONLY
1. The four measurement bases currently used in
financial accounting for asset measurement do not
include the:
A. amount of cash expected to be received in the future, as in the normal conversion
of an account receivable.

B. price in a current purchase, as in applying the lower cost or market to inventories.

C. price in a current sale, as in applying the lower of cost or market to temporary

investments.

D. price of a past purchase adjusted from changes in the general purchasing power of
the peso, as in the application of the LIFO inventory method.
 2. The use of original historical cost in the
matching process is commonly referred to as an
application of the concept of:
A. conservatism

B. cost

C. consistency

D. answer not given

3. What is the objective of financial reporting?
A. assist investor in analyzing the economy

B. assist supplier in determining an appropriate discount to offer a

particular company.

C. enable banks to determine an appropriate

D. interest rate on their guaranteed investment certificates.

 4. Normally, revenue is recognized:
A. when the customer’s order is received.

B. when the customer’s order is accompanied by a check.

C. only if the transaction will create an accounts receivable.

D. when the title to the goods changes.

5. According to ASC conceptual framework, the
process of reporting an item in the financial
statements of an enterprise is:
A. allocation

B. realization

C. recognition

D. matching
DIFFICU
LT
SECOND YEAR STUDENTS ONLY
1. In Jessica and Arnold Partnership, which of the
following accounts can be found in their general ledger?
i. A, Drawing
ii. J, Loan
iii. Receivable from A
A. i only

B. i and ii only

C. i, ii, and iii

D. ii, and iii

2. Axl Rose contributed an equipment in a partnership. On
the date of the formation of the partnership, the equipment
costs 100,000, with an accumulated depreciation of 60,000
and a fair value of 20,000. At what amount should it be
reported?
A. 60,000

B. 100,000

C. 20,000

D. 40,000
 3. Profits should be divided at what ratio if the
agreement provides only for division of losses?

A. Equally

B. According to average capital ratio

C. According to beginning capital ratio

D. According to ending capital ratio

EASY
THIRD YEAR STUDENTS ONLY
1. Which of the following is the primary purpose of
accounting:
A. to provide comprehensive financial information about a business or other
economic entity.

B. to provide comprehensive reports on the debits and credits to come up with

accounts balances

C. to interpret the results of operations of a business entity.

D. to classify the business transactions of a business entity.

2. What is the objective of the financial
statements?
A. to disclose the market value of the firm’s assets and
liabilities

B. to determine compliance with tax laws

C. to make forecasts about the economy

D. to help users makes decisions

3. In accounting, objectivity means that the data
which enter into the accounting process are based
on:
A. opinions of an auditor

B. interpretations

C. objective and verifiable evidences

D. estimates
 4. In doing business, why is a certain cost
capitalized when incurred and then depreciated or
amortized over the periods benefited?
A. to aid management in decision making process

B. to adhere to the concept of conservatism

C. to reduce income tax liability

D. to properly match costs of production with revenue earned

5. Which of the following is not an accepted basis
for the recognition of revenue?

A. passage of time

B. completion of percentage of a project

C. performance of service

D. signing of contract
6. In accounting, those standards and practices that
have won acceptance because of their logic and
proven usefulness are referred to as:
A. accounting postulate

B. accounting procedures

C. accounting principles

D. accounting theories
7. Generally, the revenue should be recognized at a point
when:
A. the customer pays for the goods

B. the product is available for sale to the ultimate consumer.

C. an exchange has taken plant and the earnings process is virtually

complete.

D. the customer orders for a definite amount of merchandise has been

received for shipment at FOB destination later
 8.These are the omissions and misstatement in the
financial statements for one or more periods arising from
a failure to use or misuse reliable information
A. Changes in Accounting Policy

B. Fraud

C. Prior Period Error

D. Changes in Accounting estimates

9. In a single-entry system, what do you call its
major record?
A. Sales book

B. Book of Equity Account

C. Sales Account in the Journal entry

D. Cash book
 10. A policy of choosing the acceptable alternatives
methods or presentation that will give the least
favorable effect on the owner’s equity is an application
of:
A. conservatism.

B. principle.

C. concept.

D. disclosure.
AVERA
GE
THIRD YEAR STUDENTS ONLY
1. Which is not true in a Cash basis of Accounting?

A. Income is recognized when received regardless of when earned

B. It does recognize the accounts payable account

C. It is different from Accrual Basis

D. It does not record accrued expense and prepaid expenses

 2. Conventionally, accountants measure
income:
A. by applying the value-added concept.

B. by using the transactions approach.

C. as a change in the value of owner’s equity.

D. as a change in the purchasing power of owner’s equity.

 3. Cash equivalent is a short-term, highly liquid
investment that is readily convertible into known
amount of cash and
A. Is acceptable as a means to pay current liabilities.

B. Has a current market value that is greater than original cost

C. Bears an interest rate that is at least equal to the prime rate of interest
at the date of liquidation.

D. Is so near maturity that it presents insignificant risk of change in

interest rate.
 4. Why is retrospective treatment of changes in
accounting estimate prohibited?
A. Changes in estimate are normal recurring corrections and adjustments which are
the natural result of the accounting process.

B. The retrospective treatment for any type of presentation is not allowed.

C. Retrospective treatment of changes in accounting estimate is prohibited

because PFRS requires it.

D. The PFRS does not prohibit retrospective treatment of changes in accounting

estimate but is silent on this issue
5. Which of the following is a requirement for a
component of an entity to be classified as a
discontinued operation?
a. Its activities must cease permanently prior to the issue of the
financial statements.

b. It must comprise a separate reportable segment.

c. Its assets must have been classified as held for sale in the previous
financial statements.

d. It must have been a cash-generating unit while being held for use
DIFFICU
LT
THIRD YEAR STUDENTS ONLY
 1. The insurance premium of P36,000
dated September 31, 2018 was for 6
months. Under the asset method, what is
the adjusting entry at the end of the
year?
1. What is the effect if at the start of the year, a
company's inventory is overstated?

A. Net Purchases is overstated

B. Overstated gross margin

C. Overstated cost of goods available for sale

D. Understated cost of goods sold

 2. On January 1(Year 1) ABM corporation purchased a machine
costing P200,000 and it is to be depreciated on a straight-line basis
over a 5-year period with 50,000 residual value. Because of a
bookkeeping error, no depreciation was recognized in ABM’s Year
1 financial statements. The oversight was discovered during the
preparation of ABM’s Year 2 financial statements. Depreciation
expense on this machine for Year 2 should be
A. 50,000 B. 40,000

C. 60,000 D. 30,000
 3. While examining financial records, JATS Co. discovered that a
machine acquired on January 1 2009 for P300,000 was incorrectly
expensed at the time where it should be depreciated over 5 years
with 50,000 salvage value. What amount, if any, should be adjusted
to their depreciation expense at January 1, 2011 which is the
beginning of the third year, when the error was discovered?

A. 50,000 B.150,000

C. 0 D. 100,000
4. JPIA has a sales revenue of P1,000,000 on its
Income Statement for the year ended December 31,
2019 Additional information is as follows:

Beginning 1/1/2019
Accounts receivable 50,000
Allowance for bad debts 11,000
Ending 12/31/2019
Accounts Receivable 30,000
Allowance for bad debts 15,000
4. JPIA wrote off uncollectible accounts totaling 20,000 during
2019. Under the cash basis of accounting, they would have
reported 2019 sales of:
A. 1,000,000

B. 1,180,000

C. 1, 184,000

D. 4,280,000