Review in FABM 2

for the 1 st

Periodical Exam
1. Which of the following is a difference between the cash
basis of accounting and the accrual basis of accounting?
A. In accrual accounting, income is recognized after
the receipt of cash
B. In cash accounting, expenses are recognized when
they are actually paid.
C. In accrual accounting, expenses are recognized
when payment is made.
D. In cash accounting, income is recognized when it is
earned.
1. Which of the following is a difference between the cash
basis of accounting and the accrual basis of accounting?
A. In accrual accounting, income is recognized after
the receipt of cash
B. In cash accounting, expenses are recognized when
they are actually paid.
C. In accrual accounting, expenses are recognized
when payment is made.
D. In cash accounting, income is recognized when it is
earned.
2. These external users of financial reports primarily use
accounting information to assess their return on
investment in the business.
A. Government and its agencies
B. Investors
C. Management
D. Creditors
2. These external users of financial reports primarily use
accounting information to assess their return on
investment in the business.
A. Government and its agencies
B. Investors
C. Management
D. Creditors
3. A chart of accounts is a/an
A. flowchart of all transactions
B. list of names of all account titles
C. accounting procedures
D. journal
3. A chart of accounts is a/an
A. flowchart of all transactions
B. list of names of all account titles
C. accounting procedures
D. journal
4. This device is used as listing of account titles used in
recording
A. Accounts
B. Chart of Accounts
C. Account name
D. Trial Balance
4. This device is used as listing of account titles used in
recording
A. Accounts
B. Chart of Accounts
C. Account name
D. Trial Balance
5. The normal balance of an account is on the
A. debit side of the account
B. credit side of the account
C. side represented by increases in the
account balance
D. side represented by decreases in the
account balance
5. The normal balance of an account is on the
A. debit side of the account
B. credit side of the account
C. side represented by increases in the
account balance
D. side represented by decreases in the
account balance
6. The accrual concept focuses on determining
the actual cash received and cash paid in a
given accounting period.
A. True
B. False
6. The accrual concept focuses on determining
the actual cash received and cash paid in a
given accounting period.
A. True
B. False
7. A fiscal year is inclusive of 12-month period
that ends in the month of December
A. True
B. False
7. A fiscal year is inclusive of 12-month period
that ends in the month of December
A. True
B. False
8. The drawing/withdrawal account of a sole
proprietorship is debited when
A. the owner invest cash
B. the owner withdraws cash
C. an expense is paid
D. a liability is paid
8. The drawing/withdrawal account of a sole
proprietorship is debited when
A. the owner invest cash
B. the owner withdraws cash
C. an expense is paid
D. a liability is paid
9. Credits are used to record
A. decrease in liabilities
B. decreases in owner’s equity
C. increases in expense
D. increase in revenue
9. Credits are used to record
A. decrease in liabilities
B. decreases in owner’s equity
C. increases in expense
D. increases in revenue
10. They represent the claims of creditors and
owners over the asset of the enterprise
A. Asset
B. Liabilities
C. Equities
D. Capital
10. They represent the claims of creditors and
owners over the asset of the enterprise
A. Asset
B. Liabilities
C. Equities
D. Capital
11. It is an artificial being created by operation
of law, having the rights of succession and the
powers, attributes and properties expressly
authorized by law or incident to its existence.
A. Sole Proprietorship
B. Partnership
C. Corporation
D. Cooperative
11. It is an artificial being created by operation
of law, having the rights of succession and the
powers, attributes and properties expressly
authorized by law or incident to its existence.
A. Sole Proprietorship
B. Partnership
C. Corporation
D. Cooperative
12. Which of the following accounting process
comes first ahead of others?
A. Interpreting
B. Measuring
C. Communicating
D. Identifying
12. Which of the following accounting process
comes first ahead of others?
A. Interpreting
B. Measuring
C. Communicating
D. Identifying
13. It is a type of business that purchase
products from other businesses like
manufacturers and sells them to customers at
a higher retail price.
A. Services
B. Merchandising
C. Manufacturing
D. None of these
13. It is a type of business that purchase
products from other businesses like
manufacturers and sells them to customers at
a higher retail price.
A. Services
B. Merchandising
C. Manufacturing
D. None of these
14. It is a type of business that provides labor
and other services to customers.
A. Services
B. Merchandising
C. Manufacturing
D. None of these
14. It is a type of business that provides labor
and other services to customers.
A. Services
B. Merchandising
C. Manufacturing
D. None of these
15. This is a form of business organization in
which the ownership is evidenced by
shareholdings.
A. Corporation
B. Partnership
C. Cooperative
D. Sole Proprietorship
15. This is a form of business organization in
which the ownership is evidenced by
shareholdings.
A. Corporation
B. Partnership
C. Cooperative
D. Sole Proprietorship
16. Which of the following is the correct
sequence of the communicating aspect of
accounting?
A. Recording, classifying, and reporting
B. Classifying, recording, and reporting
C. Recording, reporting, and classifying
D. Reporting, classifying, and recording
16. Which of the following is the correct
sequence of the communicating aspect of
accounting?
A. Recording, classifying, and reporting
B. Classifying, recording, and reporting
C. Recording, reporting, and classifying
D. Reporting, classifying, and recording
17. Two or more persons bind themselves to
contribute money, property or industry to
common fund with the intention of dividing
profits among themselves.
A. Sole Proprietorship
B. Partnership
C. Corporation
D. Cooperative
17. Two or more persons bind themselves to
contribute money, property or industry to
common fund with the intention of dividing
profits among themselves.
A. Sole Proprietorship
B. Partnership
C. Corporation
D. Cooperative
18. The function of accounting is to provide
quantitative information
A. Quantitative Information
B. Qualitative Information
C. Quantitative and Qualitative Information
D. Mission and Vision
18. The function of accounting is to provide
quantitative information
A. Quantitative Information
B. Qualitative Information
C. Quantitative and Qualitative Information
D. Mission and Vision
19. These groups are interested in information
about the stability and profitability of their
employers
A. Investor
B. Employees
C. Customers
D. Lenders
19. These groups are interested in information
about the stability and profitability of their
employers
A. Investor
B. Employees
C. Customers
D. Lenders
20. This agency of the Philippine government
requires financial reports to ensure
compliance of national taxes.
A. SEC
B. BSP
C. LGU
D. BIR
20. This agency of the Philippine government
requires financial reports to ensure
compliance of national taxes.
A. SEC
B. BSP
C. LGU
D. BIR
21. Which of the following is NOT to be
followed in accounting for transactions.
A. The accounting equations must be in balance at all
times.
B. If measurement is not possible, the transaction is
not recorded in the books
C. A debit is always on the left and a credit is always on
the right
D. All journal entries must have exactly two accounts
involved
21. Which of the following is NOT to be
followed in accounting for transactions.
A. The accounting equations must be in balance at all
times.
B. If measurement is not possible, the transaction is
not recorded in the books
C. A debit is always on the left and a credit is always on
the right
D. All journal entries must have exactly two accounts
involved
22. It is the process of identifying, measuring,
and communicating economic information to
permit informed judgement and decision by
users of the information
A. Auditing
B. Accounting
C. Taxation
D. Management
22. It is the process of identifying, measuring,
and communicating economic information to
permit informed judgement and decision by
users of the information
A. Auditing
B. Accounting
C. Taxation
D. Management
23. Which of the following is not a correct
accounting equation?
A. Assets – Liabilities = Owner’s Equity
B. Assets = Liabilities + Owner’s Equity
C. Liabilities = Assets – Owner’s Equity
D. Liabilities – Owner’s Equity = Assets
23. Which of the following is not a correct
accounting equation?
A. Assets – Liabilities = Owner’s Equity
B. Assets = Liabilities + Owner’s Equity
C. Liabilities = Assets – Owner’s Equity
D. Liabilities – Owner’s Equity = Assets
24. This is referred as the side of an account
where increases in the balance of such
account are recorded
A. debit balance
B. credit balance
C. trial balance
D. normal balance
24. This is referred as the side of an account
where increases in the balance of such
account are recorded
A. debit balance
B. credit balance
C. trial balance
D. normal balance
25. All of the following affect the owner’s
equity account except
A. original investment
B. additional investment
C. withdrawal by the owner
D. payment of a liability
25. All of the following affect the owner’s
equity account except
A. original investment
B. additional investment
C. withdrawal by the owner
D. payment of a liability
26. Which of the following events would not
be considered an accounting transaction?
A. Payment of fees to a tax consultant
B. Purchase of print advertising space for a
new service
C. Tabulation of the result of a customer
satisfaction survey
D. Sales of a new product during the first
month of preparations
26. Which of the following events would not
be considered an accounting transaction?
A. Payment of fees to a tax consultant
B. Purchase of print advertising space for a
new service
C. Tabulation of the result of a customer
satisfaction survey
D. Sales of a new product during the first
month of preparations
27. There is no effect in the amount of
accounting equation if an asset is changed
into another form of asset.
A. True
B. False
27. There is no effect in the amount of
accounting equation if an asset is changed
into another form of asset.
A. True
B. False
28. The business acquired equipment and
issued a promissory note for the value. Which
of the following could best describe the effect
of the transaction
A. Debit Asset, Credit another Asset
B. Debit Asset, Credit Liabilities
C. Debit Expense, Credit Liabilities
D. Debit Expense, Credit Asset
28. The business acquired equipment and
issued a promissory note for the value. Which
of the following could best describe the effect
of the transaction
A. Debit Asset, Credit another Asset
B. Debit Asset, Credit Liabilities
C. Debit Expense, Credit Liabilities
D. Debit Expense, Credit Asset