1. Which entities are required to apply deferred tax accounting?
I. Public Entities
II. Nonpublic entities

a. I only
b. II only
c. Both I and II
d. Neither I nor II

2. It is the excess of taxable revenue over tax deductible expense and exemptions for the year as defined by the Bureau of Internal Revenue

a. Taxable income
b. Accounting income per book
c. Accounting income subject to tax
d. Comprehensive income

3. It is the net profit for a period before deducting tax expense

a. Accounting profit
b. Taxable profit
c. Gross profit
d. Net profit


4. This is  a difference between the tax basis of an asset or liability and its carrying amount that will result in taxable or deductible amounts in future years when the carrying amount of the asset or liability is recovered or settled.
I. Temporary difference
II. Permanent difference

a. I only
b. II only
c. Both I and II
d. Neither I nor II

5. Taxable temporary difference is the 
I. Temporary difference that will result in future taxable amount in determining taxable income of future periods when the carrying amount of the asset or liability is recovered or settled.

II. Temporary difference that will result in future deductible amount in determining taxable income of future periods when the carrying amount of the asset or liability is recovered or settled.

a. Both I and II
b. I only
c. II only
d. Neither I nor II


Answers:
1.c
2.a
3.a
4.a
​5.b

1. A voucher system is used in connection with transactions that involve only

a. the receipt of cash
b. the payment of cash
c. the purchase and sale of merchandise
d. revenue and expense

2. It is the business paper which a company makes for every cash payment

a. check
b. voucher
c. journal
d. official receipt

3. all vouchers are recorded in numerical sequence in the

a. check register
b. voucher register
c. general journal
d. cash disbursements journal

4. After voucher are recorded, they are filed in an unpaid vouchers file

a. numerically
b. in the order of payment
c. chronologically
d. no regular order

5. Which of the following statements is not correct? A file of unpaid vouchers

a. may be used to replace the accounts payable subsidiary ledger
b. is controlled by the vouchers payable account in the general ledger
c. shows during the year the total amount of all recorded outstanding liabilities for goods and services
d. shows only the total amount of outstanding liabilities for merchandise purchased


Answer:
1b.
2.b
3.b
4.b
5.d

1. In recording transactions

a. the word debit means increase and the word credit means decrease
b. assets, expenses, and drawing accounts are debited for increases
c. liabilities, revenue, and drawing accounts are debited for increases
d. assets, expenses, and capital accounts are debited for increases

2. Which is false concerning the rules of debit and credit

a. the left side of an account is always the debit side and the right side is always the credit side
b. increases in assets and expenses are debit entries, and increases in liabilities, equity and revenue are credit entries.
c. the normal balance of any account appears on the side for recording increases
d. the word debit means to increase and the word credit means to decrease

3. Debits

a. increases assets and decrease expenses , liabilities, revenue, and equity
b. increase assets and expenses and decrease liabilities, revenue and equity
c. increase assets and equity and decrease liabilities, expenses and revenue
d. decrease assets and expenses and increase liabilities , revenue, and equity

4. In accrual accounting system

a. all accounts have normal debit balances
b. a debit entry is recorded on the left-hand side of an account
c. liabilities, share capital, and dividends all have normal credit balances
d. revenues are recorded only when cash is received

5. Which of the following is not considered a book of original entry

a. general journal
b. general ledger
c. sales journal
d. purchases journal

6. A simple journal entry

a. consists of one debit and one credit
b. consists of two debits and one credit
c. consists of one debit and two credits
d. is a memorandum entry

7. A journal entry that contains more than two accounts is called

a. a posted journal entry
b. an adjusting journal entry
c. an erroneous journal entry
d. a compound journal entry

8. What function do accounting journals serve in the accounting process

a. recording
b. classifying
c. summarizing
d. reporting

9. Which of the following is correct

a. retained earnings account normally has a debit balance
b. retained earnings account normally has a credit balance
c. retained earnings account is closed at the end of the fiscal year
d. retained earnings account is a nominal account

10. Which of the following accounts would be increased by a debit

a. share capital
b. notes payable
c. accounts payable
d. dividends

Answer:
1.b
2.d
3.b
4.b
5.b
6.a
7.d
8.a
9.b
10.d


1.  Which is falls concerning use of special journal

a. only sales of merchandise on account are recorded in the sales journal. Cash sales are recorded in the cash receipts journal
b. Purchases on any items on account are recorded in the purchases journal. Acquisitions of any items for cash are recorded in the cash disbursements journal
c. transactions that cannot be appropriately recorded in a special journal are recorded in the general journal
d. only cash purchases are recorded in the cash disbursements journal

2. If a firm uses special journal, in which journal would the sale of merchandise for cash be recorded

a. sales journal
b. cash receipts journal
c. general journal
d. cash disbursements journal

3. A firm that uses special journals acquired merchandise by giving a note payable. In which journal would transaction be recorded

a. invoice register
b. sales journal
c. general journal
d. cash disbursements journal

4. When special journals are used, which of the following is true

a. a general journal is used
b. all sales receipts should be recorded in the cash receipts journal
c. all cash receipts should be recorded in the cash receipts journal
d. all purchase transactions should be recorded in the purchase journal

5. When special journals are used, adjusting and closing entries are generally recorded in the

a. cash disbursements journal
b. cash receipts journal
c. general journal
d. purchases journal

Answer:
a.d
2.b
3.c
4.c
5.c

1. Revenue from sale of goods shall be recognized when all of the following conditions have been satisfied, except

a. the entity has transferred to the buyer the significant risks and rewards of ownership of the goods.
b. the entity retains either continuing managerial involvement of effective control the goods sold.
c. the amount of revenue can be measured reliably
d. it is probable that economic benefits will flow to the entity

2. Which is incorrect concerning recognition of revenue?

a. revenue from rendering of services shall be recognized by reference to the stage of completion of the transaction at balance sheet date.
b. interest revenue shall be recognized on a time proportion basis that does not take into account the proportion basis that does not take into account the effective yield on the asset
c. royalty revenue shall be recognized on an accrual basis in accordance with the substance of the relevant agreement.
d. dividend revenue shall be recognized when the shareholder's right to receive payment is established.

3. Which definition is correct relating to elements of financial performance?

a. gains are increases in equity from ongoing major or central operations of an entity
b. expenses are outflows of assets or liabilities incurred from peripheral or incidental transactions of an entity
c. revenues are inflows or other enhancements of assets or settlements of liabilities from ongoing major or central operations.
d. losses are all decreases in equity other than from transactions with owners.

4. According to conceptual framework, the term "income"

a. includes change in market value of investments in marketable securities classified as available for sale
b. includes foreign currency translation adjustment
c. includes gain resulting from the sale of a productive asset to another party in an arm's length transaction
d. is the same as comprehensive income

5. The revenue principle states that revenue shall be recognized at a point when

a. an exchange transaction involving goods and services has occurred and the earnings process is essentially complete
b. an order for shipment of a definite amount of merchandise has been received
c. a contract between buyer and seller has been signed by both parties
d. the seller has shipped merchandise to a customer under the terms that the customer need not pay for the merchandise until it is sold

6.What is an example of an accounting principle

a. the fact that one type of accounting is designed to help managers identify, measure and control operating costs
b. the definition of when income is to be recognized
c. the fact that business transactions involve a completed exchange of economic transactions
d. the definition of assets minus liabilities equals shareholders' equity

7. 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 account receivable
d. when the title to the goods changes

8. Depending on the nature of the entity, revenue may be recognized based on different acceptable  criteria. Which of the following is not an acceptable basis for recognition of revenue?

a. passage of time
b. performance of service
c. completion of percentage of a projects
d. upon signing of contract

9. Generally, recognition criteria  are met and revenue is recognized

a. at the point of sale
b. when cause and effect are associated
c. at the point of cash collection
d. at the appropriate points throughout the operating cycle

10. Which of the following best describes the conditions that must be present for the recognition of revenue?

a. the revenue must be earned, measurable and collected
b. the revenue must be earned, measurable and collectible
c. the revenue must be earned and collectible
d. the revenue must be measurable and collectible
 

Answer:
1.b
2.b
3.c
4.c
5.a
6.b
7.d
8.d
9.a
10.b

1. Which of the following terms best describes assets recorded at the amount that represents the immediate purchase cost of an equivalent asset?

a. historical cost
b. realizable value
c. present value
d. current cost 

2. Which of the following terms best describes the discounted value of the future net cash inflows that an item is expected to generate in the course of business?

a. historical cost
b. fair value
c. present value
d. residual value

3. Which of the following measurement attributes is not currently use in practice?

a. present value
b. net realizable value
c. current replacement cost
d. inflation-adjusted cost

4. Which of the following financial attributes of assets is generally considered to be the most relevant?

a. present value
b. current exit value
c. current cost
d. historical cost

5. Asset measurements in conventional financial statements

a. are confined to historical cost
b. are confined to historical cost and current cost
c. reflect several financial attributes
d. do not reflect output value

6. Internally generated goodwill is

a. recognized as an asset because the inflow of future economic benefits is highly probable and the cost of the goodwill can be measured reliably
b. not recognized as an asset because the cost cannot be measured reliably although the inflow of future economic benefits is highly probable
c. recognized as expense
d. recognized as revenue

7. An entity needed a new warehouse and a contractor quoted a P5,000,000.00 price to construct it. The entity believed that it could build the warehouse for P4,300,000.00 and decided to use entity employees to build it. The final construction cost incurred by the entity was P4,80,000.00 but the asset was recorded at P5,000,000.00. What principle is violated?

a. cost principle
b. separate entity
c. matching principle
d. full disclosure

8. According to GAAP, at what amount should an entity measure its assets in the statement of financial position?

a. market value at all times
b. cash equivalent of asset given up or the asset received, whichever is more clearly evident
c. best estimate of an internal auditor
d. cash outlay only, even if part of the consideration given was something other than cash

9. What is another term for equity?

a. net assets
b. net loss
c. revenue
d. liability

10. Which of the following statements is not consistent with generally accepted accounting principles as they relate to asset valuation?

a. assets are originally recorded in the accounting records at cost to the entity
b. accountants assume that assets such as supplies, buildings and equipment will be used in the business operations rather than sold
c. subtracting total liabilities from total assets results in the current market value of an entity
d. accountants base asset valuation upon objective, verifiable evidence rather than on personal opinion

Answer:
1.d
2.c
3.d
4.a
5.c
6.b
7.a
8.b
9.a
10.c

"Questions are lifted from the following sources: PHILCPA, AICPA, ACP, PAS, PFRS, IAS, IFR  

1. Which of the following enhances the reliability of accounting information

a. accounting entity
b. going concern
c. verifiability
d. time period

2. The conceptual framework of accounting sets out certain qualitative characteristics of accounting information. Which of the following is not a qualitative characteristic

a. understandability
b. profit-oriented
c. reliability
d. comparability

3. Historical cost has been the valuation basis most commonly used in accounting because of its

a. timeliness
b. conservatism
c. reliability
d. accuracy

4. Which of the following qualitative characteristics of financial information requires that information should not be biased in favor of one group of users to the detriment of others

a. relevance
b. reliability
c. verifiability
d. neutrality

5. Conservatism is best described as  selecting an accounting alternative that

a. understates assets and net income
b. has the least favorable impact on owners' equity
c. overstates, as opposed to understates, liabilities
d. is least likely to mislead users of financial information

6. Accounting for inventory by applying the lower of cost or net realizable value is an example of the application of

a. conservatism
b. comparability
c. consistency
d. materiality

7. An item would be considered material and therefore would be disclosed in the financial statements if

a. the expected benefits of disclosure exceed the additional costs
b. the impact on earnings is greater than 10 percent
c. the standard definition of materiality is met
d. the omission or misstatement of the amount would make a difference to the users

8. Recording the purchase price of a pencil sharpener with an estimated useful  life of 10 years as an expense of the current period is justified by the

a. going concern assumption
b. materiality constraint
c. matching principle
d. comparability principle

9. Financial information exhibits consistency when

a. accounting procedures are adopted which smooth net income and make results consistent between years
b. gains and losses are shown separately on the income statement
c. accounting entities give similar events the same accounting treatment each period
d. expenditures are reported as expenses and netted against revenue in the period in which they are  paid

10. When information about two different entities engaged in the same industry has been prepared and presented in similar manner, the information exhibits the qualitative characteristic of

a. relevance
b. reliability
c. consistency
d. comparability


Answer:
1. c
2. b
3. c
4. d
5. b
6. a
7. d
8. b
9. c
10. d


"Questions are lifted from the following sources: PHILCPA, AICPA, ACP, PAS, PFRS, IAS, IFR  

1. The principles which constitute the ground rules for financial reporting are termed generally accepted accounting principles. To qualify as generally accepted, an accounting principle must

a. usually guide corporate managers in preparing financial statements, which will be understood by widely scattered shareholders
b. guide corporate managers in preparing financial statements, which will be used, for collective bargaining agreement with trade unions
c. guide an entrepreneur of the choice of an accounting entity like single proprietorship, partnership or corporation
d. receive substantial authoritative support

2. Under generally accepted accounting principles

a. income and expenses, assets and liabilities are measured based on the occurrence of changes in the economic resources and obligations
b. assets and liabilities are measured on the basis of their liquidation value
c. income and expenses are recognized on the basis of cash receipts and payments, including depreciation of property, plant and equipment
d. financial position and financial performance are measured on the basis of cash received and cash paid

3. There are four phases of accounting. The phase whereby the liquidity, solvency and profitability of an entity are significantly portrayed is known as

a. summarizing
b. classifying
c. recording
d. interpreting

4. Four types of money prices are used in measuring resources in financial accounting. The type which uses such concepts as present value, discounted cash flow and value in use is known as

a. price in a current purchase exchange
b. price in past purchase exchange
c. price based on future exchange
d. price in a current sale exchange

5. External events include all of the following except

a. sale of merchandise
b. borrowing of money from the bank
c. donation received from shareholder
d. casualty loss caused by flood, earthquake or other natural disaster



Answer:
1. d
2. a
3. d
4. c
5. d

"Questions are lifted from the following sources: PHILCPA, AICPA, PAS, PFRS, IAS, IFR

1. The objectives of financial reporting for entities are based on

a. the need for conservatism
b. reporting on management's stewardship
c. generally accepted accounting principles
d. the needs of the users of the information

2. The information provided by financial reporting pertains to

a. individual business entities, rather than to industries or an economy as a whole or to members of society as consumers
b. individual business entities and an economy as a whole or to members of society as consumers or to members of society as consumers
c. individual business entities and an economy as a whole, rather than to industries or to members of society as consumers
d. individual business entities, industries and an economy as a whole, rather than to members of society as consumers

3. During a period when an entity is under the direction of a particular management, financial reporting will directly provide information about

a. both entity performance and management performance
b. management performance but not entity performance
c. entity performance but not management performance
d. neither entity performance nor management performance

4. Which of the following items is not listed as a major objective of financial reporting

a. financial reporting shall provide information about entity resources, claims to those resources and changes in them
b. financial reporting shall provide information useful in evaluating management's stewardship
c. financial reporting shall provide information useful in investment, credit and similar decisions
d. financial reporting shall provide information useful in assessing cash flow projects

5. Which of the following statements is not normally an objective of financial reporting

a. to provide information about an entity's assets and claims against those assets
b. to provide information that is useful in assessing an entity's sources and uses of cash
c. to provide information that is useful in lending and investing decisions
d. to provide information about an entity's liquidation value


Answer:
1. d
2. a
3. c
4. b
5.d

"Questions are lifted from the following sources: PHILCPA, AICPA, ACP, PAS, PFRS, IAS, IFR

1. The theory of accounting which best describes the accounting equation expressed assets = liabilities + equity is the

a. entity theory
b. fund theory
c. proprietary theory
d. residual equity theory

2. What theory of ownership equity is enumerated by the following equation: assets minus liabilities minus preference share equity equals ordinary share equity?

a. fund
b. entity
c. proprietary
d. residual equity

3. Classifying preference dividends as expense is an application of what concept?

a. entity
b. proprietary
c. residual equity
d. fund

4. The primary accounting objective is fair presentation of the financial performance of the entity

a. entity
b. proprietary
c. residual equity
d. fund

5. Fiduciary accounting is an application of

a. entity theory
b. proprietary theory
c. residual equity theory
d. fund theory

6. The overall objective of financial reporting is to provide information

a. that is useful for decision making
b. about an entity's assets, liabilities  and owners' equity
c. about an entity's financial performance during a period
d. that allows owners to assess management's performance

7. Which of the following statements concerning the objectives of financial reporting is correct

a. the objectives are intended to be specific in nature
b. the objectives are directed primarily toward the needs of internal users of accounting information
c. the objectives are the end result of the conceptual framework project
d. the objectives encompass not only financial statement disclosures but other information as well

8. Information about financial structure is useful in predicting

a. future borrowing needs and how future profits and cash flows will be distributed among those with an interest in the entity
b. the ability of the entity to meet its financial commitments as they fall due over a longer term
c. the ability of the entity to use its available cash for unexpected requirements and investment opportunities
d. the capacity of the entity to generate cash flows from its operations

9. Which of the following statements best describes the term financial position

a. the net income and expenses of an entity
b. the net of financial assets less liabilities of an entity
c. the potential to contribute to the flow of cash and cash equivalents to the entity
d. the assets, liabilities and equity of an entity

10. Which of the following best describes financial performance of an entity

a. the revenue, expenses and net income or loss for a period of an entity
b. the assets, liabilities and equity of an entity
c. the total assets minus total liabilities
d. the total cash inflows minus cash outflows


Answer:
1. a
2. d
3. c
4. a
5. d
6. a
7. d
8. a
9. d
10. a


"Questions are lifted from the following sources: PHILCPA, AICPA, ACP, PAS, PFRS, IAS, IFR

1. Which of the following is an internal user of an entity's financial information?

a. board of directors
b. shareholder in the entity
c. holder of the entity's bond
d. creditor with long-term contracts with the entity

2. These users require information on risk and return on investment and hence an entity's ability to pay dividends.

a. investors
b. employees
c. lenders
d. customers

3. These users are interested in information about the profitability and stability of an entity in order to assess the ability of the entity to provide remuneration, retirement, benefits and employment opportunities

a. customers
b. the public
c. governments and their agencies
d. employees

4. These users are interested in information that enables them to determine whether amounts owing to them will be paid when due.

a. suppliers and trade creditors
b. lenders
c. banks
d. finance entities

5. These users are interested in information that enables them to assess whether an entity is able to repay loans and the related interest when the loans fall due.

a. lenders
b. borrowers
c. trade creditors
d. owners

6. These users are interested in information about the continuance of an entity, especially when they have a long-term involvement with or are dependent on the entity

a. customers
b. employees
c. trade unions
d. suppliers

7. These users are interested in information in order to regulate the activities of an entity, determine taxation policies and provide a basis for national statistics

a. governments and their agencies
b. major organization of users
c. bureau of internal revenue
d. department of finance

8. These users need information on trends and recent developments where an entity makes a substantial contribution to the local economy providing employment and using local suppliers

a. the public
b. government and their agencies
c. finance entities
d. private entities

9. The providers of risk capital and their advisers

I. Are concerned with the risk inherent in and return provided by their investments
II. Need information to help them determine whether they should buy or sell.

a. I only
b. II only
c. both I and II
d. neither I nor II

10. Which statement is correct regarding information needs

I. All information needs of users cannot be met by financial statements
II. As investors are providers of risk capital to the entity, the provision of financial statements that meet their needs will also meet most of the needs of other users that financial statements can satisfy.

a. I only
b. II only
c. both I and II
d. neither I nor II


Answer:
1. a
2. a
3. d
4. a
5. a
6. a
7. a
8. a
9. c
10. c



"Questions are lifted from the following sources: PHILCPA, AICPA, ACP, PAS, PFRS, IAS, IFRS

1. The concept of accounting entity is applicable

a. only to the legal aspects of business organizations
b. only to the economic aspects of business organizations
c. only to business organizations
d. whenever accounting is involved

2. When a parent and subsidiary relationship exists, consolidated financial statements are prepared in recognition of

a. legal entity
b. economic entity
c. stable monetary unit
d. time period

3. The valuation of a promise to receive cash in the future at present value is valid because of the accounting concept of

a. entity
b. time period
c. going concern
d. monetary unit

4. Continuation of an accounting entity in the absence of evidence to the contrary is the basic concept of

a. accounting entity
b. time period
c. going concern
d. accrual

5. This accounting concept justifies the usage of accruals and deferrals

a. going concern
b. materiality
c. consistency
d. stable monetary unit

6. One of the basic features of financial accounting is the

a. direct measurement of economic resources and obligations and changes in them in terms of money and sociological and psychological impact
b. direct measurement of economic resources and obligations and changes in them in terms of money
c. direct measurement of economic resources and obligations and changes in them in terms of money and sociological impact
d. direct measurement of economic resources and obligations and changes in them in terms of money and psychological impact

7. During the lifetime of  an entity accountants produce financial statements at arbitrary points in time in accordance with which basic accounting concept

a. accrual
b. periodicity
c. unit of measure
d. continuity

8. Historical cost is a measurement base commonly used in financial accounting. Which of the following measurement bases is also currently used in financial accounting

                          Current selling price            Discounted cash flow           Replacement cost
a.                                     Yes                                               No                                                          Yes
b.                                     Yes                                             Yes                                                          Yes
c.                                      Yes                                              No                                                            No
d.                                      No                                             Yes                                                           Yes

9. When discussing asset valuation, the following valuation bases are sometimes mentioned: replacement cost, exit value and discounted cash flow. Which of these bases should be considered a current value measure

a. replacement cost and exit value only
b. replacement cost and discounted cash flow only
c. exit value and discounted cash flow only
d. replacement cost, exit value and discounted cash flow

10. The primary measurement basis currently used to value assets in external financial statements of an entity is

a. the current market price if the assets currently held by an entity were sold on the open market
b. the current market price if the assets held by an entity were purchased on the open market
c. the present value of the cash flows the assets are expected to generate over their remaining useful lives
d. the market price of the assets held by an entity at the date the assets were acquired


Answer:
1. d
2. b
3. c
4. c
5. a
6. b
7. b
8. b
9. d
10. d

" Questions are lifted from the following sources: PHILCPA, AICPA, ACP, PAS, PFRS, IAS, IFRS

1. The conceptual framework specifically mentions two underlying assumptions, namely

a. accrual and going concern
b. accrual and accounting entity
c. going concern and time period
d. time period and monetary unit

2. Which of the following terms best describes financial statements whose basis of accounting recognizes transactions and other events when they occur?

a. accrual basis of accounting
b. going concern basis of accounting
c. cash basis of accounting
d. invoice basis of accounting

3. The accrual basis of accounting is based primarily on

a. conservatism and revenue realization
b. conservatism and matching
c. consistency and matching
d. revenue realization and matching

4. Which of the following statements best describes the term going concern?

a. when current liabilities of an entity exceed current assets
b. the ability of the entity to continue in operation for the foreseeable future
c. the potential to contribute to the flow of cash and cash equivalents to the entity
d. the expenses of an entity exceed its income

5. Which of the following is not an implication of the going concern assumption?

a. the historical cost principle is credible
b. depreciation and amortization policies are justifiable and appropriate
c. the current and noncurrent classification of assets and liabilities is justifiable and significant
d. amortizing research and development costs over several periods is justifiable and appropriate

6.The relatively stable economic, political and social environment supports

a. conservatism
b. materiality
c. timeliness
d. going concern

7. The financial statements that are prepared for the entity are separate and distinct from the owners according to the

a. going concern principle
b. matching principle
c. economic entity assumption
d. accounting period assumption

8. Which underlying concept serves as the basis for preparing financial statements at regular intervals?

a. accounting entity
b. going concern
c. accounting period
d. stable monetary unit

9. Which of the following is not an important characteristic of the financial statements that accountants currently prepare?

a. the information in financial statements is expressed in units of money adjusted for changing purchasing power
b. financial statements articulate with one another because measuring financial position is related to measuring changes in financial position
c. the information in financial statements is summarized and classified to help meet users' needs
d. financial statements can be justified only if the benefits they provide exceed the costs

10. Which of the following statements is incorrect?

a. the accrual method, which builds directly on the revenue and matching principles, ignores the timing of cash receipts or payments in determining when to recognize revenue or expenses
b. in accordance with the unit of measure assumption, accountants normally revise the amounts to reflect the changing purchasing power of money due to inflation or deflation
c. in accordance with the going concern assumption, the life of an entity is presumed to be indefinite
d. accountants prepare financial statements at arbitrary points in time during and entity's lifetime in accordance with the accounting concept of accounting period


Answer:
1. a
2. a
3. d
4. b
5. d
6. d
7. c
8. c
9. a
10. b


"Questions are lifted from the following sources: PHICPA, AICPA, AA,ACP,PAS, PFRS, IAS, IFRS

1. Generally accepted accounting principles

a. are accounting adaptations based on the laws of economic science
b. derive their credibility and authority from legal rulings and court precedents
c. derive their credibility and authority from the national government through the SEC
d. derive their credibility and authority from general recognition and acceptance by the accountancy profession

2. Which of the following statements best describes generally accepted accounting principles?

a. they have been formulated in the public sector
b. they have been developed on the basis of such factors as usage and practical necessity
c. they are the same as laws within our legal system
d. they do not apply to small entities

3. Proper application of accounting principles is most dependent upon the

a. existence of specific guidelines
b. oversight of regulatory bodies
c. external audit function
d. professional judgment of the accountant

4. The process of establishing financial accounting standards

a. is a democratic process in that a majority of practicing accountants must agree with a standard before it becomes implemented
b. is a legislative process based on rules promulgated by government agencies
c. is based solely on economic analysis of the effects each standard will have if it is implemented
d. is a social process which incorporates political actions of various interested user groups as well as professional research and logic

5. Once an accounting standard has been established

a. the standard is continually reviewed to see if modification is necessary
b. the standard is not reviewed unless the SEC makes a complaint
c. the task of reviewing the standard to see if modification is necessary is given to the PICPA
D. the principle of consistency requires that no revisions ever be made to the standard

6. As independent or external auditors, CPAs are primarily responsible form

a. preparing financial statements in conformity with GAAP
b. certifying the accuracy of financial statements
c. expressing an opinion as to the fairness of financial statements
d. filing financial statements with the SEC

7. The singularly unique function performed by Certified Public Accountant is

a. tax preparation
b. management advisory services
c. the attest function
d. the preparation of financial statements

8. The purpose of the International Financial Reporting Standards is to

a. Issue enforceable standards which regulate the financial accounting and reporting of multinational entities
b. develop a uniform currency in which the financial transactions of entities  throughout the world would be measured
c. promote uniform accounting standards among countries of the world
d. arbitrate accounting disputes between auditors and international entities

9. The International Accounting Standards Board was formed to

a. enforce IFRS in foreign countries
b. develop worldwide accounting standards
c. establish accounting standards for multinational entities
d. develop accounting standards for countries that do not have their own standard-setting bodies

10. It is a global phenomenon intended to bring about transparency and a higher degree of comparability in financial reporting, both of which will benefit the investors and are essential to achieve the goal of one uniform and globally accepted financial reporting standards

a. IFRS
b. Borderless accounting
c. world trade
d. information technology


Answers:
1. d
2. b
3. d
4. d
5. a
6. c
7. c
8. c
9. b
10. a

1. Accounting is a service activity and its function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision. This accounting definition is given by:

a. Accounting Standard Council   b. AICPA Committee on Accounting Terminology  c. American Accounting Association d. Board of Accountancy

2. The basic purpose of accounting is

a. To provide the information that the managers of an economic entity need to control its operations
b. To provide information that the creditors of an economic entity can use in deciding whether to make additional loans to the entity
c. To measure the periodic income of the economic entity.
d. To provide quantitative financial information about an entity that is useful in making rational economic decision

3. Which accounting process is the recognition or nonrecognition of business activities as accountable events.
a. Identifying
b. Measuring
c. Recording
d. Communicating

4. These are the events that affect the entity and in which other entities participate
a. Internal events
b. External events
c. Current events
d. Past events

5. The communicating process of accounting includes all of the following except

a. Recording

b. Classifying

c. Summarizing

d. Interpreting

6. What is the law regulating the practice of accountancy in the Philippines ?

a. R.A. No. 9298

b. R.A. No. 9198

c. R.A. No. 9928

d. R.A. No. 9892

7. 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
b. Philippine Institute of Certified Public Accountants
c. Securities and Exchange Commission
d. Financial Reporting Standards Council

8. Many accountants are employed in entities in various capacity as accounting staff, chief accountant or controller. These accountants are said to be engaged in

a. Public accounting
b. Private accounting
c. Government accounting
d. Financial accounting

9. It is the accounting standard setting body created by PRC  upon recommendation of the Board of Accountancy to assist the Board of Accountancy in carrying out its powers and functions under R.A. No. 9298

a. Accounting Standards Council
b. Auditing and Assurance Standards Council
c. Philippine Accounting Standards Board
d. Financial Reporting Standards Council

10. Which is not required to be represented in the FRSC ?

a. Bangko Sentral ng Pilipinas
b. Bureau of Internal Revenue
c. Commission on Audit
d. Department of Budget and Management


Answers:
1. a
2. d
3. a
4. b
5. d
6. a
7. a
8. b
9. d
10. d