SAN PEDRO COLLEGE OF BUSINESS ADMINISTRATION

Brgy. Nueva, San Pedro, Laguna

Name Accounting 1
Section: Quiz - Acctg Princip
Date/Time Randolf B. de Guzm

I. Multiple Choice
1 A primary user of accounting information with a direct financial interest in the business is a?
a. Lenders b. taxing authority c. regulatory agency d. labor union
2 Which of the following transactions does not involve an exchange of value?
a. payment of debt c. loss from thef
b. purchase of a building on credit d. borrowing money
3 The separate entity concept requires that
a. tax records be kept separate from financial reporting records
b. the personal assets and liabilities of an owner not be shown on the business's financial statem
c. transactions that involve an exchange of value be kept separate from those which do not.
d. a separate set of books be established for each segment of the business
4 Which of the following is not a satisfactory statements of the balance sheet equation?
a. Assets = Liabilities - Owner's Equity c. Assets = Liabilities + Owner's Equity
b. Assets - Liabilities = Owner's Equity d. Assets - Owner's Equity = Liabilities
5 The best definition of assets is
a. the collections of resources belonging to the company and the sources of, or claims on, these
resources
b. the cash owned by the company
c. the resources belonging to a company having future benefit to the company
d. the owner's investment in the business
6 Net assets equal
a. assets minus expenses c. assets minus owner's equity
b. assets less owner's equity d. assets minus liabilities
7 Accounting is
I. 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.
II. The art of recording, classifying and summarizing in a significant manner and in terms of
money, transactions and events which are in part at least of a financial character and
interpreting the results thereof.
III. the process of identifying, measuring and communicating economic information to permit

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 informed judgment and decision by users of the information.
a. I only c. I and III
b. I and II d. I, II and III
8 Under this assumption, the effects of transactions and other events are recognized when they
occur and not as cash or its equivalent is received or paid, and they are recorded in the
accounting records and reported in the financial statements of the period to which they relate.
a. Accrual basis c. Monetary unit
b. Going concern d. Time period

9 Information has the quality of relevance

I. When it influence the economic decision of users by helping them evaluate past, present
and future events or confirming or correcting their past evaluations.
II. When it is free from material error and bias and can be depended upon by users to represent
faithfully that which it purports to represent or could reasonably be expected to represent.
a. I only c. Both I and II
b. II only d. Neither I nor II
10 The information contained in the financial statements is neutral when the information
a. Is free from bias and error
b. Is complete within the bounds of materiality and cost
c. Reflects the economic substance of the transactions rather than their mere legal form.
d. Represents faithfully the transactions and other events that it purports to represent.
11 The elements directly related to the measurement of financial position are
a. Assets, liabilities and equity
b. Assets and liabilities
c. Income and expenses
d. Assets, liabilities, equity, income and expenses
12 The elements directly related to the measurement of performance are
a. Income and expenses c. Assets and liabilities
b. Assets, liabilities and equity d. Income, expenses and equity
13 An asset is
a. A resource controlled by the enterprise as a result of past events and from which future
economic benefits are expected to flow to the enterprise.
b. A present obligation of the enterprise arising from past events, the settlement of which is
expected to result in an outflow from the enterprise of resources embodying economic
benefits.

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 c. The residual interest in the assets of the enterprise afer deducting all its liabilities.
d. The excess of revenue over expenses.
14 Revenue is
I. Gross inflow of economic benefits during the period arising in the course of ordinary
activities of an enterprise when such inflow results in an increase in equity, other than
contribution from owners.
II. Gross outflow of economic benefits during the period in the course of ordinary activities
when such outflow results in a decrease in equity, other than distribution to owners.
a. I only c. Both I and II
b. II only d. Neither I nor II
15 Expenses are recognized in the income statement on the basis of a direct association between
the cost incurred and the earning of specific items of income. This process is commonly referred
to as
a. Matching of costs with revenues c. Revenue recognition
b. Matching of revenues with costs d. Cost allocation
16 These users require financial information in order to regulate the activities of an enterprise,
determine taxation policies and as a basis for national income and similar statistics.
a. Lenders c. Investors
b. Public d. Governments and their agencies

17 Which accunting process is the assigning of peso amounts to the accountable economic
transactions and events?
a. Identifying c. Summarizing
b. Communicating d. Measuring
18 They encompass the conventions, rules, and procedures necessary to define what
is accepted accounting practice.
a. Generally accepted accounting principles
b. Accounting assumptions
c. Qualitative characteristics
d. Recognition principles
19 These are also known as postulates
a. Accounting concepts c. Accounting principles
b. Acounting standards d. Accounting asumptions
20 R. Nevalga is the sole owner and manager of Clean Laundry Service. Nevalga
purchased a car for personal use. Nevalga uses a van in the business. Which

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 of the following is violated if Nevalga recorded the cost as an asset of the business?
a. Accounting entity c. Full disclosure
b. Going concern assumption d. Time period.

II. Identification
1 An art of recording, classiying and summarizing in a significant manner in terms of m
transactions and events which are part of at least a financial character and interpreti
the results thereof.
2 Also known as continuity assumptions.
3 Accounting concept wherein expenses are recognized when it is incurred rather than
and income is recognized when earned rather than received.
4 Formal component of accounting.
5 The capacity of the information to influence economic decisions.
6 It is an inherent characteristics of faithful representation. The information must be
accounted for in accordance with their substance not merely in their legal form.
7 To be neutral is to be fair.
8 The rule if practicality which dictates that strict compliance with GAAP is not require
items are not significant enough to affect evaluation, decision and fairness of financ
statements.
9 Information can be used as an input to processes employed to predict future outcom
10 It is the residual interest in the assets of enterprise afer deducting all its liabilities.

III. Enumeration
1 Enumerate the 4 factors of enhancing qualitative characteristics of financial information.
2 What are the two ingredients of Relevance
3 What are the three ingredients of Faithful Representation

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ION

unting 1
- Acctg Principles
olf B. de Guzman, CPA

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