FAR Flashcards
(286 cards)
1
Q
______ helps decision makers make informed choices regarding the allocation of scarce resources under control.
A
Information
2
Q
Language of Business
A
Accounting
3
Q
a system that measures business activities, processes that information into reports and communicates the result to decision makers.
A
Accounting
4
Q
Accounting is a _____ activity. Its function is to provide quantitative information primarily financial in nature, about economic entities that is intended to be useful i making economic decisions.
A
service
5
Q
Accounting id an _____ ___ that measures, process, and communicates financial information about an economic entity.
A
information system
6
Q
Accounting is the ___ of recording, classifying, and summarizing in a significant manners and in terms of money and transactions, and events etc.
A
art
7
Q
Inventor of double entry bookkeeping.
A
Amatino Manucci
8
Q
He The Model Chart of Accounts
A
Eugen Schmalenbach
9
Q
Forms of Business Organizations: (3)
A
Single Proprietorship
Partnership
Corporation
10
Q
Forms of Business Organizations:
This business organization has a single owner. Often small service-type. Solely responsible for all debts of the business
A
Single Proprietorship
11
Q
The owner of a single proprietorship is called:
A
Proprietor
12
Q
Forms of Business Organizations:
It is owned and operated by two or more persons who bind themselves to contribute money, property, to a common fund with the intent of dividing the profits
A
Partnership
13
Q
Forms of Business Organizations:
In here both are liable for any debt incurred by the business.
A
Partnership
14
Q
Forms of Business Organizations:
It is an artificial being created by operation of law, having the rights of succession and power, attributes and properties expressly…
A
Corporation
15
Q
The owner of a corporation is called:
A
stockholders
16
Q
Forms of Business Organizations:
The owners are not personally liable for the company’s debts
A
Corporation
17
Q
Provides goods and services at low costs relative to their selling prices
A
Efficient
18
Q
Successful in providing goods and services demanded by the customers.
A
Effective
19
Q
It is the use of resources to design, produce, distribute, and market goods and services.
A
Operating Activities
20
Q
It is the method an organization uses to obtain financial r sources from financial markets and how it manages theses resources.
A
Financing Activities
21
Q
Primary sources of financing:
A
owner and creditor; banks and suppliers
22
Q
Managers use capital from financing activities to acquire other resources used in the transformation process- transform resources from one form to different form which is more valuable.
A
Investing Activities
23
Q
It serves as medium of exchange and a measure of value
A
Money
24
Q
Economic activities of business.
A
Business transactions
25
Before the effects of transactions can be recorded they must be ______.
measured
26
______ reduces the effects of numerous transactions into useful groups or categories.
Classification
27
_______ of financial data is achieved through the preparation of financial statements.
Summarization
28
the ______ is the book where all transactions are recorded.
Memorandum
29
Also known as the merchants private book.
Journal
30
Alphabetical listing of all the business accounts along with the running balance of each particular account
Ledger
31
In every debet dare there exist a debet habere.
Double entry
32
Transactions of different entities should not be accounted for together. Each entity should be evaluated separately.
Entity Concept
33
An entity's life can be meaningfully subdivided into equal time periods for reporting purposes.
Periodicity Concept
34
The usual accounting period
1 year
35
The Philippine peso id a reasonable unit of measure and that's its purchasing power is relatively stable. It allows accountants to add and subtract peso amounts ad though each peso has same purchasing power as any other peso at any time.
Stable Monetary Unit Concept
36
The assumption that the entity is a ____ and will continue operation for the foreseeable future. Hence it is assumed that the entity has neither the intention nor the need to enter liquidation or to cease trading.
Going Concern
37
To the extent that results in information is meaningful and useful to those who need to know something about a certain organization.
Relevance
38
To the extent that the resulting information is not influenced by personal bias or judgement of those who furnish it. Connoted reliability and trustworthiness.
Objectivity
39
To the extent that it can be implemented without undue complexity or cost.
Feasibility
40
Accounting records and statements are based on the most reliable data available do that they will be as accurate and as useful as possible.
Objectivity Principle
41
This principle states that acquired assets should be recorded at their actual cost and not what management think they are worth as at reporting date.
Historical Cost
42
Revenue is to be recognized when goods are delivered or services are rendered or performed.
Revenue Recognition Principle
43
Expense should be recognized when goods and services used up to produce revenue not when the entity pays for those goods and services.
Expense Recognition Principle
44
This principle requires that all relevant information that would affect the users understand and assessment of the accounting entity be disclosed in the financial statements.
Adequate Disclosure
45
In this principle; financial reporting is only concerned with information that is significant enough to affect evaluations and decisions.
Materiality
46
In this principle the entity should use the same accounting method from period to period to achieve comparability over time within a single enterprise.
Consistency Principle
47
Accrued income is an asset account.
True
48
items that have been initially recorded as liabilities but are expected to become income over time through the operations of the business.
Unearned Income
49
A financial statement showing the revenue and expense for a fiscal period.
Income Statement
50
Accounts receivable represents receivables supported by a oral or informal promise to pay.
True
51
There are income items that have been earned but bot have been recorded and paid by the customer.
Accrued Income
52
Accrued expense is an expense account.
True
53
Contains the results of the company's operations for a specific period of time.
Statement of Comprehensive Income
54
Prepaid expense is an expense account.
False
55
This statement provides an analysis of inflows and outflows of cash from or to operating, investing, and financing activities.
Statement if Cash Flows
56
Temporary accounts begin each new fiscal period with a ___ balance.
zero
57
items of expenses that have been incurred but not have been recorded and paid.
Accrued Expense
58
This statement includes the amounts of the company's total ass t, liabilities, and owner's equity which in totality provided financial position of the company.
Balance Sheet or Statement of Financial Position
59
Is a method of allocating the cost of an asset to an expense over the accounting periods that make up the assets useful life.
Depreciation
60
Unearned revenue is an _____ account.
liability
61
An account with a normal credit balance is increased by debiting it.
False
62
Freight out is an expense.
True
63
This is the process of transferring amounts from journals to ledgers.
Posting
64
are items that have been initially recorded as assets but are expected to become expenses over time or through operations of the business.
Prepaid Expense
65
Normal balance of expense account.
Debit
66
Normal balance of income or revenue.
Credit
67
Normal balance of liability.
Credit
68
Normal balance of assets.
Debit
69
A credit balance in an asset account is considered as an abnormal balance.
True
70
The book of original entries.
Journal
71
Tis is used to document disbursement process.
Check Vouchers
72
Accrued income is an asset account.
True
73
It is concerned with right and wrong and how conduct should be judged to br good or bad
Ethics
74
A situation in which there is no obvious right or wrong decision rather right or right answer.
Ethical Dilemma
75
Refers to going to the authorities or the media with proof that a company is engaged in wrong doing.
Whistle Blowing
76
It arise when a person must play two conflicting roles in a situation.
Conflict of interest
77
It is the independent examination that ensures fairness and reliability of the reports that management submits to users outside the business entity.
External Audit
78
Is a mechanical task involving collection of basic financial data.
Bookkeeping
79
It is the process that involves recording of cost data in books of accounts. It makes use of those data once they have been extracted from the cost books in providing information for managerial planning and control.
Cost Accounting
80
It is focused on recording business transactions and the periodic preparation of reports on financial position and results of operations.
Financial Accounting
81
It is responsible for setting financial objects, making plans based on those objectives, obtaining the finance needed to achieve plans, and generally safeguarding all the financial resources of the entity.
Financial Management
82
Incorporates cost accounting data and adapts them for specific decisions which management may be called upon to make.
Management Accounting
83
It is concerned with the identification of the sources and uses of resources consistent with the provisions of city, municipal, provincial or national laws.
Government Accounting
84
Personal financial activities of the owners of a business are not recorded in the books of the business.
Entity Concept
85
Accounting is a process of recording, ______, analyzing,_______, and reporting of financial information to the stakeholders of the business.
Summarizing, Interpreting
86
Transactions are recorded based on reliable and verifiable information.
Objectivity Principle
87
The personal liability of a partner is limited to the amount of his investment.
False
88
A separate legal entity organized in accordance with codes and laws in which ownership is divided into shares of stocks is referred to as corporation.
True
89
The _____ assumes that the business has na indefinite economic life
Going Concern
90
Limited Liability
Corporation
91
GAAP
Generally Accepted Accounting Principle
92
End users who use hardware and software to solve information-related and decision-making problems.
People
93
These are the manuals and guidelines that instruct end users on how to use the software and hardware.
Procedures
94
Another name for programs-instructions that tell the computer how to process data.
Software
95
Two kinds of software:
System Software
Application Software
96
Types of Applications Software
Basic and Advanced Applications
97
Background software that helps a compute manage its internal resources. Example is operating systems like Windows and Linux
System Software
98
A software that performs useful work on general-purpose problems.
Application Software
99
Electronic circuity e. g CPU and memory.
System Unit
100
It translate data and programs that human can understand into a form the computer can process. e. g keyboard, mouse, scanner, digital camera, microphone
Input devices
101
output processed information from the CPU. e. g monitor and printer
Output devices
102
These send and receive data and programs from one computer to another
Communication devices
103
Raw material for data processing. It consist of numbers, letters, and symbols and related to facts, events, and transactions.
Data
104
Collection of characters organized as a single unit.
File
105
It specifies the policies and procedures to be followed in accumulating information within the accounting information system.
Accounting Manual
106
It generates reliable financial information needed by the decision makers in a timely manner
Accounting Information System
107
Present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits.
Asset
108
Increase in assets; decrease in liabilities
Income
109
Decreases in asset; increase in liabilities
Expenses
110
A present obligation of the entity to transfer an economic resource as a result of past events.
Liability
111
Residual interest in the assets of the entity after deducting all its liabilities.
Equity
112
Decrease in asset
Credit
113
Increase in Income
Credit
114
Decrease in income
Debit
115
Decrease in Liabilities and OE
Debit
116
Increase in Asset = Increase in Liabilities
Source of Asset
117
Increase in asset = Increase in OE
Source of Asset
118
Increase in one asset = Decrease in another asset
Exchange of Asset
119
Decrease in asset = Decrease in Liabilities
Use of Asset
120
Decrease in asset = decrease in OE
Use of Asset
121
Increase in liabilities = Decrease in OE
Exchange of Asset
122
Increase in OE = Decrease in Liabilities
Exchange of Asset
123
Increase in one OE = Decrease i another OE
Exchange of Asset
124
An economic occurrence that causes changed in enterprises asset, liability, and OE.
Accounting event
125
Normal Balance of Liability
Credit
126
Occurrence of an event or a condition that affects financial position and can be reliably recorded.
Business Transactions
127
Reference book of accounting system.
Ledger
128
Permanent accounts:
Asset, Liabilities, OE
129
Temporary accounts:
Income, Expenses
130
A control device that helps minimize accounting errors.
Trial balance
131
List of all accounts with their respective debit or credit balances.
Trial balance
132
4 Phases of Accounting:
Recording
Classifying
Summarizing
Interpreting
133
Device used to record increases or decreases in the accounting elements .
Account
134
Lifeline of Business
Credit
135
Life of the business is limited to the life of the owner
Single Proprietorship
136
Profits are divided among the partners
Partnership
137
A business organized as a separate legal entity.
Corporation
138
The ___ is the government agency primarily tasked to regulate private corporation.
SEC
139
The proof of ownership is evidenced by a stock certificate
Corporation
140
Owners are not personally liable for the debts of business.
Corporation
141
Prepared first financial statement
Income Statement
142
Provides information on the movement in the components of equity during the period.
Statement of Changes in Equity
143
Structured representation of an entity s financial position and results of its operations.
Financial Statement
144
Output of accounting
financial statements
145
Interest credited to bank account.
Add To BOOK Balance
146
Interest charged to bank account.
Deducted to Book balance
147
Under the accrual basis of accounting, revenues are reported in the accounting period when which of the following occurs?
Services Or Goods Have Been Delivered
148
Assets are usually reported on the balance sheet at which amount?
Cost
149
Unearned Revenues is what type of account?
Liability
150
The listing of all of the accounts available for use in a company's accounting system is known as
Chart of Accounts
151
Which term is associated with "left" or "left side"?
Debit
152
Every transaction will affect how many accounts?
Only One
Only Two
Two Or More
Two Or More
153
The chart of accounts is a listing of the accounts presently having balances in the general ledger.
True
False
False
154
A very large corporation's financial statements have the dollar amounts rounded to the nearest $1,000. Which accounting principle/guideline justifies not reporting the amounts to the penny?
Full Disclosure
Materiality
Monetary Unit
Materiality
155
Accountants might recognize losses but not gains in certain situations. For example, the company might write-down the cost of inventory, but will not write-up the cost of inventory. Which principle/guideline is associated with this action?
Conservatism
156
When the accountant has to choose between two acceptable alternatives, the accountant should select the alternative that will report less profit, less asset amount, or a greater liability amount. This is based upon which principle/guideline?
Conservatism
157
A large company purchases a $250 digital camera and expenses it immediately instead of recording it as an asset and depreciating it over its useful life. This practice may be acceptable because of which principle/guideline?
Cost
Matching
Materiality
Materiality
158
A corporation pays its annual property tax bill of approximately $12,000 in one payment each December 28. During the year, the corporation's monthly income statements report Property Tax Expense of $1,000. This is an example of which accounting principle/guideline
Matching
159
Accrual accounting is based on this principle/guideline.
Matching
160
An asset with a cost of $120,000 is depreciated over its useful life of 10 years rather than expensing the entire amount when it is purchased. This complies with which principle/guideline?
Matching
161
accrued expensed is a
liability
162
According to double entry system, an account that obtains the benefit is
debit
163
Financial Reporting Standards Council was createdthru the enactment of
a. RA 9184
b. RA 9298
c. RA 1089
RA 9298
164
The International Accounting Standards Board (IASB) is a/an
a. Non-independent accounting standard setter
b. Government entity which seeks out to set and enforce standards for accounting procedures G. Organization succeeded by the IASC Standards (International Accounting Committee)
d. None of the above
D
165
Posting
a. Accumulates the effects of ledger entries and transfer them to the general journal
b. Done once every year
c. Transfers journal entries to the ledger accounts
d. Done only for income statement activity
C
166
Nominal accounts are also called
Temporary Accounts
167
Revenue is
a. Impacted by debit credit in the same way that expenses are impacted by debit and credit
b. A subdivision of equity, providing information about why equity increased
c. Reported in the statement of financial position as a current item
d. All of the choices are corrected regarding revenue
B
168
According to Conceptual Framework, verifiability implies
a. Legal evidence
b. Logic
c. Consensus
d. Legal verdict
Consensus
169
Which of the following is not an acceptable basis for the recognition of expense?
a. Systematic rational allocation
b. Cause and effect association:
c. Immediate recognition
d. Cash disbursement
D
170
The conceptual framework includes which constraint?
a. Prudence
b. Conservatism
c. Cost
C
171
The residual interest in a corporation belongs to the
a. management.
b. creditors.
c. common stockholders.
d. preferred stockholders.
c. common stockholders.
172
Deposits held as compensating balance
a. Usually do not earn interest
b. If legally restricted and held against short-term credit may be included as cash If legally restricted and held against long-term
C. credit may be included among current assets
d. None of these
D
173
When the allowance method of recognizing bad debt expense is used, the entries at the time of collection of an account previously written off would
a. Decrease the allowance for doubtful accounts
b. Increase the net income
c. Have no effect on the allowance for doubtful accounts
d. Have no effect on net income
D
174
Interim financial reports should include as a minimum
a. A complete set of financial statements
b. A condensed set of financial statements and selected notes
c. A condensed statement of financial position and a condensed income statement
d. A condensed statement of financial position and a condensed statement of cash flows
B
175
Under the defined benefit plan the obligation of the entity is to provide the
a. benefits to current employees
b. the benefits to current and former employees
c. the agreed benefit to current employees
d. the agreed benefit to current and former employees.
D
176
An example of an item which is not a liability is
a. dividends payable in stock. b. advances from customers on contracts.
C. accrued estimated warranty costs.
d. the portion of long-term debt due within one year.
A
177
Which of the following inventories carried by a manufacturer is similar to the merchandise inventory of a retailer?
a. Raw materials.
b. Work-in-process.
c. Finished goods.
d. Supplies.
c. Finished goods.
178
Raw materials is classified in the balance sheet as
Inventory
179
For purposes of measuring business income, the life of a business is:
a. divided into specific points in time.
b. divided into irregular cycles.
c. divided into discrete accounting periods.
d. considered to be a continuous cycle.
C
180
Adjusting entries at the end of an accounting period would not be required for which of the following
a. Multiperiod costs that must be split among two or more accounting periods.
b. Multiperiod revenues that must be split among two or more accounting periods.
c. Expenses that have been incurred in a given period but not as yet recorded in the accounts.
d. Revenue that has been earned and recorded in the accounting records.
D
181
Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. What journal entry would be recorded (on Wednesday) if the end of the accounting period occurred on a Wednesday?
Salary Expense 6,000
Salary Payable 6,000
182
Question
Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. Blankenship’s year-end occurred on Wednesday, at which time a correct adjusting entry was recorded. On the following Friday, which of the following payroll journal entries should be recorded?
Salary Expense 4,000
Salary Payable 6,000
Cash 10,000
183
The appropriate journal entry to record equipment depreciation expense would consist of a debit to Depreciation Expense and a credit to which of the following accounts?
a. Equipment
b. Accumulated Depreciation: Equipment
c. Retained Earnings
d. Cash
B
184
At the end of the current accounting period, Johnson Company failed to record utilities consumed during the period. Johnson will be billed for the utilities during the next accounting period. As a result, current period assets, liabilities, equity, and income, respectively, are:
a. Overstated, overstated, correct, correct
b. Correct, understated, overstated, overstated
c. Overstated, understated, overstated, overstated
d. Overstated, understated, correct, correct
B
185
On November 1, 20X1, Limit Company purchased a one-year insurance policy for $12,000. Limit Company debited Cash and credited Prepaid Insurance for $12,000. At the end of December, 20X1, $2,000 of insurance had expired. The journal entry to properly state all accounts involved on December 31, 20X1, would be:
Insurance Expense 2,000
Prepaid Insurance 22,000
Cash 24,000
186
The ____ is a chronological record of transactions.
general journal
187
is the accidental reversing of two digits in a number.
Transposition
188
Failure to record the receipt of a utility bill for services already received will result in:
a. An overstatement of assets.
b. An overstatement of liabilities.
c. An overstatement of equity.
d. An understatement of assets.
C
189
provides a listing of the balance of each active account.
trial balance
190
is concerned with external reporting to parties outside the firm.
Financial accounting
191
is primarily concerned with providing information for internal management.
managerial accounting
192
The accountant’s worksheet:
a. lays the groundwork for formal financial statement preparation.
b. is a fundamental financial statement.
c. provides details necessary for full disclosure and the preparation of footnotes.
d. is prepared at the end of each operating cycle.
A
193
Question
In preparing a worksheet, a net loss would be computed and entered in the:
credit column of the income statement
debit column of the balance sheet
193
Question
In preparing a worksheet, a net loss would be computed and entered in the:
a. debit column of the income statement columns of the worksheet.
b. credit column of the income statement columns of the worksheet.
B
194
Net income is entered as a __ at the bottom of the Income Statement section of the work sheet.
debit
195
Net income is entered as a __ at the bottom of the Balance Sheet section of the work sheet.
Credit
196
Net loss is entered as a __ at the bottom of the Balance Sheet section of the work sheet.
Debit
197
After closing all revenue and expense accounts, Norris Company had a debit balance in its Income Summary account of $10,000. The proper entry to record the closing of the Income Summary account would be:
Retained Earnings 10,000
Income Summary 10,000
198
The following statements all pertain to the accounting cycle. Which of these statements is wrong?
a. A post-closing trial balance is prepared prior to closing temporary accounts.
b. Formal financial statements may be produced from the worksheet.
c. Adjusting entries are recorded in the journal and posted to the ledger.
d. The post-closing trial balance is prepared by examining ledger balances subsequent to the closing of accounts.
A
199
Which of the following statements about reversing entries is true?
a. Identical account balances are achieved in the subsequent accounting period whether reversing entries are utilized or not.
b. Reversing entries may not be used with accrued revenues.
c. Reversals are generally applied to those adjusting items that do not involve future cash flow.
d. Reversing entries would not be prepared if a company also utilized closing entries.
A
200
Reversing entries are often used for ___ revenues, and other similar items which will involve future cash flows.
accrued
201
must be prepared whether or not the company elects to use reversing entries.
Closing entries
202
Current assets are those assets which management intends to convert into cash or consume within:
a. The operating cycle
b. One year
c. The longer of (a) or (b)
d. The shorter of (a) or (b)
c. The longer of (a) or (b)
203
Deferred Revenue is a
liability
204
Accrued revenue is an
asset
205
Deferred Expense
Asset
206
accrued expense is a
liability
207
Post closing trial balance is prepared before
Reversing the accountd
208
Treasury stock is a
contra stockholders equity account
209
adjusting entry or adjustment are not necessary if fs were to reflect net income from
lifetime operations
210
1 year but does not begin in Jan 1
fiscal
211
Management usually desires____ statements
monthly
212
IRS required business to file tax returns ___
annually
213
adjusting entries are required
everytime financial statements are prepared
214
What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?
Gross Profit
215
Merchandise with a sales price of $5,000 is sold on account with terms 2/10, n/30. The journal entry to record the sale would include a
credit to Sales for $4,900
216
Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a
Dr. Cash
Cr. Sales
217
When purchases of merchandise are made on account with a perpetual Inventory system, the transaction is recorded with which entry?
debit Merchandise inventory; credit Accounts Payable
218
Merchandise is sold for cash. The selling price of the merchandise is $6,000 and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include a credit to
Sales tax payable 420
219
If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as
FOB Shipping point
220
If the seller is to pay the freight costs of delivering merchandise, the delivery terms are stated as
FOB Destination
221
Who is responsible for the freight costs when the terms are FOB shipping point?
buyer
222
Who is responsible for the freight cost when the terms are FOB destination?
seller
223
If tide to merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are
FOB Destination
224
Which of the fallowing accounts should be closed to Income Summary at the end of the fiscal year?
Cost of Merchandise Sold
225
Inventory shrinkage is recorded when
a. there is a difference between a physical count of inventory and inventory record
b. merchandise is returned by a buyer
c. merchandise purchased from sellers incomplete or short
d. merchandise is returned to the seller
A
226
Which of the following items has no effect on owner’s equity?
a. Expense
c. Purchase of land
b. Owner’s Withdrawal
d. Revenue
C
227
most common service
provided by CPAs and involves
independent examination of financial statements for the purpose of
expressing an opinion on the fairness
of these statements
Auditing
228
Father of Double-Entry
Bookkeeping
Luca Pacioli
229
profit or loss is
computed by deducting the expenses incurred from the income earned during an accounting period. Income recorded and reported in one accounting period should be matched against the expenses that directly or indirectly contributed to the generation of the income
Matching principle
230
income is recognized when it is earned, regardless of when cash is received. Expenses are recognized when incurred, regardless of when cash is paid
Accrual basis
231
summarizes cash activity for the period, classified according to the nature of activity
Statement of cash flows
232
availability of cash over the long term
to meet obligations when they fall due
Solvency
233
- availability of cash in the near future to cover currently maturing liabilities or obligations
Liquidity
234
if the debit equals credit
Closed account-
235
adding all the debits and credits
Footing
236
an entry which has no debit or credit, which shows only the date and a brief explanation or reminder
Memorandum entry
237
evidences an employee’s request for the purchase of
needed goods or suppliers
Purchase requisition forms
238
authorization of cash
disbursement transactions
Check voucher-
239
accounting is a service activity. Its function is to provide quantitative information primarily financial in
nature that is intended to be useful in making economic decisions.
ASC
240
AICPA
accounting is the ART of
recording, classifying, summarizing
241
AAA
Accounting is a PROCESS of
identifying, measuring, communicating
242
Identifying as the __ component
analytical
243
Measuring as the __ component
technical
244
Communicating as the __ component
formal
245
body authorized by law to promulgate rules and regulations affecting the practice of the accountancy profession
BOA
246
highest accounting officer
Controller
247
FRSC replaces
ASC
248
relate to content and are primary qualities
relevance and reliability
249
is affected by its nature and materiality. It helps users form predictions and confirmations or
revision to their expectation
Relevance
250
Ingredients of relevance are:
a. Predictive value
b. feedback value
c. Timeliness
251
Unreleased checks, which are checks drawn before the end of reporting period but held for later delivery to creditors
a. Shall be treated as outstanding checks
b. Shall be restored back to the cash balance if previously recorded as disbursements
c. Shall be treated as outstanding checks if the date is shortly after the end of reporting period.
d. Shall be treated as outstanding checks if they are ultimately encash
B
252
A check disbursement during the current month for P5,000,000 was credited in the book at P5,500,000. This error was discovered and corrected in the same month. How would this affect the proof of cash in the book?
a. P500,000 deducted from disbursements, P500,000 deducted from receipts.
b. P500,000 added from disbursements, P500,000 added to ending cash balance.
c. P500,000 deducted from disbursements, P500,000 deducted from ending cash balance.
d. P500,000 deducted from disbursements, P500,000 added to ending cash balance
A
253
When the allowance method of recognizing uncollectible accounts is used, the entry to record the recovery of accounts previously written off would?
a. Increase the balance of the allowance for uncollectible accounts and decrease accounts receivable.
b. Decrease both accounts receivable and the allowance for uncollectible accounts.
c. Decrease accounts receivable and increase allowance for uncollectible accounts.
d. Increase the allowance for uncollectible accounts and no effect on accounts receivable
D
254
If your analysis of the balance of allowance for uncollectible accounts resulted to following adjusting entry:
Dr Uncollectible accounts expense
Cr Allowance for uncollectible accounts
This may indicate that:
a. the amount of provisions made is understated.
b. the amount of provisions made is overstated.
c. the amount of provisions made is greater than the amount of uncollectible accounts expense.
d. the amount of provisions made is always equal to the ending balance of the allowance for uncollectible accounts
A
255
Which of the following statements concerning non-interest-bearing notes receivable is generally a false statement?
a. Amortization of the premium causes the carrying amount of the notes receivable to decrease over the life of the note.
b. The periodic amortization of discount or premium is the difference of nominal interest recorded and effective interest recorded over the life of the note.
c. The unamortized discount on notes receivable should be deducted from the principal amount of notes receivable to arrive at the carrying value of notes receivable.
d. Amortization of the discount causes the carrying amount of the notes receivable to increase over the life of the note
A
256
Assuming that your bad debts expense increased by 50% from prior period’s bad debts expense and your ending balance of allowance for bad debts remains the same. Which of the following is true?
a. the ratio of the write-off and beginning balance of allowance is equal to the ratio of the write-off and ending balance of allowance.
b. The ratio of the write off and ending balance of allowance is equals to the ration of write off and bad debts expense recognized.
c. the ratio of the write-off and beginning balance of allowance is higher than the ratio of the write-off and ending balance of allowance.
d. the ratio of the write-off and beginning balance of allowance is less than the ratio of write-off and ending balance of allowance
A
257
Which of the following is correct?
I. Direct origination costs – added to principal
II. Direct origination fees – added to principal
III. Direct origination costs – deducted from principal
IV. Direct origination fees – deducted from principal
a. I and II only
b. III and IV only
c. II and III only
d. I and IV only
D
258
Is good out on consignment inventory?
Yes
259
The account title “Inventories” as shown on an entities financial statement would
include?
a. Unused supplies in the factory for administrative purposes.
b. Goods in transit, purchased FOB buyer.
c. Goods sold with a buyback arrangement.
d. Goods held on consignment
C
260
Evaluate whether each of the following two statements is true or false.
Statement 1: The retail inventory method is allowed for external reporting purposes as an alternative method to measure the cost of inventory.
Statement 2: The gross profit method may be used to measure inventory and related expense for interim reporting purposes, but not for annual reporting purposes
a. True, true
b. True, false
c. False, true
d. False, false
A
261
Which of the following is added to both cost and retail in computing the total goods available for sale?
a. Freight – in b. Purchase returns
c. Departmental transfer – in
d. Net mark – up
C
262
Roczan Company is determining the amount of inventory to be reported in its statement of financial position as of December 31, 2023. An entry was made as follow:
Dr Allowance for inventory write down
Cr Gain on recovery
This indicates that:
a. The cost of ending inventory in 2022 is less than its net realizable value in 2022.
b. The cost of ending inventory in 2022 is greater than its net realizable value in 2022.
c. The cost of ending inventory in 2023 is less than its net realizable value in 2023.
d. The cost of ending inventory in 2023 is greater than its net realizable value in 2023
C
263
Which of the following is similar for sum-of-the-years’-digit method and double
declining balance method of depreciation?
a. results in a lower depreciation method in earlier years of the asset.
b. results in residual value being ignored in computing periodic depreciation expense.
c. the carrying amount should not be lower than its residual value at the end of its useful life.
d. Depreciation rate based on its useful life is used to depreciate the asset
C
264
actual amount received by the company through its business activities without any deduction is known as
revenue
265
The surplus remained after reducing all expenses from the revenue is known as
profit
266
The actual earnings of the company during a particular accounting year is known as
income
267
An account used in the periodic inventory system that is not used in the perpetual inventory system is?
Cost of sales
Purchases
Purchases
268
Using the indirect method, the cash flow statement starts with which item?
Cash receipts
Gross profit
Net income
Net income
269
When is an adjusting entry normally prepared?
a. before the end of the reporting period, and dated after the reporting date
b. before the end of the reporting period, and dated at the reporting date
c. after the reporting period, and dated after the reporting date
d. after the reporting period, and dated at the reporting date
D
270
Declaration of cash dividend
a. decreases assets
b. decreases liabilities
c. decreases equity
d. decreases net income
C
271
Question 0009
If the adjusting entry for an accrued income was not made
a. assets will be overstated
b. revenues will be overstated
c. liabilities will be understated
d. equity will be understated
D
272
The collection of accounts is known as
a. Trial balance
b. General ledger
c. General journal
d. Special journal
B
273
Which of the following is not a required step in the accounting cycle?
a. Preparation of post-closing trial balance
b. Preparation of financial statements
c. Preparation of closing entries
d. Preparation of adjusting entries
A
274
Which of the following has normal debit balance?
a. Deficit
b. Retained earnings
c. Allowance for doubtful accounts
d. Sales revenue
A
275
Which of the following source documents is least likely to warrant a journal entry?
a. Sales order
b. Purchase invoice
c. Official receipt
d. Delivery receipt
A
276
If 45,650 is recorded as 456,500, there is a/an -
a. Transposition
b. Transplacement
c. Error of commission
d. Error of omission
B
277
Which of the following accounts is most likely to abnormal balance after reversing entries have been made?
a. Accumulated depreciation
b. Accrued professional fees
c. Salaries expense
d. Prepaid rent
C
278
What is the primary purpose of reversing entries?
a. Compliance with accounting and reporting standards
b. Procedure standardization
c. Debit-credit analysis reinforcement
d. Financial statement preparation expediency
B
279
Which of the following may be eliminated by computerized accounting data processing?
a. The necessity for International Financial Reporting Standards
b. The system of double-entry
c. The necessity for accountants
d. The verifiable document trails
D
280
Reversing entries
a. Are made at year-end
b. Are done for consistency
c. Are necessary for proper matching of revenue and expenses
d. Are prepared for all prepayments
B
281
The main object of providing depreciation is
a. To calculate true profit
b. To show true financial position
c. To reduce tax
d. To provide funds for replacement
A
282
Total depreciation cannot exceed the asset's
a. Scrap value
b. Original cost
c. Fair value
d. Depreciable cost
D
283
Which statement is incorrect with respect to depreciation?
a. The depreciation method shall reflect the pattern in which the asset's economic benefits are consumed by the entity
b. Depreciation of an asset begins when it is available for use or when it is in the location and condition necessary for the intended use
c. Depreciation ceases at the earlier between the date the asset is classified as held for sale and the date the asset is derecognized
d. Depreciation is not recognized if the fair value of an asset exceeds carrying amount
D
284
Which statement is true with respect to residual value?
a. Residual value is the estimated net amount currently obtainable if the asset is at the end of the useful life
b. The residual value of an asset may increase to an amount equal to or greater than the carrying amount in which case the depreciation charge is zero
c. The residual value of an asset shall be reviewed at least at each financial year-end and any charge is accounted for as a change in accounting estimate
d. All of the foregoing
D
285
Any position in any business or company in the private sector which requires supervising the recording of financial transactions, preparation of financial statements, coordinating with the external auditors for the audit of such financial statements and related functions shall be occupied only by a CPA if the business or company's paid-up capital is at least
a. PhP1,000,000
b. PhP2,000,000
c. PhP5,000,000
d. PhP10,000,000
C
