Which of the following statements is false?

A sole proprietor has limited risk with respect to the amount of resources he invests in his business.

A sole proprietorship has only one owner.

A sole proprietorship is easy to set up.

A sole proprietorship may not be able to obtain loans easily.

Which of the following best explain the feature of consistency of presentation?

When preparing the accounts of a firm, one should normally account for similar items in the same way from one accounting period to the next.

Firms in the same industry must account for similar items in the same way.

Firms must comply with accounting standards and regulations.

Which type of business organization is owned by its stockholders?

All the above are owned by stockholders

Which accounting concept should be considered if the owner of a business takes goods from inventory for his personal use?

The substance over form concept

Stating assets and liabilities and changes in them in terms of a common financial denominator is a prerequisite in measuring financial position and periodic net income.

measurement of economic resources and obligations

Carrying out professional responsibilities diligently and in accordance with applicable technical and professional standards is descriptive of the principle of

professional competence and due care.

A professional accountant should be straightforward and honest in all professional and business relationships. This is in consonance with the fundamental principle of

professional competence and due care.

Which of the following is an appropriate definition of accounting?

The measurement, processing, and communication of financial information about an identifiable economic entity

A means of recording transactions and keeping records

The interconnected network of subsystems necessary to operate a business

Electronic collection, organization, and communication of vast amounts of information

The periodicity concept

requires that all companies prepare monthly, quarterly and annual financial statements.

results from the Bureau of Internal Revenue requirement that taxable income be reported on an annual basis.

requires all companies to use a fiscal year ending December 31.

involves dividing the life of a business entity into accounting periods of equal length thus enabling the financial users to periodically evaluate the results of business operations.

The Filipino accountants should possess knowledge to enable them to compete internationally, they are:

Organizational and Business Knowledge

Information Technology Knowledge

The following documents shall be submitted in support of the requirements in the previous question except the

Certificate of Live Birth in National Statistics Office (NSO) security paper.

Marriage Contract in NSO security paper for married female applicants.

College diploma with date of graduation and Special Order Number.

Baccalaureate Transcript of Records with date of graduation and Special Order Number.

Proponents of historical costs maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more

indicative of the entity’s purchasing power.

The concept of matching is best demonstrated by

associating effort with accomplishment.

not recognizing any expense unless some revenue is realized.

recognizing prepaid rent received as revenue.

establishing an allowance for possible market decline in inventory account.

The basic purpose of accounting is

To provide information that the creditors of an economic entity can use in deciding whether to make additional loans to the entity.

To provide the information that the managers of an economic entity need to control its operations.

To measure the periodic income of the economic entity.

To provide quantitative financial information about a business enterprise that is useful in making rational economic decision.

Accountants employed by a particular business firm or not-for-profit organization, perhaps as chief accountant, controller, or financial vice president, are said to be engaged in

practice in commerce and industry.

The entity concept means that

The financial affairs of a firm and its owner are always kept separate for the purpose of preparing accounts.

Because a firm is separate and distinct from its owners, those owners cannot have access to its assets unless the firm ceases to trade.

Accounts must be prepared for every firm.

The financial accounting process provides information about economic activities of an enterprise for a specified accounting period that is shorter than the life of the enterprise.

measurement of economic resources and obligations

The consistency concept means that

When preparing the accounts of a firm, one should normally account for similar items in the same way from one accounting period to the next.

Firms in the same industry must account for similar items in the same way.

Firms may never change the way in which they prepare their accounts.

The consistency standard of reporting requires that

accounting procedures be adopted which give a consistent rate of return.

expenses be reported as charges against the period in which they are incurred.

the effect of changes in accounting upon income be properly disclosed.

extraordinary gains and losses should not appear on the income statement.

Which of the following best describes the attributes of a partnership?

Limited ability to raise capital; unlimited personal liability of owners.

Limited ability to raise capital; limited personal liability of owners.

Ability to raise to raise large capital; unlimited personal liability of owners.

Ability to raise large amounts of capital; limited personal liability of owners.

The concept of the accounting entity is applicable

whenever accounting is involved.

only to the legal aspects of business organizations.

only to the economic aspects of business organizations.

only to business organizations.

A person applying for examination shall establish the following requisites to the satisfaction of the Board that he:

is a holder of the degree of Bachelor of Science in Accountancy conferred by a school, college, academy or institute duly recognized and/or accredited by the Commission on Higher Education (CHED) or other authorized government offices; and

has not been convicted of any criminal offense involving moral turpitude. e. “a” and “c” only.

The main function is to establish and improve accounting standards that will be generally accepted in the Philippines.

Financial Reporting Standards Council

Professional Regulation Commission

FAR Reviewer 1 Quiz

98 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

The concept assumes that the business has an indefinite economic life.

accounting entity

accounting period

going concern

objectivity

2.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

Which form of business organization is characterized by limited liability?

Sole Proprietorship

Partnership

Corporation

Both sole proprietorship and partnership

3.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

Which of the following processes best defines accounting?

Measuring economic activities

Communicating results to interested parties

Preventing fraud

Both a and b.

4.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

To which area of accounting are generally accepted accounting principles primarily relevant? a. Managerial Accounting

Managerial Accounting

Financial Accounting

Tax Accounting

Financial Reporting To all Regulatory Agencies

5.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

Which of the following is not one of the three types of business activities?

Investing

Financing

Marketing

Operating

6.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

Which of the following processes is considered bookkeeping?

Analyzing

Reporting

Recording

Summarizing

7.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

Krishna started a speech therapy center. He also sells professional books on speech development. What is the nature of his business? Support your answer with a reason

manufacturing

service

trading

service and trading

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FAR Reviewer 1

The concept assumes that the business has an indefinite economic life.

Which form of business organization is characterized by limited liability?

Which of the following processes best defines accounting?

To which area of accounting are generally accepted accounting principles primarily relevant? a. Managerial Accounting

Which of the following is not one of the three types of business activities?

Which of the following processes is considered bookkeeping?

Krishna started a speech therapy center. He also sells professional books on speech development. What is the nature of his business? Support your answer with a reason

Which of the following is a trading business?

Which of the following statements is false?

A business which prepares financial statements every year is following the concept.

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