2024B-OVERVIEW OF ACCOUNTING

Accounting has been given various definitions, which of the following is not one of those definitions

• Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.

• Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part of at least, of a financial character and interpreting the results thereof.

• Accounting is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria and communicating results to interested users.

• Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgment and decisions by users of information.

The following statements correctly refer to the accounting process. I. Measuring is the accounting process of analyzing business activities as to whether or not they will be recognized in the books. II. Recognition refers to the process of including the effects of an event in the totals of the statement of financial position or the statement of profit or loss and other comprehensive income through memo entries. III. Disclosure of events in the notes to financial statement without including in the totals of the statement of financial position or statement of profit or loss and other comprehensive income is not an application of the recognition principle. IV. An accountable event is an event that has an effect on the assets, liabilities or equity of an entity and its effect can be measured reliably. V. Sociological and psychological matters are within the scope of accounting

• I, II, III, IV, V

• I, II, III, IV

• IV

• III, IV

Which of the following statements is true? I. Loss from theft should be classified as a nonreciprocal transfer II. Internal events are changes in economic resources by actions of other entities that do not involve transfers of enterprise resources and obligations III. Nonreciprocal transfers involve the transfer of resources in only one direction, either from an entity to other entities or from other entities to the entity. IV. Internal events are sudden, substantial, unanticipated reductions in enterprise resources not caused by other entities V. Fire, earthquake and flood are examples of accountable events classified as internal events

• I, II, III, V

• I, III, V

• II, III, IV, V

• I, III, IV, V

All of the following are events considered as exchange or reciprocal transfer, except

• . purchase of investment in equity securities

• sale of equipment for non-interest bearing note

• sale of equipment for non-interest bearing note

• exchange of a note payable for an account payable

All of the following are events considered as internal events, except

• Transfer of goods from work-in-process to finished goods inventory

• flood, earthquake, fire and other “Acts of God”

• transformation of biological assets from immature to mature

• vandalism committed by the entity’s employees

Which of the following events is considered an internal event?

• sale of inventory on account

• provision of capital by owners

• borrowing of money

• conversion of raw materials into finished goods

Which of the following events is considered an external event?

• production

• casualty loss

• payment of taxes

• growth of biological assets

Which of the following events is considered an internal event?

• theft

• vandalism

• contributions by owners

• degeneration of biological assets

Which of the following correctly relates to accountable events? I. An obsolete asset which has no use was received in exchange of an existing asset. This transaction may be classified as an exchange. II. An entity exchanges a non-cash asset for another non-cash asset in an exchange transaction with commercial substance. This is a reciprocal transfer. III. An entity issues its shares of stocks in exchange for a non-cash asset. This is a reciprocal transfer.

• I

• II

• II,III

• I.II,III

Asset measurements in conventional financial statements

• are confined to historical cost

• are confined to historical cost and current COST

• reflect several financial attributes

• do not reflect output values