EASY ROUND

1. The main purpose of accounting is

• A. to account for money so it will not be lost

• B. to provide information that is useful in making economic decisions

• C. to safeguard the assets of a company

• D. to provide a clear view of the industry’s economy

Answer explanation

2. Financial accounting provides economic and financial information for all of the following except

• A. creditors

• B. investors

• C. managers

• D. other external users

3. Under this concept, the business transactions are recorded together with the personal transactions of its owners.

• A. Separate entity concept

• B. Historical cost concept

• C. Not an accounting concept

• D. Matching principle

4. The first step in the accounting cycle is

• A. Record transactions in a journal

• B. Post journal entries to general ledger accounts

• C. Analyze transaction from source documents

• D. Adjust the general ledger accounts

5. Information has the qualitative characteristic if two different users could reach a general agreement as to what the information intends to represent

• A. Relevance

• B. Faithful representation

• C. Comparability

• D. Verifiability

6. The procedure to compute for the adjusted balances of accounts in the adjusted trial balance is

• A. Footing

• B. Cross-footing

• C. Closing

• D. Adjusting

7. When an entity pays employees for their services, the effect is an increase in

• A. Assets

• B. Expenses

• C. Liabilities

• D. Income

8. An investment by the owner in a business increases

• A. Assets

• B. Equity

• C. Assets and Liability

• D. Assets and Equity

9. Which of the following items has no effect on Owner’s Equity?

• A. Revenue earned

• B. Expense incurred

• C. Equipment acquired

• D. Withdrawal

10. Which is correct when an entity receives cash for services performed?

• A. The Owner’s Equity is increased

• B. Total assets remain unchanged

• C. The Owner’s Equity is decreased

• D. An asset is decreased