ACCOUNTING CONCEPTS AND ITS CONSIDERATIONS

Accounting is a service activity. Its function is to provide

• Qualitative information

• Quantitative information

• Quantitative and qualitative information

• None of the above

The basic purpose of accounting is

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

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

• 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.

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 large capital; unlimited personal liability of owners.

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

Which of the following 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 accounting process is the recognition or non-recognition of business activities as accountable events?

• Identifying

• Communicating

• Recording

• Measuring

The entity concept means that

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

• None of the above

Which of the following is not a user of internal accounting information?

• Store Manager

• Chief executive officer

• Creditor

• Chief financial officer

All of the following are external users of accounting information except:

• Creditors, lenders and suppliers

• Present and potential investors

• Government regulatory bodies

• Managers and employees

It is the simplest of business organization

• Service Entity

• Merchandising Entity

• Partnership

• Sole Proprietorship

The following are examples of service business except:

• SM Supermarket

• Amana Hotel and Resorts

• Cebu Pacific

• Manila Water Inc.