FABM1 Periodical Examination 2

What is the primary purpose of accounting principles?

• To calculate taxes
• To guide financial reporting
• To simplify bookkeeping
• To manage payroll

Which accounting standard in the Philippines is based on IFRS and IAS?

• Generally Accepted Accounting Principles
• Philippine Financial Reporting Standards
• Basic Accounting Guidelines
• International Financial Reporting Code

In the Business Entity Concept, how are the business and owner treated?

• As the same entity
• As separate entities
• As partial entities
• As interchangeable entities

What does the Going Concern Principle assume about a business?

• It will continue operating indefinitely
• It will liquidate its assets soon
• It will merge with another business
• It will halt operations next year

Why is the Monetary Unit Concept important in financial reporting?

• Ensures reports are timely
• Ensures consistency in currency usage
• Ensures all financial statements are signed
• Ensures complete financial analysis

Which principle requires recognizing revenue only when it is earned, regardless of when payment is received?

• Matching Principle
• Revenue Recognition Principle
• Conservatism Principle
• Cost Principle

How does the Materiality Concept affect the treatment of immaterial assets?

• Recorded as revenue
• Recorded as liabilities
• Recorded as expenses
• Recorded as a footnote

If a company estimates potential losses during a calamity, which principle are they applying?

• Objectivity Principle
• Matching Principle
• Conservatism Principle
• Cost Principle

Why must a company disclose details about loans and lawsuits in its financial statements?

• To avoid penalties
• To comply with the Full Disclosure Principle
• To attract more investors
• To simplify audits

If you were designing a financial report, how would you ensure it is useful for decision-making?

• Use neutral and timely data
• Focus only on completeness
• Include complex calculations
• Avoid clear presentation