Fundamentals of Accountancy Quiz 2

Ms. Maya a business owner, made a withdrawal amounting of P50,000 for a trip as a birthday gift for herself but recorded the transaction separately from business expenses.

• ENTRY

• ENTITY

• MATCHING

• REVENUE REALIZATION

Radleigh Manufacturing records the purchase of a piece of equipment at its original price of P190,000.

• ACCRUAL

• COST

• ENTRY

• GOING CONCERN

ABM Company records P300,000 of revenue in its income statement for service rendered even though the cash payment has not been received yet.

• ACCRUAL

• CONSERVATISM

• CONSISTENCY

• REVENUE REALIZATION

Green Corp. a multinational corporation convert its financial records from various currencies into their reporting currency.

• COST

• CONSERVATISM

• MONETARY

• PERIODICITY

A cosmetic company buys a truckload of make-up in June to resell to customers over the next several months, it does not record the cost of all that make-up in June. Rather, it records the cost of each make-up on the income statement when each of the make-up is sold.

• ACCRUAL

• GOING CONCERN

• MATCHING

• REVENUE REALIZATION

MEMA Co. has sales representatives who earn commissions of 10%, the company should recognize the commission expense in the same period as the sales revenue that the sales representatives generated.

• CONSERVATISM

• MATCHING

• OBJECTIVITY

• PERIODICITY

Hotel de Luna was affected by a typhoon, one of its buildings was damaged and the company reports a loss of P200,000. The hotel has a net income of P20,000,000. However, the company states that they would not be concerned with something that is only 1% of net income.

• CONSISTENCY

• FULL DISCLOSURE

• MATERIALITY

• OBJECTIVITY

The purchase of inventory on account of Siksik Merchandise is debiting the inventory and crediting the accounts payable, reflecting the increase in assets and liabilities.

• ENTITY

• ENTRY

• FULL DISCLOSURE

• GOING CONCERN

Roment Company Limited mows the garden of Mr. Envi for P12,500 and records the revenue immediately upon completion of the service.

• CONSISTENCY

• MATCHING

• MONETARY

• REVENUE REALIZATION

Ms. Roxy uses the First-In-First-Out (FIFO) method for her retail shop to value its inventory for several years.

• CONSISTENCY

• MATCHING

• MONETARY

• REVENUE REALIZATION