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Accounting Concepts Quiz

Total questions: 132

Worksheet time: 1hrs 9mins

Name
Class
Date
1.

Which concept assumes that a business will continue to operate indefinitely unless there is evidence to the contrary?

a)

Periodicity Concept

b)

Going Concern Concept

c)

Stable Monetary Unit Concept

d)

Entity Concept

2.

Which of the following best describes accounting according to the American Accounting Association (AAA)?

a)

An art of recording, classifying, and summarizing financial events

b)

A service activity providing quantitative financial information

c)

A process of identifying, measuring, and communicating economic information

d)

A system of safeguarding financial resources

3.

Who is regarded as the “Father of Double-Entry Accounting”?

a)

Aristotle

b)

Luca Pacioli

c)

Leonardo da Vinci

d)

William Paterson

4.

What branch of accounting is primarily concerned with preparing tax returns and computing tax liabilities?

a)

Auditing

b)

Tax Accounting

c)

Financial Accounting

d)

Government Accounting

5.

Which principle requires that financial reporting should disclose all relevant information that would affect users’ understanding?

a)

Adequate Disclosure

b)

Objectivity

c)

Materiality

d)

Consistency

6.

In a sole proprietorship, the owner:

a)

Shares profits and losses with partners

b)

Has limited liability for debts

c)

Receives all profits and absorbs all losses

d)

Cannot be legally distinguished from the business entity

7.

Which activity refers to the use of resources to design, produce, and sell goods or services?

a)

Investing Activities

b)

Operating Activities

c)

Financing Activities

d)

Accounting Activities

8.

What does GAAP stand for?

a)

Generally Accepted Accounting Practices

b)

General Accounting and Auditing Principles

c)

Government Approved Accounting Policies

d)

Generally Accepted Accounting Principles

9.

Which accounting principle requires assets to be recorded at their original acquisition cost?

a)

Historical Cost

b)

Materiality

c)

Revenue Recognition

d)

Accrual

10.

Which form of business organization is described as “an artificial being created by law, with right of succession”?

a)

Sole Proprietorship

b)

Partnership

c)

Corporation

d)

Cooperative

11.

In the Philippines, which body succeeded the Accounting Standards Council (ASC) in setting standards?

a)

BOA – Board of Accountancy

b)

PIC – Philippine Interpretations Committee

c)

FRSC – Financial Reporting Standards Council

d)

IFRS – International Financial Reporting Standards

12.

The process of reducing numerous transactions into categories such as assets, liabilities, or expenses is known as:

a)

Measuring

b)

Summarizing

c)

Classifying

d)

Recording

13.

Which principle recognizes income when goods are delivered or services performed, regardless of when cash is received?

a)

Matching Principle

b)

Consistency Principle

c)

Revenue Recognition Principle

d)

Objectivity Principle

14.

A business that designs products and assembles finished goods belongs to which type of activity?

a)

Services

b)

Trading

c)

Manufacturing

d)

Financial

15.

Which branch of accounting is only limited to the recording phase of financial transactions?

a)

Bookkeeping

b)

Financial Accounting

c)

Management Accounting

d)

Auditing

16.

According to the AICPA, accounting is best described as:

a)

The art of recording, classifying, and summarizing in a significant manner transactions and events in terms of money

b)

An information system that communicates economic information

c)

A science of interpreting the results of financial operations

d)

A method of safeguarding resources through internal controls

17.

A group of people pooling money, property, or industry to a common fund for profit-sharing is a:

a)

Sole Proprietorship

b)

Partnership

c)

Corporation

d)

Cooperative

18.

Which accounting concept separates the affairs of the business from its owner?

a)

Going Concern

b)

Stable Monetary Unit

c)

Entity Concept

d)

Objectivity

19.

Which accounting principle recognizes expenses when they are incurred, not when paid?

a)

Accrual Principle

b)

Revenue Recognition Principle

c)

Historical Cost

d)

Adequate Disclosure

20.

Which form of enterprise has P3 million or less in assets and not more than 9 workers?

a)

Small

b)

Medium

c)

Micro

d)

Large

21.

Which financial statement shows the results of operations for a period?

a)

Balance Sheet

b)

Statement of Financial Position

c)

Income Statement

d)

Statement of Changes in Equity

22.

The accounting cycle begins with:

a)

Posting to the ledger

b)

Analyzing transactions

c)

Preparing financial statements

d)

Journalizing

23.

Which account normally has a credit balance?

a)

Cash

b)

Accounts Payable

c)

Supplies

d)

Prepaid Rent

24.

A business purchased equipment for ₱50,000 on account. The journal entry includes:

a)

Debit Cash; Credit Equipment

b)

Debit Equipment; Credit Accounts Payable

c)

Debit Equipment; Credit Cash

d)

Debit Accounts Receivable; Credit Equipment

25.

Which statement is TRUE about adjusting entries?

a)

They are optional

b)

They are prepared daily

c)

They ensure revenues and expenses are properly matched

d)

They affect only balance sheet accounts

26.

Which account is classified as an intangible asset?

a)

Building

b)

Patent

c)

Accounts Receivable

d)

Equipment

27.

Which accounting concept assumes the peso remains stable over time?

a)

Periodicity

b)

Stable Monetary Unit

c)

Consistency

d)

Prudence

28.

Which adjusting entry is required when salaries are earned by employees but not yet paid?

a)

Debit Salaries Payable; Credit Cash

b)

Debit Salaries Expense; Credit Salaries Payable

c)

Debit Cash; Credit Salaries Expense

d)

Debit Salaries Payable; Credit Salaries Expense

29.

Which is an example of an accrued revenue?

a)

Rent collected in advance

b)

Fees earned but not yet billed

c)

Depreciation of machinery

d)

Supplies on hand

30.

Depreciation is recorded to:

a)

Show market value of assets

b)

Allocate the cost of an asset over its useful life

c)

Recognize cash flow effects

d)

Adjust owner’s capital

31.

A trial balance is prepared to:

a)

Prove the equality of debits and credits

b)

Report net income

c)

Summarize all adjusting entries

d)

Value assets at fair market value

32.

Which account is not closed at the end of the accounting period?

a)

Revenues

b)

Expenses

c)

Owner’s Capital

d)

Income Summary

33.

The process of transferring amounts from the journal to the ledger is called:

a)

Journalizing

b)

Posting

c)

Recording

d)

Summarizing

34.

A liability is best described as:

a)

Future economic benefit

b)

Present obligation from past events

c)

Owner’s residual interest

d)

Cash inflows from operations

35.

When an owner withdraws cash for personal use, it is recorded as:

a)

Expense

b)

Owner’s Drawing

c)

Liability

d)

Revenue

36.

Which adjusting entry is required for prepaid insurance that has expired?

a)

Debit Insurance Expense; Credit Prepaid Insurance

b)

Debit Prepaid Insurance; Credit Insurance Expense

c)

Debit Insurance Expense; Credit Cash

d)

Debit Insurance Payable; Credit Insurance Expense

37.

An account that accumulates depreciation is called a:

a)

Liability account

b)

Contra-asset account

c)

Expense account

d)

Capital account

38.

Which accounting concept states that profits should not be anticipated but losses should be recognized?

a)

Consistency

b)

Prudence (Conservatism)

c)

Materiality

d)

Historical Cost

39.

Which is an internal user of accounting information?

a)

Creditors

b)

Investors

c)

Management

d)

Government

40.

Which account is considered a nominal account?

a)

Rent Expense

b)

Accounts Receivable

c)

Cash

d)

Equipment

41.

The matching principle requires that:

a)

Expenses be recognized when cash is paid

b)

Revenues and related expenses be recognized in the same period

c)

Revenues be recognized only when collected

d)

Assets be matched with liabilities

42.

Which of the following is NOT an asset?

a)

Cash

b)

Prepaid Rent

c)

Unearned Revenue

d)

Accounts Receivable

43.

The general journal is used to:

a)

Summarize balances

b)

Record transactions chronologically

c)

Post to accounts

d)

Prepare adjusting entries

44.

The book of final entry is:

a)

General Journal

b)

General Ledger

c)

Trial Balance

d)

Subsidiary Ledger

45.

Which is an example of a deferral?

a)

Salaries earned but not yet paid

b)

Rent collected in advance

c)

Services rendered but not billed

d)

Interest earned but not received

46.

Which is an example of a deferral?

a)

Salaries earned but not yet paid

b)

Rent collected in advance

c)

Services rendered but not billed

d)

Interest earned but not received

47.

Which accounting assumption divides the life of the business into artificial periods?

a)

Periodicity Assumption

b)

Going Concern

c)

Monetary Unit

d)

Time Consistency

48.

Which type of account is credited when revenue is earned?

a)

Asset

b)

Liability

c)

Revenue

d)

Expense

49.

Which of the following transactions increases assets and increases liabilities?

a)

Purchase of supplies for cash

b)

Purchase of equipment on account

c)

Owner’s investment in cash

d)

Collection of receivables

50.

Which is considered a current liability?

a)

Bonds Payable due in 10 years

b)

Accounts Payable

c)

Equipment Loan (noncurrent)

d)

Owner’s Capital

51.

The basic accounting equation is:

a)

Assets = Liabilities – Equity

b)

Assets = Liabilities + Equity

c)

Assets = Equity – Liabilities

d)

Assets + Liabilities = Equity

52.

Which account is debited when the owner invests cash in the business?

a)

Owner’s Capital

b)

Cash

c)

Accounts Payable

d)

Revenue

53.

Unearned Rent is classified as:

a)

Asset

b)

Liability

c)

Equity

d)

Revenue

54.

The main purpose of accounting is to:

a)

Satisfy tax requirements

b)

Provide useful information for decision-making

c)

Record all transactions

d)

Prepare trial balances

55.

Which financial statement shows assets, liabilities, and equity at a specific point in time?

a)

Balance Sheet

b)

Income Statement

c)

Cash Flow Statement

d)

Statement of Changes in Equity

56.

Which is an example of an investing activity?

a)

Borrowing money from the bank

b)

Purchasing equipment

c)

Paying salaries

d)

Collecting receivables

57.

Which principle states that accounting methods should be applied consistently?

a)

Consistency Principle

b)

Matching Principle

c)

Objectivity Principle

d)

Going Concern

58.

If a trial balance is balanced, it proves:

a)

No errors exist in the records

b)

Debits equal credits

c)

All transactions are posted correctly

d)

Financial statements are accurate

59.

Which account appears only in the post-closing trial balance?

a)

Cash

b)

Service Revenue

c)

Rent Expense

d)

Income Summary

60.

Recording ₱1,000 revenue as ₱100 is an example of:

a)

Error of Commission

b)

Error of Omission

c)

Error of Misplacement

d)

Error of Transposition

61.

The accounting concept that guides accountants to choose methods least likely to overstate assets or income is:

a)

Prudence (Conservatism)

b)

Consistency

c)

Objectivity

d)

Materiality

62.

Which is considered a real account?

a)

Salaries Expense

b)

Service Revenue

c)

Furniture and Fixtures

d)

Owner’s Drawing

63.

When supplies are used, the adjusting entry includes:

a)

Debit Supplies Expense

b)

Debit Supplies

c)

Credit Supplies Expense

d)

Debit Cash

64.

What is the normal balance of an expense account?

a)

Debit

b)

Credit

c)

Zero

d)

Contra

65.

Which type of enterprise has assets more than ₱100 million?

a)

Small

b)

Medium

c)

Large

d)

Micro

66.

Which financial statement explains changes in owner’s equity during a period?

a)

Statement of Changes in Equity

b)

Income Statement

c)

Balance Sheet

d)

Cash Flow Statement

67.

When cash is received in advance for services, which account is credited?

a)

Cash

b)

Unearned Revenue

c)

Service Revenue

d)

Accounts Receivable

68.

Which is an example of an accrued expense?

a)

Supplies used

b)

Salaries payable

c)

Prepaid Rent

d)

Unearned Income

69.

Which GAAP principle states that accounting information should be supported by verifiable evidence?

a)

Objectivity Principle

b)

Matching Principle

c)

Revenue Recognition

d)

Consistency

70.

Which is NOT an element of financial statements?

a)

Assets

b)

Liabilities

c)

Cash Flow

d)

Equity

71.

Closing entries are made to:

a)

Prepare accounts for the next period

b)

Correct errors in journalizing

c)

Adjust accrued accounts

d)

Summarize ledger balances

72.

Which type of account increases with a debit?

a)

Revenue

b)

Expense

c)

Liability

d)

Capital

73.

The accounting equation must:

a)

Always be in balance

b)

Equalize only revenues and expenses

c)

Reflect cash transactions only

d)

Show only liabilities and equity

74.

What is the normal balance of liabilities?

a)

Debit

b)

Credit

c)

Contra

d)

None

75.

Which of the following decreases owner’s equity?

a)

Investment

b)

Revenue

c)

Expense

d)

Accounts Receivable

76.

The adjusting entry for depreciation includes:

a)

Debit Cash; Credit Accumulated Depreciation

b)

Debit Depreciation Expense; Credit Accumulated Depreciation

c)

Debit Accumulated Depreciation; Credit Depreciation Expense

d)

Debit Equipment; Credit Depreciation Expense

77.

Which is a limitation of accounting?

4 lines
78.

Which is a limitation of accounting?

a)

It uses money as a unit of measurement

b)

It is affected by estimates and judgments

c)

It records all business activities

d)

It requires consistency

79.

What is the purpose of adjusting entries?

a)

To correct previous errors

b)

To update accounts at period-end

c)

To prepare trial balance

d)

To record cash transactions

80.

Which account does NOT appear in the balance sheet?

a)

Salaries Expense

b)

Accounts Payable

c)

Cash

d)

Prepaid Rent

81.

Which GAAP principle assumes that accounting information should be prepared without bias?

a)

Objectivity Principle

b)

Matching Principle

c)

Prudence

d)

Materiality

82.

When owner withdraws supplies for personal use, it is recorded as:

a)

Owner’s Drawing

b)

Supplies Expense

c)

Accounts Payable

d)

Prepaid Supplies

83.

Which accounting branch focuses on taxes and filing returns?

a)

Auditing

b)

Tax Accounting

c)

Cost Accounting

d)

Management Accounting

84.

The primary objective of financial accounting is to:

a)

Provide information to managers

b)

Provide information to external users

c)

Compute taxes

d)

Detect fraud

85.

The process of transferring journal entries to ledger accounts is called:

a)

Closing

b)

Posting

c)

Summarizing

d)

Adjusting

86.

Which financial statement shows a company’s assets, liabilities, and equity at a specific date?

a)

Income Statement

b)

Balance Sheet

c)

Cash Flow Statement

d)

Statement of Owner’s Equity

87.

What does 'going concern' assumption mean?

a)

Business is about to liquidate

b)

Business will continue to operate indefinitely

c)

Business operates for one year only

d)

Business and owner are the same

88.

Which principle requires consistency in applying accounting methods?

a)

Consistency Principle

b)

Objectivity Principle

c)

Historical Cost

d)

Matching Principle

89.

What is the normal balance of an asset?

a)

Credit

b)

Debit

c)

Contra

d)

None

90.

Which account is increased by credits?

a)

Cash

b)

Accounts Receivable

c)

Service Revenue

d)

Supplies

91.

What is the term for reducing assets into small, manageable groups?

a)

Summarizing

b)

Classifying

c)

Measuring

d)

Posting

92.

What does RA 9298 regulate in the Philippines?

a)

Corporations

b)

Accountancy Profession

c)

Government Auditing

d)

Taxation

93.

Which phase of accounting answers the question 'How much?'

a)

Measuring

b)

Recording

c)

Classifying

d)

Summarizing

94.

Which accounting concept allows businesses to divide their life into equal reporting periods?

a)

Periodicity Concept

b)

Going Concern

c)

Entity Concept

d)

Monetary Unit

95.

Which branch of accounting focuses on internal decision-making?

a)

Management Accounting

b)

Financial Accounting

c)

Auditing

d)

Government Accounting

96.

The principle requiring significant items to be reported is:

a)

Adequate Disclosure

b)

Materiality

c)

Historical Cost

d)

Prudence

97.

What is the basic accounting equation?

a)

Assets = Liabilities + Equity

b)

Assets = Revenues – Expenses

c)

Assets = Capital – Withdrawals

d)

Assets = Liabilities – Equity

98.

Recording assets at acquisition price follows which principle?

a)

Historical Cost

b)

Matching

c)

Accrual

d)

Materiality

99.

Who is regarded as the Father of Accounting?

a)

Adam Smith

b)

Luca Pacioli

c)

Andrew Carnegie

d)

Aristotle

100.

Which branch of accounting examines the fairness of financial statements?

a)

Auditing

b)

Financial Management

c)

Bookkeeping

d)

Tax Accounting

101.

Which assumption ignores inflation?

a)

Stable Monetary Unit Concept

b)

Going Concern

c)

Periodicity

d)

Entity Concept

102.

What is the purpose of a trial balance?

a)

To summarize financial performance

b)

To check if debits equal credits

c)

To measure profitability

d)

To interpret results

103.

Which of the following is a financing activity?

a)

Paying salaries

b)

Issuing shares to raise funds

c)

Purchasing equipment

d)

Selling products

104.

What is bookkeeping primarily concerned with?

a)

Recording of transactions

b)

Interpreting financial data

c)

Preparing budgets

d)

Analyzing profitability

105.

Which financial statement shows revenues and expenses?

a)

Balance Sheet

b)

Income Statement

c)

Statement of Cash Flows

d)

Statement of Changes in Equity

106.

Which principle requires recording revenue when earned, not when received?

a)

Accrual Principle

b)

Historical Cost

c)

Consistency

d)

Materiality

107.

Which concept separates business and personal transactions?

a)

Entity Concept

b)

Monetary Unit Concept

c)

Going Concern

d)

Prudence

108.

In double-entry accounting, every transaction affects:

a)

At least one account only

b)

Two or more accounts

c)

Only assets

d)

Only liabilities

109.

Which branch of accounting relates to government funds?

a)

Government Accounting

b)

Management Accounting

c)

Financial Accounting

d)

Auditing

110.

Which body replaced the Accounting Standards Council in the Philippines?

a)

IASB

b)

FRSC

c)

SEC

d)

PIC

111.

Which branch of accounting helps management plan and control operations?

a)

Management Accounting

b)

Financial Accounting

c)

Auditing

d)

Bookkeeping

112.

Which is an example of an investing activity?

a)

Issuing bonds

b)

Purchasing machinery

c)

Paying salaries

d)

Selling finished goods

113.

What do you call profits distributed to owners of a corporation?

a)

Withdrawals

b)

Dividends

c)

Capital

d)

Equity

114.

Which principle requires relevant information to be presented in FS?

a)

Adequate Disclosure

b)

Consistency

c)

Historical Cost

d)

Matching

115.

What is the first step in the accounting cycle?

a)

Posting

b)

Identifying transactions

c)

Journalizing

d)

Preparing trial balance

116.

Which branch involves preparing cost data for production decisions?

a)

Cost Accounting

b)

Tax Accounting

c)

Financial Management

d)

Auditing

117.

What is the normal balance of equity?

a)

Debit

b)

Credit

c)

None

d)

Contra

118.

Which account decreases with a debit?

a)

Cash

b)

Accounts Receivable

c)

Owner’s Capital

d)

Supplies

119.

What is the main purpose of summarizing in accounting?

a)

Recording transactions

b)

Preparing financial statements

c)

Posting entries

d)

Analyzing ratios

120.

Which principle requires expenses to be recorded in the same period as revenues?

a)

Matching Principle

b)

Historical Cost

c)

Consistency

d)

Materiality

121.

What is the role of the Philippine Interpretations Committee (PIC)?

a)

To set accounting laws

b)

To issue guidance on PFRS implementation

c)

To regulate auditors

d)

To issue tax codes

122.

Which assumption allows financial statements to be prepared yearly?

a)

Periodicity Assumption

b)

Going Concern

c)

Entity Assumption

d)

Stable Monetary Unit

123.

Which account is a liability?

a)

Accounts Payable

b)

Rent Expense

c)

Service Revenue

d)

Cash

124.

Which is NOT a branch of accounting?

a)

Financial Accounting

b)

Management Accounting

c)

Taxation

d)

Engineering Accounting

125.

Which activity is concerned with day-to-day operations?

a)

Financing

b)

Investing

c)

Operating

d)

Auditing

126.

Which branch ensures compliance with tax laws?

a)

Tax Accounting

b)

Auditing

c)

Bookkeeping

d)

Government Accounting

127.

Which principle requires reliable data free from bias?

a)

Objectivity Principle

b)

Consistency Principle

c)

Prudence Principle

d)

Adequate Disclosure

128.

Who establishes accounting standards in the Philippines today?

a)

FRSC

b)

IASB

c)

SEC

d)

ASC

129.

Which account appears in the Statement of Owner’s Equity?

a)

Service Revenue

b)

Withdrawals

c)

Accounts Payable

d)

Supplies

130.

Which is an intangible asset?

a)

Equipment

b)

Building

c)

Patent

d)

Cash

131.

What is the last step in the accounting cycle?

a)

Closing entries

b)

Post-closing trial balance

c)

Adjusting entries

d)

Preparing financial statements

132.

Which financial statement provides information about cash inflows and outflows?

a)

Income Statement

b)

Cash Flow Statement

c)

Balance Sheet

d)

Statement of Changes in Equity

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