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WorksheetsTEST BANK (UCNHS Reviewer for Kingfisher ABM Cup)
Total questions: 117
Worksheet time: 44mins
Which of the following make up a company’s cash flow prospects?
Return of investment
Return on investment
Accessibility to investment
Return of investment and return on investment
The accounting cycle includes the following, EXCEPT:
Analyzing
Recording
Interpreting
Summarizing
Accounting records are based on:
Money changing hands
Any events that can be recorded reliably
Any event that affects the financial position of a business
Any event that affects the financial position of a business and any event that can recorded reliably
An accounting system is cost-effective when it
Produces information that is more valuable than the cost obtaining the information
Produces useful information
Produces reports required by law
Uses computers to replace manual activities
Which of the following is NOT typically true of accounting information?
The information relates to specific accounting entities
The information relates to the future time periods
The information is quantitative in nature
The information is primary financial in nature
Which of the following is NOT part of the functions of the accounting system?
Reporting the results of the operations during the period
Analysing and recording business transactions of the enterprise.
Classifying and summarizing the effects of the transactions on the accounting elements.
Preparing financial statements that are favorable to the data users.
The professional organization that serves the needs of accountants who work for a single company is the:
Securities and Exchange Commission (SEC)
Philippine Association of Management Accountants (PAMA)
Association of CPAs in Public Practice (ACPAPP)
Financial Reporting Standards Council (FRSC)
The general- purpose assumption of externally reported information relates to
The historical nature of reported information
The notion that ‘one size fits all’
The notion that financial statements are the means by which is the end is achieved
Using notes and explanations as footnotes to the financial statements for clarification.
Which of the following is NOT an important aspect of management accounting?
Planning
Implementing plans
Product design
Controlling costs
Which of the following is NOT one of the four primary financial statements?
Statement of retained earnings
Statement of cash flows
Statement of financial position
Statement of financial performance
Corporations differ from proprietorships and partnerships in several ways. One difference is that:
Only corporations are going-concern
Retail stores are usually not owned by corporations
People can invest in corporation with limited personal risk
Only corporations adhere to the business entity concept
Which of the following would be considered an external user?
Plant manager
Store manager
Board of directors
Owner
Which of the following provides the guidance for determining what accounting treatment where a Philippine Financial Reporting Standards (PFRS) or a Philippine Accounting Standards (PAS) does not provide specific guidelines?
Generally Accepted Amortization Standards
Generally Accepted Auditing Standards
Accounting standards and practices
Conceptual framework
Which of the following is NOT a service typically provided by large public accounting firms?
Re-designing operating procedures
Making management decisions
Performing audits
Establishing accounting systems
Which of the following is NOT a step in the decision making process?
Identify the issue
Gather information
Identify alternatives
Select the option that will result in the greatest financial increase
Private accounting as a sub discipline of accounting information includes
Management accounting
Tax consultancy
Management advisory services
External auditing
Which of the following is true regarding business transactions?
Business transactions are not recorded on the books of an organization.
All business transactions can be stated in terms of changes in the elements of the accounting equation
Business transactions do not have to be recorded in the book of organization.
Business transactions are only recorded in the book of organization when the transaction is more than P1,000
Which of the following statements best describes GAAP?
They have been developed on the basis of such factors as usage and practical necessity
They do not have apply to small companies
They are the same laws within our legal system
They have been formulated in the public sector
Which of the following is not true?
Accounting is not an exact science
Accounting is a language of business
Accounting is useful only for profit-oriented organizations
Accounting is a communication tool that is useful to both internal and external decision makers
Which of the following is NOT an external user of financial information?
Management
Competitors
Employees
Suppliers
For management accountants, avoiding conflicts of interest by refusing compromising gifts and favors is included in the code of ethics requirement of
Competence
Confidentiality
Integrity
Objectivity
GAAP principle are
Natural laws
Based on scientific proof
Developed by accounting rule makers
None of these are correct
Which of the following involves determining the cost of certain business activities and interpreting cost information?
Cost accounting
Management accounting
Tax accounting
Financial accounting
Which of the following statements does not pertain to the definition of income statement?
Tells the story of the profits and losses experienced by the firm for a given period of time
Report the results of operations over a specific period of time
Explains, in part, how the company’s financial position changed over a specific period of time
Is the end of accounting process that conveys the management and external parties to concise the picture of the cash movement of the company over a specified period of time
When the company purchases for 500,000 cash an asset with market value of 750,000, which accounting concept, principle, or assumption specifically requires that the asset be reported at $500,000 on the balance sheet?
(a)
Decreases in owners’ equity occur when there is a/an
Additional investment
Expenses
Revenue
Net income
Under which form of business are the owners directly responsible for the debts of the business?
Partnership only
Sole proprietorship only
Corporation only
Sole proprietorship and partnership
Resource increases from the sale of goods or services are called
Revenues
Assets
Gains
Net income
Which of the following is NOT one of the four general types of financial statement notes?
Supplementary information required by the BIR
Additional information about the summary totals found in the financial statements
Disclosure of important information that is not recognized in the financial statements
Summary of significant accounting policies
Which of the following activities would NOT be classified as investing activities?
Purchase of land
Purchase of supplies
Sale of equipment
Sale of properties
Which of the following transactions would appear on the statement of cash flows as financing activities?
Cash paid for expenses
Investment by the owner(s)
Purchase of equipment
Cash received from the revenue transactions
Objectivity is assumed to be achieved when an accounting transaction:
Involved in arm length transaction between two independent parties
Is recorded in a fixed amount of pesos
Involves the payment or receipt of cash
Allocates revenue or expenses in a rational and systematic manner
Office equipment was purchased by issuing a check for 15,000andnotepayableforthebalanceof 45,000. What is the effect the transaction has on the financial position of the company?
Assets, decrease; Liabilities, increase; Equity, no change.
Assets, decrease; Liabilities, no change; Equity, increase.
Assets, increase; Liabilities, increase; Equity, no change.
Assets, no change; Liabilities, no change; Equity, no change.
If the current liabilities are $62,100 and the current ratio is 0.7, what is the total of the current assets?
(a)
If the company has an assets of 800,000, liabilities of 360,000 and capital stock of $300,000, what is the amount of retained earnings?
(a)
Which of the following financial statements provides a picture of the enterprise at a particular point in time?
Statement of changes in equity
Statement of cash flows
Statement of comprehensive income
Statement of financial position
Earnings per share is equal to
Total revenues divided by the number of shares of stock sold during the year
Net income divided by the number of shares of stock sold during the year
Net income divided by total number of shares of stock outstanding
Total revenues divided by total number of shares of stock outstanding
As a gesture of goodwill, office supplies of $3,000 were sold to a neighboring business that paid cash for supplies. What is the effect the transaction had on the financial position of the company?
Assets, decrease; Liabilities, increase; Equity, no change.
Assets, decrease; Liabilities, no change; Equity, increase.
Assets, increase; Liabilities, increase; Equity, no change.
Assets, no change; Liabilities, no change; Equity, no change.
Which of the following is the primary use of cash?
Borrowing
Purchase of equipment
Investment by owners
Operating expenses
Notes to the financial statements about lawsuits, pledged assets, contractual commitments, and due dates on large liabilities that help the users interpret the financial statements are required under an important GAAP known as which of the following?
Going concern assumption
Cost principle
Window dressing
Disclosure
Measures taken by management to make the company appear as strong as possible in its financial statements are called which of the following?
Window dressing
Adequate disclosure
Improvements of accounting equation
GAAP
In accounting, the word accrued refers to the payment of expenses
That will not be made
At the time of payment
That has been deferred
That has occured
Articulation refers to the relationship among the financial statements. What item on the balance sheet ties to the statement of cash flows?
Beginning cash
Ending cash
Net income
Revenues
The accuracy of the information contained in the financial statements is the responsibility of the
CPA
Board of Directors
Management
Stockholders
Which of the following classifications refers to those activities whereby cash is obtained or repaid to owners and creditors?
Borrowing
Financing
Investing
Operating
Companies prepare classified and comparative financial statements because
They are required by the BIR
They are required by the international accounting principles
They show the changes in a company's management procedures and policies
They provide financial statement readers with useful information about trends in financial position and operating performance
Cash was invested in the business in exchange for capital stock. What is the effect the transaction has on the financial position of the company?
Assets, decrease; Liabilities, increase; Equity, no change.
Assets, increase; Liabilities, no change; Equity, increase.
Assets, increase; Liabilities, increase; Equity, no change.
Assets, no change; Liabilities, no change; Equity, no change.
The company paid its employees their weekly wages of $36,000, what is the effect did the transaction have on the financial position of the company?
Assets, decrease; Liabilities, decrease; Equity, no change.
Assets, increase; Liabilities, no change; Equity, increase.
Assets, decrease; Liabilities, no effect; Equity, decrease.
Assets, no change; Liabilities, no change; Equity, no change.
Historical cost is the
Amount of cash paid or fair value of the consideration given at the time of acquisition
Amount of cash that would have to be paid if the same or amount equivalent asset is acquired currently
Discounted value of the future net cash inflows that the items is expected to generate
The idea that transactions are recorded at their exchange prices at the transaction date is referred to as the
Cost principle
Monetary measurement principle
Going concern assumption
Arm's length transaction assumption
Which of the following distinguishes between current and long-term assets?
Comparative statement of financial position
Statement of comprehensive income
Classified balance sheet
Liquidity balance sheet
The company paid a 50,000installmentonanotepayableof 450,000. What is the effect the transaction has on the financial position of the company?
Assets, decrease; Liabilities, decrease; Equity, no change.
Assets, decrease; Liabilities, no change; Equity, decrease.
Assets, increase; Liabilities, increase; Equity, increase.
Assets, no change; Liabilities, no change; Equity, no change.
The company sold the 940,000apieceofequipmentthatwasusedinproduction,collectingadownpaymentof 300,000 and a note receivable for the balance to be paid in subsequent accounting periods. On the statement of cash flow, the $640,000 balance would be
Reported as a financing activity of $940,000
Reported as an operating activity as $940,000
Reported as an investing activity as $940,000
Disclosed as a noncash investing and financing transaction
In the short run, what distinguishes liquidity and profitability?
Creditors are more interested in profitability than liquidity
Owners have an interest in profitability but not in liquidity
Profitability increases owner's equity, liquidity does not
There is no distinguishable differences
Suppose you decide to purchase a stereo and an independent store dealer offers to sell you a system that retails for 4,000forapriceof 3,695. After the negotiation, you purchase the system for 3,400.The 3,400 is considered the accounting measurement for the transaction because of the
Double-entry assumption
Going concern assumption
Arm's-length assumption
Fair value assumption
Users of accounting information who analyze the financial statement and monitor the development of a company are called?
Creditors
Investors
Taxing authorities
Government regulatory agencies
Which of the following issues licences to practice as a CPA?
Board of Accountancy
Philippine Institute of Certified Public Accountant
Financial Reporting Standards Council
Certified Institute of Management Accountant
The internal control structure is intended to
Ensure the entire organization operates according to plan
Only uncover errors, fraud, and waste
Discourage teamwork among personnel
Specifically ensure the board of directors act according to the formal mission of the company
Which of the following is NOT a key component of the definition of accounting?
Useful
Qualitative
Financial
Decision-oriented
Which of the following is true about the double-entry system of bookkeeping?
It was developed in the 1300s-1400s in Italy
It was developed in the 1300s-1400s in France
It was developed in the 1400s-1500s in Italy
It was developed in the 1400s-1500s in France
Which of the following organizations has specific legal authority to establish accounting standards for publicly held companies?
Philippine Institute of Certified Public Accountant
Financial Reporting Standards Council
Bureau of Internal Revenue
Securities and Exchange Commission
Which area of the accounting emphasis is not a major part of financial accounting?
Auditing
Regulatory
Criminal investigation
Internal audit
The character of externally reported information is characterized by all fo the following except:
Is oriented toward the future
Largely historical in nature
May be inexact and contain approximations
Is general-purpose in nature
Which of the following is the mechanical aspect of accounting?
Reviewing the effectiveness of the internal control procedures
Designing the accounting system
Analyzing the transactions preparatory to the recording process
Preparation of the financial budget
Public accounting as a sub-discipline of accounting includes
Cost Accounting
Internal Auditing
Management Accounting
Management Advisory Services
Measures used by an organization to guard against errors, waste and to assure the reliability of accounting information; to promote compliance with management policies; and to evaluate the level of performance of all divisions of the company, are called
Integrity
Audits
Internal control structure
Internal auditing
Which of the following is not a characteristic of management accounting information?
Historically oriented
Timeless is of importance
Measures effectiveness and efficiency
Decision-making authority is identified
The emphasis in the financial accounting is on which of the following external user groups
Management
Educators
CPA
Investors and creditors
Accounting can be described as a
Service activity
Merchandising activity
Manufacturing activity
All of these
The basic functions of the accounting system include all the following except:
Classifying the effects of similar transaction
Interpreting and recording the effects of the business transactions
Summarizing and communicating the information contained in the system
Dictating the specific types of business transactions that the enterprise may engage in
Which of the following professional accounting organizations intends to influence the concepts and ethical practice of management accounting and financial management?
Association of CPAs in Public Practice (ACPAPP)
Philippine Institute of Certified Public Accountant (PICPA)
Government Association of CPAs (GACPA)
Philippine Association of Management Accountants (PAMA)
Accountants typically perform what action related to the financial results of business activities?
Report the result of business activities
Advise on how to structure business activities
Both a and b
None of the above
Ethics are especially important in accounting because
Independent accountant represents the public interest
The accounting profession does not have a code of professional conduct
Accountants have historically committed more company thefts than other employees
Accountants can steal money more easily than employees
Only the $2,000 debit portion was posted of an adjusting entry in which Insurance Expense was debited and Unexpired Insurance was credited. As a consequence of this error,
Trial balance will have a debit balance of $2,000 greater than the credit balance
Trial balance will have a credit balance of $2,000 greater than the debit balance
Trial balance will have equal totals of debit and credit balances
Assets will be understated by $2,000
Jim is a lawyer who requires that his clients pay him in advance of legal services rendered. Jim routinely credits Legal Service Revenue when his clients pay him in advance. In June, Jim collected $12,000 in advance fees and completed 75% of the work related to these fees. What adjusting entry is required by Jim's firm at the end of June?
(a)
The preparation of adjusting entries is
Optional when financial statements are prepared
Only required for accounts that do not have a normal balance
Often an involved process requiring the skills of a professional
Straight forward because the accounts that need adjustment will be out of balance
Failure to prepare an adjusting entry at the end of the period to record an accrued revenue would cause
An understatement of revenues and understatement of liabilities
An understatement of revenues and overstatement of liabilities
An understatement of revenues and understatement of assets
An understatement of revenues and overstatement of assets
Expenses sometimes make their contribution to revenue in a different period than when the expense is paid. When wages are incurred in one period and paid in the next period, this often leads to which account appears on the balance sheet at the end of the period?
Wages Expense
Wages Payable
Due from Employees
Due to Employer
A company spends P10 million pesos for an office building. Over whar period should the cost be written off?
All in first year
Over the useful life of the building
When the 10 million is expended in cash
After 10 million in revenue is earned
At the end of July, the first month of the business year, the usual adjusting entry transferring rent earned to revenue account from the unearned rent account was omitted. Indicate which items will bw incorrectly stated because of the error on the income statement for the month of July.
Assets, no effect; Liabilities, understated; Equity, overstated.
Assets, no effect; Liabilities, overstated; Equity, understated.
Assets, understated; Liabilities, no effect; Equity, understated.
Assets, overstated; Liabilities, no effect; Equity, overstated.
Adjustments would not be necessary if financial statements were prepared to reflect net income from
Interim operations
Monthly operations
Fiscal year operations
Lifetime operations
Which of the following is not a justification for adjusting entries?
adjusting entries are necessary to bring the general ledger accounts in line with the budget
adjusting entries are necessary to ensure that revenue recognition principles are followed
adjusting entries are necessary to ensure that matching recognition principles are followed
adjusting entries are necessary to enable financial statements to be in conformity with GAAP
Accumulated depreciation account
Has a normal credit balance
Increases on the debit side
Is a contra-liability account
Is offset against total assets on the balance sheet
On March 31, 2019, Pheonix, Inc. paid Melanie Publishing Company P15,480 for a 3-year subscription for five different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by Melanie Publishing Company for each year of the subscription?
2019: P15,480; 2020: P0; 2021: P0; 2022: P0
2019: P3,870; 2020: P5,160; 2021: P5,160; 2022: P1,290
2019: P5,160; 2020: P5,160; 2021: P5,160; 2022: P0
2019: P0; 2020: P0; 2021: P0; 2022: P15,480
If business pays rent in advance and debit a Prepaid Rent account, the company receiving the rent earned payment will credit
Rent Revenue
Rent Expense
Unearned Rent
Prepaid Rent
Can financial statements be prepared directly from the adjusted trial balance?
Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts.
They can because that is only reason that an adjusted trial balance is prepared.
No, the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose.
They cannot. The general ledger must be used.
If the company's adjustment for unearned rent had incorrectly been made for P18,000 instead of P12,000, what would have been the effect on the financial statements?
Revenues would have overstated by P6,000; net income would have overstated by P6,000; liabilities would have overstated by P6,000; and owner's equity would have overstated by P6,000.
Revenues would have overstated by P6,000; net income would have overstated by P6,000; liabilities would have understated by P6,000; and owner's equity would have overstated by P6,000.
Revenues would have understated by P6,000; net income would have understated by P6,000; liabilities would have understated by P6,000; and owner's equity would have understated by P6,000.
Revenues would have understated by P6,000; net income would have understated by P6,000; liabilities would have overstated by P6,000; and owner's equity would have understated by P6,000.
If unearned revenues are initially recorded in revenue accounts and have not all been earned at the end of the accounting period, then failure to make an adjusting entry will cause
Revenues to be overstated
Revenues to be understated
Liabilities to be overstated
Asset to be understated
Interim financial statements refer to financial reports
Where revenues reported on the income statement when cash is received and expenses are reported when cash is paid.
Where the adjustment process is used to assign revenues in the period in which they are earned and to match expenses with revenues.
That cover less than one year, usually spanning one, three, or six-month periods
That show the assets must above the liabilities
King University sold season tickets for 2018 football season for P160,000. A total of 8 games will be played during September, October and November. In September, two games were played. In October, three games were played. The balance in Unearned Revenue at October 31 is
(a)
Accrued salaries of P17,750 owed to employees for December 30 and 31 are not considered in preparing the financial statements for the year ended December 31. Indicate which item on the balance sheet as of December 31, will be incorrectly stated either overstated or understated.
Assets, no effect; Liabilities, understated; Equity, overstated.
Assets, no effect; Liabilities, overstated; Equity, understated.
Assets, understated; Liabilities, no effect; Equity, understated.
Assets, overstated; Liabilities, no effect; Equity, overstated.
A company usually determines the amount of supplies used during a period by
Taking the difference between the supplies purchased and the supplies paid during the period
Adding the supplies on hand to the balance of the supplies account
Summing the amount of supplies purchased during the period
Taking the difference between the balance of the supplies account and cost of supplies on hand
Which of the following is NOT a reason that business documents are used in a business?
To confirm that a transaction has occurred
To facilitate the analysis of business transactions
To forecast sales
To establish the amounts to be recorded
On January 25, Blayne Corporation bought supplies from a supplier for P3,600 on account. On February 20, Blayne paid the P3,600 owed to the supplier. The correct entry to record the purchase on January 25 is
DR. Supplies 3,600; CR. Supplies Expense 3,600
DR. Supplies 3,600; CR. Accounts Payable 3,600
CR. Supplies 3,600; DR. Accounts Payable 3,600
CR. Supplies 3,600; DR. Supplies Expense 3,600
On May 16, Bennion Company, providing services to Bonaccorsi Inc. for P10,000 cash and P60,000 credit. On June 10, Bonaccorsi Inc. paid Bennion Company to record the transaction on May 16 would include:
A credit to Accounts Receivable
A credit to Cash
A credit to Service Revenue
A debit to Accounts Payable
Which of the following statements is true?
An account shows only increases, not decreases, in the item it relates to.
An account is an accounting record of either specific asset or specific equity.
A simple form of an account, consisting of just account title, the left side, and the right side, is called a T-account.
Some items, such as cash and prepayments, are combined into one account.
Which of the following is the correct order for preparing a journal entry?
Identify which account is involved; For each account, determine if it is increased or decreased; For each account, determine by how much it has changed
For each account, determine if it is increased or decreased; Identify which account is involved; For each account, determine by how much it has changed
For each account, determine if it is increased or decreased; For each account, determine by how much it has changed; Identify which account is involved
Identify which account is involved; For each account, determine by how much it has changed; For each account, determine if it is increased or decreased.
A trial balance may balance even when each of the following occurs except when
A journal entry is posted twice
Incorrect accounts are used in journalizing
A transposition error is made
A transaction is not journalized
Which of the following is NOT usually part of an entry in the General Journal?
Account numbers for the debit and credit entry
An explanation of the transaction
The transaction date
Account titles for the debit and credit entry
Which of the following is NOT a step in the accounting cycle?
Recording the effects of transactions
Summarizing the effects of transactions
Preparing reports
Forecasting sales
What is the primary purpose of the balance sheet?
To show the company's revenues and expenses
To provide a snapshot of the company's financial position at a specific point in time
To summarize cash inflows and outflows
To report the changes in equity over a period
Which accounting principle requires that expenses be matched with revenues?
Revenue recognition principle
Matching principle
Cost principle
Full disclosure principle
What is the effect of recording depreciation on an asset?
Equity increases and liabilities decrease
Assets increase and equity decreases
Assets decrease and expenses increase
Liabilities increase and assets decrease
Which of the following is a primary purpose of financial accounting?
To provide information for internal decision-making
To prepare tax returns
To provide information to external users
To manage cash flow
What is the primary focus of managerial accounting?
Tax planning
Compliance with regulations
Cost control and budgeting
External reporting
What is the primary tax imposed on the income of individuals and corporations in the Philippines?
Excise Tax
Capital Gains Tax
Income Tax
Value Added Tax (VAT)
Which government agency is responsible for the collection of taxes in the Philippines?
Department of Finance
Bureau of Internal Revenue
Commission on Audit
National Economic and Development Authority
What is the tax rate for individuals earning above P8 million in the Philippines as of the latest tax reform?
40%
35%
25%
30%
What is the primary purpose of performing a bank reconciliation?
To calculate the company's total assets
To ensure that the company's cash records match the bank's records
To assess the company's profitability
To prepare the financial statements
Which of the following items would typically be adjusted during a bank reconciliation?
Inventory
Outstanding checks
Accounts receivable
Fixed assets
When reconciling a bank statement, what does a bank service charge represent?
An increase in the company's cash balance
A decrease in the company's cash balance
A liability for the company
An asset for the company
What is the first step in the bank reconciliation process?
Prepare a reconciliation statement
Compare the bank statement with the cash book
Identify outstanding checks
Adjust the bank statement balance
Which of the following items would typically be included in a bank reconciliation?
Fixed asset purchases
Inventory adjustments
Accounts payable
Deposits in transit
What is the primary reason for performing a bank reconciliation?
To manage cash flow effectively
To identify potential fraud
To comply with tax regulations
To ensure accurate financial reporting
What is the first step in the accounting cycle for a merchandising business?
Preparing financial statements
Recording transactions
Closing the books
Analyzing transactions
In a merchandising business, which of the following accounts is typically affected when inventory is sold?
Accounts Receivable
Sales Revenue
Cost of Goods Sold
Accounts Payable
Which document is essential for tracking the flow of inventory in a merchandising business?
Sales invoice
Purchase order
Inventory ledger
Bank statement
