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BAED-FABM2112 Fundamentals of Accountancy, Business and Management 1

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BAED-FABM2112-2322S
QUARTERLY EXAM
Second Quarter Exam
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Question 1
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Accounting involves communication.
Select one:

a.
True

b.
False

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Question text
IDENTIFICATION. Read the question carefully and type what is being asked in the space
provided.

Answer
This refers to probable future sacrifices of economic benefits due to present obligations.
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Which of the following is NOT part of the inventory of the business?
Select one:

a.
Goods in transit from the supplier. Term: F.O.B shipping point.

b.
Goods that are ready for shipment to the customer.

c.
Goods in transit to the customer. Term: F.O.B destination.

d.
Goods held for sale on behalf of Monte Company, a consignor.

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The top of the T account is used for account titles. Credits are entered on the left side of the T;
debits, on the right.
Select one:

a.
True

b.
False

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What are the accounting standards issued by the IASB called?
Select one:

a.
Internationally Accepted Accounting Standards

b.
International Financial Accounting Standards
c.
International Financial Reporting Standards

d.
International Accounting Principles

Question 6
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Generally, revenues is recognized:
Select one:

a.
When management chooses to do so.

b.
At the point of cash collections.

c.
When customers make their orders.

d.
At the point of delivery of the goods to the customers.
Question 7
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Information is material if:
Select one:

a.
It is recorded on the basis of concrete documents.

b.
None of the previous answers.

c.
Its omission or misstatement could influence the economic decisions of users taken on the basis
of the financial statements.

D.
It corresponds to financial variables

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A company with merchandise that has a high unit value would probably use a:
Select one:

a.
Single entry inventory system

b.
Perpetual inventory system

c.
Periodic inventory system

d.
Double entry inventory system

Question 9
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IDENTIFICATION. Read the question carefully and type what is being asked in the space
provided.

Answer
An average length of time needed for cash to become goods, services, and then back to cash.
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Accounting deals with quantifiable information.
Select one:

a.
False

b.
True

Question 11
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Financially, shareholders are rewarded by
Select one:

a.
Dividends

b.
Profits

c.
Interest
d.
No correct answer

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Which financial statement is used to show what the firm owns?
Select one:

a.
Income statement

b.
Cash flow statement

c.
Statement of retained earnings

d.
Balance sheet

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Information is cost effective when:
Select one:

a.
The information aids management in controlling costs.

b.
The information is based upon the historical costs, rather than upon?

c.
The value of the information exceeds the cost of producing it.

d.
The information is generated by a computer-based system.

Question 14
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In determining cost of goods sold:
Select one:

a.
Purchase returns and allowances are deducted from net purchases.
b.
Freight-in is added to net purchases.

c.
Purchase discounts are deducted from net purchases.

d.
Freight-out added to net purchases.

Question 15
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Person who manages all of a firm’s accounting activities.
Select one:

a.
Accounting staff

b.
Payroll manager

c.
Controller
Question 16
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All of the following are characteristics of managerial accounting, except:
Select one:

a.
Reports are used primarily by insiders rather than by persons outside of the business entity.

b.
Information must be developed in conformity with generally accepted accounting principles or
with income tax regulations.

c.
Its purpose is to assist managers in planning and controlling business operations.

d.
Information may be tailored to assist in specific managerial decisions.
Answer: C

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Which is the last step of accounting as a process of information?
Select one:

a.
Communication of information

b.
Preparation of financial statement

c.
Recording the transaction

d.
Analysis and interpretation of information

Question 18
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Accounting provides information on
Select one:

a.
Financial conditions of an institution

b.
All of the answers correct

c.
Company’s tax liability for a particular year

d.
Cost and income for managers

Question 19
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Financial statements are prepared:
Select one:

a.
Primarily for the benefit of persons outside of the business organizations

b.
For corporations, but not for sole proprietorship or partnership.

c.
In either monetary or non-monetary terms, depending upon the need of the decision-maker.

d.
Only for publicly owned business organizations.
Question 20
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Probable future sacrifices of economic benefits arising from past transactions are known as:
Select one:

a.
Expenses

b.
Liabilities

c.
Assets

d.
Income

Question 21
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The four principal qualitative characteristics of useful financial statements are:
Select one:

a.
Understandability, relevance, reliability, simplicity

b.
Timeliness, relevance, reliability, comparability

c.
Understandability, relevance, reliability, comparability

d.
Understandability, relevance, accuracy, comparability

Question 22
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The type of accounting which reports on the performance of the firm to essential external users.
Select one:

a.
Managerial accounting

b.
Internal auditing
c.
Financial accounting

d.
External accounting

Question 23
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When credit terms of 1/10, n/30 are offered, the discount period is:
Select one:

a.
20 days

b.
1 day

c.
10 days

d.
30 days
Question 24
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Refers to an increase in the balance in Accounts payable.
Select one:

a.
Investing

b.
Financing

c.
Supplemental

d.
Operating

Question 25
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IDENTIFICATION. Read the question carefully and type what is being asked in the space
provided.
Answer
The difference between the total current assets and the total current liabilities.
Question 26
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Work was completed and invoiced to a customer for payment within 30 days, is the posting to
accounts receivable a debit or a credit?
Select one:

a.
Debit

b.
Credit

Question 27
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A chart of accounts is limited to 50 accounts.
Select one:

a.
False

b.
True

Question 28
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Which of the following statements is?incorrect?
Select one:

a.
An asset has future usefulness or service potential

b.
A reliable monetary value must be assignable to the reported asset items.

c.
The business enterprise must have ownership over the items reported as business assets.

d.
An asset does not always have physical attributes.

Question 29
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Which of the following is more appropriate definition for Accountancy?
Select one:

a.
Accountancy refers to the art of communicating the financial transactions to accounting users

b.
Accountancy refers to the systematic knowledge of accounting.

c.
Accountancy refers to the process of recording financial transactions in the order of their
occurrence

D.
Accountancy refers to the art of classifying the recorded transactions under their respective
accounts

Question 30
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Accounting is the language of business.
Select one:
a.
True

b.
False

Question 31
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The basic function of financial accounting is to
Select one:

a.
Record all business transactions

b.
No correct answer

c.
Assist the management in performing functions effectively

d.
Interpret financial data

Question 32
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The term book keeping and accountancy can be used interchangeably.
Select one:

a.
False

b.
True

Question 33
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Which of the following groups use financial accounting?
Select one:

a.
Suppliers, customers and competitors

b.
Tax authorities, government and general public
c.
Management, employees, shareholders, and lenders

d.
All of the answers correct

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Government agency gives a CPA certificate to an accountant after he passes a series of rigorous
examinations administered by the Board of Accountancy (BOA).
Select one:

a.
BIR

b.
School Registrar

c.
PRC

d.
Civil Service Commission
Question 35
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Although accounting information is used by a wide variety of external parties, financial reporting
is primarily directed toward the information needs of:
Select one:

a.
Government agencies such as the Internal Revenue Service.

b.
Investors and creditors

c.
Customers

Question 36
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Which of the following would be classified in a statement of earnings as a non-operating
activity?
Select one:

a.
Interest expense

b.
Selling expense

c.
Casualty expense

d.
Gain on the disposal of capital asset

Question 37
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The sales discount is based on:
Select one:

a.
Invoice less discount

b.
Invoice price less return and allowances

c.
Invoice price plus freight in
d.
Invoice price plus freight out

Question 38
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When does an accountant record a transaction?
Select one:

a.
If it is materialized by a concrete document

b.
If it has a tax implication

c.
No correct answer

d.
On manager’s demand

Question 39
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Which is the last step of accounting as a process of information?
Select one:

a.
Analysis and interpretation of information

b.
Communication of information

c.
Recording the transaction

d.
Preparation of financial statement

Question 40
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The basic function of financial accounting is to
Select one:

a.
Record all business transactions
b.
Interpret financial data

c.
Assist the management in performing functions effectively

d.
No correct answer

Question 41
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The purchase of a new delivery truck to be used in the business is an example of which of the
following?
Select one:

a.
Supplemental

b.
Investing

c.
Financing
d.
Operating

Question 42
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Cash paid to a supplier for goods supplied by them on credit terms, is the entry to accounts
payable a debit or credit entry?
Select one:

a.
Debit

b.
Credit

Question 43
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A one year reporting period that begins on January 1 ends on December 31 is:
Select one:
a.
Quarterly reporting period

b.
Calendar year reporting period

c.
Fiscal year reporting period

d.
Semester reporting period

Question 44
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Accounting aims to communicate financial information to investors only.
Select one:

a.
False

b.
True

Question 45
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Assume that sales are P450,000, sales discounts are P10,000, net earnings are P35,000, and cost
of goods sold is P320,000. Gross Profit and operating expenses are respectively:
Select one:

a.
P120,000 and P85,000

b.
P120,000 and P95,000

c.
P130,000 and P85,000

d.
P130,000 and P95,000

Question 46
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Which financial statement displays the revenues and expenses of a company for a period of
time?
Select one:
a.
Balance sheet

b.
Income Statement

c.
Cash Flow

d.
Statement of Owner’s Equity

Question 47
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Which of the following accounts is not liability?
Select one:

a.
Unearned rent

b.
Prepaid insurance
c.
Accrued wages

d.
Provision for income taxes

Question 48
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Under the general rule, revenue is recognized when:
Select one:

a.
All the expense related to the revenue can be identified and measured.

b.
The marketability and the market price of the products are assured.

c.
The earning process is complete or virtually complete.

d.
Cash is collected from the customer.

Question 49
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Which of the following transactions should be entered in the petty cash book.
Select one:

a.
Travelling expenses

b.
Stock issued

c.
Subscriptions

d.
Salary payments

Question 50
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The basic purpose of accounting is to:
Select one:
a.
Provide as much useful information to decision makers as possible, regardless of cost.

b.
Develop financial statements in conformity with generally accepted?

c.
Record changes in the financial position of an organizations by applying the concepts of double-
entry accounting.

D.
Meet an organization’s need for accounting information as efficiently as possible.

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