PROBLEM 1: True or False
1. All events and transactions of an entity are recognized the book of accounts. FALSE. ONLY
ACCOUNTABLE EVENTS.
2. The accounting process of assigning numbers, commonly in monetary terms, to the
economic transactions and events is referred to as classifying. FALSE. MEASURING.
3. The basic purpose of accounting is to provide information about economic activities
intended to be useful in making economic decision. TRUE
4. Financial accounting is the branch of accounting that focuses on general purpose reports of
financial position and operating results known as the financial statements. TRUE
5. General purpose financial statements are those statements that cater to the common and
specific needs of a wide range of external users. FALSE. COMMON
6. The financial statements are the only source of information when making economic
decision. FALSE. OTHER REPORTING STATEMENTS
7. All information presented in the financial statements are sourced from the accounting
records of the entity. FALSE. EXTERNAL SOURCE.
8. Entity A’s accounting period starts only July 1 and ends on June 30 of the following year.
Entity A uses a fiscal year period. TRUE
9. Once promulgated, accounting standards are never changed. FALSE.
10. The entity’s management is responsible for the selection of appropriate accounting policies,
not the accountant. TRUE.