Financial Accounting and Reporting Introduction to Accounting Topic 1: Definition, Nature and Purpose of Accounting Application Congratulations! You have just completed Topic 1. I prepared some activities for you to assess your learning. Please answer/accomplish the following activity/ies Multiple Choice: 1. Which of the following statements regarding accounting is incorrect? a. All business transactions and events are recorded in the accounting books. b. Although bookkeeping and accounting are interrelated, they are not the same. c. The purpose of accounting is to provide information that is useful in making economic decisions. d. A transaction or event is recorded in the accounting records only if it has an effect on the assets, liabilities, equity, income or expenses of the business. 2. Which of the following is not one of the necessary processes performed in accounting in order to provide information that is useful to interested users? a. Identifying b. Summarizing c. Recording d. Counting 3. Accounting is described in various ways. Which of the following is not one of those descriptions? a. Accounting is a process and a service activity. b. Accounting is a social science and a practical art. c. Accounting is the “language of business” because it is fundamental to the communication of financial information. d. Accounting is the art of professionally stealing money and other evil purposes. 4. Accounting has a long history. Which of the following is incorrect regarding the history of accounting? a. Accounting can be traced as far back as the prehistoric times. b. Accounting is as old as civilization and has evolved in response to economic and social needs of men. c. Fra Luca Pacioli is the mama of modern accounting. d. All of these are correct. CSU Financial Accounting and Reporting Introduction to Accounting 5. The main purpose of accounting is a. to account for money so it will not be lost. b. to provide information that is useful in making economic decisions. c. to safeguard the assets of a company. d. to provide a clear view of the state of the industry’s economy. 6. In accounting, the term “recording” is also called a. journalizing. b. communicating. c. debiting. d. videoing. 7. This process refers to the reporting of the information processed in the accounting system to interested users. a. Measuring b. Identifying c. Communicating d. Classifying 8. Which of the following statements regarding the recording of events is valid? a. Only non-accountable events are recorded in the accounting books. b. Only accountable events are recorded in the accounting books. c. Both non-accountable and accountable events are recorded in the accounting books. d. Neither non-accountable nor accountable events are recorded in the accounting books. 9. Accounting has been given various definitions, which of the following is not one of those definitions a. Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. b. Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part of at least, of a financial character and interpreting the results thereof. c. Accounting is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria and communicating the results to interested users. 10. What is the primary purpose of accounting? a. To count money. b. To provide accounts. c. To provide information that is intended to be useful in making economic decisions. CSU Financial Accounting and Reporting Introduction to Accounting d. To produce accountants. Topic 2: Users of Accounting Information Application Congratulations! You have just completed Topic 2. I prepared some activities for you to assess your learning. Please answer/accomplish the following activity/ies 1. Which of the following statements is correct? a. Financial accounting is the branch of accounting that deals with the specific needs of an entity’s management. b. The internal users of accounting information include management, owners and creditors. c. The external users of accounting information include potential and existing investors and lenders and other creditors. d. Government accounting is the branch of accounting that deals with the analysis of the costs of products and services. 2. These users need accounting information in order to regulate businesses that are within the scope of their legal authority. a. Employees b. Creditors c. Auditors d. Government regulatory bodies or agencies 3. These users need accounting information in evaluating the stability of the business in so far as their job security, future remuneration, and career growth and opportunities are concerned. a. Employees b. Creditors c. Auditors d. Regulatory authorities 4. The following are decisions made by external users except a. whether to hold or sell investments in stocks. b. whether or not to extend a loan to the business. c. whether to sell goods on credit to the business. CSU Financial Accounting and Reporting Introduction to Accounting d. whether to obtain additional capital from outside creditors or to generate it internally. 5. Which of the following users of financial information is not considered a creditor of the business? a. A loan provider, such as a bank b. A supplier that sells goods to the entity on credit c. A customer that buys goods from the entity on credit d. A financing company that provides the entity with machineries on a “rent-toown” basis Topic 3 Common Branches of Accounting Application Congratulations! You have just completed Topic 3. I prepared some activities for you to assess your learning. Please answer/accomplish the following activity/ies 1. This branch of accounting focuses on catering to the information needs of external users. a. Management accounting b. Financial accounting c. Auditing d. External accounting 2. It is the branch of accounting that involves the careful analysis of economic events and other variables to understand their impact on decisions. a. Accounting education b. Cost accounting c. Accounting research d. Tax accounting 3. It is the process of objectively evaluating evidence and expressing an opinion regarding the correspondence between management’s assertions and established criteria. a. Accounting education b. Auditing c. Accounting research d. Tax accounting CSU Financial Accounting and Reporting Introduction to Accounting 4. The branch of accounting that deals with providing financial information to external decision makers is a. Public accounting. b. Government accounting. c. Financial accounting. d. Managerial accounting. 5. Without this branch of accounting, there will be no accountants a. Public accounting. b. Government accounting. c. Accounting education. d. Managerial accounting Topic 4: Forms of Business Organization Application Congratulations! You have just completed Topic 4. I prepared some activities for you to assess your learning. Please answer/accomplish the following activity/ies True/False A. Sole Proprietorship TRUE 1. The owner is the only boss and you keep all the profits. _TRUE 2. Although it is easier to form, it may be more difficult to raise financing. _FALSE_3. It has unlimited life. _FALSE _4. It has limited liability. B. Partnership ___TRUE__ 1. Compared to a sole proprietorship, risks are spread out over more than one owner. FALSE__2. Compared to a cooperative, the business organization is driven more towards the earning of profit. ___TRUE__3. Compared to a corporation, it is easier to form because of fewer legal requirements. __FALSE___ 4. Compared to a corporation, it has an unlimited life and an unlimited liability. CSU Financial Accounting and Reporting Introduction to Accounting Topic 5: Types of Business According to Activities Application Congratulations! You have just completed Topic 5. I prepared some activities for you to assess your learning. Please answer/accomplish the following activity/ies. Make a Table of Comparison about Service, Merchandising, and Manufacturing Activities of a Business. Type Activity Structure Service Selling other people's knowledge, time, skills, and expertise Recruiting competent personnel and selling their services Merchandising/Trading Purchasing and selling goods Manufacturing CSU Designing goods, assembling components, and putting them all togeth Examples Schools Hospitals Banks Entertainment Purchasing a wide range of raw materials and produced items and combining them, making them accessible for sale in places close to their clients or online for delivery Sari-sari store Converting raw resources into final products by means of machinery and personnel Factories Department store Groceries General merchandise Distributors Dealers Food processing Fabricators Product assembly Financial Accounting and Reporting SS CSU Introduction to Accounting