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Fabm 1st quarter exam
Accountancy (AMA Computer Learning Center)
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Merchandising business are charging fees for rendered services.
False
Transactions which are financial in nature, such as payment and purchases in cash.
Financial Character
A promissory note issued by the customer is an evidence of the notes receivable
account.
True
Noncurrent assets are kept principally for trading.
False
Manufacturing business converts raw materials to finished goods.
True
What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses?
Asset
ABC Store records the transaction by a debit to Accounts Receivable for P1,000 and a
credit to Service Revenues for P1,000. What is the effect of this entry upon the accounting equation
for ABC Store?
Asset Increase, Equity Increase
Increase in assets is recorded as a Debit.
True
Cash and cash equivalents are current assets.
True
Revenues are commonly called the "cost of doing business."
True
Property, plant, and equipment are not assets
False
This principle has two aspects, the quantifiability and stability of peso.
Stable monetary unit
A liability is a present obligation arising out of past events.
True
If Revenue is greater expenses, there is a Gain.
False
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Manufacturing business changes the basic inputs into products that are sold to individualcustomers.
True
Capital is another term for equity.
True
When the owner makes withdrawal from the business for personal use, only the asset decreases.
False
The Income Statement is composed of the revenues and expenses.
True
Which of the following will cause owner's equity to increase?
Revenue
In August 2016, ABE Store receives the P4,000 for services rendered. What is the effect on the
accounting equation and which accounts are affected?
Increase Cash
Operating expenses and operating income or operating loss are items which can be found in an
income statement prepared in a multi-step approach.
True
These are reductions in the total sales price given to the customer if the account will be paid within a
short period of time.
Sales discount
Mr. Alvarez , capital is an example of account title used for the equity of the owner in what form of
business organization?
Sole Proprietorship
This is the common transaction happening in the organization.
All
What item do we deduct from the beginning capital of the statement of changes in equity to arrive at
the ending capital?
Withdrawals
Liabilities are company's obligations.
True
Owner's Equity is to sole proprietorship as Capital is to corporation.
False
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In cash basis accounting, income shall only be recognized when cash is received, and
expenses shall only be recorded when cash is paid.
True
There are common account titles between assets and liabilities.
The correct answer is 'True'.
Losses are outflows that result from the main activity of the business.
The correct answer is 'False'
Owner's equity represents the right of the owner over the resources of the firm.
The correct answer is 'True'.
Cash withdrawal of an owner for personal use falls in what cash flow category?
The correct answer is: Investing
Merchandising business are charging fees for rendered services.
The correct answer is 'False'
Accrual basis of accounting is a basic accounting principle that states that income
shall only be recognized when cash is received, and expenses shall only be recorded
when cash is paid.
The correct answer is 'False'.
Cash flows are categorized into three types:
The correct answer is 'False'
The following are cash flow transactions under the direct method except
The correct answer is: Cash paid to creditors
The cost accountant handles Management Accounting.
The correct answer is 'False'.10. Account form is more commonly used form of
an SFP.
The correct answer is 'True'
Cash on hand is a current asset.
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The correct answer is 'True'.
It is a voluntary association of at least 15 persons having a common bond
of interest for the purpose of generating capital from among themselves through a
systematic and continuous savings program in order to grant loans to each other
at reasonable rates of interest.
The correct answer is: single proprietorship
GAAP is Generally Applicable Accounting Principles.
The correct answer is 'False'.
Services businesses offer products.
False
Accrual basis of accounting records income when earned regardless of when cash is
received.Select one:True
The firm can create as many capital accounts as there are owners in a corporation.
Select one:True
and is a current asset. Select one:True
The cash in a financing activity mostly involve current assets or income and
expense accounts. Select one:True
SFP is an acronym for Statement of Financial Position, which is also known as the
Balance Sheet. Select one:True
A mortgage payable is a noncurrent liability. Select one:false
Land is a current asset. Select one:True
Among all the activities, only financing activities have different ways of being
presented. Select one:True
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The transactions falling under operating activities does not primarily involve cash
received from customers and paid to suppliers, lenders, or employees.
Select one:false
The cost accountant handles Management Accounting. Select one:false
A liability is a present obligation arising out of past events. Select one:true
Increase in assets is recorded as a Debit. Select one:true
Financing activities are the common transactions happening in the organization.
Select one:false
Investing activities cannot be presented in direct or indirect method. Select one:true
Cash flows are categorized into three types: operating, investing, and financing
activities. Select one:false
Accrual basis of accounting is a basic accounting principle that states that income
shall only be recognized when cash is received, and expenses shall only be recorded
when cash is paid. Select one:false
Cash flows are categorized into three types; these activities does not determine the
purpose for which the cash has been used.
Select one:true
The following are cash flow transactions under the direct method except Select one:
Cash paid to creditors
Current assets are expected to be used after 12 months. Select one:false
The owner's equity is also called capital, net assets, or net worth. Select one:true
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GAAP is Generally Applicable Accounting Principles. Select one:false
Services businesses offer products. Select one:false
Merchandising business are charging fees for rendered services. Select one:false
Cash and cash equivalents are noncurrent assets. Select one:true
Liabilities are present obligations arising from past events. Select one:true
CPA means Certified Public Accountant. Select one:true
Gains increase the income of the business. Select one:true
Owner's Equity is to sole proprietorship as Capital is to corporation. Select one:false
In cash basis accounting, income shall only be recognized when cash is received,
and expenses shall only be recorded when cash is paid. Select one:true
Owner's equity represents the right of the owner over the resources of the firm.
Select one:true
Manufacturing business converts raw materials to finished goods. Select one:true
Cash and cash equivalents are current assets. Select one:true
The Calendar year ends on January 01. Select one:true
The Statement of Financial Position is commonly prepared at the year ended
December 31. Select one:false
There are common account titles between assets and liabilities. Select one:true
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A sole proprietor's equity account is written as follows: name of owner, capital.
Select one:true
Stockholders are the owners of a corporation. Select one:false
Revenues are also known as income. Select one:true
Cash basis accounting is not acceptable in the accounting industry though we need
to understand this in order to prepare our cash flow statement. Select one:true
If the firm has been operating in the past year, the beginning capital of the current
year is the same as the ending capital of the previous year. Select one:false
Net loss indicates that the business is doing well. Select one:false
Operating activities may be presented using either the direct method or indirect
method. Select one:true
Capital is also known as a residual asset. Select one:false
The acquisition and disposal of long-term assets, including investments not
considered cash equivalents are parts of an investing activities. Select one:true
Capital is also known as a residual asset. Select one:false
Residual asset is the result of combining liabilities and equity. Select one:false
roperty, plant, and equipment are assets. Select one:true
If the beginning capital of Mrs. Castro is P200,000 and she made an additional
investment during the year of P100,000 with a net profit of P52,000, how much is
the ending capital? Select one:P352,000
If additional investment of the owner is P650,000 and payment of long-term loan to
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the bank is P700,000, how much is the net cash increase or decrease from financing
activities? Select one:Decrease of P50,000
Cash basis accounting relies entirely on the payment and receipt of cash. Select
one:true
Liabilities are company's obligations. Select one:true
Beginning inventory is P50,000, net cost of purchases is P125,000, and ending
inventory is P35,000. Compute for the cost of goods sold. Select one:P140,000
Withdrawals or drawings are resources of the firm which were taken by the owner
for personal use. Select one:true
Sole proprietorships mostly managed by their owners. Select one:false
Operating expenses and operating income or operating loss are items which can be
found in an income statement prepared in a multi-step approach. Select one:false
Losses are outflows that result from the main activity of the business. Select
one:false
Investments made by the owner may represent the original investment made at the
start of business, and any additional investments thereafter. Select one:true
Account form is more commonly used form of an SFP. Select one:true
The following are the advantages of forming a partnership except ~Minimal
regulatory requirements than corporation. Select one:Can exist for a period of 50
yrs
The following are examples of non-current assets except ~Property, plant and
equipment. Select one:Accounts Receivable
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It is a voluntary association of at least 15 persons having a common bond of interest
for the purpose of generating capital from among themselves through a systematic
and continuous savings program in order to grant loans to each other at reasonable
rates of interest. Select one: partnership
Accounting is defined in part as the art of ____________, ___________, and ____________
in a significant manner and in terms of money, transactions and events. Select
one:recording, classifying, summarizing
The following are cash flow transactions under the direct method except Select
one:Cash paid to creditors
In the statement of changes in equity of a sole proprietor, this is deducted from the
beginning capital to arrive at the ending capital Select one:withdrawal
This occurs whenever the enterprise purchased goods or received services on
account issuing a promissory note to settle the account in a specified future date.
Select one:Notes Payable
Branch of accounting solely for government purposes such as collecting of taxes,
computing of national income, fixing the gross national product target, ascertaining
the balance of payments position, etc.. Select one: Government Accounting
Liabilities are present obligations arising from past events.. Select one:true
Bank loans are credited to Loans Payable or Mortgage Payable. Select one:true
A mortgage payable is a noncurrent liability.. Select one:false
Noncurrent assets are assets that are expected to be used within 12 months. Select
one:false
Report form is where assets are listed on the left side. Select one:false
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Asset is equal to Liability plus Capital. Liability is equal to Asset minus Capital.
Select one:Both statements are true
The owner invests trucksto be used in the business. Select one:Asset Increase,
Equity Increase
A Statement of Financial Position is a formal statement presenting the three
accounting elements which are? Select one:assets, liabilities and equity
Salaries are considered income to the business. Select one:false
A form of business organization which has unlimited liability for any debt of the
business which may extend up to the owner's personal properties. Select one:Sole
proprietorship
Net income is a result of expenses higher than revenues. Select one:false
Also known as Time Period Concept Select one:Periodicity
AICPA means Select one:American Institute of Certified Public Accountants
A business organization where two or more persons join together to contribute
money, property or industry for purposes of dividing the profits (or loss) among
themselves. Select one:Partnership
Which of the following will cause owner's equity to increase? Select one:Revenue
All of the following are general and administrative expenses except Select
one:Advertising & promotional expenses
What is the effect on accounting equation of Triple A when it records the transaction
as a debit to Rent Expense for P8,000 and a credit to Accounts Payable for P8,000?
Owner's (or Stockholders') Select one:Equity Decrease, Liability Increase
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When the owner makes withdrawal from the business for personal use, only the
asset decreases. Select one:false
Entity principle separate business from personal transactions. Select one:true
If revenue increases and cost of goods sold remains constant, gross profit also
increases. Select one:trueThe financial statement that reports the assets, liabilities,
and stockholders' (owner's) equity at a specific date is the __________. Select
one:Statement of Financial Position
Accounting is the language of business. Select one:true
The Statement of Financial Position has two forms. Select one:true
Cash, Accounts receivable and Office supplies are examples of current assets.
Select one:true
Increases in the assets are recorded on the right side of the account. Select
one:false
Current assets are obligations expected to be settled after a year. Select one:false
Income statement covers a period of time. Select one:true
Debit entries with a larger number would always possess a debit balance. Select
one:true
Manufacturing business changes the basic inputs into products that are sold to
individual customers. Select one:true
Examples of real accounts are revenues, expenses, and drawing accounts. Select
one:false
Cash, building, and office supplies are examples of assets. Select one:true
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Wages are considered expenses. Select one:true
A promissory note issued by the customer is an evidence of the notes receivable
account. Select one:true
Assets minus Liabilities is equal to Equity is also considered an Accounting Equation.
Select one:true
Examples of this type of business are laundry shops, salons, spas, dress shops,
barber shops, appliance repair shops, vulcanizing shops, computer/internet shops,
printing and photocopying. Select one:Service business
A mortgage payable is a noncurrent liability.. Select one:false
Withdrawals are also known as "drawings". Select one:true
If Revenue is greater expenses, there is a Gain. Select one:false
Losses from trading investments of a law firm are not considered expenses. Select
one:true
Accounting is the system of measuring business activities of financial character.
Select one:true
Any twelve-month period starting from any month other than 01 January Select
one:Fiscal year
Capital is another term for equity. Select one:true
As compared to the corporation, single proprietorship is easier to form because of
its simplicity in operation. Select one:true
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The following are examples of non-current assets except Select one:Accounts
Receivable
This principle has two aspects, the quantifiability and stability of peso. Select
one:Stable monetary unit
Refers to the outflows of resources usually paid in cash or incurred on credit
resulting from the main operating activities of the business. Select one:Expenses
Capital are claims by creditors against the company's assets. Select one:false
Rent Expense, Wages Expense and Utilities Expense are nominal accounts.
Select one:true
The accounts in the report form of SFP are arranged in a single column wherein
assets are listed first, followed by the liabilities and owner's equity.. Select one:true
Revenue is synonymous to Gains. Select one:false
The business receives cash from a bank loan. Select one:Asset Increase, Equity
Increase
Ownership of a cooperative is divided into shares of stock. Select one:false
What form of the SFP wherein the assets are listed on the left side and the liabilities
and equity are on the right side, and the two sides must equal? Select one:Account
form
Meaning of GAAP Select one:General Accepted Accounting Principles
Account form is more commonly used form of an SFP. Select one:true
Losses are outflows that result from the main activity of the business.
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Select one:false
Management accounting is also referred to as General Information Financial
Accounting. Select one:false
Increase in assets is recorded as a Debit.. Select one:true
Current assets are presented in the SFP as follows: Select one:Cash, Accounts
Receivable, Prepaid expense
In this concept, accounts assume that the business will continue operating at a
foreseeable future. Select one:going concern concept
Long-term debts are noncurrent. Select one:true
It is the difference arrived at after deducting withdrawals from the sum of the
beginning capital, additional investments, and profit. Select one:ending capital
The equation for cost of goods sold is: Select one:Beginning inventory + Net cost of
goods purchased - Ending inventory
These are reductions in the total sales price given to the customer if the account
will be paid within a short period of time.
Select one:sales discount
The following are parts of the heading of the Statement of Changes in Equity
except: Select one:net profit
These are resources of the firm which were taken by the owner for personal use.
Select one:Withdrawals
It represents the residual claim of the owner on the total resources or assets of the
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firm after deducting the claims of creditors. Select one: Statement of Income
Net Profit is derived from: Select one:statement of income
An income statement for _________________ could be written using a single-step
approach. Select one:service businessIt is the usual account title used for
corporations. Select one:Stockholder's Equity
How many parts does the Statement of Changes in Equity have? Select one:5
Income statement for merchandising businesses usually have how many sections?
Select one:7
These are added to the capital beginning to arrive at the total investments used
during the year.
Select one:investment
The owner's equity is usually consists of ___________________. Select one:Owner's
investment and the earned profit less any withdrawals made during a given period.
The heading of a statement of income usually consists of the following except:
Select one:Both A and B
These are deducted in the purchase price either because of returns or reductions
due to defects or damages of goods purchased. Select one:Purchase returns and
allowances
Its use varies depending on the form of business organization. Select one:Equity
Accounts
It is the total or gross purchases less any purchase discounts and purchase returns
and allowances. Select one: Net cost of goods purchased
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Refers to total or gross sales less any sales discounts, and sales returns and
allowances. Select one:net sales
It is the difference arrived at after deducting withdrawals from the sum of the
beginning capital, additional investments, and profit. Select one:ending capital
How many sections do income statement for merchandising businesses usually
have?
Select one:7
This could be deducted to the beginning capital and additional investments done
during the year. Select one:net loss
It is the total or gross purchases less any purchase discounts and purchase returns
and allowances. Select one: Net cost of goods purchased
It represents the total amount of inventory on hand.
Select one: Merchandise Inventory
These are reductions in the total sales price given to the customer if the account
will be paid within a short period of time.
Select one: Sales discount
The following consists an income statement for merchandising businesses except:
Select one: None of the choices
Operating expenses and operating income or operating loss are items which can be
found in an income statement prepared in a multi-step approach.
Select one: true
Owner's equity usually consists of the owner's investment and the earned profit less any
withdrawals made during a given period
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True
Among all the activities, only ___________________ have different ways of being presented.
Operating activities
These are activities which involve changes in the equity and liability accounts in the accounting
records.
Financing activities
The income statement for merchandising businesses usually has the following sections, namely:
revenue, expenses and net profit or loss.
False
It relies entirely on the payment and receipt of cash
Cash basis accounting
Stockholder's equity is the account title used by what form of business organization?
Corporation
If the beginning capital of Mrs. Castro is P200,000 and she made an additional investment during
the year of P100,000 with a net profit of P52,000, how much is the ending capital?
352,000
In this form of business organization, many capital accounts may be created as there are owners.
Partnership
This accounting principle relies entirely on the payment and receipt of cash.
Cash basis accounting
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