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Jasper R. Indangan Financial Accounting and Reporting 1 (FAR1) Prelim

1. The document contains the answers to practice tests and situations relating to key accounting concepts for a Financial Accounting and Reporting course. 2. It includes the answers to 3 multiple choice tests covering topics like the accrual method, balance sheet elements, and normal balances of accounts. 3. There are also 10 situations that require identification of the accounting concept being demonstrated, covering topics such as going concern assumption, separate entity assumption, and consistency.

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carol indangan
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93 views2 pages

Jasper R. Indangan Financial Accounting and Reporting 1 (FAR1) Prelim

1. The document contains the answers to practice tests and situations relating to key accounting concepts for a Financial Accounting and Reporting course. 2. It includes the answers to 3 multiple choice tests covering topics like the accrual method, balance sheet elements, and normal balances of accounts. 3. There are also 10 situations that require identification of the accounting concept being demonstrated, covering topics such as going concern assumption, separate entity assumption, and consistency.

Uploaded by

carol indangan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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JASPER R.

INDANGAN
Financial Accounting and Reporting 1 (FAR1)
Prelim

Test 1: TRUE or FALSE


1. FALSE- Accrual Method concept is that whenever we identify and record income
regardless when received and record expense when incurred regardless when paid
2. FALSE - The transactions which reflected on the Balance Sheet resulted from past
events not future
3. TRUE
4. TRUE
5. FALSE - A liability is an element of the statement of financial position not in the
statement of comprehensive income
6. FALSE- An increase in owner’s equity resulting from the ordinary course of the
business is recorded as income or revenue. Gains are increases resulting from
extraordinary transactions like sale of PPE.
7. FALSE - Not all assets are tangible.
8. TRUE
9. FALSE - the normal balance of a liability account is credit .
10. TRUE -

Test 2: Multiple Choice


1. A
2. C
3. D
4. D
5. C

Test 3: Enumeration
1. Going Concern Assumption
Situation: The equipment is recorded at the amount for which it could be sold at
short notice.

2. Accounting Entity/ Separate Entity Assumption


Situation: A purchased of computer for personal use is recorded in the company
statements.

3. Time Period/ Periodicity


Situation: The entity prepares financial statements in an irregular basis and at the
vacancy of the accountant.

4. Monetary Unit
Situation: The currency used in the financial statements of ABC Company, a domestic
company, is dollar.
5. Historical Cost Concept
Situation: The entity record the purchased of an equipment at fair market value
wherein its original price is ten percent lower its fair value.

6. Accrual Basis Concept


Situation: The entity only recognizes income when cash is received.

7. Full Disclosure Concept


Situation: The law suit case of the entity which appears to a probable liability does
not reflect on the notes to financial statements.

8. Matching Principle
Situation: The finance staff do not have a matching expense recognition entry with
regards to the revenue recorded.

9. Consistency
Situation: Every year the entity changes its depreciation method.

10. Materiality Concept


Situation: ABC Company has a pending case with XYZ Company requesting for the
former to pay damages for breach of contract for 10million. The transaction has not
been disclosed.

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