ACCA102 QUIZZES

QUIZ NO. 1
The events that affect the entity and in which other entities participate are known as*

Internal events
External events
Current events
Obligating events

What is the measuring component in the definition of accounting?

The recognition or nonrecognition of business activities as accountable events
The assigning of peso amounts to the accountable events
The distribution of accounting reports to users of accounting information
The preparation of audit report by CPAs

The communicating process of accounting includes all of the following, EXCEPT

Recording
Classifying
Summarizing
Interpreting

What is the overall objective of accounting?

To provide the information that the managers of an economic entity need to control the
operations
To provide information that the creditors can use in deciding whether to grant loans to
an entity
To measure the periodic economic entity
To provide quantitative financial information about an entity that is useful in
making economic decision

What is the standard-setting body in the Philippines at the present time?

Accounting Standards Council
Auditing and Assurance Standards Council
Philippine Accounting Standards Council
Financial Reporting Standards Council

What is the law regulating the practice of accountancy in the Philippines?

RA No. 9298
RA No. 9198
RA No. 9928
RA No. 9892

GAAP is an abbreviation for

Generally authorized accounting procedures
Generally applied accounting procedures
Generally accepted auditing practices
Generally accepted accounting principles

This accounting process is the recognition or nonrecognition of business activities as

accountable events.
Identifying
Measuring
Communicating
Reporting
All of the following are represented in FRSC, EXCEPT
Board of Accountancy
Securities and Exchange Commission
Commission on Audit
Department of Budget and Management

What is the primary services of CPAs in public practice?

Auditing
Taxation
Managerial Accounting
Controllership

QUIZ NO. 2
QUIZ NO. 3
The valuation of a promise to receive cash in the future at present value is valid
because of what accounting concept?
Entity
Time period
Going concern
Monetary unit

The concept of accounting entity is applicable

Only to the legal aspects of business organization
Only to the economic aspects of business organizations
Only to business organizations
Whenever accounting is involved

Which basic assumption may NOT be followed when an entity in bankruptcy reports
financial results?
Economic entity assumption
Going concern assumption
Periodicity assumption
Monetary unit assumption

What is the general objective of financial statements?

To provide information about economic resources of an entity, claims against the
entity and changes in the economic resources and claims.
To assess future cash flows to the entity.
To assess management stewardship of economic resources
To satisfy the information needs of users of financial statements

Which is an implication of the going concern assumption?

The historical cost principle is credible.
Depreciation and amortization policies are justifiable and appropriate.
The current and noncurrent classification of assets and liabilities is justifiable and
significant.
All of these are an implication of going concern.

What is being violated if an entity provides financial reports in connection with a new
product introduction?
Economic entity
Periodicity
Monetary unit
Continuity

A reporting entity
Can compromise more than one entity
Can be a portion of single entity
All of these can be considered a reporting entity
Can be a single entity

If the reporting entity comprises both the parent and its subsidiaries, the financial
statements are referred to as
Unconsolidated financial statements
Consolidated financial statement
Separate financial statements
Combined financial statements

Which of the following is NOT a basic assumption underlying financial accounting?

Going concern assumption
Monetary unit assumption
Economic entity assumption
Historical cost assumption

When a parent and subsidiary relationship exists, consolidated financial statements are
prepared in recognition of
Legal entity
Time period
Stable monetary unit
Economic entity
An entity has experienced a drastic reduction in revenue by reason of a long dry spell in
the area where the entity grows its tobacco. The management decided to wait until next
year and present financial statements for a two-year period rather than prepare now the
traditional twelve-month financial statements.
TIME PERIOD
The parent entity in Manila has a subsidiary in Japan. The financial statements of the
subsidiary are translated to pesos for consolidation with the financial statements of the
parent entity at year-end
ACCOUNTING ENTITY ASSUMPTION
The operations of a saving bank are being evaluated by the Bangko Sentral ng
Pilipinas. During the investigation, the BSP has determined that numerous loans made
by top management were unwise and have seriously endangered the future of the
saving bank.
GOING CONCERN ASSUMPTION
A machinery was imported from USA at a certain cost five years ago. Because of
inflation, the machinery has now a current replacement cost which is very much higher
than the historical cost. Management would like to report the machinery at current
replacement cost.
MONETARY UNIT
A subsidiary was exhibiting poor financial performance for the current year. In an effort
to increase the subsidiary's reported income, the parent entity purchased goods from
the subsidiary at twice the normal markup.
ACCOUNTING ENTITY ASSUMPTION
QUIZ NO. 5
Which of the following criteria need not be satisfied for a liability to exist?
The obligation is to transfer an economic resource
The entity has an obligation.
The settlement is expected to result in an outflow of economic benefit.
The obligation is a present obligation that exists as a result of a past event.

It is a present economic resource controlled by the entity as a result of past events.

Asset
Liability
Equity
Income

It is the present ability to direct the use of an economic resource and obtain the benefit
that may flow form it.
Control
Legal right
Ownership
Obligation

The elements directly related to the measurement of financial performance are

Asset, liability, and equity
Income, expense, and equity
Asset an liability
Income and expense

A present obligation exists as result of past event if

The entity has already obtained economic benefit.
The entity has already obtained economic benefit and must transfer economic
resource
The entity must transfer an economic resource.
The entity has not yet obtained economic benefit but must transfer an economic
resource.

The elements of financial position describe amounts of resources and claims against
resources
Neither during a period of time nor at a moment in time
During a period of time
At a moment in time
During a period of time and at a moment in time

It is a duty or responsibility that an entity has no practical ability to avoid.

Job
Right
Obligation
Commitment

The elements directly related to the statement of financial position are

Asset, liability, and equity
Income and expense
Asset and liability
Asset, liability, equity, income, and expense
An economic resource could produce economic benefit if an entity is entitled to all,
EXCEPT
To exchange economic resources with another entity on unfavorable terms
To receive cash by selling the economic resource
To extinguish a liability by transferring an economic resource
To receive contractual cash flows

Obligations to transfer an economic resource include all, EXCEPT

Obligation to transfer an economic resource even if a specified future event does
not occur
Obligation to pay cash
Obligation to deliver goods
Obligation to provide services

Which is not within the definition of an asset?

The economic resource is controlled by the entity as a result of past event.
An asset is a present economic resource
Future economic benefit is expected to flow to the entity.
The economic resource is a right that has potential to produce economic benefit.

Rights have the potential to produce economic benefits and correspond to an obligation
of another entity include all, EXCEPT
Right to receive cash
Right to receive goods
Right to exchange economic resources with another entity on favorable terms
Right over property, plant and equipment

It is an increase in asset or a decrease in liability that results in increase in equity other

than contribution from equity holders.
Liability
Income
Expense
Asset

Which statement in relation to income is true?

Income encompasses both revenue and gain
Revenue encompasses both income and gain
Gain encompasses both income and revenue
Income encompasses revenue only

What is the primary distinction between revenue and gain?

The nature of the activity that gives rise to the transaction
The materiality of the amount
The likelihood that the transaction will recur
The method of disclosing the transaction

QUIZ RECOGNITION
Costs that can be reasonably associated with specific revenue but not with specific
product should be
Expensed in the period incurred
Allocated to the specific product based on the best estimate of the product processing
time
Expensed in the period in which the related revenue is recognized
Capitalized and then amortized over a reasonable period
Which accounting principle is being observed when an accountant charges to expense
a cost that contributed to revenue during a period?
revenue realization
conservatism
monetary unit
matching

Measurement bases include

historical cost
current value
assessed value
historical cost and current value

Which principle best described the rationale for matching distribution costs and
administrative expenses with revenue of the current period?
direct matching
systematic and rational allocation
immediate recognition
partial recognition

Generally, revenue is recognized

when cause and effect are associated
at appropriate points throughout the operating cycle
at the point of cash collection
at the point of sale

Which of the following principles best describes the conceptual framework rationale for
the method of matching depreciation with revenue
systematic and rational allocation
immediate recognition
partial recognition
cause and effect association

A cause and effect relationship is implicit in the

matching principle
going concern assumption
realization principle
historical cost principle

It is the removal of all part of a recognized asset or liability from the statement of
financial position
write-off
derecognition
extinguishment
retirement

The term recognized is synonymous to the term

recorded
realized
matched
allocated

The write-off of a worthless patent is an example of which of the following principles?

cause and effect association
systematic and rational allocation
objectivity
immediate recognition

What is an example of cost that cannot be directly related to particular revenue but
incurred to obtain benefits that are exhausted in the period when the cost is incurred?
sales commission
sales salaries
freight in
prepaid insurance

Which of the following practices may NOT be an acceptable deviation from recognizing
revenue at the point of sale?
upon receipt of cash
during production
upon receipt of order
end of production

Which of the following is an example of the cause and effect association principle?
Sales commission
Allocation of insurance cost
Depreciation of property, plant, and equipment
Officers' salaries

QUIZ NO. 7
Financial capital is defined as
Net assets in terms of physical productive capacity
Share capital issued and outstanding
Net assets in monetary terms
Legal capital

The physical capital maintenance concept requires the adoption of which measurement
basis?
Fair value
Present value
Current cost
Historical cost

The presentation and disclosure requirements achieves all of the following, except
An effective communication tool
Understandability and comparability of information
More relevant and faithfully represented financial information
Financial position, financial performance and cash flows

Income and expenses are classified as

Ordinary and Extraordinary
Profit or loss and other comprehensive income
Retained earnings and other comprehensive income
Profit loss and retained earnings

Under the financial capital concept, net income occurs when

The physical productive capital at year-end increased.
The physical productive capital at year-end increased after excluding any distributions
to and contributions form owners
The nominal amount of net assets at year-end increased after excluding
distributions to and contributions from owners.
The nominal amount of net assets at year-end increased.

Which statement regarding the term profit is TRUE?

Profit is equal to income minus expenses.
All of these statements are true about the term profit
Profit is the equivalent of net income under IFRS
Profit is any amount over and above that required to maintain the capital at the
beginning of the period.

All of the following can be considered appropriate classification, except

ordinary share capital and preference share capital
current and non current liabilities
offsetting asset and liability
current and noncurrent assets

Which concept is applied to net income and other comprehensive income?

Legal capital
Physical capital
Financial capital
Borrowed capital

What is the new term to describe the statement of profit or loss together with the
statement showing other comprehensive income.
Statement of financial performance
Income statement
Statement of profit or loss
Statement of other comprehensive income

It is the sorting of assets, liabilities, equity, income and expenses with similar
characteristics
Classification
Recognition
Aggregation
Interpretation

The statement of financial position and the statement of financial performance provide
detailed and segregated information.
True
False

The Statement of Profit or Loss is the primary source of information about an entity's
financial performance for the reporting period.
True
False

Physical capital is the qualitative measure of the physical productive capacity to

produce goods and services.
True
False

The concept of physical capital requires that the productive assets be measured at
current cost rather than historical cost.
True
False
Return on capital and Return of capital are the same.
True
False
Aggregation is the adding together of assets, liabilities, equity, income and expenses
that have similar or shared characteristics and are included in the same classification.
True
False

Capital is synonymous with net assets or equity of the entity.

True
False

Financial capital is the traditional concept based on current cost and adopted by most
entities.
True
False

Classifying is the sorting of accounts based on shared or similar characteristics.

True
False

Net income occurs under the financial capital concept when the physical productive
capital of the entity at the end of the year exceeds the physical productive capital at the
beginning of the period, after excluding distributions to and contributions from owners
during the period.
True
False

QUIZ NO. 8