Review Quiz No. 1

NAME: Capa, Charmaine Cate D.S.
SCORE:
SECTION: BSMA 1-9 PROFESSOR:
Full in the blanks.

1. Accounting is a process of recording, summarizing, analyzing, classifying, and
reporting of financial information to the stakeholders of the business.
INTERPRETING
2. An activity carried out by a business to provide goods and services in exchange

for money is known as business transaction.
3. Only business activities that can be measured in pesos and centavos are
recorded. This is in accordance with the money measurement concept.STABLE
MONETARY UNIT
4. Personal financial activities of the owner of a business are not recorded in the
books of the business. This complies with the accounting entity concept.
SEPARATE BUSINESS ENTITY OR ENTITY
5. Transactions are recorded based on reliable and verifiable information. This is in

accordance with the objectivity concept.
6. Transactions should be recorded in the accounts at their original cost shown in

the source documents. This practice complies with the historical cost concept.
True or False ( write TRUE/FALSE at the end of each statement.)
1. Accounting is often characterized as the "language of business". TRUE
2. A partnership is a business owned and operated by two or more persons who bind
themselves to contribute money, property, or industry to a common fund, with the
intention of dividing the profits among themselves. TRUE
3. The Philippine accountant considers peso as the common unit of measure for all
business transactions. TRUE
4. For accounting purposes, a business and its owner are considered one and the
same. FALSE
5. Summarization reduces the effects of numerous transactions into useful groups or
categories. FALSE
6. The liability of corporate stockholders is limited to the amount of their investment.
TRUE
7. The terms bookkeeping and accounting are synonymous. FALSE
8. Most members of the accountancy profession are Certified Public Accountants.
TRUE
9. A corporation is an economic unit that is legally separate from its owners. TRUE
10. The personal liability of a partner is limited to the amount of his investment. FALSE
11. Manufacturing companies buy raw materials, convert them into products and then
sell the products to other companies or to final consumers. TRUE
12. The entity concept states that the transactions of different entities should not be
accounted for together. TRUE
13. A partnership is always owned by two individuals. FALSE
14. For reporting purposes, the personal assets and debts of a business owner should
be combined with the assets and debts of the business. FALSE
15. Government accounting deals solely with the identification of the sources of
resources consistent with laws. FALSE
16. All members of the accountancy profession are Certified Public Accountants.
FALSE
17. Accounting is a service activity whose function is to provide quantitative information,
about economic entities that is intended to be useful in making economic decisions.
TRUE
18. A corporation is a business owned by its stockholders. TRUE
19. A separate legal entity organized in accordance with codes and laws and in which
ownership is divided into shares of stock is referred to as a corporation. TRUE
20. An audit is the independent examination that ensures the fairness and reliability of
the reports that management submits to users outside the business entity. TRUE
21. A business transaction is the occurrence of an event or of a condition that must be
recorded. TRUE
22. One characteristic of a corporation is that its owners are personally liable for any
losses incurred by the business. TRUE
23. The set of guidelines and procedures that constitute acceptable accounting practice
at a given time is GAAP, which stands for generally accepted accounting process.
FALSE
24. Classification reduces the effects of numerous transactions into useful groups or
categories. TRUE
Multiple Choice (bold the correct answer) ex. If the correct answer is “a” bold the entire
answer. a. accounting entity
1. The ____________ concept assumes that the business has an indefinite

economic life.
a. accounting entity
b. accounting period
c. going concern
d. objectivity
2. Which form of business organization is characterized by limited liability?
a. Sole Proprietorship
b. Partnership
c. Corporation
d. Both sole proprietorship and partnership
3. Which of the following processes best defines accounting?
a. Measuring economic activities
b. Communicating results to interested parties
c. Preventing fraud
d. Both a and b
4. To which area of accounting are generally accepted accounting principles
primarily relevant?
a. Managerial Accounting
b. Financial Accounting
c. Tax Accounting
d. Financial Reporting to All Regulatory Agencies
5. Which of the following is not one of the three types of business activities?
a. Investing
b. Financing
c. Marketing
d. Operating
6. Which of the following processes is considered bookkeeping?

a. Analyzing
b. Reporting
c. Recording
d. Summarizing
7. Krishna started a speech therapy center. He also sells professional books on
speech development. What is the nature of his business? Support your answer with
a reason.
a. manufacturing
b. service
c. trading
d. service and trading
8. Which of the following is a trading business?
a. a clinic
b. a law firm
c. a pharmacy
d. telecommunications company
9. Which of the following statements is false?
a. A sole proprietorship has limited risk with respect to the amount of
resources he invests in his business.
b. A sole proprietorship has only one owner.
c. A sole proprietorship is easy to set up.
d. A proprietorship may not be able to obtain loans easily.
10. A business which prepares financial statements every year is following the
______________ concept.
a. accounting entity
b. periodicity
c. going concern
d. objectivity
11. Assets are usually valued under which basis?

a. Replacement cost
b. Historical cost
c. Net realizable value
12. Which of the following best explain the feature of consistency of presentation?
a. When preparing the accounts of a firm, one should normally account
for similar items in the same way from one accounting period to the
next.
b. Firms in the same industry must account for similar items in the same
way.
c. Firms must comply with accounting standards and regulations.
d. None of the above.
13. Which of the following statements about accounting concepts and the
characteristics of financial reporting information is not correct?
(i) Entities may exclude information that is relevant in financial statements
because it is too difficult for the users to understand.
(ii) The historical cost concept means that only items capable of being measured
in monetary terms can be recognized in the financial statements.
(iii) Consistency in use of the same accounting policies for the same or similar
items from one period to the next is essential to enhance comparability among
the entities.
a. (i) and (ii)
b. (i) and (iii)
c. (ii) and (iii)
d. All of the above
14. Which type of business organization is owned by its stockholders?

a. Corporation
b. Partnership
c. Proprietorship
d. All the above are owned by stockholders
Mtmc
10/20/22
Tanza, Cavite
Philippines

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NAME: Capa, Charmaine Cate D.S.

Full in the blanks.

2. An activity carried out by a business to provide goods and services in exchange

5. Transactions are recorded based on reliable and verifiable information. This is in

6. Transactions should be recorded in the accounts at their original cost shown in

1. The ____________ concept assumes that the business has an indefinite

6. Which of the following processes is considered bookkeeping?

11. Assets are usually valued under which basis?

14. Which type of business organization is owned by its stockholders?

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