Name: PASCUA, ROWENA V.

Course: BSA 1-3. Subject Code: A401 FAR

Instructor: Romulo Soria

FINANCIAL ACCOUNTING AND REPORTING (Reviewer)

P-I,II
1. Revenues increase owner's equity. • True

2. The financial accounting process provides information about economic activities of an enterprise for a

specified accounting period that is shorter than the life of the enterprise.
.• Time period
3. The principles that requires all relevant information that would affect the users’ understanding and assessment of the
accounting entity be disclosed in the financial statements.
• full disclosure
4. The term ‘present obligation’ connotes.
• a liability

5. which of the following is not included in a trial balance?

a) • dates of transactions c). ledger accounts
b) debit balances d). credit balances
6. It is the accumulation and communication of information for use by internal parties
• Managerial Accounting
7. A conceptual framework is?
• A theoretical foundation which guides the ASC/FRSC, preparers and users of financial accounting
information.
8. Which of the following is an appropriate definition of accounting?
•A. The measurement, processing, and communication of financial information about an identifiable economic entity
9. Which of the following is incorrect regarding profit?
•Profit is measured only indirectly as an arithmetical difference
10. For a sole proprietorship, this represents the residual amount after deducting total liabilities from total assets.
•owner’s equity
11. Which accounting concept should be considered if the owner of the business takes goods from inventory for
his personal use?
• The business entity concept
12. Accounting is called the language of business. •TRUE
13. The term liability refers to?
•the equity of the creditors only
14. Accountants employed by a particular business firm or not for profit organization, perhaps as chief accountant,
controller, or financial vice president, are said to be engaged in?
•Practice in commerce and industry
15. An audit is an independent examination that ensures the fairness and reliability of the reports that
management submits to users outside the business entity? •True
16. An increase in expense is recorded as debit. •TRUE
17. It is an economic resource controlled by the entity that has resulted from past events and has a potential to
produce economic benefits. •ASSET
18. It is the accounting standard setting body in the Philippines at the present time.
• Financial Reporting Standards Council
19. A business owner’s contribution to the business results in
•an increase in assets and an increase in owner’s equity.

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

•R.A. No. 9298

21. Assets are things of value owned by a business entity. • TRUE
22. The communicating process of accounting includes all of the following, except
•Interpreting
23. The entity concept means that
• The financial affairs of a firm and its owner are always kept separate for the purpose of preparing accounts.
24. Which of the following would not give rise to income?
• investment by the business owner to the business
25. The financial statements should be stated in terms of a common financial denominator.
•Stable monetary unit
26. It is a form of business engaged in buying and selling goods without changing its forms or substance.
•Merchandising
27. Which of the following users need financial information to enable them to determine whether amounts owing
to them will be paid when due?
•Employees
28. Both sides of the accounting equation is unequal. •FALSE
29. Which of the following accounting concepts means that similar items should receive a similar accounting
treatment? •Consistency
30. These are the events that affect the entity and in which other entities participate.
•External events
31. Decrease in asset may •decrease in liabilities
32. Which of the following is incorrect concerning equity?
•It is different from capital, net assets or net worth
33. An entity obtained a loan. What is the effect of this transaction on the entity's financial statement elements?
•Total assets and liabilities increased
34. Accounts that appear on the left side of the accounting equation usually have credit balances.
•False
35. A credit may result in? An increase in a liability account, An increase in a revenue account,
An increase in capital account. •All of these
36. Net worth is the same as? •Capital
37. In an expanded basic accounting equation, why is the income added to equity
•because income increases equity
38. Which of the following is a correct computation?
•Equity, beg. + Profit = Equity, end
39. Which of the following transactions affects the total value of liabilities of a firm?
•office equipment bought on account
40. An entity has a total liabilities of P360,000 and total equity of P90,000. How much are the total assets?
• 450,000 Asset= liabilities + equity
41. Income is defined as increases in assets or decreases in liabilities that result in an increase in equity, other
than those that relate to contributions by the business owner(s).
•True
42. Joven Aguinaldo Hand Clinic has the following accounts and balances: Cash P11,750; Accounts receivable P1,400;
Professional equipment P6,000; Office equipment P33,500; Accounts payable P21,900; J. Aguinaldo capital P10,000;
Income from services P30,000; Rent expense P9,250. What is the amount of assets?
•52,650 11,750+1,400+33,500+6,000=52,650
43. Which of the following has no effect on owner's equity?
•land acquired
44. All the process in an accounting system must observe the equality of the accounting equation.
•True
45. Prepaid insurance is a(n)? •Asset
46. liability and a revenue account. •liability and a revenue account
47. Received P20,000 for the sale of the lot.
•Debit cash, credit land
48. An entity had a beginning equity of P123,000. If the total income for the period is P59,000, while the total
expenses are 81,000, how much is the ending balance of equity? •101,000
sol.123,000+59,000-81,000= 101,000
49. Increases the proprietorship? •service income
50. Which financial statement element is defined in terms of changes in assets and liabilities?
•income and expenses
51. The purchase of a service vehicle on account will
• increase asset and increase liabilities
52. When an entity pays employees for their services, the effect is an increase in
• expenses
53. Paid P105,000 for business automobile. • debit automobile, credit cash
54. Which of the following is not an essential factor in determining the existence of an asset?
the presence of an economic resource that resulted from past events.
Control over the economic resource
Potential of the economic resource to produce economic benefits for the entity
•present obligation
55. On April 1, 2022, Efren Barillo sets up a firm and brings in office equipment of P50,000 and inventory of P30,000 to
the business. Efren Barillo puts P80,000 into the firm’s cash box and P100,000 into the firm’s bank account.
Meanwhile the firm lends P50,000 to SJ and Associates and borrows P200,000 from the bank to acquire a piece of
premises. What is the amount of the firm’s capital on April 1, 2022? •260,000
50,000+30,000+80,000+100,000= 260,000
56. An entity had total liabilities of P340,000 at the end of the year. The beginning equity is P280,000. If during
the year, the entity earned income of P420,000 and incurred expenses of P390,000, How much is the
ending balance of total assets?
• 650,000 340,000+280,000+420,000-390,000= 650,000
57. An expense? •decrease owner’s equity
58. legal obligations arise only from law. •False
59. An expense could not possibly result. •from an increase in assets
60. Which of the following is not a correct variation of the expanded accounting equation?
• Assets = Liabilities + Equity - Income + Expenses
Assets = Liabilities + Equity + Income – Expenses, Assets - Liabilities = Equity + Income – Expenses, Assets
+ Expenses =Liabilities + Equity + Income

61. Business obligation is. •creditor's claim

62. Amounts owed by a business are referred to as. •liabilities
63. Entity A earned a total income of P50,000,000 and reported a loss 0f P8,000,000. Entity A's total expenses
were •P58,000,000
64. The acquisition of an asset for cash. • leaves total assets unchanged
65. Owner’s equity is the excess of an entity’s capital over its liabilities. •False
66. The payment of a liability. •decrease asset and liabilities
67. Which financial statement element is defined as a residual amount? •Equity
68. Decreases proprietorship. •representation of expense
69. Which of the following is correct if the sole proprietor of an entity borrows P30,000 in the name of the entity and
deposits it into the entity’s account? •The assets of the entity increase by P30,000
70. Entity A’s beginning equity was P60,000,000. If during the year. Entity A earned total income of P16,000,000 and
incurred a total expenses of P8,000,000, how much is Entity A’s ending equity?
•P68,000,000
71. Which of the following is an asset of a firm? •computer equipment owned by the firm
72. Jay Ilagan invested P50,000 in a real estate agency? •Debit cash, credit J. Ilagan capital
73. If an owner invests her laptop computer in the business, there is an increase to
•Computer equipment and Capital
74. An entity has a total assets of P360,000 and total equity of P90,000. How much are the total liabilities?
•270,000 A=L+OE
75. External users of general-purpose financial statements include all of the following except.
•Owners who are directly involved in managing the business.
External users are creditors, Investors, lenders
76. The minimum balance of an account is zero. In accounting, a negative balance in an account is referred to
as. •abnormal balance.
77. Which of the following is incorrect regarding profit?
•Profit is earned if total income is less than total expenses.
Is correct ( a. Profit is measured only indirectly as an arithmetical difference. b. Profit is the excess of total income
over total expenses. c. Profit increases equity.)
78. What function do accounting journals serve in the accounting process? •Recording
79. A decrease in the economic benefits of a resource would be treated as. •Expense
80. This accounting process is the recognition or nonrecognition of activities as accountable events.
•identifying
81. What is the primary service of CPAs in public practice? •Auditing
82. This includes money or its equivalent that is readily available for unrestricted use. •Cash
83. Mang Kulas Company sells “balut,” “penoy,” “taho,” and barbeque. At the same time, Mang Kulas Company also
offers spa, manicure, pedicure, and armpit hair removal to its customers. Mang Kulas Company is referred to as a.
•hybrid business
84. Which of the following statements is correct?
•A contra-asset account is increased through credit
85. Entity A had total assets, liabilities, and equity of ₱130M, ₱80M and ₱50M, respectively, at the beginning of the
period. During the period, Entity A’s total liabilities decreased by ₱20M, while its profit was ₱25M. There were no
other transactions or events that affected equity during the period. How much is Entity A’s ending total assets?
•₱135M. ₱80M+50M+25M-20M= 135M
86. Accounting concepts and principles can be derived from
•All of these are sources of accounting concepts and principles used in practice.
The Standards (i.e., IFRS or PFRS).
the Conceptual Framework.
long-time use in the profession and have been proven to be most useful.
87. Indicating to others, through your past action, that you will accept and discharge certain responsibilities, thereby
creating an expectation on them that you will do so, creates an obligation called
•constructive obligation
88. In which of the following did a loss occur?  ASSETS    = LIABILITIES + EQUITY  
+   INCOME  - EXPENSES. •₱920,000 ₱710,000 ₱290,000 ₱440,000 ₱520,000
89. The business owner invested cash to the business. •Owner’s equity
90. Transactions and other events are recorded in the periods in which they occur, not when they affect cash.
•Accrual basis
91. He paid the monthly rent of the office, P9,500. •Debit rent expense, credit Cash