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QUIZ 2 - Accounting Principles and The Elements of Accounting With Answers

Sample Quiz for Accounting with answers and explanation

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22 views3 pages

QUIZ 2 - Accounting Principles and The Elements of Accounting With Answers

Sample Quiz for Accounting with answers and explanation

Uploaded by

strwbxiii
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Republic of the Philippines

Commission on Higher Education


Don Honorio Ventura State University
Bacolor, Pampanga

QUIZ 2- ACCOUNTING CONCEPTS AND PRINCIPLES AND THE ELEMENTS OF


ACCOUNTING

ACCTG 101- FINANCIAL ACCOUNTING AND REPORTING (FUNDAMENTALS)

Name: _______________________________________ Score: _______________________

SET A

I. MULTIPLE CHOICE (30 pts)

1. An asset is an economic resource, and an economic resource is a right that has the potential to produce
economic benefits. Which of the following is not one of the potentials of an economic resource to produce
economic benefits for an entity?

a. Service potential i.e, the resource can be used to provide services in the entity’s normal business
activities
b. The resource can be converted into cash
c. The resource can provide cost- savings to the entity
d. The resource causes more outflows of cash from the entity than inflows

2. Which of the following would not result to the recognition of a liability?

a. Receipt of proceeds of a bank loan


b. Receipt of delivery of equipment purchased on credit
c. A commitment for future execution becomes burdensome
d. Paying in advance the purchase price of inventories for future delivery

3. Which of the following is a current asset?

a. Property, Plant and Equipment


b. Accounts Receivable
c. Non-Trade Note Receivable due in 13 months
d. Deferred Tax Asset

4. The term “Net Assets” represents

a. Retained Earnings
b. Current Assets less Current Liabilities
c. Total Contributed Capital
d. Total Assets less Total Liabilities

ACCTG 101 1|Page


5. An Income Statement is a statement that shows:

a.) The changes in Owner’s equity


b.) The results of operations in a given period
c.) The financial condition of the business
d.) The changes that take place between the two balance sheet dates

6. The conceptual framework is least applicable in which of the following cases?

a. To account for a transaction that is specifically dealt with by a standard


b. In resolving issues not addressed directly by a Standard
c. In developing standards
d. In analysing and interpreting standards

7. Which of the following is not a factor to consider when applying the qualitative characteristics?

a. The information must be both relevant and faithfully represented for it to be useful.
b. The enhancing qualitative characteristics only enhance the usefulness of information but cannot make
irrelevant information or erroneous information to be useful.
c. Sometimes, it may be necessary to make trade-offs between qualitative characteristics in order
to provide useful information.
d. To be useful, information need not only to meet one, but not necessarily all the qualitative
characteristics.

8. Which of the following statements is incorrect regarding the purpose of the conceptual framework?

a. The conceptual framework is intended to provide a foundation for the development of globally
accepted standards.
b. Globally acceptable standards contribute to economic efficiency by lowering the cost of capital and
reducing international reporting costs
c. Globally acceptable standards reduce the information gap between the financial statement users and
the entity management
d. The conceptual framework prescribes the concepts for both general purpose and specific purpose
financial reporting

9. This qualitative characteristic is unique in the sense that it necessarily requires at least two items.

a. Verifiability c. Timeliness
b. Faithful Representation d. Comparability

10. Statement 1: When making materiality judgments, a quantitative assessment alone is not always sufficient to
conclude that an item of information is not material.
Statement 2: Materiality judgments apply only to items that are recognized but not to those that are
unrecognized.

a. Statement 1 is True, Statement 2 is False


b. Statement 1 is False, Statement 2 is True
c. Both statements are True
d. Both statements are false

ACCTG 101 2|Page


11. Identify the fundamental qualitative characteristics under the Conceptual Framework.
I. Relevance
II. Reliability
III. Faithful representation
IV. Comparability
V. Verifiability
VI. Timeliness
VII. Understandability

a. I, II
b. I, III
c. I, II, III, IV, V, VI
d. IV, V, VI, VII

12. Information has this quality when it influences the economic decisions of users by helping them evaluate past,
present or future events or confirming, or correcting, their past evaluations.

a. Predictive Value
b. Reliability
c. Relevance
d. Understandability

13. This concept defines the accountant’s area of interests and determines what information should be included in or
excluded from the financial statements.
a. Periodicity
b. Accrual basis
c. Going concern
d. Accounting entity

14. Decision makers vary widely in the types of decisions they make, the methods of decision making they employ,
the information they already possess or can obtain from other sources, and their ability to process information.
Consequently, for information to be useful there must be a linkage between these users and the decisions they make.
This link is

a. Relevance
b. Reliability
c. Understandability
d. Materiality

15. Objectivity is assumed to be achieved when an accounting transaction

a. Is recorded in a fixed amount of pesos


b. Involves the payment or receipt of cash
c. Involves an arms’ length transaction between two independent parties
d. Allocates revenue or expenses in a rational and systematic manner

ACCTG 101 3|Page

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