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THEORY OF ACCOUNTS REVIEW Which is not a characteristic of financial accounting and financial statements? a. Financial accounting presents information needed to serve the common needs of users b. The cash basis of accounting is used c. Financial statements are expressed in pesos d. Financial account...

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THEORY OF ACCOUNTS REVIEW 1.

Which is not a characteristic of financial accounting and financial statements? a. Financial accounting presents information needed to serve the common needs of users b. The cash basis of accounting is used c. Financial statements are expressed in pesos d. Financial accounting information is primarily historical in nature

2.

Standards Council? a. Securities and Exchange Commission b. Department of Trade and Industry c. Board of Accountancy d. Philippine Institute of Certified Public Accountant

3.

The body authorized by law to promulgate rules and regulations affecting the practice of Accountancy in the Philippines. a. The Accounting Standards Council b. The Philippine Institute Of Certified Public Accountants c. The Board Of Accountancy d. The Auditing Standards And Practices Council

4.

When was the ASC established? a. 1980 b. 1981 c. 1982 d. 1983

5.

The primary purpose of the Securities and Exchange Commission is to – a. ensure that investors have adequate information b. issue accounting and auditing regulations for publicly held enterprise c. prevent the trading of speculative securities d. enforce generally accepted accounting principles

6.

The International Accounting Standards Committee was established in – a. 1967 b. 1973 c. 1981 d. 1984

7.

In what year did the ASC start to move fully to the IAS? a. 1987 b. 1995 c. 1997 d. 2001

8.

Republic Act 9298 is otherwise known as a. Revised Accountancy Law b. Revised Accountancy Act c. Philippine Accountancy act of 2004 d. Code of Professional Ethics for CPAs

9.

The body created by the Board of Accountancy is 2006 to assist the Board in carrying out its power and function to promulgate accounting standards in the Philippines a. Philippine Institute Of Certified Public Accountant b. International Accounting Standards Committee c. Auditing And Assurance Standards Council d. Financial Reporting Standards Council

1.

A petty cash system is designed to a. cash checks for employees b. handle cash sales c. account for all small cash receipts and disbursements d. pay small miscellaneous expenses

2.

Bank statements provide information about all of the following, except a. checks cleared during the period b. errors made by the company c. NSF checks d. bank charges for the period

3.

Seldom does the balance of the cash in bank account in the depositor’s books agree with the balance appearing in the bank statement at a particular date because of a. Bank secrecy requirements

b. Negligence by the bookkeeper c. A tax avoidance scheme d. Time – lapse differences

4.

Deposits held as compensating balances a. usually do not earn interest b. if legally restricted and held against short – term credit may be included as cash c. if legally restricted and held against long – term credit may be included among current assets d. if legally restricted and held against short – term credit should not be included in the cash balance but is reported among current assets

5. A proof of cash is a. a proof of a company’s liquid position b. a reconciliation of a cash receipts and payments during the previous period, together with the beginning and ending balances of cash c. proof of the existence of a cash deposit in a bank d. reconciliation of the cash receipts and payments during the current period, together with the beginning and ending balance of cash 6. In a bank reconciliation that attempts to reconcile the bank balance to the correct cash balance, the following items would affect reconciliation in what way? Outstanding checks Deposit in transit a. Added Added b. Deducted Added c. Added Deducted d. Deducted Deducted 7. If the cash balance shown in a company’s accounting records is less than the correct cash balance, and neither the company nor the bank has made any errors, there must be a. deposits credited by the bank but not yet recorded by the company b. outstanding checks c. bank charges not yet recorded by the company d. deposit in transit 1.

Notes or accounts receivable from officers, employees or affiliated companies should be reported in the statement of financial position as a. current assets if collectible within twelve months b. non – current assets only c. trade notes and accounts receivable if they otherwise qualify as current assets d. offsets to capital

2.

When a specific customer’s account is written off by a company using allowance method, the effect on profit and net amortized cost of the accounts receivable is Profit

Amortized Cost of Accounts Receivable a. None None b. Decrease Decrease c. Increase Increase d. Decrease None A form of receivable financing which is equivalent to an absolute sale of accounts receivable is a. pledge of accounts receivable b. assignment of accounts receivable c. factoring d. discounting of notes receivable

3.

1.

Which of the following would not be reported as inventory? a. Land acquired for resale by a real estate firm b. Agricultural produce held by a farm c. Partially completed goods held by a manufacturing company d. Machinery acquired by a manufacturing company for use in the production process

2.

Goods on consignment should be included in the inventory of a. the consignor but not the consignee b. the consignee but not the consignor c. both the consignor and consignee d. neither the consignor nor the consignee

3.

When using the periodic inventory method, which of the following generally would not be separately accounted for in the computation of cost of goods sold? a. Trade discounts applicable to purchases during the period b. Cash (purchase) discounts taken during the period c. Purchase returns and allowances of merchandise during the period d. Cost of transportation – in for merchandise purchases during the period...