Accounting Basics

Question 1

not only a modest and less expensive profession, but also a prestigious one

Answer 1

Accountancy

Question 2

is a holder of baccalaureate degree in Bachelor of Science in Accountancy (BSA), who has taken and passed the difficult and competitive licensure examination for CPAs, vested by laws to practice the accounting profession under the supervision of the Professional Regulation

Answer 2

Certified Public Accountant (CPA)

Question 3

helps the owner to know how much profit his business makes.

Answer 3

Accounting

Question 4

Prepares financial report for the business.

Answer 4

Accountant

Question 5

income is recorded when earned, regardless of cash collection
and expenses are recorded when incurred, regardless of cash payments

Answer 5

Accrual Basis

Question 6

business is assumed separate from the owners

Answer 6

Accounting Entity

Question 7

business is assumed to operate indefinitely

Answer 7

Going-Concern

Question 8

the business life is divided into equal periods

Answer 8

Time Period

Question 9

Peso is assumed to have a stable value regardless of inflation

Answer 9

Unit of Measure

Question 10

the accountant’s reports to business owners or management and considered the end products of the accounting process.

Answer 10

Financial Statement

Question 11

Shows the financial position of the business as of a particular date, also called balance sheet.

Answer 11

Statement of Financial Position

Question 12

Also called Income Statement. Shows the performance of the business for a given period of time.

Answer 12

STATEMENT OF COMPREHENSIVE INCOME (SCI)

Question 13

Summarizes the changes that occurred in the owner’s equity.

Answer 13

STATEMENT OF CHANGES IN EQUITY (SCE)

Question 14

Shows cash receipts (inflows) and cash disbursements (outflows) of the business classified into operating activities, investing activities and financing activities.

Answer 14

STATEMENT OF CASH FLOWS (SCF)

Question 15

Presents the summary of accounting policies and other explanatory information or

Answer 15

NOTES TO FINANCIAL STATEMENTS (NTFS)

Question 16

begins on January 1 and ends on December 31

Answer 16

Calendar Year

Question 17

begins on the first day of any month except January and ends on the last day of the twelfth month

Answer 17

Fiscal Year

Question 18

twelve-month period that ends on any month when the business is at the lowest or in a slack season

Answer 18

Natural Business Year

Question 19

involves journalizing

Answer 19

Recording

Question 20

involves posting

Answer 20

Classifying

Question 21

involves financial statements completion

Answer 21

Summarizing

Question 22

involves analytical and interpretative works

Answer 22

Interpreting

Question 23

An accounting device used to summarize the effect of changes in assets, liabilities and owner’s equity.

Answer 23

T- ACCOUNT

Question 24

refers to the difference between the debit total and the credit total.

Answer 24

Account balance

Question 25

means total of debit side exceeds total of credit side.

Answer 25

Debit balance

Question 26

means total of credit side exceeds total of debit.

Answer 26

Credit balance

Question 27

means total of debit side equals total of credit side.

Answer 27

Closed account