Chap 1

Question 1

It is a service activity. The activity utilizes the complete process of identifying, measuring, and communicating financial information to formulate reports that will be used to provide relevant information to perform decision-making.

Answer 1

Accounting

Question 2

It represents the wealth or finance of the business which is composed of its properties or assets.

Answer 2

Net Worth

Question 3

First three parts of the Accounting Cycle found in the bookkeeping:

Answer 3

Track down business activities from the time cash is used to transact,

Analyze, calculate, and record business activities (transactions), and

Prepare progress reports through making financial reports.

Question 4

used for census or the registry of people living in a province to serve as a guide for collection of taxes.

Answer 4

Bookkeeping

Question 5

He wrote the first mercantile book “Libro de Larte dela Mercatura” in 1458.

Answer 5

Benedetto Cotrugli

Question 6

Father of Modern Accounting.

Answer 6

Luca Pacioli

Question 7

He introduced the concept of double-entry bookkeeping through his first printed exposition titled “Summa de Arithmetica” in 1594.

Answer 7

Luca Pacioli

Question 8

Primary users or parties inside the company. Those stakeholders that are directly involved in managing the business.

Answer 8

Internal Users

Question 9

Secondary users or parties outside the company. Those individuals that are indirectly involved in managing the business.

Answer 9

External Users

Question 10

Writing down financial activities
chronologically
transaction.

Answer 10

Recording

Question 11

Recording is writing down financial activities ________ after analyzing each transaction.

Answer 11

chronologically

Question 12

Grouping recorded transactions or financial activities into specific account classifications.

Answer 12

classifying

Question 13

Process of preparing financial reports that is used for decision-making by the users of accounting information.

Answer 13

Summarizing

Question 14

Interpretation of reports based on the provided Financial Statements and presentation of this information in a qualitative and quantitative form.

Answer 14

Interpreting

Question 15

An economic unit that engages in buying and selling of goods or rendering services to other people.

Answer 15

Business

Question 16

The business is owned and operated by one person only.

Answer 16

Sole Proprietorship

Question 17

Most small businesses in different industries are _____-owned businesses.

Answer 17

sole proprietorship

Question 18

A business is owned by two or more individuals that are called partners. Each partners decided to contribute knowledge and cash and non-cash assets to start up a business with the intent of dividing the profit eventually

Answer 18

Partnership

Question 19

This is a type of business which is created through a separate legal entity that is owned by more than one individual called shareholders/stockholders.

Answer 19

Corporation

Question 20

This type of business organization is not managed by the owner, but by the Elected Board of Directors (BOD) that are sometimes shareholders too.

Answer 20

Corporation

Question 21

Operation involves rendering service for a fee to customers.

Answer 21

Service

Question 22

Engaged in the buying and selling of goods or merchandise to customers.
The products sold are already manufactured and ready to use.

Answer 22

Merchandising/Trading

Question 23

Take part in the production of items or the purchase of raw materials and processing them into finished products to be sold for cash.

Answer 23

Manufacturing

Question 24

Performs more than two of the abovementioned business operations.

Answer 24

Hybrid Business

Question 25

Aspects of Accounting

Answer 25

Recording, Classifying, Summarizing, Interpreting

Question 26

Types of Business Organization

Answer 26

Sole Proprietorship, Partnership, Corporation

Question 27

Types of Business Operations

Answer 27

Service, Manufacturing, Merchandising/Trading, Hybrid Business

Question 28

The set of rules to be followed by the business. A system that an entity utilizes to collect, store, and manage its financial data.

Answer 28

Accounting Information System

Question 29

It states that the advantages enjoyed must outweigh its cost.

Answer 29

Cost-Benefit

Question 30

It prescribes that information must be reported promptly and must be useful for the user to make a right decision and conclusion.

Answer 30

Relevance

Question 31

It advises that the AIS System to be used by the business must be designed to fit the unique characteristics of the overall company.

Answer 31

Compatibility Principle

Question 32

It suggests that the company system should allow and adapt for changes when needed.

Answer 32

Flexibility Principle

Question 33

It prescribes that the business’ AIS must have good internal control.

Answer 33

Control Principle

Question 34

Enumerates the methods and procedures necessary to monitor the activities of the business to ensure efficient operation

Answer 34

Internal Control

Question 35

It refers to the device used to record the changes, either increase or decrease, in the accounting elements. Similar transactions are grouped together under one account.

Answer 35

Account

Question 36

Classified and presented according to liquidity with the most liquid by those with lesser liquidity.

Answer 36

Assets

Question 37

Realized in the normal operating cycle (1 Year) Held Primarily for trading purposes. Cash, Cash Equivalents, Marketable Securities, Receivables, Accrued Income, and Prepaid Expenses

Answer 37

Current Assets

Question 38

Long-term assets with a full value that cannot be recognized until after one year. Long term investments, Property, Plant, Equipment (P.P.E), and Intangible Assets

Answer 38

Non-Current Assets

Question 39

A present obligation arising from a past event and a settlement is expected. Economic Obligations.

Answer 39

Liabilities

Question 40

Payables to be settled within one (1) normal operating year. It does not have an unconditional settlement.

Answer 40

Current Liabilities

Question 41

Obligations needed to be settled for more than one (1) accounting period. Mortgage Payable, and Bonds Payable. Not expected to be paid immediately.

Answer 41

Non-current Liabilities

Question 42

Includes the interest of the owner in the business, claims of the owner on the assets of the business. Economic Residual

Answer 42

Owner's Equity

Question 43

Represents the original and additional investment of the owner to business.

Answer 43

Capital

Question 44

Represents the withdrawals made by the owner of the business in cash or other assets.

Answer 44

Drawing

Question 45

or Temporary Account – containing the next income or loss – used at the end of the period to close nominal accounts.

Answer 45

Income Summary

Question 46

Refers to the cash earned or generated by the business in performing services or delivering goods.

Answer 46

Revenue

Question 47

Represents an inflow of cash or assets for service rendered or merchandise sold.

Answer 47

income

Question 48

Income that does not come from the normal course of business

Answer 48

Gain

Question 49

It refers to the cost or charges incurred in the process of generating or earning revenue. Reduction in the value of an asset as it is used.

Answer 49

Expenses

Question 50

Major Accounts

Answer 50

Assets, Liabilities, Owner's Equity, Revenue, Expenses