Fundamental Accounting

Question 1

A service activity that provides quantitative information, primarily financial in nature, about economic entities to users of such information (stakeholders) that is intended to be useful in making economic decisions

Answer 1

Accounting

Question 2

Involves bookkeeping function and periodic financial reporting

Answer 2

Financial Accounting

Question 3

The mechanical task involving the collection of basic financial data

Answer 3

Bookkeeping

Question 4

The utilization of accounting data for specific decision-making needs by management

Answer 4

Managerial Accounting

Question 5

The rendering of opinion by an independent CPA in the fairness of an organization’s financial statement

Answer 5

Auditing

Question 6

Preparation of tax return and analysis of tax effect of certain transactions

Answer 6

Taxation

Question 7

Identification of the tax revenue sources and usage of funds consistent with the national and local laws

Answer 7

Government Accounting

Question 8

Professional accountants must be straightforward and honest in all professional and business relationships

Answer 8

Integrity

Question 9

Professional accountants should not allow bias, conflict of interest or undue influence of others to override professional judgement

Answer 9

Objectivity

Question 10

Professional accountants should continuously hone their knowledge to ensure that their clientele receive competent services

Answer 10

Professional competence and due care

Question 11

Professional accountants must follow laws and regulations and avoid acts that can discredit the profession

Answer 11

Professional Behavior

Question 12

Organizations created for purposes of specific undertaking and is not meant to generate profit in its operation

Answer 12

Not-for-profit organization

Question 13

Government instrumentalities that generates from taxes used for public projects and welfare

Answer 13

Government Institution

Question 14

An entity engaged in providing specific kinds of service to its customer and does not create any tangible product

Answer 14

Service Business

Question 15

An entity engaged in buying goods from a manufacturer or other merchandise to be sold to its customer at a mark-up

Answer 15

Trading/ Merchandising Business

Question 16

An entity engaged in procuring raw materials, labor and other goods and services with the intention of creating a finished product for sale

Answer 16

Manufacturing Business

Question 17

A business owned by a single owner who generally manages the affair of the business

Answer 17

Sole Proprietorship

Question 18

A business owned by two or more persons who bind themselves to contribute money, property or industry in an undertaking with the intention of dividing profits among themselves

Answer 18

Partnership

Question 19

An artificial being created by operation and owned by stockholders. The corporation is a separate legal entity and the stockholders are not personally liable to the corporation’s liabilities

Answer 19

Corporation

Question 20

Regulates business activities and collects taxes from the entity, ensure the entity’s compliance with regulation and check accuracy of tax payment

Answer 20

Government

Question 21

provides fund needed by the entity to finance its operation and activities, determine the entity’s ability to repay loans and interests as they fall due

Answer 21

Financial institution

Question 22

has interest in the general affairs of the entity, use financial information for specific purposes

Answer 22

General public

Question 23

it can influence decisions made by users, information is relevant when it has both predictive and confirmatory value

Answer 23

Relevance

Question 24

information can confirm or correct the user’s expectations

Answer 24

Confirmatory value

Question 25

information can be used by the user to make predictions

Answer 25

Predictive value

Question 26

financial statement should reflect a true and fair view the economic substance of transactions, balances are recorded completely, objectively, unbiased, and free from material error

Answer 26

Faithful representation (reliability)

Question 27

information has more value if it can be compared with other entities or with other similar information about the entity

Answer 27

Comparability

Question 28

information is verifiable when different knowledgeable and independent observers can reach a consensus that such information is faithfully represented

Answer 28

Verifiability

Question 29

information needs to be provided to decision-makers in time to be capable of influencing their decision

Answer 29

Timeliness

Question 30

information needs to be clearly and concisely presented

Answer 30

Understandability

Question 31

transactions must be separate from owner and other entities, comingled transactions must be charged to the proper party

Answer 31

Economic entity concept

Question 32

an entity is viewed as a continuing business unless there is evidence to the contrary, expected to continue operating within 12 months from reporting date, if there is evidence that its no longer a going concern, it shall disclose such fact and discontinue the use of _

Answer 32

Going concern assumption

Question 33

An entity’s life can be divided into meaningfully equal time period (accounting periods) for reporting purposes ex. fiscal year - 12 months on different year, Calendar year - 12 months within the same year, Interim period - less 12 months (monthly, quarterly, semi-annual)

Answer 33

Periodicity concept

Question 34

assumes the value of a currency (PH peso) is stable over time, impact of inflation is disregarded

Answer 34

stable monetary unit concept

Question 35

accounting records and statements are based on the most reliable data so that they will be as accurate and as useful as possible

Answer 35

Objectivity principle

Question 36

transaction balances are carried at actual cost, unless required/ permitted by the standard to use a different measurement basis (kung magkano ang binayaran)

Answer 36

Historical cost

Question 37

Revenue is recognized in the period realized or earned irrespective of the timing of cash receipt

Answer 37

Revenue recognition principle

Question 38

cash is received after the delivery of goods or services (revenue)

Answer 38

receivable

Question 39

cash is received before the delivery of goods or serviced (revenue)

Answer 39

liability

Question 40

Expense is recognized in the period incurred or used up irrespective of the timing of cash payment

Answer 40

Expense recognition value

Question 41

cash is paid after receipt of goods or services (expense)

Answer 41

liability

Question 42

cash is paid before the receipt of goods or services (expense)

Answer 42

asset

Question 43

The entity should provide footnotes, supplementary schedule and other relevant information that will complement the figures in the financial statement and give the users a better understanding of the Company’s financial statement

Answer 43

Adequate disclosure

Question 44

Financial reporting is concerned with information that is significant enough to affect evaluations and decisions, accounting information is deemed material if its inclusion or exclusion can change user’s decisions

Answer 44

Materiality

Question 45

The firm should use the same accounting method from period to period to achieve comparability over time within a single enterprise, changes are permitted if justifiable and disclosed in the financial statements

Answer 45

Consistency principle