Module 1 - What is Accounting?

Question 1

What’s the definition of accounting according to the American Accounting Association?

Answer 1

The process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by the users of the information.

Question 2

Accounting is the _______ of business.

Answer 2

Language

Question 3

Professional entities in the Philippines are regulated by the Philippines’ highest regulatory government organization. What is the name of this organization?

Answer 3

Professional Regulatory Board

Question 4

The Accounting Standards Council is established by organization?

Answer 4

Philippine Institute of Certified Public Accountants (PICPA)

Question 5

What’s the function of the Accounting Standards Council?

Answer 5

Establish generally accepted accounting principles in the Philippines.

Question 6

The Accounting Standards Council was replaced by what organization?

Answer 6

Financial Reporting Standards Council on 2006

Question 7

On August 2009, the FRSC created the Philippine Interpretations Committee for what purpose?

Answer 7

Assist the FRSC in establishing and improving the financial reporting standards in the Philippines.

Question 8

Give at least three countries that formed the International Accounting Standards Committee.

Answer 8

Any of the following: Australia, Canada, France, Japan, Mexico, Germany, United Kingdom, Ireland, USA, and Netherlands

Question 9

The International Accounting Standards Committee’s main goal is what?

Answer 9

Achieve a uniform accounting principles around the world.

Question 10

The Republic Act No. 9298 repealed the Presidential Decree No. 692 on May 13, 2004. This law is also known as what?

Answer 10

Philippine Accountancy Act of 2004

Question 11

The Philippine Financial Reporting Standards (PFRSs) corresponds to what international format?

Answer 11

International Financial Reporting Standard (IFRSs)

Question 12

This phase of accounting is also called journalization.

Answer 12

Recording

Question 13

This phase of accounting involves sorting and grouping similar items under the designated name, category or account.

Answer 13

Classifying

Question 14

Graphs and other visual elements are often used to complement the text data in this accounting phase.

Answer 14

Summarizing

Question 15

In this phase, data is used to prepare future plans and frame policies to execute financial plans.

Answer 15

Interpreting

Question 16

What’s the definition of accounting according to AICPA?

Answer 16

The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least of financial character, and interpreting the results thereof.

Question 17

Accounting is a service activity.Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions, in making reasoned choices among alternative courses of action. This definition is from what organization?

Answer 17

Accounting Standards Council

Question 18

The following are what kind of accounting information users: Owners, Creditors and Suppliers, Potential workers, Management, Taxing Authorities, Employees, and Customers?

Answer 18

Direct Users

Question 19

Give at least 3 indirect users of accounting information.

Answer 19

Any of the following: Regulatory Authorities, Financial Analyst and Advisors, Stock Exchanges, Lawyers, Financial press and reporting agencies, Trade Associations and labor unions.

Question 20

The main function of accounting is what?

Answer 20

Provide quantitative financial information about a business that is useful to statement users particularly owners and creditors, in making economic
decisions.

Question 21

What direct user retain, increase or decrease proportionate ownership and evaluate the use and stewardship of resources by management?

Answer 21

Owner/s

Question 22

These direct users commit resources to the enterprise.

Answer 22

Potential Owners

Question 23

They assess nature and extent of financing needs and evaluate results of past economic decision.

Answer 23

Management

Question 24

They extend and determine terms of credit.

Answer 24

Creditors

Question 25

They evaluate tax returns and assess taxes or penalties.

Answer 25

Taxing authorities

Question 26

They negotiate wages, inspect their job security, and look into the company’s financial condition, sales volume, and profitability.

Answer 26

Employees

Question 27

They anticipate price changes to help in seeking other sources of supply.

Answer 27

Customers

Question 28

These entities assess reasonableness of rate of return, require or recommend changes in accounting and disclosure practices, and issue cease-and-desist order or stock trading suspension order.

Answer 28

Regulatory or registration authorities

Question 29

They are the people who evaluate prospect of investment in the enterprise relative to alternative investment and advise investor and potential investor to retain, increase or decrease investment
in the enterprise.

Answer 29

Financial analyst and advisors

Question 30

They accept or cancel listing of securities.

Answer 30

Stock exchanges

Question 31

They determine whether covenant and contractual provisions are fulfilled.

Answer 31

Lawyers

Question 32

They prepare descriptive analysis and compute trends and ratios.

Answer 32

Financial press and reporting agencies

Question 33

They compile industry statistics, make comparisons and analyze industry results.

Answer 33

Trade associations

Question 34

They formulate wage and contract demands.

Answer 34

Labor unions