Professional Regulation & Basic Accounting Concepts

Question 1

•RA 9298 is officially known as

a. The revised accountancy act
b. The revised accountancy law
c. The Philippine Accountancy Act of 2004
d. The accountancy law of the Philippines, 2007

Answer 1

c.The Philippine Accountancy Act of 2004

Question 2

•Under Section 5 of RA 9298, who shall appoint the members of the Professional Regulatory Board of Accountancy?

a. The chairman of the Board of Accountancy
b. The president of the Republic of the Philippines
c. The chairperson of the Professional Regulations Commissions
d. The president of the Philippines Institute of Certified Public Accountants

Answer 2

b.The president of the Republic of the Philippines

Question 3

Financial Accounting can be broadly defined as the area of accounting that prepares

a. Financial statements to be used by investors only
b. Financial statements to be used primarily by management
c. General purpose financial statements to be used by parties internal to the business enterprises only
d. General purpose financial statements to be used by parties both internal and external to the business enterprise

Answer 3

d.General purpose financial statements to be used by parties both internal and external to the business enterprise

Question 4

The economic entity assumption

a. Requires periodic income measurement
b. Is applicable to unincorporated business
c. Recognizes the legal aspects of business entities
d. Is applicable to all forms of business organization

Answer 4

d.Is applicable to all forms of business organization

Question 5

Preparation of consolidated FS when a parent-subsidiary relationship exists is an example of the

a. Comparability characteristics
b. Economic entity assumption
c. Neutrality characteristics
d. Relevance characteristics

Answer 5

b.Economic entity assumption

Question 6

Which of the following is not an economic entity?

a. SM group of companies
b. Lions club international, a civic organization
c. ABS-CBN foundation, a charitable institution
d. Chris James, a Quezon City resident who owns a chain of beauty salon

Answer 6

d. Chris James, a Quezon City resident who owns a chain of beauty salon

Question 7

This accounting objective emphasizes the importance of the income statement as it is geared toward proper income or performance determination of the enterprise

a. Entity theory
b. Fund theory
c. Proprietary theory
d. Residual equity theory

Answer 7

a. Entity theory

Question 8

Which among the following equations best simplifies the ENTITY theory of accounting?

a. Assets = Liabilities + Capital
b. Assets – Liabilities = Capital
c. Assets + Liabilities = Capital
d. Assets – Liabilities – Preferred SHE = Common SHE

Answer 8

a. Assets = Liabilities + Capital

Question 9

Which among the following equations best exemplifies the PROPRIETORY theory of accounting?

a. Assets = Liabilities + Capital
b. Assets – Liabilities = Capital
c. Assets + Liabilities = Capital
d. Assets – Liabilities – Preferred equity = Common Equity

Answer 9

b. Assets – Liabilities = Capital

Question 10

An accountant uses creative skills and judgment when he or she

a. Applies the rules of debit and credit
b. Attest the fairness of presentation of financial condition and performance of an entity
c. Interprets the information presented in the financial statements through ratios and trend analysis
d. Performs the function described in (B) and (C) above but not function (A)

Answer 10

d. Performs the function described in (B) and (C) above but not function (A)