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Liabilities are company's obligations.
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True
False

Question 2
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Owner's Equity is to sole proprietorship as Capital is to corporation.
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True
False

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In cash basis accounting, income shall only be recognized when cash is received, and expenses
shall only be recorded when cash is paid.
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True
 False

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Investing activities cannot be presented in direct or indirect method.
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True
False

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Accrual basis of accounting is a basic accounting principle that states that income shall only be
recognized when cash is received, and expenses shall only be recorded when cash is paid.
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True
False

Question 6
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Services businesses offer products.
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 True
False

Question 7
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This is derived from the income statement and is also added to the beginning capital and additional
investments done during the year.
Select one:
a. None of the choices
b. withdrawal
c. investment
d. Net profit

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The transactions falling under operating activities does not primarily involve cash received from
customers and paid to suppliers, lenders, or employees.
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True
False

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Owner's equity usually consists of the owner's investment and the earned profit less any withdrawals
made during a given period.
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True
False

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Capital is also known as a residual asset.
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True
False

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The owner's equity is also called capital, net assets, or net worth.
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True
False

Question 12
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The Statement of Financial Position is commonly prepared at the year ended December 31.
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True
False

Question 13
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Gains increase the income of the business.
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True
False

Question 14
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In this principle, it is assumed that the business owners or managers are separate from the business
enterprise.
Select one:
a. Dual effect principle
b. Going concern principle
c. matching principle
d. Business entity principle

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Cash receipts from customers is P200,000, cash paid to suppliers is P10,000 and cash paid to
employees is P25,000, how much is the net cash from operating activities.
Select one:
a. Cannot be determined from the data given
b. P190,000
c. P165,000
d. P175,000

Question 16
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Withdrawals or drawings are resources of the firm which were taken by the owner for personal use.
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True
False

Question 17
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The following are examples of non-current assets except
~Property, plant and equipment.
Select one:
a. Intangible asset
b. Accounts Receivable
c. Long-term investment

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There are common account titles between assets and liabilities.
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True
False

Question 19
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Merchandising business are charging fees for rendered services.
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True
False

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The Calendar year ends on January 01.
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True
False

Question 21
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Accounting is defined in part as the art of ____________, ___________, and ____________ in a
significant manner and in terms of money, transactions and events.
Select one:
a. processing, computing, finalizing
b. recording, classifying, summarizing
c. journalizing, synthesizing, reporting
d. analyzing, evaluating, assessing

Question 22
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Cash basis accounting relies entirely on the payment and receipt of cash.
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True
 False

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Account form is more commonly used form of an SFP.
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True
False

Question 24
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Losses are outflows that result from the main activity of the business.
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True
False

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The acquisition and disposal of long-term assets, including investments not considered cash
equivalents are parts of an investing activities.
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 True
False

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Gross profit is P150,000, total selling expenses is P39,000, and total general and administrative
expenses cost P52,000. Compute for the operating income.
Select one:
a. P163,000
b. P241,000
c. Cannot be determined from the given data
d. P59,000

Question 27
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Beginning inventory is P50,000, net cost of purchases is P125,000, and ending inventory is P35,000.
Compute for the cost of goods sold.
Select one:
a. P110,000
b. P140,000
c. Cannot be determined from the given data
d. P210,000

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Investments made by the owner may represent the original investment made at the start of business,
and any additional investments thereafter.
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True
False

Question 29
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Residual asset is the result of combining liabilities and equity.
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True
False

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A liability is a present obligation arising out of past events.
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True
False

Question 31
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Cash basis accounting is not acceptable in the accounting industry though we need to understand
this in order to prepare our cash flow statement.
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True
False

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A sole proprietor's equity account is written as follows: name of owner, capital.
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True
False

Question 33
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Owner's equity represents the right of the owner over the resources of the firm.
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True
False
Question 34
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There are common account titles between assets and liabilities.
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True
False

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Revenues are also known as income.
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True
False

Question 36
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Current assets are expected to be used after 12 months.
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True
False
Question 37
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Operating activities may be presented using either the direct method or indirect method.
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True
False

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Increase in assets is recorded as a Debit.
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True
False

Question 39
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CPA means Certified Public Accountant.
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True
False
Question 40
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This occurs whenever the enterprise purchased goods or received services on account issuing a
promissory note to settle the account in a specified future date.
Select one:
a. Bonds Payable
b. Accounts Payable
c. Notes Payable
d. Mortgage Payable

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It is a voluntary association of at least 15 persons having a common bond of interest for the purpose
of generating capital from among themselves through a systematic and continuous savings program
in order to grant loans to each other at reasonable rates of interest.
Select one:
a. single proprietorship
b. partnership
c. corporation
d. cooperative

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The cost accountant handles Management Accounting.
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True
False

Question 43
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A mortgage payable is a noncurrent liability.
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True
False

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SFP is an acronym for Statement of Financial Position, which is also known as the Balance Sheet.
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True
False

Question 45
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Manufacturing business converts raw materials to finished goods.
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True
False

Question 46
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The following are the advantages of forming a partnership except
~Minimal regulatory requirements than corporation.
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a. Exempt from paying corporate tax
b. Can exist for a period of 50 yrs
c. more capital from partners

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If additional investment of the owner is P650,000 and payment of long-term loan to the bank is
P700,000, how much is the net cash increase or decrease from financing activities?
Select one:
a. Increase of P650,000
b. Decrease of P50,000
c. Increase of P50,000
d. Decrease of P700,000

Question 48
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Cash flows are categorized into three types; these activities does not determine the purpose for
which the cash has been used.
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True
False

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Among all the activities, only financing activities have different ways of being presented.
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True
False

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GAAP is Generally Applicable Accounting Principles.
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True
False