Pamantasan ng Cabuyao
Brgy. Banay- Banay, City of Cabuyao, Laguna
Fundamentals of Accounting
Activity No. 1
Name: Trinidad, Marvin D. Score:
Course & Section: BSBA-Marketing 1BAM-A Date: 09-30-20
Instructions: Select the best answer. Show the necessary computations.
1. Which of the following is not a business transaction? D.
a. incurring interest on a business loan
b. purchasing office supplies
c. receiving fees for services
d. hiring a new employee
2. The steps in the process of accounting take place in the following order: A.
a. measuring, identifying, decision making, communicating
b. identifying, communicating, measuring, decision making
c. identifying, measuring, communicating, decision making
d. identifying, decision making, measuring, communicating
3. The difference between bookkeepers and accountants is: C.
a. just in the name because bookkeepers and accountants always do the
same job
b. that bookkeepers perform all the steps in the accounting process but
accountants only do steps one and two.
c. that accountants perform all the steps in the accounting process but
bookkeepers only do steps one and two.
d. that bookkeepers require a higher level of education to perform their
duties than accountants.
4. Which of these is not likely to be the responsibility of a bookkeeper? D.
a. calculating and paying wages
b. checking a customer’s credit rating
c. preparing the bank reconciliations
d. selecting an accounting package to the used by the entity
5. The information about a customer that would be of most interest to a supplier
is: A.
a. ability to pay off debts as they fall due.
b. annual dividends.
c. taxable income.
d. compliance with accounting standards.
6. The information that would be of most interest to an organisation's production
manager is: B.
a. ability to pay off debts as they fall due
b. continuity of orders for the factory.
c. annual dividends.
d. taxable income.
7. The external user of accounting information is the: D.
a. Purchasing officer.
b. Director of Research and Development.
c. Inventory clerk.
d. Customer.
8. The internal user of accounting information is the: A.
a. Building maintenance manager.
b. Supplier.
c. Environmental lobby group.
d. Auditor from the Australian Tax Office.
9. Which of these would not be considered an internal user of accounting
information? D.
a. The chairman of ASIC
b. The human resources manager
c. The Chief Financial Officer
d. The Production supervisor
10. The content of management accounting reports is governed by: D.
a. the Australian Securities Exchange.
b. the Corporations Act 2001
c. CPA Australia and the Institute of Chartered Accountants of Australia.
d. there are no specific rules governing the content of management
accounting reports
11. How many of the following are differences between management and
financial accounting? D.
o Types of reports produced
o Frequency of reports
o The format of reports
o The users of reports
a. One
b. Two
c. Three
d. Four
12. Management accounting reports are prepared:B.
a. based on GAAP and IASB accounting standards
b. to provide information for a wide range of stakeholders
c. to provide up to date information to managers for decision making
d. based only on historical figures
13. Select the option that does not represent a difference between financial and
management reporting.
a. The level of detail in the reports
b. Whether the reports are quantitative only or are both quantitative and
qualitative
c. How up-to-date the report is
d. Whether the reports are useful for decision-making
14. The Framework describes the qualitative characteristic of relevance as:
a. information that can be classified
b. information that is of value to users in decision making
c. information that can be reliably measured
d. information that is understandable.
15. The fundamental purpose of accounting standards is to improve
a. Accountants ethics.
b. Social accountability.
c. Company profits.
d. Resource allocation.
16. Which of these entities is least likely to have users dependent on General
Purpose Financial Statements?
a. A company with a large number of shareholders
b. A company listed on the stock exchange
c. A small company whose shareholders also run the business
d. A government department
17. The cost of producing financial information is
a. Always outweighed by the benefits gained
b. Sometimes outweighed by the benefits gained
c. Never outweighed by the benefits gained
d. irrelevant as users will want all the information they can get
18. Under the Framework the four principle qualitative characteristics for General
Purpose Financial Statements are:
a. relevance, reliability, materiality, conservatism
b. relevance, reliability, comparability, understandability
c. uniformity, consistency, prudence, readability
d. comparability, verifiability, timeliness, understandability
19. Resources controlled by the entity as a result of past transactions or events and
from which future economic benefits are expected to flow to the entity is the
definition of:
a. equity
b. assets.
c. liabilities.
d. income.
20. Which of these is an asset?
a. Income tax payable
b. Revaluation reserve
c. Interest earned on investments
d. Investments
21. “A present obligation of the entity arising from past events, the settlement of
which is expected to result in an outflow from the entity of resources
embodying economic benefits” is the definition of:
a. an expense
b. a liability
c. equity
d. revenue
22. Which of the following is an example of a liability?
a. allowance for doubtful debts
b. accumulated depreciation
c. revenue received in advance
d. GST paid
23. Decreases in economic benefits in the form of outflows or depletions of assets
or incurrences of liabilities that result in a decrease in equity, other than those
relating to distributions to equity participants, is the definition of:
a. liabilities.
b. income.
c. expenses.
d. equity.
24. Special-purpose financial reports provide information for which group(s)?
Internal Users External Users
Yes Yes
Yes No
No Yes
No No
a. I
b. II
c. III
d. IV
25. Under the Framework, the qualitative characteristic of relevance is described
as:
a. information that is of value to users in decision making.
b. information that is understandable
c. information that can be recorded in accounting reports.
d. information that can be reliably measured.
26. The term 'general-purpose financial statements’ refers to the fact that the
information conveyed is:
a. generally reliable but not perfect.
b. useful for general purposes but not for making specific decisions.
c. potentially valuable for a number of users.
d. average information from several accounting periods.
27. Providing accounting reports to external users costs large organisations:
a. nothing, as all charges are reimbursed by the government.
b. very little, as the reports are quite simple to produce.
c. varying amounts depending on the year in question.
d. a significant amount.
28. When making informed investment decisions, investors:
a. are only interested in the company’s financial situation
b. are only interested the company’s market share
c. are mainly interested in how long the company has been in existence
d. are interested in the company’s financial situation and other relevant
business factors as well
29. Subjectivity does not apply to the valuation of:
a. cash
b. inventory
c. property, plant and equipment
d. net accounts receivable
30. Firms of accountants who work for many different clients are known as:
a. financial accountants
b. private accountants
c. public accountants
d. company accountants
