1. Which of the following in NOT a step in the accounting processing?

a. identification b. communication c. recording d. verification

2. Which of the following is NOT a relevant economic event?
a. An agent who attended to the concern of a complaining customer
b. Patricia, manager of company x, who sold an abandoned building of her company
c. Company Y which borrowed 5 million from a bank due to tight financial conditions
d. Company Z which paid its employees their salaries for the month of January
3. Which of the following does NOT show one of the main functions of accounting?
a. Fred prepare a report to be submitted to the taxing authorities
b. John recorded the purchase of an equipment in the accounting books immediately after
purchase.
c. Jason prepares financial reports monthly for the company’s stakeholders
d. Allen canvassed the price of a sewing machine to be used in the company’s operations.
4. Which of the following statements describes the accounting process?
a. It involves identifying relevant economic events.
b. Recording economic events is an essential part of the accounting process.
c. The accounting process is not complete if the financial information is not communicated to
interested users.
d. All of the above
5. Which is the most important step in the accounting process?
a. Identification
b. Recording
c. Communication
d. All steps are equally important
6. Which of the following cannot be considered a imitation of accounting?
a. Accounting is only historical in nature
b. Accounting provides limited information to the management.
c. The accounting process is tedious to execute.
d. Accounting considers only those transactions which can be measured in terms of money or
those quantitatively expressed.
7. Who is considered as the father of modern accounting?
a. Queen Victoria
b. Luca Pacioli
c. Augustus
d. Suetonius
8. Which order of events correctly portrays the history of accounting?
a. Early development in Mesopotamia – Development in the Roman Empire – Dissemination of
double- entry bookkeeping in the fourteenth century Italy – signing of charter by Queen
Victoria – Formation of accounting standards such as PAS and PFRS
b. Development in the Roman Empire – Early Development in Mesopotamia – Dissemination of
double-entry bookkeeping in the fourteenth century Italy – Signing of charter by Queen
Victoria – Formation of accounting standards such as PAS and PFRS
 c. Early Development in Mesopotamia – Development in the Roman Empire – Dissemination of
double-entry bookkeeping in the fourteenth century Italy – Formation of accounting standards
such as PAS and PFRS – Signing of charter by Queen Victoria
d. Early Development in Mesopotamia- Development in the Roman Empire – Signing of charter
by Queen Victoria – Dissemination of double-entry bookkeeping in the fourteenth century
Italy – Formation of accounting standards such as PAS and PFRS
9. Which nature of accounting best emphasizes that accounting is not the objective?
a. Accounting is an art
b. Accounting deals with financial information and transactions
c. Accounting is a means not an end
d. Accounting is a process
10. Jamie, the chief accountant of Company X, is preparing for a meeting with the top management.
This meeting is done monthly to evaluate the performance of the company. Which step of the
accounting process is most likely being done?
a. Recording
b. Communication
c. Identification
d. Classification
11. Which of the following is mostly use by accountants in communicating the results or operations
to outside parties?
a. Performance memos
b. Bulletin board postings
c. Public announcements of the results of operations
d. Financial Statements
12. What profession does NOT use accounting information at all?
a. Entrepreneurs
b. Economists
c. Government Officials
d. None of the above
13. Who is the person responsible for the process of identifying, recording, and communicating
economic events of an organization?
a. Manager
b. Accountant
c. Bookkeeper
d. Treasurer
14. Which of the following is false?
a. The accounting process consists of identifying economic events, recording these events, and
communicating these events to external users only.
b. The accounting process consists of identifying economic events, recording these events, and
communicating these events to internal and external users.
c. The accounting process consists of identifying economic events, recording these events, and
communicating these events to internal users only.
d. A and c only
 15. The history of accounting covers a very long period. Which of the following statements regarding
the history of accounting is NOT correct?
a. PAS and PFRS are the standards followed by accountants in performing their profession in
the present day.
b. It is believed that accounting was being used as early as the days of the ancient Mesopotamia.
c. During the fourteenth century Italy, the use of the single-entry bookkeeping became
widespread due to the work of Luca Pacioli.
d. The modern profession of chartered accountants originated in Scotland.
16. Which of the following can be considered as a relevant economic events?
a. A meeting of the top management was held in the discussion room last month.
b. The company received advance payments from its customers.
c. Meralco announced that it will increase energy prices by the end of the month.
d. GMA Network signed a contact with Kris Aquino.

For the following items. Identify if the statements are true of false. Choose the letter that represents the
correct combination of answers.

17. Statement I – Double-entry bookkeeping involves a debit and a credit or every transaction.
Statement II – The recording of the economic events also involves the classifying of such events.
a. Both statements are true.
b. Only Statement I s true.
c. Only Statement II is true.
d. Both statements are false.
18. Statement I – Accounting is used by all types of businesses, even not-for-profit organizations
such as charitable institutions.
Statement II – Government agencies have no use for accounting.
a. Both statement are true
b. Only Statement I is true
c. Only Statement II is true
d. Both statement are false.
19. Statement I – Accounting gives more benefit to larger companies than smaller companies.
Statement II – Large companies normally have more complex accounting processes.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statement are false
20. Statement I – small businesses, such sari-sari stores, have little to no use of accounting.
Statement II – accounting reports and/or financial statements need not be presented in a
standardized way.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statement are false
21. Statement I – accounting only involves financial information in the recording process.
Statement II- there are three principal activities in the accounting process.
 a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statement are false
22. Statement I – keeping a chronological diary of events is part of the recording aspect of
accounting.
Statement II – preparing accounting reports is part of the communication aspect of accounting.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statement are false
23. Statement I – the performance of car maintenance services of Toyota is a relevant economic
event.
Statement II – events that do not affect the company financially need to be recorded.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statement are false
24. Statement I – all businesses are required to communicate the results of their operations to
interested outside parties.
Statement II – in double-entry bookkeeping, the total amount in the debit and credit columns
should be equal.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statement are false
25. Statement I – accounting helps managers and owners of businesses in decision-making.
Statement II – all successful companies use the accounting process in some form.
a. Both statements are true
b. Only statement I is true
c. Only statement II is true
d. Both statement are false
26. This branch of accounting focuses on creating value for the business by providing information
used in the financial accounting and management accounting fields.
a. Accounting education
b. Cost accounting
c. Tax accounting
d. Auditing
27. One of the differences of financial accounting from management accounting is
a. Financial accounting are beneficial to external users only
b. Financial accounting can be used by internal users only
c. Financial accounting produces reports known as the financial statements
d. Financial accounting , unlike management accounting , primary aims to help managers in
their decision-making
28. The definition of government accounting came from?
a. Section 109 of Presidential Decree 1446
b. Section 109 of Presidential Decree 1445
c. Section 110 of Presidential Decree 1445
d. Section 110 of residential Decree 1446
29. Information produced by this branch of accounting aims to education students in the field of
accountancy
a. Accounting education
b. Accounting research
c. Financial accounting
d. Management accounting
30. Which of the following qualifications of an external auditor is considered the most important?
a. Competence
b. Objectivity
c. Independence
d. Integrity
31. Financial accounting is concerned with
a. General purpose financial statements
b. Special purpose financial statements
c. Tax returns
d. Management reports
32. Financial accounting reports primarily to
a. Government agencies
b. Taxing authorities
c. Top management of the company
d. Creditors and investors
33. Which of the following is true about the board exam of accountancy students?
a. In order to pass, a student needs to achieve a general average of at least 75%
b. All in all, there are a tool of six subjects in the board exam
c. In order to pass, a student should not get a rating below 60% in any of the subjects
d. A and C only
34. The primary guidance followed by tax accountants is
a. National Internal Revenue Code (NIRC)
b. Philippine Financial Reporting Standards (PFRS)
c. Philippine Accounting Standards (PAS)
d. Chartered Institute of Management Accountants (CIMA)
35. These are costs that do not change total amount within a relevant range of activity.
a. Variables costs
b. Fixed costs
c. Direct cost
d. Indirect costs
36. Which government agency is responsible for the keeping of national funds of the government?
a. Bureau of Treasury
b. Department of Budget and Management
 c. Commission on Audit
d. Department of Education
37. Accounting Research should follow which of the following guidelines?
a. PFRS and PAS
b. NIRC
c. CIMA Code of Ethics
d. All of the above
38. The frequency of reports generated by management accounting can be best described as
a. Annually
b. Quarterly
c. Semi-Annually
d. Whenever management demands
39. Which of the following agency is NOT charged with government accounting described as
a. Government agencies
b. Bureau of Treasury
c. Legislative Department
d. Commission on Audit
40. These are the resources sacrificed to achieved to achieve an objective.
a. Expenses
b. Costs
c. Benefits
d. Revenues

Test II. Identity what branch of accounting performs the following functions.

Write the answer in the space provided.

a. Financial accounting
b. Management accounting
c. Government accounting
d. Auditing
e. Tax accounting
f. Cost accounting
g. Accounting education
h. Accounting research

_________1. Provides reports used by internal users only

_________2. Tasked with the creation of new accounting knowledge

_________3. Follows the NIRC instead of the PFRS and PAS

_________4. Provides information to be used by the other branches accounting

_________5. Deals with the identifying of economic transactions, recording such transactions, and
communicating the results of operations.

_________6. Enhances the credibility of the financial statements by doing an independent examination
and evaluation of the financial statements

_________7. Determines the amount payable of each business

_________8. Controls the accountancy profession in the country

_________9. Reports generated by this branch of accounting depend on the requests of management

________10. Is not required to follow all of the pronouncements of the PFRS and PAS