NAME:

SUBJECT:
IDENTIFICATION:
1. This refers to a set of logical ideas and procedures that guide accountant in recording and communicating economic information.
2. Under this concept, the indefinite life of the business is subdivided into series of reporting periods.
3. The personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline?
4. Which principle/guideline allows a company to ignore the change in the purchasing power of the peso over time?
5. Assets are recorded at their original purchase price according to what accounting principle?
ANALYSIS:
6. An asset with a cost of P120,000 is depreciated over its useful life of 10 years rather than expensing the entire amount when it is purchased. This complies with
which principle/guideline?
7. A retailer wishes to report its merchandise inventory on its balance sheet at its retail value. This would violate which accounting principle/guideline?
8. A company borrowed P100,000 on December 1, 2010 and will make its only payment for interest when the note is paid off on June 1, 2011. The total interest for the
six months will be P3,600. On the December 2010 income statement the accountant reported Interest Expense of P600. This action was the result of which
accounting principle/guideline?
9. Randy estimated that the life of his business will be terminated after 30 years. He decided to prepare the financial statement only after 30 years upon its
termination. Which accounting principle is violated?
10. XYZ received the internet bill of his business on October 30. However, he decided to pay the said bill on November 15 of the succeeding month so he recorded the
expenses related to it on November financial statement. Which accounting principle is violated?
FACT OR BLUFF: Write FACT if statement is correct. Write Bluff if statement is incorrect then change the underlined word to make it fact.
11. An accounting period that is shorter than 12 months is natural period.
12. The life of a business is divided into series of equal short periods called fiscal year period.
13. The going concern considers the entity and the owner as distinct from each other.
14. To be irrelevant, information on financial statements must be prepared and communicated timely.
15. GAAP stands for Generally Accepted Accounting Propositions.
APPLICATION: Identify the accounting principle applied on the given scenario.
During the year, you started a business of selling personalized mugs and shirts. You opened a separate bank account for the business and deposited your initial investment of
P250, 000 to this account. 16.____________.
The business acquired a printing machine. The regular selling price is P100, 000, however, you were able to acquire it at discounted price of P90, 000. You will record the
machine in the amount of P90, 000 rather than P100, 000. 17.________________.
The business acquired initial inventory of mugs and shirts for total cost of P50, 000. You will record the cost as an asset rather than expense. 18._______________________
Of the total credit sales of P300, 000, P290, 000 was collected. You will deposit your collections to the bank account of the business and not to your personal account.
19.___________________________
The debtor for the remaining P10,000 is in financial difficulty which raised doubt if he can still pay his obligations to your business. You will immediately recognize this doubtful
account as expense. 20._____________________
You withdrew cash from the business for personal use. You recorded this as withdrawal of your investment rather than a business expense. 21.______________________
At the end of the year, you prepared the financial statement. This is among other things, to determine whether the business earned profits. 22.__________________________
When preparing the financial statement, you discovered that the businessv has $10. You will translate this to Peso using the current exchange rate. The amount you will report
in the financial statement is the translated amount. 23._______________________
Also, you have found out that the regular selling price for new printing machine is P120, 000. You will ignore this information and still reported the machine at its acquisition
cost. 24.______________, 25.__________________
CASE ANALYSIS: 26-30. During the period, the business acquires an equipment costing P300, 000 in cash. The business is questioning why you, as the accountant, did not
include the P300, 000 equipment as one of the items of operating expenses in the Statement of Comprehensive Income which resulted to higher income tax of business. How
would you explain it to the owner?

NAME:
SUBJECT:
IDENTIFICATION:
1. This refers to a set of logical ideas and procedures that guide accountant in recording and communicating economic information.
2. Under this concept, the indefinite life of the business is subdivided into series of reporting periods.
3. The personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline?
4. Which principle/guideline allows a company to ignore the change in the purchasing power of the peso over time?
5. Assets are recorded at their original purchase price according to what accounting principle?
ANALYSIS:
6. An asset with a cost of P120,000 is depreciated over its useful life of 10 years rather than expensing the entire amount when it is purchased. This complies with
which principle/guideline?
7. A retailer wishes to report its merchandise inventory on its balance sheet at its retail value. This would violate which accounting principle/guideline?
8. A company borrowed P100,000 on December 1, 2010 and will make its only payment for interest when the note is paid off on June 1, 2011. The total interest for the
six months will be P3,600. On the December 2010 income statement the accountant reported Interest Expense of P600. This action was the result of which
accounting principle/guideline?
9. Randy estimated that the life of his business will be terminated after 30 years. He decided to prepare the financial statement only after 30 years upon its
termination. Which accounting principle is violated?
10. XYZ received the internet bill of his business on October 30. However, he decided to pay the said bill on November 15 of the succeeding month so he recorded the
expenses related to it on November financial statement. Which accounting principle is violated?
FACT OR BLUFF: Write FACT if statement is correct. Write Bluff if statement is incorrect then change the underlined word to make it fact.
11. An accounting period that is shorter than 12 months is natural period.
12. The life of a business is divided into series of equal short periods called fiscal year period.
13. The going concern considers the entity and the owner as distinct from each other.
14. To be irrelevant, information on financial statements must be prepared and communicated timely.
15. GAAP stands for Generally Accepted Accounting Propositions.
APPLICATION: Identify the accounting principle applied on the given scenario.
During the year, you started a business of selling personalized mugs and shirts. You opened a separate bank account for the business and deposited your initial investment of
P250, 000 to this account. 16.____________.
The business acquired a printing machine. The regular selling price is P100, 000, however, you were able to acquire it at discounted price of P90, 000. You will record the
machine in the amount of P90, 000 rather than P100, 000. 17.________________.
The business acquired initial inventory of mugs and shirts for total cost of P50, 000. You will record the cost as an asset rather than expense. 18._______________________
Of the total credit sales of P300, 000, P290, 000 was collected. You will deposit your collections to the bank account of the business and not to your personal account.
19.___________________________
The debtor for the remaining P10,000 is in financial difficulty which raised doubt if he can still pay his obligations to your business. You will immediately recognize this doubtful
account as expense. 20._____________________
You withdrew cash from the business for personal use. You recorded this as withdrawal of your investment rather than a business expense. 21.______________________
At the end of the year, you prepared the financial statement. This is among other things, to determine whether the business earned profits. 22.__________________________
When preparing the financial statement, you discovered that the businessv has $10. You will translate this to Peso using the current exchange rate. The amount you will report
in the financial statement is the translated amount. 23._______________________
Also, you have found out that the regular selling price for new printing machine is P120, 000. You will ignore this information and still reported the machine at its acquisition
cost. 24.______________, 25.__________________
CASE ANALYSIS: 26-30. During the period, the business acquires an equipment costing P300, 000 in cash. The business is questioning why you, as the accountant, did not
include the P300, 000 equipment as one of the items of operating expenses in the Statement of Comprehensive Income which resulted to higher income tax of business. How
would you explain it to the owner?