Review on FABM 1Online version Let's test your knowledge in FABM 1 Quarter 1 by Crisha Resonable 1 Which of the following best defines accounting? a It is a system of identifying, recording, analyzing, and interpreting financial information of a business. b It is a system of recording, interpreting, and communicating summarized financial events. c It is a system of identifying, recording, and communicating financial transactions of a business. d It is a process of recording and communicating financial decisions in a business. 2 Which of the following is NOT true about the nature of accounting? a Accounting is a procedure. b Accounting is an art. c Accounting is a means and not an end. d Accounting deals with financial information and transactions 3 Which of the following functions of accounting entails that all information in a business is governed by accounting? a Protecting properties of the business b Communicating results to various parties in or connected with the business c Meeting legal requirements d Keeping systematic records of business transactions. 4 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 5 Which nature of accounting best emphasizes that accounting is not 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. 6 Which of the following does NOT show one of the main functions of accounting? a Fred prepared a report to be submitted to the taxing authorities. b John recorded the purchase of 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. 7 Who is considered the Father of Modern Accounting? a Queen Victoria b Luca Pacioli c Augustus d Suetonius 8 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 ancient Mesopotamia. c During the 14th 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. 9 They are internal users of accounting information interested in knowing if their investment is in the right hands. a Government b Creditor c Debtor d Owner/Shareholders 10 It is the user of accounting information who analyzes the organization’s performance and position and takes appropriate measures to improve the company’s results of operations. a Government b Creditor c Consumer d Management 11 What is the principle that requires financial statement information to be supported by independent, unbiased evidence other than someone’s belief or opinion? a Business entity principle b Monetary Unit Principle c Cost Principle d Objectivity Principle 12 What is the rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold unless evidence shows that it will not continue? a Going-concern principle b Business entity principle c Objectivity principle d Cost principle 13 If a business has total assets of P50 000 and total liabilities of P20 000, what is the owner’s equity? a P70 000 b P30 000 c P50 000 d P20 000 14 If a company’s liabilities are P15 000 and its owner’s equity is P25 000, what is the total value of its assets? a P10 000 b P40 000 c P15 000 d P25 000 15 What happens to the accounting equation if a business borrows P10 000 from a bank? a Assets increase, liabilities increase. b Assets increase, equity increases. c Assets decrease, liabilities increase. d Assets decrease, equity decreases. 16 In the five major accounts, where would you find the account “Cost of Goods Sold”? a Assets b Liabilities c Equity d Expenses 17 In a subsidiary ledger for accounts receivable, what is typically used to identify each individual customer account? a Transaction Date b Invoice Number c Employee ID d Customer Name 18 What is the primary purpose of a subsidiary ledger? a To record all transactions of a business b To provide details for a specific general ledger account c To replace the general journal d To track only revenue transactions 19 4Where are the individual transactions initially recorded before being posted to the ledger? a In the general journal b In the trial balance c In the financial statements d In the income statements 20 Which term describes the process of transferring information from the journal to the ledger? a Posting b Journalizing c Balancing d Adjusting
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