QFABM WEEK 1-10
Q1. Resources of the firm taken by the owner for personal use:
Answer: Withdrawals
Q2. The right of the owner over the resources of the firm:
Answer: Equity
Q3. There are common account titles between assets and liabilities:
Answer: True
Q4. Property, plant, and equipment are assets:
Answer: True
Q5. Assets minus Liabilities is equal to Equity is also considered an Accounting Equation:
Answer: True
Q6. This is the type of business which offers services for a fee:
Answer: Service business
Q7. Service businesses offer products:
Answer: False
Q8. Long-term liabilities are noncurrent:
Answer: True
Q9. Cash and cash equivalents are current assets:
Answer: True
Q10. A liability is a present obligation arising out of past events:
Answer: True
Q11. An income statement for a merchandising business usually has how many sections?
Answer: 7
Q12. The heading of a statement of income usually consists of the following except:
Answer: None of the choices
Q13. The story of the success or failure of operations is shown in the:
Answer: Statement of Income
Q14. The following are included in the income statement for merchandising businesses except:
Answer: Business name
Q15. Operating expenses and operating income are items found in an income statement prepared in a multi-step approach:
Answer: True
Q16. We use a multi-step approach in preparing a statement of income for a:
Answer: Merchandising Business
Q17. The income statement for merchandising businesses has eight sections: Net sales, Cost of goods sold, Gross profit, etc.:
Answer: True
Q18. In preparing the income statement for service businesses, expenses are deducted from revenue to arrive at net profit or loss:
Answer: True
Q19. The usual account title for the equity of a corporation:
Answer: Stockholder's Equity
Q20. Consists of the owner's investment and earned profit less any withdrawals:
Answer: Capital
Q21. These are added to the beginning capital to arrive at total investments:
Answer: Investments
Q22. The result of deducting withdrawals from the sum of beginning capital, additional investments, and profit:
Answer: Ending Capital
Q23. If a firm has been operating, the beginning capital of the current year is ________ the ending capital of the previous year:
Answer: The same
Q24. 'Mr. Alvarez, Capital' is an equity account title for what type of business?
Answer: Sole proprietorship
Q25. Account title used for the owner's equity in a Statement of Changes in Equity for a Sole Proprietorship:
Answer: Name of owner, capital
Q26. The corporation uses this account title for the equity of the owner(s):
Answer: Stockholder's equity
Q27. Represents the total amount of inventory on hand:
Answer: Merchandise Inventory
Q28. Deductions from the purchase price due to returns or defects of goods purchased:
Answer: Purchase returns and allowances
Q29. Reductions in the total sales price given to a customer for prompt payment:
Answer: Sales discounts
Q30. Refers to total sales less sales discounts, returns, and allowances:
Answer: Net Sales
Q31. Total purchases less purchase discounts, returns, and allowances:
Answer: Net cost of goods purchased
Q32. Cost of goods sold (Beg. Inv. P50k + Net Purchases P125k - End. Inv. P35k):
Answer: P140,000
Q33. The equation for cost of goods sold is:
Answer: Beginning inventory + Net cost of goods purchased - Ending inventory
Q34. Which one does not form part of the cost of goods sold?
Answer: Owner's equity
Q35. Cash flows are categorized into operating, investing, and financing activities:
Answer: True
Q36. Net cash from operating activities (Receipts P200k - Paid to Suppliers P10k - Paid to Employees P25k):
Answer: P165,000
Q37. Principle stating that income is earned regardless of when cash is received, and expenses are incurred regardless of when cash is paid:
Answer: Accrual basis
Q38. It relies entirely on the payment and receipt of cash:
Answer: Cash basis accounting
Q39. A cash withdrawal by an owner for personal use falls into what cash flow category?
Answer: Financing
Q40. The _________________ method involves transactions showing gross cash receipts and gross cash payments:
Answer: Direct method
Q41. Among all the cash flow activities, only ____________________ have different ways of being presented:
Answer: Operating Activities
Q42. It details the movement of cash in the business:
Answer: Cash flow statement
Q43. Effect on the accounting equation (Debit Accounts Receivable P1,000, Credit Service Revenues P1,000):
Answer: Asset Increase, Equity Increase
Q44. Effect on the accounting equation (Receives P4,000 cash for services rendered):
Answer: Asset Increase, Equity Increase
Q45. Effect on the accounting equation (Pays P22,500 to a supplier on account):
Answer: Asset Decrease, Liability Decrease
Q46. Effect on the accounting equation (The business bought furniture for office use on account):
Answer: Asset Increase, Liability Increase
Q47. Effect on the accounting equation (The owner invests trucks to be used in the business):
Answer: Asset Increase, Equity Increase
Q48. An increase in assets is recorded as a Debit:
Answer: True
Q49. Debit entries with a larger total value would always possess a debit balance:
Answer: True
Q50. A business that converts raw materials into finished products:
Answer: Manufacturing
Q51. The law that manages Corporations:
Answer: Corporate code
Q52. Meaning of GAAP:
Answer: Generally Accepted Accounting Principles
Q53. Meaning of AICPA:
Answer: American Institute of Certified Public Accountants
Q54. This principle has two aspects: the quantifiability and stability of the peso:
Answer: Stable monetary unit
Q55. This concept states that assets and services acquired should be recorded at their actual cost:
Answer: Cost concept
Q56. Principle requiring that costs and expenses be recorded in the same period as the revenue they helped generate:
Answer: Matching Principle
Q57. The going-concern concept assumes the business will continue to operate for the foreseeable future:
Answer: True
Q58. Total is synonymous with:
Answer: Gross
Q59. The difference between net sales and the cost of goods sold:
Answer: Gross profit
Q60. Accounting is the system of measuring business activities of a financial character:
Answer: True
Q61. The T-account is the simplest form of an account:
Answer: True
Q62. The group of accounts for an entity is called a ledger:
Answer: True
Q63. This concept ensures that accounting information is current and is reported at regular intervals:
Answer: Time-period concept
Q64. Also known as the Time Period Concept:
Answer: Periodicity
Q65. The entity principle separates business from personal transactions:
Answer: True
