Financial Accounting > TEST BANKS > Mindanao State University - General Santos ACCTG 001mcq with ans-VERIFIED BY EXPERTS 2021-GRADED A+ (All)

Mindanao State University - General Santos ACCTG 001mcq with ans-VERIFIED BY EXPERTS 2021-GRADED A+

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OVERVIEW OF ACCOUNTING (Correct answers highlighted in pink) 1. The concept of recognition is applied in which of the following instances? a. An entity includes the effects of an event in the finan... cial statements through a journal entry. b. An entity removes the effects of an event from the financial statements through a journal entry. c. An entity discloses only an event in the notes because its occurrence is not probable. d. An entity records an event through a memorandum entry. 2. Which of the following events is not considered an exchange or reciprocal transfer? a. Purchase of inventory on account b. Lending money to another entity c. Payment of a loan payable d. Payment of taxes 3. Which of the following events is considered a nonreciprocal transfer? a. Sale of an asset b. Donation c. Loss from a calamity d. Production of finished goods 4. To be useful, accounting information should be presented using a. Monetary amounts. b. A common denominator. c. Historical costs. d. Fair values. 5. Which of the following violates the historical cost concept? a. Recording purchases of merchandise inventory at the purchase price. b. Recording a building at the total construction costs. c. Measuring inventories at net realizable value. d. Recording an equipment acquired in an instalment purchase at the cash price equivalent. 6. Entity A values its fixed assets at their historical costs and does not restate them for changes in the purchasing power of the Philippine peso due to inflation. Entity A is applying which of the following accounting concepts? a. Prudence b. Accrual basis c. Stable monetary unit d. Time period7. Entity A engages in importing and exporting activities. At the end of the period, Entity A has assets and liabilities denominated in foreign currencies. When preparing its financial statements, Entity A translates these assets and liabilities to pesos. Entity A is most likely to be applying which of the following accounting concepts? a. Double entry b. Accrual basis c. Stable monetary unit d. Time period 8. Preparing financial statements at least annually is an application of which of the following accounting concepts? a. Historical concepts b. Accrual basis c. Stable monetary unit d. Time period 9. Entity A acquires merchandise inventory. Entity A initially records the acquisition cost of the inventory as asset rather than an outright expense. When the inventory is subsequently sold, Entity A recognizes the cost of the inventory sold as expense, in the same period the sale revenue is recognized. This is an application of which of the following accounting concepts? a. Stable monetary unit b. Materiality c. Matching d. Proprietary [Show More]

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