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Abm Exercises

This document provides an introduction to accounting. It includes questions to test understanding of key accounting concepts. The questions cover topics such as the definition of accounting, the purpose of financial statements, the basic components of financial statements, and important figures in the history of accounting. Accounting is established as the process of identifying, measuring, recording, and communicating financial information about an entity to allow for informed decisions by users.

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gerett mendez
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3K views2 pages

Abm Exercises

This document provides an introduction to accounting. It includes questions to test understanding of key accounting concepts. The questions cover topics such as the definition of accounting, the purpose of financial statements, the basic components of financial statements, and important figures in the history of accounting. Accounting is established as the process of identifying, measuring, recording, and communicating financial information about an entity to allow for informed decisions by users.

Uploaded by

gerett mendez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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INTRODUCTION TO ACCOUNTING

Name:

A. True or False. On the Space provided before each number, write TRUE if the statement is correct
and FALSE if the statement is wrong.

_______ 1. The ability to transform a need into an opportunity to undertake a business is consistent
with the concept of environmental scanning.
_______ 2. The cash-in versus cash-out techniques of measuring business performance will result in
the correct net profit.
_______ 3. A complete set of financial statements has five basic components.
_______ 4. The financial statements are the outputs of the accounting process.
_______ 5. The objective of financial statements is to provide information about the Financial position,
financial performance, and cash flows of a business that is useful to specific users so that
they can make sound decisions.
______ 6. Financial statements provide information about a business assets, liabilities, equity, income
and expenses, cash flows, contributions by and contributions to owners in their capacity as
owners.
______ 7. Business Transactions are limited to interactions being engaged by business with customers
and suppliers.
______ 8. There is only one acceptable definition of accounting.
______ 9. Accounting is only applicable to businesses rendering services because accounting is a
service activity.
______ 10. Because accounting is systematic, definite techniques and their application require
particular skill and expertise.

B. Fill in the blanks. On the space provided, write the term (word or phrase) that is being described or
completes the thought of each statement.

1. The ________________ dictates that the business owes its stakeholders fair information on how the
business performed for and as of a particular period.
2. _______________ are the means by which a business communicates to interested users significant
information about its economic activities.
3. According to AAA, accounting is the ____________ of identifying, measuring, and communicating
economic information to permit informed judgments and decisions by users of the information.
4. According to AICPA, accounting is the ___________ of recording, classifying and summarizing in a
significant manner and in terms of money, transactions, and events which are in part of least of
financial character, and interpreting results thereof.
5. The definition provided by the ASC requires that the business transactions have to be measured in
terms of _______________.
6. A/An __________________ is a set of interrelated components that work together to achieve a
common purpose.
7. The three basic functions of accounting is supportive of the fact that accounting is being regarded as
the _________________.
8. Unlike accounting, _______________ is confined with the recording of monetary transactions.
9. Because of the enormous impact of his work in the field of accounting, _________________ is being
regarded as the father of modern accounting.
C. Multiple choice. Encircle the best answer.

1. Which of the following is not a basic component of financial statement?


a. Statement of financial position c. Statement of changes in cash
b. Income Statement d. Statement of cash flows
2. The cash-in versus cash-out technique is useful in preparing
a. Statement of financial position c. Statement of changes in cash
b. Statement of changes in equity d. Statement of cash flows
3. Economic activities relate to transactions that affect
a. Financial positions
b. Financial performance
c. Cash flows.
d. All of the above
4. Which of the following is not an output of the accounting process?
a. Statement of financial position
b. Notes to financial statement
c. Income Statement
d. None of the above
5. Which of the following activities undertaken by Jose Mercado (in the opening case) did not result in a
business transaction that is financial in nature?
a. Hiring of a staff
b. Purchase of photocopying machine
c. Borrowing of money from his father
d. Receipt of electricity bill
6. Which professional organization below defines accounting as a service activity.
a. Accounting Standards Council
b. American Association of Certified Public Accountants
c. American Accounting Associate
d. Philippine Institute of Certified Public Accountants
7. Because accounting is an art, _______________.
a. it refers to something that can be performed
b. it refers to a behavioral knowledge
c. it refers to a skill that can be enhanced
d. all of the above
8. Accounting being regarded as the performance of specific actions such as identifying, measuring,
and communicating financial information is through the nature of accounting as ______________.
a. a process c. a skill
b. an art d. a service activity
9. The management or owners report on how well the business fares which is a reflection of how well
they run the business. What function of accounting to business does this primarily refer to?
a. To support daily operations of the business
b. To help interested users come up with informed decisions
c. To fulfill the stewardship function of the management
d. all of the above
10. The English translation of Summa de Arithmetica, Geometria, Proportiona et Proportionalita is
___________.
a. Details of calculation and recording
b. Everything about Arithmetic, Geometry, and Proportion
c. Everything about Accounting, Geometry, and Proportion
d. Details of Recording and Journalizing

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