16. What is the purpose of information presented in notes to financial statements?
a. To present management's responses to auditor comments
b. To correct improper presentation in the financial statements
c. To provide disclosures required by generally accepted accounting principles
d. To provide recognition of amounts not included in the total of the financial statements
17. Proper application of accounting principles is most dependent upon
a. Existence of specific guidelines
b. Oversight of regulatory bodies
c. External audit function
d. Professional judgment of the accountant
18. Which of the following is not a correct variation of the basic accounting equation?
a. Asset = Liabilities +Equity
b. Asset - Liabilities = Equity
c. Asset - Equity = Liabilities
d. Asset + Liabilities = Equity
19. Entity A's total liabilities are P50M, while its total equity is P10. Entity A's total assets are
a. P60M
b. P50M
c. P40M
d. Any of these
20. What is the effect on an entity's financial statement elements when an owner invests money to the business
a. Total assets increase
b. Total equity increases
c. Total assets and total liabilities both increases
d. Total assets and total equity both increases
21. Obligations supported by oral or informal promises to pay by debtor
a. Cash
b. Accounts receivables
c. Accounts payable
d. Notes payable
22. Goods are held for sale by a business.
a. Cash
b. Accounts receivables
c. Accounts payable
d. Inventory
23. Revenues earned from rendering services
A. Unearned income
24. The cost of promotional or marketing activities during the period.
A. Market expense
D. Insurance expense
25. Which of the following is not one of the essential parts of a general journal?
A. Date columN
C. Debit and credit columns
D. Running balance column
26. Which of the following accounts is increased through debit?
A. Accumulated
depreciatioN
D. Accounts payable-
27. Which of the following accounts are affected when a business owner invests cash to the business
A. Cash and Accounts receivables
B. Cash and Owner's equity
D. Accounts receivable and Owner's equity
28. Which of the following transactions increases total assets? *
B. Collection of accounts payable
C. Payment of accounts payable
D. Provision of capital by the owner
29. In accounting, to post means *
A. to record a transaction in debit-credit format.
B. to transfer the debits and credits of a recorded transaction to the affected accounts.
C. to determine whether total debit equal total credits.
D. to update your status.
30. The heading of
trial balance will least likely show *
A. the name of the business
B. the date covered by the report
C. the title of the report
D. the name of the business owner
31. How would a share split affect share premium and retained earnings, respectively?
A. Increase and No effect
B. No effect and No effect
C. No effect and Decrease
D. Increase and Decrease
32. Which of the following is not a method that may be used to account for treasury shares? *
C. Retained earning method
D. Constructive retirement method
33. An ordinary shareholder does not possess which of the following? *
A. The right to share in the earnings of the corporation when dividends are declared
B. The right to vote in the election of the board of directors of the corporation
C. The right to direct ownership of the corporate assets
D. The right to share proportionately in corporate assets in case of liquidation if such assets exceed the claims of creditors.
34. In accounting for shareholders’ equity, the accountant is primarily concerned with which of the following?
A. Determining the total amount of shareholders’ equity
B. Distinguishing between realized and unrealized revenue
C. Recording the source of each of the various elements of shareholders’ equity
D. Making sure that the directors do not declare dividends in excess of retained earnings.
35. An entity declared a cash dividend on a certain date payable on another date. Retained earnings would *
A. Increase on the date of declaration
B. Decrease on the date of declaration
C. Not be affected on the date of payment
D. Decrease on the date of payment
36. Total shareholders’ equity remains the same when there is *
A. Issuance of preference share in exchange for convertible debentures
B. Issuance of nonConvertible bonds with share warrants
C. Declaration of a share dividend
D. Declaration of cash dividend
37. Which of the following is most likely to be found in corporate laws regarding payment of dividends? *
A. Dividends may be paid from legal capital
B. Retained earnings are available for dividends unless restricted by contract or statute
C. Legal capital is available for any type of dividend
D. Capital from donated asset is available for dividends
