Identification.

1. Accounting is often called the “__________ of business”.

2. The residual interest in the assets of the enterprise after deducting all its liabilities is called __________.
3. This principle requires that accounting methods and procedures should be applied on a uniform basis from period to period
to achieve comparability in this financial statement. __________
4. An assumption which gives the business a continuous life of existence. __________
5. “No profit, no loss” situation of the business is being referred to as __________.
6. The account title for cash received in advance but services are to be rendered yet.
7. The book of original entry is called ________.
8. The skeleton form of a general ledger is a __________.
9. Under this method or approach, an asset account is debited upon payment of the prepaid expense.
10. A journal entry that is being prepared at the beginning of the next accounting period. __________
11. To __________ is to record the value parted with in an economic transaction.
12. Accounting __________ are economic activities of the business enterprises which affect any of the basic accounting
elements.
13. The __________ is a device used as a convenient and orderly way of organizing the accounting data to facilitate the
preparation of adjusting entries, financial statements and closing entries.
14. __________ is an accounting convention whereby the anticipated losses are to be provided and anticipated gains are not
to be accounted for unless realized.

MCQ.
1. It is in this field of professional practice where CPAs are considered as independent entity vested with freedom to exercise
his own judgment and impartiality of the reports he prepared.
a. Government accounting c. Private accounting
b. Managerial accounting d. Public accounting
2. A CPA in public service who carefully examines, tests and checks accuracy of accounting data.
a. Auditor c. Accountant
b. Bookkeeper d. Budget officer
3. The accounting period will begin on the first day of any month and will end on the last day of the twelfth month completing
the one year period.
a. Calendar year c. Natural business year
b. Fiscal year d. Leap year
4. Profit will result during a time period when –
a. Assets exceed liabilities c. Expenses exceed revenues
b. Assets exceed revenues d. Revenues exceed expenses
5. It is the ability of the enterprise to meet currently maturing obligations.
a. Liquidity c. Solvency
b. Financial structure d. Flexibility
6. How do you classify “withdrawal by the owner” in the cash flow?
a. Financing activity c. Investing activity
b. Operating activity d. None of these
7. The accounting process does not include –
a. Identification c. Recording
b. Verification d. Communication
8. Debit means –
a. Increases both assets and liabilities c. Decreases assets and increases liabilities
b. Decreases both assets and liabilities d. Increases assets and decreases liabilities
9. The amount entered on the left-hand of an account is called –
a. Debit side c. Credit entry
b. Debit entry d. Credit side
10. What do you call the listing of all accounts used in recording the economic activities of the business?
a. Trial balance
b. Balance sheet
c. Income statement
d. Chart of accounts
11. A trial balance will not balance if –
a. A correct journal entry is posted thrice
b. A P210 payment on account is debited to accounts payable for P21 and credited to cash for P21
c. A P100 cash drawing by owner is debited to drawing account for P1000 and credited to cash for P100
d. The purchase of supplies on account is debited supplies and credited to cash
12. Working capital may be derived from
 a. Revenue from current operation c. Sale of non-current assets
b. Long-term borrowings d. All of the above
13. If an inventory account is understated at year-end, the effect will be to
a. Overstate the net purchases
b. Overstate the cost of goods available for sale
c. Overstate the gross margin
d. Overstate the cost of goods sold