Mindanao State University - General Santos

COURSE TITLE - ACCTG 001

OVERVIEW OF ACCOUNTING

1)The concept of recognition is applied in which of the following instances?

1. 1. An entity includes the effects of an event in the financial statements through a journal entry.
   2. An entity removes the effects of an event from the financial statements through a journal entry.
   3. An entity discloses only an event in the notes because its occurrence is not probable.
   4. An entity records an event through a memorandum entry.

2. Which of the following events is not considered an exchange or reciprocal transfer?
   1. Purchase of inventory on account
   2. Lending money to another entity
   3. Payment of a loan payable
   4. Payment of taxes

3. Which of the following events is considered a nonreciprocal transfer?
   1. Sale of an asset
   2. Donation
   3. Loss from a calamity
   4. Production of finished goods

4. To be useful, accounting information should be presented using
   1. Monetary amounts.
   2. A common denominator.
   3. Historical costs.
   4. Fair values.

5. Which of the following violates the historical cost concept?
   1. Recording purchases of merchandise inventory at the purchase price.
   2. Recording a building at the total construction costs.
   3. Measuring inventories at net realizable value.
   4. 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?
   1. Prudence
   2. Accrual basis
   3. Stable monetary unit
   4. Time period