Accounting Long Quiz Chapter One
Internal and External Users of Accounting
Internal
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Employees
Managers
Auditor
Stockholders
Directors
External
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Bankers
Customers
Regulatory Agencies
Trading Partners
Journalist
Functions of Accounting
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Recording
Interpreting
Summarizing
Attributes of Entity
Sole Proprietorship
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Owned by a single person
Not a taxable entity
Partnership – the property of the owners become a common fund.
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Has limited life
A separate legal entity
Can be formed by two or more persons
Can be formed by a mere agreement
Corporation – An organization composed of five or more persons registered with the SEC having rights,
powers, and attributes of a person.
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A separate legal entity
Limited liability
Has the attributes of a person
Types of Business and Examples
Service Business
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Fitness First
Theatres
Victory Liner
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Cut Salon
Tony and Jacky
Jollibee
Resort
Hotel
Merchandising Business – engaged in buying and selling goods.
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SM Supermarket
Market Vendors
Sari-Sari Stores
Villman Computes
Ideal Vision
Manufacturing Business
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Goldilocks
Rebisco Company
Sterling Paper Group of Companies
In bookkeeping, transactions or events are recorded chronologically.
The real objective of the financial statements is to help the users make decision.
People engage in business for profit.
Accountants employed in business organization as chief accountant, accounting clerk, or controller are
to be engaged in financial accounting.
Investors are interested in the financial statements to know the rate of return of their money.
The usual accounting period is 12 months.
A business can be classified as a field of endeavor.
A calendar period is a period of 12 months.
A fiscal period is a period of 12 months.
Investors need financial information to enable them to evaluate the ability of the business to pay
dividends.
Financial statements are made within fiscal and/or calendar period.
In the business entity concept, the money of the business is treated as the money of the business.
A. Creditors are interested in the financial statements because they will earn dividends.
B. Income of a service business is derived from getting commissions.
Answer: Both statements are false.
Accounting Short Quiz: Financial Statements
Accounts in Income Statement
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Professional fees
Service Income
Bad Debts
Depreciation Expense
SSS Premium Expense
Repairs and Maintenance
Utilities Expense
Accounts in Balance Sheet
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Interest Receivable
Alvarez, Drawing
Accrued Interest Income
Unearned Interest Income
Prepaid Interest
Accumulated Depreciation
Mortgage Payable
Unused Supplies
Supplies Inventories
Supplies on Hand
Withholding Tax Payable
Petty Cash Fund
Allowance for Bad Debts
Cash in Bank
Accounts Payable
Prepaid Insurance
Unexpired Insurance
Salaries Payable
Land
Accrued Taxes Expense
SSS Premium Payable
Unearned Rent Income
Seatwork Chapter One
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What do you want to show the internal users?
Answer: accurate information
What language do you use to the government?
Answer: Revenue Code
What do you want to show the external users?
Answer: high profit
What language do you use for external users?
Answer: GAAP
What language do you use with internal users?
Answer:
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What do you want to show the government
Answer:
Accounting Long Quiz Chapter Two
Account form is the form of balance sheet when assets are listed on the left side and the liabilities and
equity are on the right side.
A loss in incurred when expenses are more than income.
The balance sheet should be dated As of MM/DD/YYYY.
Multi-step is a form of Income Statement showing different sections used by a merchandising business.
Single step is a form of Income Statement where all expenses are deducted from total income.
Owner’s drawing is deduction from the capital of the business.
Accounting date flow from:
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Income Statement to the Owner’s Equity.
Statement of Owner’s Equity to the Balance Sheet.
Working Capital is defined as total current assets less current liabilities.
Net book value is the difference between building less accumulated depreciation.
The date of the Balance Sheet shows the position of the business for the period covered.
The profit figure appears in all the following statements except the statement of cash flows.
Equity means total assets less total liabilities.