BASICS OF ACCOUNTING
Which of the following best describes the core
function of accounting?
A. Selling goods and services to consumers
B. Identifying, recording, and communicating financial information
C. Managing company employees and workplace rules
D. Predicting future stock market prices
Which phase of accounting involves summarizing
recorded data into formal financial reports?
A. Communicating
B. Identifying
C. Auditing
D. Budgeting
Accounting is considered a "service activity"
primarily because its main goal is to:
A. Provide quantitative financial information to help stakeholders
make decisions
B. Generate revenue directly from manufacturing products
C. Ensure companies follow labor laws
D. Design decorative layouts for business reports
Accounting deals mainly with events that are:
A. Purely qualitative and non-financial
B. Expressed in monetary terms and have already occurred
C. Based entirely on future estimates with no historical backing
D. Unrelated to business operations
Why is accounting often called the "language of
business"?
A. It uses universal spoken words used in international trade
B. It translates complex legal documents into plain text
C. It communicates the financial condition and results of
operations to users
D. It is the official coding language for software systems
Which external user relies on accounting reports to
evaluate whether a company can repay a loan?
A. Production manager
B. Bank / Lender
C. Store supervisor
D. Marketing specialist
Who is recognized as the "Father of Accounting" for
documenting the double-entry bookkeeping system in
1494?
A. Luca Pacioli
B. Adam Smith
C. Benjamin Franklin
D. Charles Babbage
In the Philippines, what regulatory body issues the
Philippine Financial Reporting Standards (PFRS)?
A. Securities and Exchange Commission (SEC)
B. Financial Reporting Standards Council (FRSC)
C. Professional Regulation Commission (PRC)
D. Bureau of Internal Revenue (BIR)
What is the main purpose of having uniform
accounting standards across companies?
A. To keep business strategies secret from competitors
B. To ensure financial statements are comparable, consistent, and
reliable
C. To prevent companies from making a profit
D. To eliminate the need for professional CPAs
Which branch of accounting focuses primarily on
preparing financial reports for internal management
decision-making?
A. Financial Accounting
B. Managerial Accounting
C. Tax Accounting
D. Auditing
Which field involves an independent examination of
financial statements to express an opinion on their
fairness?
A. Government Accounting
B. Forensic Accounting
C. Auditing (External)
D. Accounting Education
Which form of business organization is owned by a
single individual who retains all profits but assumes
unlimited personal liability?
A. Corporation
B. Sole Proprietorship
C. Partnership
D. Cooperative
A key legal characteristic of a corporation is
that it:
A. Is legally separate from its owners (stockholders)
B. Must be owned by no more than two people
C. Ends automatically whenever a stockholder sells shares
D. Does not require registration with the SEC
A grocery store that buys finished goods from
wholesalers and sells them directly to consumers is
classified as a:
A. Service business
B. Merchandising business
C. Manufacturing business
D. Hybrid business
Which of the following is an example of an external
stakeholder in a business environment?
A. Chief Executive Officer (CEO)
B. Department Head
C. Government Regulatory Agency (e.g., BIR / SEC)
D. In-house Accountant