Elitestudyvault
2026
, TABLE OF CONTENTS
CHAPTER 1
OVERVIEW OF ACCOUNTING ................................................................. 1
CHAPTER 1: THEORY OF ACCOUNTS REVIEWER............................................... 1
CHAPTER 1 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ....... 27
CHAPTER 2
THE ACCOUNTING PROCESS ................................................................ 28
CHAPTER 2: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
................................................................................................................. 28
CHAPTER 2: THEORY OF ACCOUNTS REVIEWER............................................. 31
CHAPTER 2 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ....... 45
CHAPTER 3
THE CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING ...... 46
CHAPTER 3: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
................................................................................................................. 46
CHAPTER 3: THEORY OF ACCOUNTS REVIEWER............................................. 47
CHAPTER 3 - SUGGESTED ANSWERS TO REVIEW THEORY QUESTIONS ............... 71
CHAPTER 4
CASH & CASH EQUIVALENTS................................................................ 72
CHAPTER 4: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
................................................................................................................. 72
CHAPTER 4: THEORY OF ACCOUNTS REVIEWER............................................. 76
CHAPTER 4 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ....... 87
CHAPTER 5
RECEIVABLES (PART 1) ........................................................................ 88
CHAPTER 5: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
................................................................................................................. 88
CHAPTER 5: THEORY OF ACCOUNTS REVIEWER............................................. 92
CHAPTER 5 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ..... 100
CHAPTER 6
RECEIVABLES (PART 2) ...................................................................... 101
CHAPTER 6: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 101
CHAPTER 6: THEORY OF ACCOUNTS REVIEWER........................................... 105
CHAPTER 6 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ..... 110
CHAPTER 7
RECEIVABLES (PART 3) ...................................................................... 111
CHAPTER 7: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 111
CHAPTER 7: THEORY OF ACCOUNTS REVIEWER........................................... 114
CHAPTER 7 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ..... 125
CHAPTER 8
INVENTORIES ...................................................................................... 126
CHAPTER 8: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 126
CHAPTER 8: THEORY OF ACCOUNTS REVIEWER........................................... 132
CHAPTER 8 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ..... 149
iii
Elitestudyvault
,CHAPTER 9
INVESTMENTS (PART 1) .................................................................... 150
CHAPTER 9: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 150
CHAPTER 9: THEORY OF ACCOUNTS REVIEWER........................................... 153
CHAPTER 9 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ..... 168
CHAPTER 10
INVESTMENTS (PART 2) .................................................................... 169
CHAPTER 10: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 169
CHAPTER 10: THEORY OF ACCOUNTS REVIEWER ........................................ 175
CHAPTER 10 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ... 185
CHAPTER 11
INVESTMENTS (PART 3) .................................................................... 186
CHAPTER 11: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 186
CHAPTER 11: THEORY OF ACCOUNTS REVIEWER ........................................ 187
CHAPTER 11 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ... 188
iv
Elitestudyvault
, Chapter 1
Overview of Accounting
Chapter 1: Theory of Accounts Reviewer
Definition of Accounting
1. Accounting has been given various definitions, which of the following is not
one of those definitions
a. Accounting is a service activity. Its function is to provide quantitative
information, primarily financial in nature, about economic entities that is
intended to be useful in making economic decisions.
b. Accounting is the art of recording, classifying, and summarizing in a
significant manner and in terms of money, transactions and events which
are, in part of at least, of a financial character and interpreting the results
thereof.
c. Accounting is a systematic process of objectively obtaining and evaluating
evidence regarding assertions about economic actions and events to
ascertain the degree of correspondence between these assertions and
established criteria and communicating the results to interested users.
d. Accounting is the process of identifying, measuring, and communicating
economic information to permit informed judgment and decisions by
users of information.
2. It is the first process used in accounting. It refers to the identification of
events as to whether they are recognized or not in the financial statements.
a. Identifying b. Measuring c. Communicating d. Auditing
3. The following statements correctly refer to the accounting process.
I. Measuring is the accounting process of analyzing business activities as to
whether or not they will be recognized in the books.
II. Recognition refers to the process of including the effects of an event in the
totals of the statement of financial position or the statement of profit or
loss and other comprehensive income through memo entries.
III. Disclosure of events in the notes to financial statement without including
in the totals of the statement of financial position or statement of profit or
loss and other comprehensive income is not an application of the
recognition principle.
IV. An accountable event is an event that has an effect on the assets, liabilities
or equity of an entity and its effect can be measured reliably.
V. Sociological and psychological matters are within the scope of accounting.
a. I, II, III, IV, V b. I, II, III, IV c. IV d. III, IV
Types of Events
4. These events involve changes in the economic resources or obligations of
entities involving other entities but do not involve transfers of resources or
obligations
a. External events c. External events other than transfers
b. Non-reciprocal transfers d. Internal events
5. Events involving an entity and an external party.
a. External events c. External events other than transfers
b. Non-reciprocal transfers d. Internal events
6. Events in which an entity transfers (or receives) economic resources to
(from) another entity without directly receiving (or giving) value in exchange.
1
Elitestudyvault
2026
, TABLE OF CONTENTS
CHAPTER 1
OVERVIEW OF ACCOUNTING ................................................................. 1
CHAPTER 1: THEORY OF ACCOUNTS REVIEWER............................................... 1
CHAPTER 1 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ....... 27
CHAPTER 2
THE ACCOUNTING PROCESS ................................................................ 28
CHAPTER 2: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
................................................................................................................. 28
CHAPTER 2: THEORY OF ACCOUNTS REVIEWER............................................. 31
CHAPTER 2 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ....... 45
CHAPTER 3
THE CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING ...... 46
CHAPTER 3: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
................................................................................................................. 46
CHAPTER 3: THEORY OF ACCOUNTS REVIEWER............................................. 47
CHAPTER 3 - SUGGESTED ANSWERS TO REVIEW THEORY QUESTIONS ............... 71
CHAPTER 4
CASH & CASH EQUIVALENTS................................................................ 72
CHAPTER 4: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
................................................................................................................. 72
CHAPTER 4: THEORY OF ACCOUNTS REVIEWER............................................. 76
CHAPTER 4 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ....... 87
CHAPTER 5
RECEIVABLES (PART 1) ........................................................................ 88
CHAPTER 5: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
................................................................................................................. 88
CHAPTER 5: THEORY OF ACCOUNTS REVIEWER............................................. 92
CHAPTER 5 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ..... 100
CHAPTER 6
RECEIVABLES (PART 2) ...................................................................... 101
CHAPTER 6: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 101
CHAPTER 6: THEORY OF ACCOUNTS REVIEWER........................................... 105
CHAPTER 6 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ..... 110
CHAPTER 7
RECEIVABLES (PART 3) ...................................................................... 111
CHAPTER 7: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 111
CHAPTER 7: THEORY OF ACCOUNTS REVIEWER........................................... 114
CHAPTER 7 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ..... 125
CHAPTER 8
INVENTORIES ...................................................................................... 126
CHAPTER 8: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 126
CHAPTER 8: THEORY OF ACCOUNTS REVIEWER........................................... 132
CHAPTER 8 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ..... 149
iii
Elitestudyvault
,CHAPTER 9
INVESTMENTS (PART 1) .................................................................... 150
CHAPTER 9: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 150
CHAPTER 9: THEORY OF ACCOUNTS REVIEWER........................................... 153
CHAPTER 9 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ..... 168
CHAPTER 10
INVESTMENTS (PART 2) .................................................................... 169
CHAPTER 10: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 169
CHAPTER 10: THEORY OF ACCOUNTS REVIEWER ........................................ 175
CHAPTER 10 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ... 185
CHAPTER 11
INVESTMENTS (PART 3) .................................................................... 186
CHAPTER 11: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES)
............................................................................................................... 186
CHAPTER 11: THEORY OF ACCOUNTS REVIEWER ........................................ 187
CHAPTER 11 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS ... 188
iv
Elitestudyvault
, Chapter 1
Overview of Accounting
Chapter 1: Theory of Accounts Reviewer
Definition of Accounting
1. Accounting has been given various definitions, which of the following is not
one of those definitions
a. Accounting is a service activity. Its function is to provide quantitative
information, primarily financial in nature, about economic entities that is
intended to be useful in making economic decisions.
b. Accounting is the art of recording, classifying, and summarizing in a
significant manner and in terms of money, transactions and events which
are, in part of at least, of a financial character and interpreting the results
thereof.
c. Accounting is a systematic process of objectively obtaining and evaluating
evidence regarding assertions about economic actions and events to
ascertain the degree of correspondence between these assertions and
established criteria and communicating the results to interested users.
d. Accounting is the process of identifying, measuring, and communicating
economic information to permit informed judgment and decisions by
users of information.
2. It is the first process used in accounting. It refers to the identification of
events as to whether they are recognized or not in the financial statements.
a. Identifying b. Measuring c. Communicating d. Auditing
3. The following statements correctly refer to the accounting process.
I. Measuring is the accounting process of analyzing business activities as to
whether or not they will be recognized in the books.
II. Recognition refers to the process of including the effects of an event in the
totals of the statement of financial position or the statement of profit or
loss and other comprehensive income through memo entries.
III. Disclosure of events in the notes to financial statement without including
in the totals of the statement of financial position or statement of profit or
loss and other comprehensive income is not an application of the
recognition principle.
IV. An accountable event is an event that has an effect on the assets, liabilities
or equity of an entity and its effect can be measured reliably.
V. Sociological and psychological matters are within the scope of accounting.
a. I, II, III, IV, V b. I, II, III, IV c. IV d. III, IV
Types of Events
4. These events involve changes in the economic resources or obligations of
entities involving other entities but do not involve transfers of resources or
obligations
a. External events c. External events other than transfers
b. Non-reciprocal transfers d. Internal events
5. Events involving an entity and an external party.
a. External events c. External events other than transfers
b. Non-reciprocal transfers d. Internal events
6. Events in which an entity transfers (or receives) economic resources to
(from) another entity without directly receiving (or giving) value in exchange.
1
Elitestudyvault
