, TESTgBANK
IntermediategFinanci
algAccountinggPartg1
A
ZEUSgVERNONgB.gMILLAN
, ALLgRIGHTSgRESERVEDg20
15
Nogpartgofgthisgworkgcoveredgbygthegcopyrigh
tghereongmaygbegreproducedgorgusedginganygf
ormgorgbyganygmeansg-
gelectronicgorgmechanical,gincludinggphotocop
yingg–
gwithoutgthegwrittengpermissiongofgthegautho
r.
ISBNg 978-621-95096-0-2
Publishedgby:
BANDOLINgENTERPRISE
No.g100gMontebellogVillage,gBakakenggSur,gBaguiogCityg2600,gPhilippines
TABLEgOFgCONTENTS
CHAPTERg1
OVERVIEWgOFgACCOUNTING ...........................................................3
CHAPTERG1:GTHEORYGOFGACCOUNTSGREVIEWER ........................................... 3
CHAPTERG1G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 22
CHAPTERg2
THEgACCOUNTINGgPROCESS ......................................................... 24
CHAPTERG2:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 24
CHAPTERG2:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 26
CHAPTERG2G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 36
CHAPTERg3
THEgCONCEPTUALgFRAMEWORKgFORgFINANCIALgREPORTINGg36
CHAPTERG3:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 36
CHAPTERG3:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 37
CHAPTERG3G-GSUGGESTEDGANSWERSGTOGREVIEWGTHEORYGQUESTIONS. 54
CHAPTERg4
CASHg&gCASHgEQUIVALENTS ...................................................... 54
CHAPTERG4:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 54
CHAPTERG4:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 57
CHAPTERG4G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 65
CHAPTERg5
RECEIVABLESg(PARTg1) ................................................................. 66
CHAPTERG5:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 66
CHAPTERG5:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 69
CHAPTERG5G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 75
CHAPTERg6
RECEIVABLESg(PARTg2) ................................................................. 75
CHAPTERG6:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 75
CHAPTERG6:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 78
CHAPTERG6G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 82
CHAPTERg7
, CHAPTERG7:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 85
CHAPTERG7G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 92
CHAPTERg g g g g g g g g g g g g g g g g g g g g g g g g 8g g INV
ENTORIES......................................................................................... 92
CHAPTERG8:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 92
CHAPTERG8:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 97
CHAPTERG8G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 109
CHAPTERg9
INVESTMENTSg(PARTg1) .............................................................. 109
CHAPTERG9:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 109
CHAPTERG9:GTHEORYGOFGACCOUNTSGREVIEWER ......................................112
CHAPTERG9G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 122
CHAPTERg10
INVESTMENTSg(PARTg2) .............................................................. 122
CHAPTERG10:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMG INSTRUCTIONGPURPOSES) 122
CHAPTERG10:GTHEORYGOFGACCOUNTSGREVIEWER ...................................127
CHAPTERG10G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 134
CHAPTERg11
INVESTMENTSg(PARTg3) .............................................................. 135
CHAPTERG11:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMG INSTRUCTIONGPURPOSES) 135
CHAPTERG11:GTHEORYGOFGACCOUNTSGREVIEWER ...................................135
CHAPTERG11G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 137
Chapterg1gOver
viewgofgAccounting
Chapterg1:gTheorygofgAccountsgReviewe
rgDefinitiongofgAccounting
1. Accountingghasgbeenggivengvariousgdefinitions,gwhichgofgthegfollowinggisgnotgonegofgthosegdefinitions
a. Accountinggisgagservicegactivity.gItsgfunctiongisgtogprovidegquantitativeginformation,gprimarilygfinancialging
nature,gaboutgeconomicgentitiesgthatgisgintendedgtogbegusefulgingmakinggeconomicgdecisions.
b. Accountinggisgthegartgofgrecording,gclassifying,gandgsummarizinggingagsignificantgmannergandgingtermsgofg
money,gtransactionsgandgeventsgwhichgare,gingpartgofgatgleast,gofgagfinancialgcharactergandginterpretinggth
egresultsgthereof.
c. Accountinggisgagsystematicgprocessgofgobjectivelygobtaininggandgevaluatinggevidencegregardinggassertions
gaboutgeconomicgactionsgandgeventsgtogascertaingthegdegreegofgcorrespondencegbetweengthesegassertions
g andgestablishedgcriteriagandgcommunicatinggthegresultsgtoginterestedgusers.
d. Accountinggisgthegprocessgofgidentifying,gmeasuring,gandgcommunicatinggeconomicginformationgtogpermit
ginformedgjudgmentgandgdecisionsgbygusersgofginformation.
2. Itg isg theg firstg processg usedg ing accounting.g Itg refersg tog theg identificationg ofg eventsg asg tog whetherg theyg
aregrecognizedgorgnotgingthegfinancialgstatements.
a.gIdentifying b.gMeasuringg c.gCommunicating d.gAuditing
3. Thegfollowinggstatementsgcorrectlygrefergtogthegaccountinggprocess.
I. Measuringgisgthegaccountinggprocessgofganalyzinggbusinessgactivitiesgasgtogwhethergorgnotgtheygwillgbegre
cognizedgingthegbooks.
II. Recognitiongrefersgtogthegprocessgofgincludinggthegeffectsgofgangeventgingthegtotalsgofgthegstatementgofgfin
ancialgpositiongorgthegstatementgofgprofitgorglossgandgothergcomprehensivegincomegthroughgmemog entri
es.
III. Disclosuregofgeventsgingthegnotesgtogfinancialgstatementgwithoutgincludinggingthegtotalsgofgthegstatementg
ofgfinancialgpositiongorgstatementgofgprofitgorglossgandgothergcomprehensivegincomegisgnotgangapplication
gofgthegrecognitiongprinciple.
IV. Angaccountablegeventgisgangeventgthatghasgangeffectgongthegassets,gliabilitiesgorgequitygofgangentitygandgits
geffectgcangbegmeasuredgreliably.
V. Sociologicalgandgpsychologicalgmattersgaregwithingthegscopegofgaccounting.
IntermediategFinanci
algAccountinggPartg1
A
ZEUSgVERNONgB.gMILLAN
, ALLgRIGHTSgRESERVEDg20
15
Nogpartgofgthisgworkgcoveredgbygthegcopyrigh
tghereongmaygbegreproducedgorgusedginganygf
ormgorgbyganygmeansg-
gelectronicgorgmechanical,gincludinggphotocop
yingg–
gwithoutgthegwrittengpermissiongofgthegautho
r.
ISBNg 978-621-95096-0-2
Publishedgby:
BANDOLINgENTERPRISE
No.g100gMontebellogVillage,gBakakenggSur,gBaguiogCityg2600,gPhilippines
TABLEgOFgCONTENTS
CHAPTERg1
OVERVIEWgOFgACCOUNTING ...........................................................3
CHAPTERG1:GTHEORYGOFGACCOUNTSGREVIEWER ........................................... 3
CHAPTERG1G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 22
CHAPTERg2
THEgACCOUNTINGgPROCESS ......................................................... 24
CHAPTERG2:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 24
CHAPTERG2:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 26
CHAPTERG2G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 36
CHAPTERg3
THEgCONCEPTUALgFRAMEWORKgFORgFINANCIALgREPORTINGg36
CHAPTERG3:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 36
CHAPTERG3:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 37
CHAPTERG3G-GSUGGESTEDGANSWERSGTOGREVIEWGTHEORYGQUESTIONS. 54
CHAPTERg4
CASHg&gCASHgEQUIVALENTS ...................................................... 54
CHAPTERG4:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 54
CHAPTERG4:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 57
CHAPTERG4G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 65
CHAPTERg5
RECEIVABLESg(PARTg1) ................................................................. 66
CHAPTERG5:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 66
CHAPTERG5:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 69
CHAPTERG5G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 75
CHAPTERg6
RECEIVABLESg(PARTg2) ................................................................. 75
CHAPTERG6:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 75
CHAPTERG6:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 78
CHAPTERG6G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 82
CHAPTERg7
, CHAPTERG7:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 85
CHAPTERG7G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 92
CHAPTERg g g g g g g g g g g g g g g g g g g g g g g g g 8g g INV
ENTORIES......................................................................................... 92
CHAPTERG8:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 92
CHAPTERG8:GTHEORYGOFGACCOUNTSGREVIEWER ........................................ 97
CHAPTERG8G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 109
CHAPTERg9
INVESTMENTSg(PARTg1) .............................................................. 109
CHAPTERG9:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMGINSTRUCTIONGPURPOSES) 109
CHAPTERG9:GTHEORYGOFGACCOUNTSGREVIEWER ......................................112
CHAPTERG9G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 122
CHAPTERg10
INVESTMENTSg(PARTg2) .............................................................. 122
CHAPTERG10:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMG INSTRUCTIONGPURPOSES) 122
CHAPTERG10:GTHEORYGOFGACCOUNTSGREVIEWER ...................................127
CHAPTERG10G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 134
CHAPTERg11
INVESTMENTSg(PARTg3) .............................................................. 135
CHAPTERG11:GMULTIPLEGCHOICEG–GCOMPUTATIONALG(SETGB)G–G(FORGCLASSROOMG INSTRUCTIONGPURPOSES) 135
CHAPTERG11:GTHEORYGOFGACCOUNTSGREVIEWER ...................................135
CHAPTERG11G-GSUGGESTEDGANSWERSGTOGTHEORYGOFGACCOUNTSGQUESTIONS 137
Chapterg1gOver
viewgofgAccounting
Chapterg1:gTheorygofgAccountsgReviewe
rgDefinitiongofgAccounting
1. Accountingghasgbeenggivengvariousgdefinitions,gwhichgofgthegfollowinggisgnotgonegofgthosegdefinitions
a. Accountinggisgagservicegactivity.gItsgfunctiongisgtogprovidegquantitativeginformation,gprimarilygfinancialging
nature,gaboutgeconomicgentitiesgthatgisgintendedgtogbegusefulgingmakinggeconomicgdecisions.
b. Accountinggisgthegartgofgrecording,gclassifying,gandgsummarizinggingagsignificantgmannergandgingtermsgofg
money,gtransactionsgandgeventsgwhichgare,gingpartgofgatgleast,gofgagfinancialgcharactergandginterpretinggth
egresultsgthereof.
c. Accountinggisgagsystematicgprocessgofgobjectivelygobtaininggandgevaluatinggevidencegregardinggassertions
gaboutgeconomicgactionsgandgeventsgtogascertaingthegdegreegofgcorrespondencegbetweengthesegassertions
g andgestablishedgcriteriagandgcommunicatinggthegresultsgtoginterestedgusers.
d. Accountinggisgthegprocessgofgidentifying,gmeasuring,gandgcommunicatinggeconomicginformationgtogpermit
ginformedgjudgmentgandgdecisionsgbygusersgofginformation.
2. Itg isg theg firstg processg usedg ing accounting.g Itg refersg tog theg identificationg ofg eventsg asg tog whetherg theyg
aregrecognizedgorgnotgingthegfinancialgstatements.
a.gIdentifying b.gMeasuringg c.gCommunicating d.gAuditing
3. Thegfollowinggstatementsgcorrectlygrefergtogthegaccountinggprocess.
I. Measuringgisgthegaccountinggprocessgofganalyzinggbusinessgactivitiesgasgtogwhethergorgnotgtheygwillgbegre
cognizedgingthegbooks.
II. Recognitiongrefersgtogthegprocessgofgincludinggthegeffectsgofgangeventgingthegtotalsgofgthegstatementgofgfin
ancialgpositiongorgthegstatementgofgprofitgorglossgandgothergcomprehensivegincomegthroughgmemog entri
es.
III. Disclosuregofgeventsgingthegnotesgtogfinancialgstatementgwithoutgincludinggingthegtotalsgofgthegstatementg
ofgfinancialgpositiongorgstatementgofgprofitgorglossgandgothergcomprehensivegincomegisgnotgangapplication
gofgthegrecognitiongprinciple.
IV. Angaccountablegeventgisgangeventgthatghasgangeffectgongthegassets,gliabilitiesgorgequitygofgangentitygandgits
geffectgcangbegmeasuredgreliably.
V. Sociologicalgandgpsychologicalgmattersgaregwithingthegscopegofgaccounting.
