, TEST BANK
Intermediate
Financial Accounting
Part 1A
ZEUS VERNON B. MILLAN
, ALL RIGHTS RESERVED
2015
No part of this work covered by the copyright
hereon may be reproduced or used in any
form or by any means - electronic or
mechanical, including photocopying – without
the written permission of the author.
ISBN 978-621-95096-0-2
Published by:
BANDOLIN ENTERPRISE
No. 100 Montebello Village, Bakakeng Sur, Baguio City 2600, Philippines
TABLE OF CONTENTS
CHAPTER 1
OVERVIEW OF ACCOUNTING........................................................................3
CHAPTER 1: THEORY OF ACCOUNTS REVIEWER...................................3
CHAPTER 1 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 22
CHAPTER 2
THE ACCOUNTING PROCESS......................................................................24
CHAPTER 2: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 24
CHAPTER 2: THEORY OF ACCOUNTS REVIEWER.................................26
CHAPTER 2 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 36
CHAPTER 3
THE CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING 36
CHAPTER 3: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 36
CHAPTER 3: THEORY OF ACCOUNTS REVIEWER.................................37
CHAPTER 3 - SUGGESTED ANSWERS TO REVIEW THEORY QUESTIONS....54
CHAPTER 4
CASH & CASH EQUIVALENTS...................................................................54
CHAPTER 4: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 54
CHAPTER 4: THEORY OF ACCOUNTS REVIEWER.................................57
CHAPTER 4 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 65
CHAPTER 5
RECEIVABLES (PART 1)...............................................................................66
CHAPTER 5: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 66
CHAPTER 5: THEORY OF ACCOUNTS REVIEWER.................................69
CHAPTER 5 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 75
CHAPTER 6
RECEIVABLES (PART 2)...............................................................................75
CHAPTER 6: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 75
CHAPTER 6: THEORY OF ACCOUNTS REVIEWER.................................78
CHAPTER 6 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 82
CHAPTER 7
RECEIVABLES (PART 3)...............................................................................82
, CHAPTER 8
INVENTORIES................................................................................................... 92
CHAPTER 8: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 92
CHAPTER 8: THEORY OF ACCOUNTS REVIEWER.................................97
CHAPTER 8 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 109
CHAPTER 9
INVESTMENTS (PART 1)...........................................................................109
CHAPTER 9: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 109
CHAPTER 9: THEORY OF ACCOUNTS REVIEWER...............................112
CHAPTER 9 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 122
CHAPTER 10
INVESTMENTS (PART 2)...........................................................................122
CHAPTER 10: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 122
CHAPTER 10: THEORY OF ACCOUNTS REVIEWER.............................127
CHAPTER 10 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 134
CHAPTER 11
INVESTMENTS (PART 3)...........................................................................135
CHAPTER 11: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 135
CHAPTER 11: THEORY OF ACCOUNTS REVIEWER.............................135
CHAPTER 11 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 137
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
Intermediate
Financial Accounting
Part 1A
ZEUS VERNON B. MILLAN
, ALL RIGHTS RESERVED
2015
No part of this work covered by the copyright
hereon may be reproduced or used in any
form or by any means - electronic or
mechanical, including photocopying – without
the written permission of the author.
ISBN 978-621-95096-0-2
Published by:
BANDOLIN ENTERPRISE
No. 100 Montebello Village, Bakakeng Sur, Baguio City 2600, Philippines
TABLE OF CONTENTS
CHAPTER 1
OVERVIEW OF ACCOUNTING........................................................................3
CHAPTER 1: THEORY OF ACCOUNTS REVIEWER...................................3
CHAPTER 1 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 22
CHAPTER 2
THE ACCOUNTING PROCESS......................................................................24
CHAPTER 2: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 24
CHAPTER 2: THEORY OF ACCOUNTS REVIEWER.................................26
CHAPTER 2 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 36
CHAPTER 3
THE CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING 36
CHAPTER 3: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 36
CHAPTER 3: THEORY OF ACCOUNTS REVIEWER.................................37
CHAPTER 3 - SUGGESTED ANSWERS TO REVIEW THEORY QUESTIONS....54
CHAPTER 4
CASH & CASH EQUIVALENTS...................................................................54
CHAPTER 4: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 54
CHAPTER 4: THEORY OF ACCOUNTS REVIEWER.................................57
CHAPTER 4 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 65
CHAPTER 5
RECEIVABLES (PART 1)...............................................................................66
CHAPTER 5: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 66
CHAPTER 5: THEORY OF ACCOUNTS REVIEWER.................................69
CHAPTER 5 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 75
CHAPTER 6
RECEIVABLES (PART 2)...............................................................................75
CHAPTER 6: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 75
CHAPTER 6: THEORY OF ACCOUNTS REVIEWER.................................78
CHAPTER 6 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 82
CHAPTER 7
RECEIVABLES (PART 3)...............................................................................82
, CHAPTER 8
INVENTORIES................................................................................................... 92
CHAPTER 8: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 92
CHAPTER 8: THEORY OF ACCOUNTS REVIEWER.................................97
CHAPTER 8 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 109
CHAPTER 9
INVESTMENTS (PART 1)...........................................................................109
CHAPTER 9: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 109
CHAPTER 9: THEORY OF ACCOUNTS REVIEWER...............................112
CHAPTER 9 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 122
CHAPTER 10
INVESTMENTS (PART 2)...........................................................................122
CHAPTER 10: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 122
CHAPTER 10: THEORY OF ACCOUNTS REVIEWER.............................127
CHAPTER 10 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 134
CHAPTER 11
INVESTMENTS (PART 3)...........................................................................135
CHAPTER 11: MULTIPLE CHOICE – COMPUTATIONAL (SET B) – (FOR CLASSROOM INSTRUCTION PURPOSES) 135
CHAPTER 11: THEORY OF ACCOUNTS REVIEWER.............................135
CHAPTER 11 - SUGGESTED ANSWERS TO THEORY OF ACCOUNTS QUESTIONS 137
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
